EU halts Palestine aid as Israel cuts Gaza off

"Incitement to hatred, violence, and glorification of terror have poisoned the minds of too many," the Hungarian politician added, speaking of Palestinians.

Várhelyi followed Austria and Germany's lead, after the two EU member states halted some €144m in bilateral aid to Palestine earlier the same day.

The commissioner's announcement came as a surprise since the decision had been expected to be made by EU foreign affairs ministers during an emergency meeting scheduled for Tuesday.

And his declaration came shortly after the Israeli defence minister announced a "complete siege" on Gaza's 2.3 million people, by stopping their water, food, and electricity supplies.

Várhelyi also spoke out as the Israeli Air Force was tweeting images of whole apartment blocks in Gaza being bombed to the ground, while the Palestinian militant group Hamas continued to fire rockets at Israel.

At least 700 Israelis were killed by Hamas fighters on Saturday in the worst escalation in 50 years in the Arab-Israeli conflict.

Some 600 Palestinians have so far been killed by Israeli fire, Gaza health authorities said on Monday afternoon.

The massacre is seeing the Israeli government asked hard questions how Hamas duped its fearsome intelligence services, while pretending to seek better job opportunities for Gaza citizens in Israel in recent times. There are also an unknown number of Israeli hostages being held in Gaza, complicating Israel's military tactics.

Várhelyi promised a root-and-branch review of EU funds.

These are meant to pay for essential things such as food for vulnerable Palestinian families, healthcare services, water sanitation, electricity projects, and some civil servants' salaries.

But the European Commission assured press in Brussels none of it has been used by Hamas, which rules Gaza, to fund operations.

"The EU is not funding Hamas or their terrorist activities directly or indirectly", a commission spokeswoman said on Monday.

EU officials have a "no contact" policy with Hamas, she said.

The EU also does "vetting" to make sure its money doesn't end up in the wrong hands, she added. "We have very strict controls," she said.

EU foreign ministers are to discuss next steps at a meeting being scrambled in Muscat, the capital of Oman, on Tuesday, where some of them were attending regional talks anyway.

"For Europeans, the immediate imperative will be to ensure violence does not spread beyond Israel and Gaza, which could provoke a disastrous regional conflict," said Hugh Lovatt from the European Council on Foreign Relations (ECFR), a think-tank.

"Giving Israel a blank check [for retaliation], as Europeans may now be doing, risks a dangerous and counter-productive outcome," he warned.

For his part, an EU foreign service spokesman, time and again at a press briefing in Brussels on Monday, condemned Hamas' aggression while saying that Israel had a "right to self-defence".

He declined to comment directly on Israel's Gaza water blockade or reports that Israeli air raids were killing Palestinian families, but he urged Israel to respect "international law".

The tension behind his response was highlighted in reports in Dublin media that Ireland, together with Denmark and Luxembourg, had tried and failed to get the EU to voice weightier appeals for Israeli restraint.

The EU foreign service also said a negotiated peace settlement with the Palestinians was the only way to stop the conflict in the long term, while conceding that might be "very difficult" for Israelis and Palestinians to envisage today.

But if that was the case, then some experts also warned against knee-jerk funding decisions that might make ordinary Palestinians more desperate in future.

"European governments must resist counter-productive measure such as cutting Palestinian Authority funding and other forms of financial support for Palestinians," the ECFR's Lovatt said.