EU rethinks hand-outs to Palestine

The EU could resume direct funding to the Palestinian government, even though the state has not recognised Israel, renounced violence or signed up to internationally-brokered peace plans.

On Monday (23 April), EU foreign ministers will discuss whether to resume direct funding to individual ministries as a way out of a stalemate which has brought the Palestinian Authority to the brink of collapse.

The EU stopped transfers to the Palestinian budget after Hamas’s election victory in January 2006 and its refusal to meet the three demands. "We will not restart direct assistance to the government as a whole," said one diplomat, "but maybe to certain parts where you can be sure it will not be diverted."

Another EU diplomat indicated that the EU would be watching closely to see which ministers follow Finance Minister Salam Fayyad, an independent, in meeting the demands.

"We will have to see how co-operation with individual ministers goes," he said.

Much will depend on Fayyad’s success in setting up a system that prevents money from going to Hamas hardliners. Diplomats said it would also matter whether the new account is managed by the Palestinian Liberation Organisation, the government, or President Mahmoud Abbas. It is likely to be months before such a system is in place.

But the EU hopes its policy shift will encourage individual ministers to meet the demands of the international community. "We need to provide an incentive," said one source.

The EU is under pressure to resume funding as the situation in the Palestinian territories worsens.

The EU could resume direct funding to the Palestinian government, even though the state has not recognised Israel, renounced violence or signed up to internationally-brokered peace plans.