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EU poised to approve continued Palestinian development aid

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The EU is set to approve the continued payment of development aid to the Palestinian territories after an internal European Commission audit found that its funding was not inadvertently financing terror groups.

The review, which is set to be discussed by senior commission officials on Monday and then be formally approved on Tuesday, would mean the first payment of non-humanitarian aid to Palestinian recipients since the Israel-Hamas war began last month can take place as planned by the end of November.

The EU is the largest external donor to Gaza and the occupied West Bank, with €1.2bn budgeted between 2021 and 2024 providing a financial lifeline to development organisations supporting Palestinians through about 100 projects.

Brussels announced a review into its development funding to the territories following the October 7 attack on Israel by Hamas, the Palestinian militant group that has run Gaza, after EU member states such as Austria and Germany suspended their bilateral aid payments.

Hamas is designated a terrorist organisation by Israel, the US and the EU.

The Brussels audit found no trace of links between EU financial support and terror groups, but it recommends stricter oversight for future payments, according to officials briefed on its contents.

Two recipients of EU funding remain under investigation over allegations of hate speech, the officials said.

Those two civil society groups have no immediate EU payments scheduled, and as such the ongoing probe will not hold up any planned development funding to the Palestinian territories, they added.

The Brussels audit also found projects accounting for €75mn of funding “are no longer feasible due to the [Israel-Hamas] conflict”, according to one EU official.

That money will be redistributed to other projects in the Palestinian territories, they added.

“We have seen in our assessment that the controls worked and there is no evidence found that money was diverted [to proscribed groups],” said the EU official.

“But given the overall situation, we need to further strengthen our controls to further mitigate the risk.”

The Brussels audit will recommend that future EU contracts for Palestinian projects include clauses banning any antisemitic statements or expressions of support for Hamas or other groups designated as terrorist organisations, and extending that to immediate relatives of beneficiaries who receive cash payments.

It will also call for third-party monitoring of all Palestinian beneficiaries and subcontractors to ensure compliance.

A European Commission spokesperson declined to comment.

EU payments of humanitarian aid to the UN Relief and Works Agency for Palestine Refugees and the Palestinian Authority are unaffected. The authority exercises limited autonomy in parts of the West Bank.

The decision to launch a review into the EU’s development funding sparked a fierce public debate between the bloc’s member states, exposing the differing positions across Europe on the Israel-Palestinian conflict.

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