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Palestinian Foreign Aid: European Union Suspends Direct Aid to Hamas-Controlled Territories

(May 2006)

The European Union, the supranational legislative body representing 25 democratic European nations, and largest donor to the Palestinian Authority, recently suspended direct aid to the Hamas-controlled government. The EU based its decision on the fact that Hamas, classified as a terrorist group by the United States, Israel, and much of the international community, has not renounced terrorism or recognized Israel’s right to exist. EU ministers did state they would still give aid via international organizations for humanitarian reasons, such as services for electricity, water, food, health care and education.

The EU provides €500 million ($638 million) to the Palestinians annually, with about half going directly to the Palestinian Authority. The EU decision to suspend aid came in April after the Palestinian finace minister, Omar Abdel Razek, claimed the PA could not pay the 140,000 civil servants on the PA payroll. Many EU ministers believed this talk was exaggerated, and that the PA would abuse the funds meant for the Palestinian people. Major Western donors, such as the United States, froze the PA’s direct assets after Hamas won control of the government in January. The situation in the Palestinian-controlled areas has quickly deteriorated into a humanitarian crisis, which prompted the Quartet to set up a donor mechanism for the Palestinian people while bypassing contact with Hamas. The mechanism would provide tens of millions of dollars monthly that would pay for health, education, and public services.

Member states of the EU and the Quartet are currently at odds over the scope of the proposed mechanism, which could delay its June 2006 start date. France, for example, wants funds for education, health care, and the Palestinian police force, while other states like Britain want funds to be initially limited to only health. One European diplomat was quoted as saying the United States favored a “very, very simple” mechanism plan. These differences between nations will have an impact on exactly how much goes to the PA, and where the money is allocated within the Palestinian infrastructure.

Sources: David Gow and Conal Urquhart, “EU suspends aid to Palestinian Authority,” Guardian; (April 11, 2006); David Brunnstrom, “Donors agree to move ahead on Palestinian plan,” Reuters, (May 24, 2006).