European Commission

Today the Commission is signing its €14 million contribution to the newly established European-Palestinian Credit Guarantee Fund. The Guarantee Fund, led by the German Development Bank (KfW), will support Palestinian small and medium size enterprises’ financing from local banks in the form of soft loans and grants. This €29 million Fund will be made up of contributions from the Commission (€14 million), KfW (€5 million), and the European Investment Bank (EIB) (€10 million). In addition to the Fund’s capital, the financing partners are providing technical assistance to the European-Palestinian Credit Guarantee Fund and partner banks with a view to strengthening the financial sector in the Palestinian Territories.

The European Commission has adopted a Communication to the Council and the European Parliament “EU-Palestinian cooperation beyond disengagement - towards a two-state solution”. The aim is to put in place a comprehensive, medium-term strategy for the EU’s support to the Palestinians. The strategy focuses on the actions required to create a Palestinian state viable both politically and economically. This is a reponse following Israel’s withdrawal from Gaza, and to the needs assessment currently being carried out by the Quartet Special Envoy, James Wolfensohn.

On the eve of the Quartet meeting (EU, US, UN and Russia) in New York on 20th September, the European Commission can announce that its allocation to the Palestinians in 2005 will be greater than foreseen, at around 280 million Euro. This package includes a substantial contribution to tackling the priorities identified by Quartet Special Envoy James Wolfensohn in the aftermath of the Israelis’ withdrawal from Gaza. A special 60 million allocation will help revive the Palestinian economy and create institutions capable of addressing the new responsibilities arising following disengagement. These efforts are designed to maintain the momentum created by Gaza withdrawal, and ensure that this important event leads on to full implementation of the Roadmap.

The European Union Election Observation Mission for the Presidential elections in West Bank and Gaza has begun work. In total, the EU is deploying more than 260 observers. This includes the EU Election Observation Mission with a core team of 13 staff, which arrived in the West Bank and Gaza this week, some 40 long-term observers, arriving around 15 December, and more than 130 short-term observers, arriving in early January. The total also comprises an observation delegation from the European Parliament made up of 30 Members of Parliament plus 16 assistants, and contributions from the governments of Switzerland, Norway and Canada.

As one of the first acts of the European Commission, the Commissioner for External Relations and the European Neighbourhood Policy Benita Ferrero-Waldner has decided to deploy an EU Election Observer Mission (EOM) to observe the Presidential Elections in the West Bank and Gaza scheduled for 9th January 2005. The decision is a concrete expression of the EU’s effort to support the development of democratic institutions and stability in the Palestinian Territories. The presence of the EOM and the reporting of its observers will help to increase transparency and build confidence in the election process.

This year, assistance to the Palestinians from the European Community Budget is set to amount to around €250 million. This includes a package for the West Bank and Gaza just approved by the European Commission for €124.25 million. Today’s announcement will be followed by the immediate release of a first contribution of €26m to the new Public Financial Management Reform Trust Fund established by the World Bank. The West Bank and Gaza Strip continue to suffer from a severe economic recession. Income levels have dropped severely and the level of suffering is unprecedented.