European Commission tightens screws on Palestinian development aid

As Gaza suffers a death toll that reached 0.5 per cent of its population before health authorities lost the ability to keep count, and damage or destruction of 45 per cent of housing according to the United Nations, the European Commission has sent a letter to all Palestinian civil society organisations that receive EU development aid asking them to provide new documentation to unlock their funding.

The commission announced it would review €331 million in Palestinian development aid immediately after the Hamas October 7th attack to ensure no money accidentally funded terrorist activities – a longtime accusation of Israel.

That review concluded this week, and found existing safeguards “work well”, and said “no evidence has been found to date that money has been diverted for unintended purposes”. Grants to international organisations and the Palestinian Authority amounting to €216 million were cleared for payment.

However, the commission announced there would be stricter controls on Palestinian development aid payments from now on. Payments worth €39 million to 51 NGOs and civil society organisations would also not be authorised until they submited new paperwork, it said.

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The “changed circumstances” mean “extra vigilance” is now required before any payments to Palestine “in particular when organisations from Gaza are involved”, the commission’s report said.

The 51 organisations have received letters from the commission requesting that they “supply further information on the procedures and tools used to enforce the contractual obligations stemming from the restrictive measures and anti-incitement clauses” and “provide an assessment of their ability to continue implementing contracts despite the changed situation on the ground”.

The “restrictive measure clause” began to be introduced into EU contracts in 2020 and 2021 to ensure no one sanctioned by the EU is included in NGO activities or receives any funds.

The anti-incitement clause means that grant recipients cannot engage in “incitement to hatred and violence”, for example through social media posts.

Two civil society organisations that have been awarded EU grants worth €8 million have been accused of breaching this latter clause by engaging in “incitement of hatred” in the wake of October 7th, according to an EU official. This is currently being investigated. Another project has been identified that carries “potential reputational risks”, and its payment is frozen until “satisfactory clarifications” are provided.

From now on, grant conditions will be stricter, the review concluded.

All contracts will have to include the anti-incitement and restrictive measure clauses, and any subcontractors will have to sign these agreements and be identified to the commission.

The commission will also introduce “ad-hoc eligibility criteria” in order to exclude any entities that “have been involved in acts of incitement to hatred and violence from being awarded a contract”, the report read.

The report also recommended screening all immediate family members of those who receive payments through the Pegase scheme, which supports Palestinian civil servants, pensioners and very poor families.

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That would mean checking all immediate family members against lists of Palestinian prisoners and relatives of people who perpetuated a terrorist attack. The report notes however that there may be “costs and feasibility” issues with this idea, so it is unclear whether it will go ahead.

There was significant opposition both within the commission and among member states to introducing stricter conditions on Palestinian aid.

Intrigue surrounded the announcement. Even as journalists were being briefed on the review’s contents, sources within the commission were insisting it had not yet been agreed and that there was huge internal opposition.

Cautious officials feared stricter rules were being introduced with the deliberate aim of denying payments – as a way to “cut aid by stealth”.

The commissioner in charge of the department is Hungary’s Olivér Várhelyi, who is widely regarded as being pro-Israel and predisposed to deny Palestinian aid due to his prior record. Payments to Palestinian development aid programmes have fallen steeply under his tenure, according to graphs released with the review.

The idea of increasing screening of social media posts has raised concerns at a time when the definition of what constitutes an anti-Semitic statement, slogan or symbol, and what constitutes legitimate criticism of Israel, is politically contested and varies between EU member states.

Commission spokespeople brushed off the backlash by saying the tightened rules did not require broad agreement, but could be imposed at the discretion of the civil servant responsible for the relevant budget.

Most importantly perhaps, Várhelyi again seems to have approval from the top: the imprimatur of commission president Ursula von der Leyen, made apparent by the inclusion of a quote by her on the press release that announced the changes.