EU ponders expanding scope of funding for Palestinians

The EU is studying ways of expanding its emergency funding mechanism to Palestinians, despite growing criticism of the way the money is transferred.

Foreign ministers are expected to discuss expanding the mechanism when they meet in Brussels on Monday (12 February). One idea being considered ahead of the meeting is to pay 19,000 Palestinian civil police being trained by the EU.

The mechanism is currently limited to supplying medicines, fuel and paying medical staff, pensioners and the very poor directly to individuals or through the World Bank. It has so far provided allowances for around 150,000 Palestinians.

According to diplomats, the expansion will aim to bolster "state-like structures", which are in danger of collapse because of the government’s inability to pay civil servants.

The EU received last week (2 February) the go ahead from its partners in the Middle East Quartet (US, UN and Russia) to examine expanding the mechanism to "support the political process". Previously the US has been sceptical about such ideas, fearing the money would help prop-up the Hamas-led government.

In a joint statement, the four said they would "identify suitable projects for international support in the areas of governance, institution building and economic development".

But diplomats from some EU member states said that the situation on the ground would make any expansion difficult.

According to one diplomat, the EU is unlikely to fund security personnel attached to Hamas-led ministries.

"Nothing is clear because of the reform of the security sector, it is not always clear who works for whom," he said.

A Commission official said that individual member states could fund police but that the EU as a whole was unlikely to do so.

Concrete proposals are not expected before the Quartet convenes again in Berlin following a meeting between US Secretary of State Condoleezza Rice, Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert on 19 February.

The EU created the so-called temporary international mechanism in June 2006 in response to Hamas’s electoral victory. The EU has refused to fund the Hamas-led government until it recognises Israel and commits to non-violence, something it has so far refused to do.

But the EU is coming under pressure to scrap the mechanism and resume direct aid to the Palestinian Authority, led by Hamas.

A report by the UK parliament’s international development committee, published last month, said that bypassing Hamas had only served to strengthen the hand of Iran and could be exacerbating tensions between Palestinian factions Hamas and Fatah.

This week the UK-based charity Oxfam accused the European Commission of overseeing a policy "fiasco", by paying more than €1 million a month in banking fees to keep the mechanism up and running. HSBC, the bank involved in the transfers, claims the transaction costs are only half that figure.

European diplomats admit that the mechanism is a stop-gap and are hoping that talks between Fatah and Hamas on forming a national unity government will pave the way for the EU to restart funding.

Leaders of the two factions met on 7 February in Mecca to try to agree the terms of cohabitation.

The EU is studying ways of expanding its emergency funding mechanism to Palestinians, despite growing criticism of the way the money is transferred.