ei: Brussels unveils 120 million aid package for Palestinians

Javier Solana meets Israeli minister of foreign affairs Silvan Shalom, 15 September 2005. (Council of Europe)

BRUSSELS -- The European Commission today unveils a package worth more than 120 million Euro to meet the basic needs of the Palestinian population and to help stabilise the finances of the current caretaker government. 40 million will be earmarked to ensure the continued and uninterrupted supply of essential public services such as electricity and water. 64 million will be allocated to the United Nations Relief and Works Agency (UNRWA). This emergency relief will help alleviate the hardships of the most vulnerable people in the West Bank and Gaza Strip. In addition, the European Commission is supporting the release of some of the money held over from 2005 in the World Bank Reform Trust Fund, in order to help the caretaker government meet obligations including salary payments. This package is independent from any future decisions on support for the incoming Palestinian Authority, which will be reviewed once the new government is in place, in the light of the principles set out in the Quartet statement of 30th January.

Benita Ferrero-Waldner, European Commissioner for External Relations and Neighbourhood Policy, said: "No other donor is doing as much as we are to support the interim government during the transition period. The 120 million package we present today is a very substantial contribution, which will help both to alleviate hardship, and relieve the pressure on the caretaker government's finances".

She added: "We are watching political developments in the Palestinian Territories very closely. How we are able to help the Palestinians in the future will depend to a large extent on the decisions taken by their newly elected government; whether its members support non violence, recognise Israel and stand by existing agreements."

The 120 million emergency support package has three components, with the bulk of the money going to meet the basic needs of the population:

40 million to contribute to the provision of essential public utilities, in particular energy and electricity. The Commission will pay the utility providers directly, against invoices which will be validated by an international audit firm. It is expected that the total amount will be disbursed fully in the coming weeks.

64 million for health and education services. The support, as in previous years, will be channelled through UNRWA, which provides essential social services to the neediest Palestinians. These funds will be disbursed immediately.

The European Commission is supporting a partial release of funds from the World Bank Reform Trust Fund. Since some of the outstanding reform benchmarks set in 2005 have been met, the Commission agrees with other donors that payments from the fund should be resumed. The Commission is ready to release half of the money it has in the fund which amounts to 17.5 million.

On 30th January, the Quartet (EU,US, UN and Russia) "expressed concern over the fiscal situation of the Palestinian Authority and urged measures to facilitate the work of the caretaker government to stabilise public finances, taking into account fiscal accountability and reform benchmarks".

The Palestinian Authority is not currently able to balance its revenues and outgoings, without outside help. It has a substantial monthly deficit, which is set to rise with the Israeli decision to withhold transfers of taxes and customs duties due to the Palestinians.

The World Bank estimates that nearly half (43%) of the Palestinian population lives below the poverty line with 15% of the population classified as living in deep poverty.

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