The EU's chief diplomat has said there will be no suspension of development aid to the Palestinian people despite an earlier claim by Hungary’s European Commissioner that €691 million would be frozen.
Josep Borrell said tonight that a review of the EU's assistance for Palestine "will not suspend the due payments".
"The suspension of the payments, punishing all the Palestinian people, would have damaged the EU interests in the region and would have only further emboldened terrorists," said Mr Borrell on social media platform X.
Earlier, the Irish Government criticised a tweet by the EU Enlargement Commissioner Oliver Varhelyi that aid would be suspended.
Mr Varhelyi said: "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 €691 million."
Mr Varhelyi said that "all payments" were immediately suspended, all projects put under review and all new budget proposals, including for 2023, would be postponed until further notice.
However, a spokesperson for the Department of Foreign Affairs said: "Our understanding is that there is no legal basis for a unilateral decision of this kind by an individual Commissioner and we do not support a suspension of aid.
"We are formally requesting the Commission to clarify the legal basis for this announcement."
The spokesperson said Ireland remained "committed to delivering this vital support to Palestinian civilians and their needs to continue to be a central part of the overall response to this crisis by the international community.
"Ireland’s funding plays a crucial role in the livelihoods and welfare of Palestinian civilians - currently up to 80% of the Palestinian population is dependent on international assistance for basic human needs."
In a statement, the European Commission said it was launching an "urgent review" of assistance for Palestine in order to ensure that no EU funding "indirectly enables any terrorist organization to carry out attacks against Israel".
The Commission would "review if, in light of the changed circumstances on the ground, its support programmes to the Palestinian population and to the Palestinian Authority need to be adjusted".
The statement added: "In the meantime, as there were no payments foreseen, there will be no suspension of payments."
However, there has been no clarification as to what "no payments foreseen" refers to.
European Union foreign ministers will hold an emergency meeting tomorrow to discuss the situation, including reviewing aspects of development aid, officials said.
Total EU assistance earmarked for the Palestinian people under the 2022 budget allocation was €296m.
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 and led by President Mahmoud Abbas, whose Fatah movement is a rival to Hamas.
Austrian Foreign Minister Alexander Schallenberg said the country was suspending development aid totaling around €19m for a handful of projects.
Neutral Austria's ruling conservatives have adopted one of the most pro-Israel stances in the EU 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," she added.
Germany's development ministry has earmarked €250m 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.
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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 €73m 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 UN 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 British Prime Minister Rishi Sunak, asked whether Britain planned to follow Austria and Germany, said the UK had previously provided aid to Palestinian refugees via the UN and he was not aware of plans to change the approach.
