The European Union announced on Monday that it will pay €138,6-million in emergency aid to the Palestinian Authority, which is on the verge of financial collapse.
Brussels insisted that only a small part of the money (€17,4-million) will go directly to the caretaker Palestinian government, pending the formation of a Hamas-backed government, which Europe says it will not fund unless the group renounces violence and recognises Israel. The money will cover the authority’s ”basic needs”: health, education, wages and energy bills.
The rest of the EU money announced on Monday will be distributed directly in the Palestinian territories by the European Commission. Companies that have supplied energy to the territories, including Israeli providers, will share €39,9-million. A further €63,8-million will be paid to the United Nations Relief and Works Agency, which provides health and education services. Such payments will continue when Hamas takes over.
Britain had pressed for the European Commission to double payments of direct funds to the Palestinian Authority. Jack Straw, the British Foreign Secretary, said the entire contents of an EU €34,9-million trust fund held by the World Bank should have been released. It is understood that the half not so far released will be paid within two weeks, taking the emergency aid to €138,6-million overall. It is badly needed.
After Hamas’s victory, Israel stopped monthly transfers of €45,5-million in tax payments. Washington wants €41-million in aid returned to ensure it is not controlled by Hamas.
The danger of a financial collapse was underlined by James Wolfensohn, the former World Bank president who is now the international envoy to the Middle East. In a letter to the UN, United States, EU and Russia, he warned of a collapse within two weeks after Israel’s decision to cut off tax transfers. He said that the authority needed up to €67,5-million by next week simply to pay about 140 000 Palestinian workers this month.
”I know I do not need to tell each of you that the failure to pay salaries may have wide-ranging consequences — not only for the Palestinian economy but also for security and stability for both the Palestinians and the Israelis,” he wrote.
Wolfensohn’s intervention may explain why Washington privately encouraged the EU to make the payments despite cutting some of its own funds. Israel is relaxed about the cash because it met two conditions: that no money should go to Hamas until it renounces violence, and that humanitarian assistance should continue.
”We don’t want to punish the Palestinian people,” an Israeli source said. — Guardian Unlimited Â