Israel smeared Palestinian activists, EU admits

But separately on 24 June and 28 June the EU envoy in Jerusalem, Kühn von Burgsdorff, wrote to each saying they were off the hook.

He did so saying Olaf, the EU's anti-fraud office, had not just "concluded there is no suspicions of irregularities", but even that they "did not find sufficient ground to open an investigation".

"Project activities can resume from the date of this letter," von Burgsdorff said.

The PCHR and Al-Haq collect evidence of alleged Israeli crimes in the occupied territories and have worked with the International Criminal Court in The Hague.

Israel's disinformation campaign came amid what Sweden has called a "shrinking space" for civil society, as well as ever-expanding Israeli settlements, in Palestine.

The "confidential Israeli memo was earlier exposed as containing little of substance in a leak in Israeli media.

Israel's charges against Al-Haq, for instance, rested on five lines from one police informant's testimony.

The EU Commission was the only international actor which froze funds and several European countries, including Ireland, the Netherlands, and Norway have spoken out against the ban.

"You have to look at the facts here," Dutch foreign minister Wopke Hoekstra said on 19 May, for example.

"There isn't a single European state — nor the United States — that has arrived at the same conclusions as has Israel. If there is proof, then we should see and we should review it. An accusation in and of itself cannot be sufficient for a country that subscribes to the rule of law", he said.

"Past allegations of the misuse of EU funds in relation to certain Palestinian civil society organisations' partners have not been substantiated," the EU's own foreign affairs chief, Josep Borrell, also said in February.

But for all that, the EU Commission's U-turn came only after Al-Haq challenged the legality of the funding ban in the Belgian court of first instance.

And it came amid speculation that Hungary's EU commissioner, Olivér Várhelyi, a pro-Israeli hawk who holds the EU chequebook for Palestine, had acted on political motives.

"Under the direct responsibility of the Hungarian EU commissioner Olivér Várhelyi, the suspension became a political initiative aimed at giving the Israeli government a tailwind in its attempts to disrupt and defame Palestinian civil society," Al-Haq said in a statement.

The first court hearing is scheduled on 4 July.

But even though Várhelyi backed down, Al-Haq is pressing its case to establish court protection against any future skullduggery.

And it is seeking a symbolic €1 in compensation for the damage done in Europe to its name.

By "giving a semblance of credibility" to Israel's "wild accusations" and "propagandistic" claims, the EU Commission "wrongly contributed to an Israeli] operation aimed solely at damaging the reputation of [Al-Haq]", its Belgian court subpoena said.