BRUSSELS/BERLIN, Oct 9 (Reuters) - The European Commission said on Monday it was putting all of its development aid for Palestinians, worth 691 million euros ($729 million), under review and immediately suspending all payments following Hamas' attack on Israel.
Germany and Austria earlier on Monday said they were suspending bilateral development aid to Palestinians, while others such as Italy had said suspending aid was not up for discussion.
Europe is one of the main sources of aid to the Israeli-occupied Palestinian territories where the United Nations estimates that around 2.1 million people need humanitarian assistance, among them 1 million children. It is unclear whether the suspensions in development aid will also apply to such assistance.
The EU commission did not immediately respond to a request to clarify this.
"The scale of terror and brutality against Israel and its people is a turning point," Oliver Varhelyi, the European Commissioner for Neighbourhood and Enlargement, said in a post on social media. "There can be no business as usual."
Late on Monday, a government source said Spain disagreed with the suspension of European Commission aid for Palestinians and it was done without consulting member states’ foreign ministers. Spain's foreign office has called for an urgent discussion during a special EU meeting on Tuesday, the source added.
Hamas militants killed hundreds of Israelis and abducted dozens in the deadliest such incursion since the Yom Kippur war 50 years ago, prompting Israel to retaliate with its heaviest ever bombardment of Gaza, which has killed more than 400 people.
Varhelyi said all new budget proposals for Palestinian aid were also postponed until further notice. "The foundations for peace, tolerance and co-existence must now be addressed," he said.
"Incitement to hatred, violence and glorification of terror have poisoned the minds of too many," he added. "We need action and we need it now."
European Union foreign ministers will hold an emergency meeting on Tuesday to discuss the situation, including reviewing aspects of development aid, officials said on Monday. Total EU assistance earmarked for the Palestinian people under the 2022 budget allocation was 296 million euros.
Neither the EU Commission, Germany or Austria differentiated between Gaza, the Palestinian enclave ruled by Hamas, and the much larger West Bank run by the Western-backed Palestinian Authority led by President Mahmoud Abbas, whose Fatah movement is a rival to Hamas.
'SIGN OF SOLIDARITY'
Austrian Foreign Minister Alexander Schallenberg said the country was suspending development aid totalling around 19 million euros ($20 million) for a handful of projects.
Neutral Austria's ruling conservatives have adopted one of the most pro-Israel stances in the European Union in recent years. The Israeli flag has been hoisted above the chancellor's office and the Foreign Ministry after the shock Hamas assault.
In Germany, Development Minister Svenja Schulze of the Social Democrats said no payments were currently being made for bilateral aid projects as Berlin re-examined its engagement with the Palestinian territories.
"This is also an expression of our unbreakable solidarity with Israel," she told a news conference. "We are in contact with our partners there and reviewing everything again."
Germany's development ministry has earmarked 250 million euros in development funds for bilateral projects in the Palestinian territories for this and next year. It did not say how much of that it had already disbursed this year.
German politicians have over the past days emphasised their country's particular duty towards Israel and its security given the historic responsibility for the Holocaust. The Israeli flag was projected on Saturday night onto Berlin's landmark Brandenburg Gate.
Still, some politicians have pushed back against the decision to suspend aid, saying Hamas but not all Palestinians were responsible for the attack.
Moreover a spokesperson for the Greens-run foreign ministry said it would continue to disburse the 73 million euros it had earmarked for Palestinians - which were separate to the development ministry funds, and most of which had already been spent.
The foreign ministry funds via international organisations and the United Nations meaning Germany is bound to disburse what it has pledged, a government source said.
Asked if Italy would follow Germany and Austria in suspending development aid, the foreign ministry spokesperson said this was not under discussion.
A spokesperson for Prime Minister Rishi Sunak, asked whether Britain planned to follow Austria and Germany, said Britain had previously provided aid to Palestinian refugees via the United Nations and he was not aware of plans to change the approach.
