Israel's security is "Germany's reason of state," as Chancellor Olaf Scholz said following Hamas' surprise terror attack over the weekend, repeating the position of his predecessor, Angela Merkel.

Foreign Minister Annalena Baerbock (Greens), President Frank-Walter Steinmeier and other leaders of the center-left ruling parties and the center-right opposition Christian Democrats (CDU)and Christian Social Union (CSU) expressed similar sentiments.

But as Germany's most important political players were clearly declaring their support for Israel, some Palestinian supporter took to the streets of Berlin to celebrate the attack.

"We do not accept that the heinous attacks against Israel are being celebrated here on our streets," an indignant Scholz said on Sunday, though he did not say how he intended to stop the protests.

Scholz himself has previously found himself in hot water on the issue. During a visit to Berlin by Palestinian leader Mahmoud Abbas last year, the chancellor was criticized for reacting too slowly to Abbas' assertion that Israel has committed "50 holocausts" against the Palestinians. Only later did Scholz distance himself from Abbas's Holocaust relativization, calling it "intolerable and unacceptable." 

Germany to review funding for Palestinians

But now the question turns from rhetoric to substance. In 2023 alone, Germany has set aside €250 million ($265 million) for Palestinian aid, according to the Development Ministry. Now, however, Development Minister Svenja Schulze wants to "give the entire commitment to the Palestinian territories a once-over."  

Officially, none of that money goes to the Palestinian Authority, which is run by Abbas and largely has power only in the West Bank. Nor does it go to Hamas, which controls Gaza and which the European Union, the US and some Arab states have designated as a terrorist organization.

Whether any of the funds inadvertently fell into Hamas' hands, however, is far harder to verify. That's why CSU lawmaker Alexander Dobrindt was among those on Sunday  demanding a complete stop to all funding for Palestinians. The German-Israeli Association wants conditions placed on that money, at the very least.

Germany is not alone in facing the financing dilemma, with European institutions supporting a range of projects meant to benefit the Palestinian people. Like in other areas of the world with weak institutions and poor enforcement mechanisms, what ultimately happens to that money can remain unclear.

More certain is that without the European Union's extensive support, Palestinian governance would be difficult to maintain. And while the EU may offer the carrots, it's the US holding the sticks. Following the attacks by Hamas, Washington began to move warships and fighter planes to the region in a show of support for Israel.

At the same time, the conflict has jeopardized long-term US interests. The easing of tensions between Israel and Saudi Arabia appears on hold, with Riyadh and neighboring Arab states staying mostly quiet so far. A revived, multilateral nuclear deal with Iran, which supports Hamas, may also be off the table.

Israel attacks move spotlight from Ukraine

One immediate consequence of the Middle East conflict may be that it diverts attention from Russia's invasion of Ukraine. Though President Volodymyr Zelenskyy issued a statement supporting Israel on Saturday, he later tied the attack to ongoing Russian aggression in his country. 

"The same evil, and the only difference is that there is a terrorist organization that attacked Israel, and here is a terrorist state that attacked Ukraine," he said in a video address on Monday to a NATO parliamentary assembly.

Cracks in Western support for Ukraine have already been showing, in light of how little progress the Ukrainian counteroffensive has had against hardened Russian positions in the country's occupied east. Another long and major conflict against an important Western ally would risk further distraction.

"In the short term, the US focus is on Ukraine. But long term, it is on China and the Indo-Pacific," Daniela Schwarzer, a political scientist with the German Council on Foreign Relations, told German public broadcaster ARD. "The political attention, the question of financing and the provision of war-fighting material, that has to be balanced somehow among the different conflict areas."

China stays neutral — again

The West is also reliving a bitter experience that it already knows from the war in Ukraine: important developing and emerging countries, including those that are attributed to the Western value system, have refrained from condemning Hamas.

South Africa, for example, has to date never officially spoken out against the Russian attack on Ukraine. On Sunday, the ruling African National Congress issued a statement comparing its former apartheid regime with today's situation in the Middle East.

"It can no longer be disputed that Apartheid South Africa's history is occupied Palestine's reality," it said. "As a result, the decision by Palestinians to respond to the brutality of the settler Israeli apartheid regime is unsurprising."

China has not condemned Hamas either, just as it has refused to condemn Russian aggression in Ukraine.

And Russia itself has spoken out, reminding Europeans and Americans alike of the goal that they themselves have supported for many years: a Palestinian state.

Creating a "Palestinian state that would live side by side with Israel [...] is the most reliable path to solve [the conflict]," Foreign Minister Sergei Lavrov said on Monday. "We cannot agree with those who say that security can only be ensured through a fight with terrorism."

His statement comes as Russian President Vladimir Putin continues to deny Ukraine's right to exist, waging a merciless war on Ukrainian civilians for more than a year-and-a-half now.

This article was originally written in German.

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