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Last Updated: Friday, 10 March 2006, 13:29 GMT
EU threatens Palestinian aid cut
EU aid stacked in the Gaza Strip
Hundreds of thousands of Palestinians urgently need aid
The European Union has warned it will cut funding to a Palestinian government led by Hamas if the group fails to renounce violence against Israel.

The EU gave no date for such a move. It has continued aid to Palestinians since Hamas won elections in January.

However, both the EU and the US regard it as a terrorist organisation.

The warning came at a meeting of EU foreign ministers, where delegates are also discussing the Iran nuclear row and Balkan efforts to join the bloc.

Ministers are also expected to consider:

  • The recent Danish cartoon row and ways in which the Christian and Islamic worlds can avoid such clashes in future

  • The situation in Ukraine and the forthcoming elections in Belarus.

However, correspondents say new policies will be thin on the ground as the meeting is informal.

'Won't go soft'

EU External Relations Commissioner Benita Ferrero-Waldner said the Palestinian Authority "must seek peace by peaceful means" if it wanted aid to continue.

GDP: $3.3bn
Population: 3.6 million
GDP per person: $934
Foreign aid per person: $469
Change in GDP per person since 1999: -38%
Poverty rate: 48%
Unemployment rate: 27%
Source: World Bank

"We want to remain a reliable partner for the Palestinian people, but we will not go soft on our principles," she said.

However, she expressed hope that Hamas could change and meet the EU conditions.

"We cannot exclude that Hamas is seriously thinking about how to respond to the situation in the future," she said.

Last month the EU approved a 120m-euro ($140m; 83m) aid package to the Palestinians, amid warnings the caretaker government faced financial collapse.

It said the aid was designed to meet the "basic needs" of Palestinians and would be distributed by the United Nations.

Most of the money would not go directly to the government, but to aid programmes on the ground and to meet energy bills, it said.

At the time, the US welcomed the EU aid move - but made clear it would still review its aid stance when Hamas took office.

1: Distributed through World Bank $85m
2: For Isr/Pal integration $12m
3: For UN relief (UNRWA) $77m
4: Food aid $35m
5: Humanitarian aid $33m
6: Special projects $24m
7: Infrastructure $72m
8: Other donations by member states $262m

EU TOTAL: $600m
1: Unused funds from 2003/04 financial year $175m
2: To pay PA debts $20m
3: Spending on new Gaza infrastructure $50m
4: USAID projects $155m

US TOTAL: $400m
Sources: EU, US


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