Shame on the Edinburgh Film Festival....

They were terrorized into returning money from the Israeli Embassy....

A film festival in Scotland has returned funding to the Israeli Embassy after succumbing to pressure from anti-Israel activists who threatened to picket the event.

The Edinburgh International Film Festival returned £300 to the embassy after a radical fringe group, Scottish Palestine Solidarity Campaign (SPSC), bombarded the organizers with threats to picket the festival when it takes place next month.

The money was to have been used to help bring Israeli director Tali Shalom-Ezer, whose film "Surrogate" is currently in Israeli cinemas, to the festival. Instead, the organizers will now fund her expenses out of the festival's budget.

The festival was also targeted by film director and pro-Palestinian activist Ken Loach, who called for a boycott of the festival, urging people to "stay away."

"Massacres and state terrorism in Gaza make this money unacceptable," he said.

In March, Loach said the rise in anti-Semitism in Europe since Israel's operation in Gaza was "not surprising" and "understandable," claiming that Operation Cast Lead was "a cold blooded massacre" and that Israel would "have to pay" for it.

On Wednesday, Shalom-Ezer accused Loach of "racism." Rebuking the festival organizers for "surrendering to political pressure," she said she would still attend the festival.

"Generalizing all citizens of Israel as warmongers and racists is racism and outrageous, and as members of the peace camp we are personally hurt by it," she said.

Television producer and executive Sir Jeremy Isaacs told The Times on Wednesday that he was "disgusted" with Loach's stance.

"The idea that he should lend himself to the denial of a film-maker's right to show her work is absolutely appalling," he said.