The European Union is to continue funding the Palestinians despite the Hamas terror attacks on Israel.

Yet Hamas boasts that it uses EU-funded water pipes to convert into missiles.

The bloc had initially announced it was suspending all aid, worth €295 million (£254million) a year,  as a response to the terrorist invasion and atrocities.

“The scale of terror and brutality against Israel and its people is a turning point,” said Oliver Várhelyi, European Union Commissioner for Neighbourhood and Enlargement, on Monday, announcing the ban.

But an emergency meeting of EU foreign ministers on Tuesday reversed the decision and said aid would continue as before.

The announcement came after a reportedly “very tetchy” meeting between the EU’s senior diplomat, Josep Borrell, High Representative for Foreign Affairs, and Várhelyi.

It was argued that suspending aid would punish civilians rather than the terrorists and be exploited by Hamas, who would claim it showed the West favoured Israel.

The EU is one of the biggest providers of financial aid to the Palestinian territories and has planned for around €1.2 billion of investment between 2021 and 2024, in health, education and water.

According to a spokesperson, the funds do not “directly or indirectly” support Hamas, which the EU classifies as a terrorist organisation.

For the past seven years, however, the EU has spent millions in installing water pipes to improve the supply in both Gaza and the West Bank. But a Hamas propaganda video from 2021 showed militants in Gaza digging up water pipes and using them to help make rockets, thousands of which have been fired at Israel in recent days.

Contrary to the EU’s stance, some EU countries have frozen their own individual support for the Palestinians.

Austria announced it would be suspending its aid, worth €19 million a year. Foreign Minister Alexander Schallenberg declared: “The extent of the terror is so horrific [...] that we cannot go back to business as usual.

“We will therefore put all payments from Austrian development cooperation on ice for the time being.”

Germany’s development minister Svenja Schulze announced this week that the country’s financial aid to the Palestinians would be reviewed.

She said: “We strongly condemn Hamas’s attacks on Israel. We have already paid strict attention to ensuring that our support for the people in the Palestinian territories serves peace and not terrorists.”