BRUSSELS, Feb 27: The European Union threw the Palestinians a short-term aid lifeline on Monday to help stave off imminent financial collapse, despite the appointment of a leader of the Islamist militant group Hamas as prime minister.
But the 25-nation bloc made sure most of the 120 million euros ($142 million) would bypass the Palestinian Authority, sharpening pressure on Hamas to “moderate” its “radical policies” when it takes over government responsibility.
“Today I have announced a very substantial package of assistance to meet basic needs,” European External Relations Commissioner Benita Ferrero-Waldner said after EU foreign ministers discussed how to respond to the impending formation of a government by Hamas, which does not recognise Israel’s right to exist and espouses armed struggle.
The package included 40 million euros to pay energy bills and 64 million euros channelled through the UN Relief and Works Agency for Palestinian refugees (UNRWA). But only 17.5 million euros will go to the PA to help pay salaries.
“In effect we will pay electricity bills for them, direct to the utilities concerned, including in Israel,” she said.
The move came amid intense debate among major powers on how to react to Hamas’s election victory.
International envoy James Wolfensohn warned in a confidential letter obtained by Reuters that without emergency funds, the Palestinian Authority faced financial collapse within two weeks now that Israel has cut off tax transfers.
The EU is the largest donor to the Palestinians but its funding has been thrown into doubt by Hamas poll victory, which the 25-nation bloc lists as a banned “terrorist group”.
French Foreign Minister Philippe Douste-Blazy said it was vital to continue supporting the Palestinians.
“There would be nothing worse than not making our contribution,” he told a news conference. “There would be social, economic, and... security chaos. We must encourage Hamas to evolve.”
His German counterpart, Frank-Walter Steinmeier, denied that continuing funding amounted to giving the PA a free hand.
“Quite the contrary. This is a signal that we are supporting the autonomous Authority and the President but anything further depends on the criteria,” he said.
He was referring to three criteria set by international mediators: renouncing violence, recognising Israel and adhering to deals already reached between the Palestinians and Israel.
Israel has stopped monthly transfers of $50-$55 million in tax payments to the Palestinians and the United States has demanded the return of $50 million in aid to prevent it falling into Hamas’s hands.
But Israeli Foreign Ministry spokesman Mark Regev played down differences between Israel and the EU on funding the PA.
Israel’s position is that aid should have been cut off on Feb 18, when Hamas became the majority bloc in the Palestinian parliament. The EU sees the key date as the swearing in of a Hamas-led cabinet, which is not expected to happen until April.
“We have agreed to disagree,” Regev said.
Wolfensohn said even if the PA survived with emergency funding, the financial crisis could bring violence and chaos unless the Quartet of international mediators — the United States, the EU, Russia and the United Nations — developed a long-term funding plan once a Hamas-led government is in place.
Ferrero-Waldner noted that even when Israel transferred the tax revenues which it collects on behalf of the Palestinians, the authority still ran a deficit.
“The Palestinian Authority cannot achieve balance in its finances without outside help,” she said, calling on others, especially Arab countries, to do more to fund it.
Hamas has named Ismail Haniyeh as Prime Minister designate. Ferrero-Waldner said the EU had yet to decide whether to support his government.
“We have to see what will be the programme of the government. We have to give them time,” she said.
She added that the bloc would seek to work with Palestinian President Mahmoud Abbas, regarded as a moderate.
Hamas official spokesman Sami Abu Zuhri called the EU decision a step in the right direction “as long as it is not restricted by any conditions or a swap with the rights of our Palestinian people.
“The EU announcement represents a declaration of the failure of US and Israeli pressure on the West to impose a siege on the Palestinian people and on Hamas,” Abu Zuhri said.
The 17.5 million euros in direct budget aid represents only half the amount of EU assistance frozen last year in a World Bank-administered trust fund, since the Palestinians had met some but not all the donors’ reform benchmarks, officials said.—Reuters
