A senior Palestinian Authority official confirmed to Israel Hayom on Tuesday that many in Ramallah were dissatisfied with the European Union’s decision to withhold economic grants and incentives to Israeli companies situated in Judea and Samaria.

“For our part, we approached a number of [European] Union officials, in the [Palestinian] Authority and also in Israel, to try and prevent the decision or at least to keep it unofficial,” said the official, who declined to give his name. “It’s not just Israeli companies that are going to be hit economically, it’s also going to be disastrous economically and socially for the Palestinian community.”

According to the Palestinian official, the European move will freeze joint projects, force employers to stop hiring Palestinians to work on joint projects with Israelis and lead to widespread layoffs of Palestinians laborers working in Judea and Samaria industrial zones.

Sammer Darawsha, who works in a hothouse that is a part of a joint Israeli-Palestinian agricultural project funded by members of the EU and situated near the Halamish settlement, said the decision will “affect everyone, whether Jew or Palestinian. If they take away our livelihoods and food, exactly what kind of peace will be here?”

Several manufacturers and exporters were concerned by the EU directive — which prevents the EU from giving grants to Israeli enterprises beyond the pre-1967 borders — estimating that the decision could cause tens of millions of euros in damages.

According to the Israel Export and International Cooperation Institute, the EU constitutes Israel’s most lucrative trade zone, and is the destination for a third of all Israeli goods. Trade with the EU in 2012 amounted to $36.6 billion. Israel imported $22.4 billion worth of goods from the EU that same year.

A top manufacturer warned that “blending politics and business results in a bad mixture, we have had bitter experience with it in the past. There’s a sense that Europe is trying to harm the freedom of trade illegitimately.”

“It must be understood that the Arab side is also going to be harmed by this directive. Indeed, a generous portion of the labor in Judea and Samaria is Palestinian,” a veteran businessman said on Tuesday.

Ramzi Gabai, the director of the export institute, said that “there’s no room to mix political and economic issues.”

Tzvika Oren, Manufacturers Association of Israel president and the chairman of the Coordinating Bureau of Economic Organizations, said he “regrets the EU’s intention to involve politics with economy.”