Oh. I got it. The Hamas team is doing R&D for new technology for solar powered rocket launchers, thereby saving energy costs to the EU who funds them. If Hamas, by some miracle, enetered this competition, they would not be banned b/c firing rockets at civilians is supported by all. However living in a settlement and attending university "contravenes international law."
Police arrest 16-year-old female Palestinian who tried to stab them in Jerusalem (Haaretz)
from the article: Spain contest bans Israeli team affiliated with West Bank college