The fresh aid pledge came as EU foreign ministers met Palestinian prime minister Mohammed Mustafa in Luxembourg for the first meeting of “high-level dialogue” between the two sides.
The EU is looking to boost the Palestinian Authority as Israel has resumed its war in Gaza after a ceasefire largely put a halt to the fighting for two months.
The EU foreign policy chief reiterated the bloc’s condemnation over the “total blockade of aid into Gaza” and insistence that there was no military solution to the conflict.
Mustafa said the international community faced a “moment of truth” over the situation in Gaza and the West Bank.
“There can be no lasting peace without accountability. Israel must be held responsible for the crimes committed.”
The funds will be linked to reforms on “fiscal sustainability, democratic governance, private sector development and public infrastructure and services”, the EU said.
A further 400 million euros in loans would come from the bloc’s lending arm, the European Investment Bank.
Despite being a major provider of aid, the EU has struggled to exert influence in the crisis as its 27 countries a frequently over their approach to the conflict.
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