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 Â£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. Israel's Ambassador to Britain, Ron Prosor, said the festival was promoting bigotry. "Rather than encourage an open dialogue through cultural exchange, the festival is promoting bigotry by denying the British public the opportunity to hear all points of view," he said. "It is regrettable that the organizers would choose to boycott Israel and compromise its artistic integrity." The festival organizers declined to comment, saying only that the film screening of "Surrogate" was unchanged and that Shalom-Ezer would attend, funded from the film festival's own budget. The festival also returned funding to the Israeli Embassy in 2006 following threats by the same group. Meanwhile, five members of the SPSC have been charged with racially aggravated conduct after they interrupted a performance of the Jerusalem Quartet during the 2008 Edinburgh International. The group responded by accusing the British government of being complicit in "in Israeli crimes" saying the charges were a "response to rising support among the public for boycott, divestment and sanctions against Israel and the wave of anger at British complicity in Israeli crimes." "The trial is, indeed, one aspect of this comprehensive British government complicity in Israeli crimes and indicates official endorsement of the tired Zionist strategy of trying to intimidate opponents of Israel with the anti-Semitic ploy," the group said. The SPSC is a radical offshoot of the London-based Palestine Solidarity Campaign. In January, the group hosted what it claimed to be a Holocaust Memorial Day commemoration with a Hamas supporter who justifies suicide bombings. In December, the group fabricated a story that it had been responsible for a boycott by Scottish companies of Israeli water company Eden Springs Ltd.