Palestinians welcome EU aid deal

The EU said the aid would address Palestinian "basic needs"

The Palestinian caretaker government has welcomed the European Union's offer of 120m euros ($140m; £83m) in emergency aid to keep it functioning.

Finance Minister Mazen Sinukrot said it was a "wise decision" but an Israeli spokesman suggested it was misguided.

Most of the money will not go directly to the government but to aid programmes on the ground and to meet energy bills.

Both the EU and the US are debating whether to stop donations after Hamas takes over following its election win.

See how the EU and US fund the Palestinians

The militant group, which does not recognise the right of Israel to exist, is regarded by many as a terrorist organisation.

Senior Israeli government official Raanan Gissin said the package was "the wrong decision at the wrong time to the wrong address".

"In a couple of weeks... Hamas will be in government," he told The Associated Press news agency.

"What kind of assurance do the Europeans have that this money will be used only for humanitarian purposes?"

The United States welcomed the EU aid move but made clear it would still review its aid stance when Hamas took office.

One-off donation

The EU package includes:
• 64m euros go through UN agencies to the poorest in the Palestinian territories

• 20m euros will pay the salaries of Palestinian Authority officials

• 40m will be earmarked for electricity and other energy expenses.

International Middle East envoy James Wolfensohn had warned the caretaker government could face financial collapse within the coming weeks.

PALESTINIAN ECONOMY 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

EU External Relations Commissioner Benita Ferrero-Waldner told the BBC the new package was aimed at helping Palestinian leader Mahmoud Abbas and the interim administration.

It is the EU's first financial aid to the PA since the January election.

However, the organisation insisted the package was "independent from any future decisions on support for the incoming Palestinian Authority".

BBC World Affairs correspondent Paul Reynolds says EU countries may seek a more pragmatic approach in future by funnelling money to Palestinians by other means.

Hamas spokesman Sami Abu Zuhri called the EU decision a step in the right direction "as long as it is not restricted by any conditions or a swap with the rights of our Palestinian people".

The group is due to send a delegation to Moscow on Friday for talks with Russian government officials.

The invitation angered Israel and was seen as an attempt to reinvigorate Russia's role in Middle East peacemaking.

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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