Partial Suspension of EU Aid to UNRWA; US Official Warns of Broader Regional Conflict

The European Commission announced on Friday, March 1, that it would suspend part of the €82 million payment to the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), but would increase overall aid to Palestinians by €68 million this calendar year. UNRWA faced a crisis after Israel accused it of involvement of 12 out of its 13,000 employees in Hamas's October 15 attack. The EU executive body, like many other major donors, suspended its financial assistance to the agency. The Commission stated on Friday that it would release the first installment of €50 million that had been blocked late last month. It also mentioned that two other installments of €16 million would be paid only 'in line with' an agreement with UNRWA to address the allegations made by Israel. UNRWA dismissed all accused employees following these allegations. However, many major donors, including the United States, the United Kingdom, and several EU countries, suspended their payments to it or stated that they would not approve new funding until this issue was clarified. The agency warned that a total of $450 million in funding is at risk and that its operations across the Middle East would be 'severely jeopardized' starting in March. European officials stated that the current payment is an 'operational financial aid' that is vital for covering UNRWA's operations, including staff salaries, this year. Ursula von der Leyen, President of the European Commission, expressed solidarity with the Palestinians in Gaza, stating that they should not pay the price for the 'crimes of the terrorist group Hamas,' hence the additional €68 million aid for them this year. In addition to this operational financial aid, the Commission allocated up to €125 million for specific humanitarian projects for Palestinians, approving the initial €16 million on Friday. US Treasury Secretary Janet Yellen criticized Israel for not issuing work permits and preventing Palestinians from traveling from the West Bank, stating that these actions harm both sides and pose a risk of a broader regional conflict. In an interview with Reuters on Thursday, she said, 'Israel is a friend, and we talk to them regularly. If we see something concerning, we tell them.' The Israeli economy has faced a recession following the October 15 attacks by Hamas militants backed by the Iranian government, which killed at least 1,200 and took about 250 hostage. In response, Israel launched comprehensive attacks in the Gaza Strip aimed at eradicating Hamas. Hundreds of thousands of reservists were called up in one of the largest military mobilizations in Israel's history. Thousands of Palestinian workers have been laid off and are not allowed to return to work. Yellen stated that Israeli travel and trade restrictions severely impact the Palestinian economy, leading to worker shortages and halting several construction projects in Israel. Yellen also expressed concern about the Egyptian economy neighboring Israel, which has seen a significant drop in revenues due to a 55% decrease in maritime traffic through the Suez Canal and a sharp decline in tourism. In another report regarding the deaths of several Palestinians in Gaza waiting for food aid, French President Emmanuel Macron expressed anger on Friday over reports of shootings of over a hundred Palestinians and called for the truth to be clarified, justice to be served, and respect for international laws. According to the White House, US President Joe Biden also spoke on Thursday, March 1, with leaders of Egypt and Qatar about the 'tragic and concerning incident' in northern Gaza, ways to ensure the release of hostages still held by Hamas, and a six-week ceasefire. The latest developments in the war in Gaza raise the question of whether the arrival of Ramadan will lead to a ceasefire agreement. Israeli media reported the discovery of 'advanced technologies' belonging to the Islamic Republic under the UNRWA headquarters. Netanyahu stated that those who tell us not to enter Rafah are saying not to win against Hamas. Israel reported the discovery of Hamas tunnels under the main UNRWA headquarters in Gaza. The complete sanctioning of UNRWA; the US State Department is seeking a replacement organization to send aid to Gaza. The Financial Action Task Force; Iran remains on the 'blacklist' while the UAE has been removed from the 'grey list.' Biden expressed concern about the complexities of the negotiation process following the 'concerning' incident in Gaza. The Palestinian Authority received $114 million from Israel. The United States and Canada are considering airlifting aid to civilians in Gaza.