The European Union (EU) has launched a review of its development aid to the Palestinians following the recent attacks on Israel by Hamas. However, the EU was quick to clarify that no aid has been suspended yet, despite initial claims made by EU Commissioner Oliver Varhelyi. Varhelyi had announced on social media that 691 million euros ($728 million) in aid had been suspended pending a review, but the European Commission later confirmed that no payments had been foreseen and therefore there would be no suspension of payments. The review only applies to development funding and not humanitarian aid.

Varhelyi's announcement sparked surprise and anger among EU member states, with Spain's foreign ministry calling him to protest. Ireland also questioned the legal authority of Varhelyi to make such a decision and requested clarification from the European Commission. European foreign ministers are set to hold emergency talks on the situation on Tuesday. Luxembourg's acting foreign minister expressed opposition to the suspension, stating that the aid is important for the people of Gaza and not for Hamas. On the other hand, Germany announced its own suspension of direct aid to the Palestinians.

The EU's development aid to the Palestinians amounts to 691 million euros ($728 million), and the EU had announced in February that it would provide up to 1.177 billion euros in financial support from 2021 to 2024. The European Commission emphasized that the aid does not fund Hamas or any other terrorist activities. Following Varhelyi's announcement, the EU reversed its decision and stated that it would urgently review its assistance to Palestine to ensure that no funding indirectly supports terrorist organizations. EU foreign policy chief Josep Borrell criticized Varhelyi's initial announcement, stating that it would have damaged EU interests in the region and emboldened terrorists.

Germany and Austria have also suspended their own development aid to the Palestinian areas temporarily. Germany, the EU's most populous member, has pledged 250 million euros ($265 million) in aid, half of which is for bilateral projects and the other half for the UN agency for the Palestinians. The German Development Ministry stated that it takes great care to ensure that its aid serves peace and not terrorists, but the recent attacks by Hamas have prompted a review of its commitment to the Palestinian areas. Austria has put all development aid payments on hold and will review all projects with the Palestinians.

The EU is the largest donor to the Palestinian people and has been advocating for the two-state approach for peace. The EU provides both development aid and humanitarian aid to meet the Palestinians' basic needs. The European Commission stated that humanitarian aid will not be affected by the review, as it has already been providing aid to Palestinians through its humanitarian aid department and the UN Office for the Coordination of Humanitarian Affairs. Germany clarified that it will continue providing humanitarian aid separately through NGOs and the UN. The EU aims to ensure that its aid supports peace and does not enable terrorist organizations to carry out attacks against Israel.