Ireland's EU commissioner, Máire Geoghegan-Quinn, is considering the allocation of two multi-million-euro technology grants for an Israeli company that made some of the most lethal weapons used in last year's war against Gaza.

Brussels officials are assessing a new series of Israeli applications for funding under the EU's multi-annual research programme, which Geoghegan-Quinn administers.

The probable beneficiaries include Israel Aerospace Industries (IAI), manufacturer of the Heron, a warplane that terrorised Gaza's 1.5 million inhabitants in late 2008 and 2009.

IAI has been deemed eligible for two new EU grants following evaluations carried out in recent months but is awaiting a final decision from Geoghegan-Quinn and her advisers. The grants – part of a series earmarked for Israel worth a total of €17 million – are supposed to help develop a new internet-type system for telecommunications and financial services.

Geoghegan-Quinn's spokesman, Mark English, said that while the projects concerned are civilian, there is no guarantee that the fruits of EU-financed research will not eventually be used by the Israeli military.

"We don't fund military projects," he said. "How­ever, probably the majority of our projects have direct or indirect military applications."

Although Israel does not formally belong to the EU, it is an active participant in the union's "framework programme" for scientific research, which has been allocated €53 billion between 2007 and 2013.

The programme is the largest source of funding that Israel receives from the EU, with Israel expecting the total value of the grants it draws over the duration of the programme to exceed €500 million.

Mahmoud Abu Rahma, a campaigner with the Gaza-based human rights group Al Mezan, said it would be "outrageous" for Geoghegan-Quinn to support Israeli arms firms.

"The EU is very well-informed about the way these weapons have been used," he said. "There have been many panels in the EU and its member states looking into cases where weapons have been used in perpetrating war crimes. The least we can expect is that the EU will take a stand on this."

IAI's Heron was one of the two pilotless drones – also known as unmanned aerial vehicles (UAVs) – "battle-tested" by Israel in Gaza last year. An investigation by Human Rights Watch found that, while these aircraft are equipped with sophisticated cameras and sensors allowing an army to verify whether a target is a combatant or a civilian, they were frequently used against innocent Gazans. Eighty-seven civilians were killed by drones during the three-week offensive.

Despite the widespread revulsion at that war among the European public, IAI's wares were given much prominence at Eurosatory, an arms exhibition held in Paris earlier this month.

The company used the occasion to promote a new unmanned weapons system called the Electronic Tethered Observation Platform (ETOP). It has been hailed as the first in a line of "hovering air vehicles" that IAI has designed for future wars.

Israel is predicting that 2010 will be a bumper year for its arms companies, with their sales reaching $8 billion, according to a recent statement from the country's defence ministry. With a population of only around seven million, Israel is already the fourth-largest arms dealer on the planet.

Among the other Israeli firms likely to have their funding bids rubber-stamped by Geoghegan-Quinn is Afcon, a supplier of metal detectors to military checkpoints in the occupied Palestinian territories, including the Erez crossing between southern Israel and Gaza. Afcon was also awarded a contract in 2008 for installing a security system in a light rail project designed to connect illegal Israeli settlements in East Jerusalem with the city centre.

Geoghegan-Quinn's anticipated support for Israeli firms specialising in surveillance follows a series of EU grants issued to such companies over the past decade, when Israel positioned itself as indispensable to George Bush's "war on terror".

Athena GS3, a company run by a former head of the secret service Mossad, has been one of many recipients. It forms part of the Mer Group, a supplier of equipment to settlements and checkpoints in East Jeru­salem and the wider West Bank.

Merav Amir from the Coalition of Women for Peace, a Tel Aviv group opposed to the occupation of Palestine, said it would be "highly problematic" for the EU to draw a distinction between military and non-military research in the case of Israel.

"The military here is used as part of this whole mechanism of control that is much wider than anything that is done at gunpoint," she said. "There are also a wide range of civilian means used for depriving Palestinians of their basic human rights. Any aspect of the occupation that you look at is done through a wide range of technologies, whether they be biometric means, security cameras, fences, sensors and so on. It is not simply things that are aimed to kill."

David Cronin's book 'Europe's Alliance With Israel: Aiding the Occupation' will be published later this year by Pluto Press