Explained: Why EU Backtracked On Its Decision To Halt Aid To Palestine

The European Union (EU) on Monday (9 October) backtracked on its earlier decision to suspend development aid payments to Palestinians, following pressure from member states Spain, Ireland, and Luxembourg.

The initial announcement to freeze all aid payments, totalling 691 million euros ($728 million), was reversed later in the day, with the European Commission releasing a brief statement confirming the continuation of aid payments.

The day was marked by confusion as EU Commissioner Oliver Varhelyi initially took to X, formerly Twitter, to announce the suspension of all payments from the development programme for Palestinians, stating that the EU's 691-million euros development support was under review.

"The scale of terror and brutality against Israel and its people is a turning point.   There can be no business as usual. As the biggest donor of the Palestinians, the European Commission is putting its full development portfolio under review, worth a total of EUR 691m," Varhelyi said.

This announcement was met with dissent from Spain, Ireland, and Luxembourg, leading to a swift reevaluation of the position.

A spokesperson for the Irish government was quoted as saying by Euronews that it was "formally requesting the Commission to clarify the legal basis for this announcement.”

"We are the largest donor to Gaza. This help is important for young people. This is not money for Hamas. It is for the people of Gaza," he told AFP.

Spain's acting deputy prime minister also criticised the decision to withhold funds as a "betrayal" of Europe's fundamental principles and called on the Commission to promote peace rather than "punish" the Palestinian people.

Later on Monday evening, the EU's top diplomat Josep Borrell attempted to dispel any doubts by confirming the EU would not suspend "any due payments".

The EU is the biggest donor of aid to Palestinians residing in Hamas-controlled Gaza and the West Bank, governed by President Mahmoud Abbas' Palestinian Authority.

On the issue of EU funds being diverted to support the terrorist activities, a bloc spokesperson assured that no EU funds destined for Gaza could have inadvertently fallen into the hands of the Hamas terrorists.

"The EU does not fund Hamas or any terrorist organisation activities, either directly or indirectly. The EU has very strict rules in place to screen and vet the beneficiaries of EU funds," Ana Pisonero, the European Commission’s spokesperson for enlargement and neighbourhood policy, said.