The European Union has raised concerns over media reports that Israel has blocked the EU from aiding tens of thousands of Palestinians in the West Bank in retaliation to a ban on financial assistance to Israeli organisations in the occupied territories.

The EU imposed its restrictions last week, citing its frustration over the continued expansion of Jewish settlements in territory captured by Israeli forces in the 1967 Middle East War. The new guidelines render Israeli entities operating there ineligible for EU grants, prizes or loans, beginning next year.

In Brussels, Maja Kocijancic, spokeswoman for EU foreign policy chief Catherine Ashton, said: "The EU is concerned by reports in the Israeli media that the Israeli Minister of Defence has announced a number of restrictions affecting EU activities supporting the Palestinian people."

"We have not received any official communication from the Israeli authorities. Our delegations on the spot are seeking urgent clarifications," Kocijancic added.

Financial restrictions

An Israeli official said on Friday the Jewish state was compelled to respond to the EU's decision "to sanction or boycott the settlements".

"From our standpoint we cannot just ignore this or treat spitting in our face as though it is rain," the official said.

The Israeli official, speaking on condition of anonymity, said Defence Minister Moshe Yaalon had decided to suspend contacts with the EU in the West Bank.

Yaalon, a former army chief and a hardliner in Prime Minister Binyamin Netanyahu's Likud party, has "frozen projects, cancelled meetings, curtailed coordination and permits for Europe's operations" for Palestinians living in what is known as Area C, a West Bank area fully administered by Israel, he said.

A Western diplomat, speaking on condition of anonymity, said that due to the Israeli measures, several European humanitarian aid staff had failed to receive permits to enter the Palestinian-ruled Gaza Strip.

Source: Al Jazeera and agencies