Europe fills Palestinian aid gap

The aid is designed to meet the "basic needs" of Palestinians and will be distributed by the United Nations.

Its comes as donors debate whether to stop funding the Palestinian Authority after militant group Hamas takes power.

Hamas won January's elections but European countries and the US regard it as a terrorist organisation.

International Middle East envoy James Wolfensohn has warned that the caretaker government - in charge until then - could face financial collapse within the coming weeks.

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

"We need to support the caretaker government,"
Benita Ferrero-Waldner
EU External Relations Commissioner

"We need to support the caretaker government, and this is what we are doing," she told the BBC.

The EU package approved on Monday includes:
• 64m euros going 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.

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%

The EU insists that the latter will go directly to suppliers, not go through the Palestinian Authority.

"They [the PA] will provide us with bills and we will pay those bills to the utilities concerned," European Commission spokeswoman Emma Udwin said.

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

But the EU insists the package is "independent from any future decisions on support for the incoming Palestinian Authority".

The 25-member union has refused to indicate whether it will maintain its funding for the PA with Hamas running the government.

Hamas has been urged by donors to change its policies towards Israel, including recognising its right to exist and renouncing violence.

The EU decision is in line with a statement from the Quartet of the US, EU, Russia and the UN on 30 January, and confirmed in informal talks last week, which "urged measures to facilitate the work of the caretaker government".

Democratic choice

BBC World Affairs correspondent Paul Reynolds says the crunch might come when Hamas forms the government, which the US says it will not give aid to.

EU countries might seek a more pragmatic approach by funnelling money to Palestinians by other means, our correspondent says.

Hamas officials have called on aid donors to respect the Palestinian people's democratic choice of government.

"We are awaiting to see a positive position from the EU over the support to the Palestinian people, who chose Hamas to represent them," said Hamas political leader Khalil Abu Laila in an interview with Reuters news agency.

A Hamas delegation is due to visit 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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