European Union Commissioner Oliver Varhelyi said Monday the bloc is suspending “all payments immediately” to the Palestinians because of what he called the “scale of terror and brutality” during the attacks on Israel by Hamas.

The surprise announcement by Varhelyi came just hours after EU officials stressed that no EU money whatsoever was going to Hamas in the first place and that contacts had been frozen for 16 years. The EU considers Hamas a terror group.

Queries about what the move entailed and whether it would hit all humanitarian aid to Palestinians were not immediately answered.

Varhelyi said that “as the biggest donor of the Palestinians, the European Commission is putting its full development portfolio under review,” which he said amounted to 691 million euros.

Varhelyi said that the measures include that “all payments (be) immediately suspended. All projects put under review. All new budget proposals...postponed until further notice”.

The EU says it is the biggest donor to the Palestinian people and has been advocating for years for the two-state approach that has guided international diplomacy since the 1993 Oslo peace accords between Israel and the Palestine Liberation Organisation.

EU foreign ministers are slated to meet in Muscat, Oman, on Tuesday to discuss the situation and see what actions should be taken. Varhelyi's announcement seemed to preempt the discussions.

“There can be no business as usual,” Varhelyi said on X, formerly known as Twitter.

“The foundations for peace, tolerance and co-existence must now be addressed. Incitement to hatred, violence and glorification of terror have poisoned the minds of too many,” the commissioner wrote.

During an earlier briefing Monday, the EU Commission sought to draw a clear line between Hamas, which it considers a terrorist organisation, and the Palestinian people, who are in need of humanitarian aid.

According to the bloc, it has provided humanitarian aid to help meet Palestinians' basic needs since 2000 through the European Commission's humanitarian aid department (ECHO) and the UN Office for the Coordination of Humanitarian Affairs (OCHA). Since 2000, ECHO has provided 700 million euros of humanitarian aid to Palestinians in the Gaza Strip and the West Bank.

The EU's most populous member, Germany, and its neighbour Austria also said they were suspending development aid for the Palestinian areas.

The Development Ministry in Berlin said there was no direct German financing of the Palestinian Authority, but a total of 250 million euros ($265 million) is currently pledged in German aid — half of that for bilateral projects via Germany's overseas aid agency and development bank and the other half for the UN agency for the Palestinians, UNRWA.

Like the EU Commission, Development Minister Svenja Schulze said in a statement that Germany took great care that its aid for Palestinians “serves peace and not the terrorists”.

“But these attacks on Israel are a terrible watershed, so we will review our whole commitment to the Palestinian areas,” she added.

Schulze said that Germany wants above all to discuss with Israel “how we can best serve peace in the region and security for Israel with our development projects”. She noted that Israel also has an interest in Palestinians being able to live in long-term stability, and said Germany will also coordinate with its international partners.

Germany is not suspending the humanitarian aid it provides separately via international NGOs and the UN, the Foreign Ministry said. Ministry spokesperson Christian Wagner said Monday that much of the 72 million euros pledged this year has been paid out, and payments will continue because they support “life-saving work”.

Austrian Foreign Minister Alexander Schallenberg told Oe1 radio on Monday that all development aid payments will be “put on ice for now”. He put the funds affected at about 19 million euros.

He said that Austria will review all projects with the Palestinian areas and consult with its international partners on further steps.