EU to ignore pleas to resume funding of Palestinian authority

The EU is resisting pressure to resume funding to the Palestinian Authority, despite pleas from important allies in the region.

EU foreign ministers meeting in Brussels on Monday (5 March) will discuss calls from Palestinian, Saudi Arabian and Egyptian leaders to end a boycott of Palestinian government institutions.

Diplomats say that EU ministers are likely to reject demands immediately to restart funding, but will discuss the EU’s conditions for resuming contacts with a new Palestinian government.

The boycott was imposed after the election of Hamas in February 2006 when the EU suspended direct payments worth hundreds of millions of euros each year to Palestinian ministries. Although the EU has continued contacts with Palestinian President Mahmoud Abbas and funded public services, such as health and education, it has severed ties with ministries led by Hamas, which is on the EU’s list of terrorist organisations.

But the EU has come under increased pressure to end the boycott after Hamas and Abbas’s Fatah factions agreed on 8 February in Mecca to forge a national unity government. Palestinians hoped that the deal would help prevent civil war, end the international boycott and prevent the collapse of Palestinian institutions.

But the agreement fell short of meeting EU demands for Hamas to recognise Israel, stop violence and honour the agreements of previous Palestinian governments.

Behind the scenes EU diplomats are struggling to find agreement on a way of responding positively to the Mecca agreement.

France, Finland, Italy and Spain are keen to support the Palestinian unity government, despite Hamas’s failure to meet international demands.

Germany, the UK and the Netherlands favour a tougher line.

Diplomatic sources said that the EU would wait to see which government posts are assigned to Fatah and which are assigned to Hamas before making a decision on how to proceed.

Appointments to the ministries of finance and the interior, as well as security service posts, will be crucial in deciding the EU’s response.

The expected appointment of Salam Fayyad, a US-educated Fatah figure, as finance minister has been welcomed as a positive sign.

There is growing anxiety among member states about the impact the boycott is having on Palestinian institutions, which many say are no longer functioning.

The European Commission has put forward ideas to expand the temporary international mechanism that has channelled money to vital Palestinian services, such has health and education, but bypassed the government.

But member states have so far failed to endorse proposals from the Commission to extend the mechanism to cover the security sector.

According to one official, direct EU budgetary assistance could restart if assurances are in place that Hamas cannot dictate where the money goes.

Diplomats are also concerned that restarting funding could torpedo talks between Abbas and Israeli Prime Minister Ehud Olmert.

The EU will press to ensure that Abbas has complete control over the talks and to reassure Israel that it has not dropped demands on Hamas.

The EU is resisting pressure to resume funding to the Palestinian Authority, despite pleas from important allies in the region.