EU imposes financial crisis on the Palestinians

A section of yesterday’s 150-strong mass picket
A section of yesterday’s 150-strong mass picket

FACING an imposed ‘suffocating financial crisis,’ Palestinian officials have made no immediate comment yet on an EU decision on Tuesday to suspend 35 million euros ($42 million) in aid to the Palestinian National Authority (PNA), coming shortly after freezing 60 per cent of funding for the PNA’s operational budget by the World Bank.

The European Union has suspended 35 million euros ($42 million) in aid to the Palestinians, citing their lack of budgetary discipline, visiting EU’s commissioner for external relations Benita Ferrero-Waldner said in Jerusalem on Tuesday.

Ferrero-Waldner said European aid to the Palestinians had previously been held up in 2002 and 2003, and he said such donations ‘could not be unconditional.’

The Palestinians reportedly receive about $1 billion a year in international aid – about half the PNA’s budget. The European Union is the largest donor to the PNA and EU assistance is stated to reach $312 million in 2006.

Visiting the region ahead of Palestinian legislative elections on January 25, Ferrero-Waldner said half of 70 million euros ($84 million) donated through the World Bank in November has not been released, and that the issue was under discussion.

‘The biggest donor is the European Commission, and we have not paid because the benchmarks have not been fulfilled,’ she told reporters in Jerusalem.

‘We have a long-term commitment with the Palestinian people that we would like to improve their living conditions (but) we are not only pumping money into the Palestinians without asking for very clear benchmarks,’ she said.

‘There has to be a credible finance minister, but there also has to be a budget and the budget should also remain within the limits of what the budget has foreseen,’ she added.

There has been no replacement appointed for Salam Fayyad, who quit as Palestinian finance minister in November to run for parliament, leading the ‘Third Way’ national list.

Before resigning, Fayyad predicted aid from a World Bank trust fund would be cut in response to ballooning Palestinian government wage costs. The trust has paid out at least $230 million to the Palestinians since its founding in 2004.

Early in January, Fayyad said that, ‘there is no doubt that the Palestinian Authority is going through a suffocating financial crisis,’ adding: ‘We are in desperate need of Arab aid.’

A tour by Palestinian President Mahmud Abbas in the GCC countries early in January has yet to yield results.

However, ‘budgetary discipline’, cited by Ferrero-Waldner as the reason for freezing the EU 43 million dollars in aid to the PNA, is being taken by Palestinians as a cover for the latest US and EU attacks to stop their aid to the PNA should the Islamic Resistance Movement ‘Hamas’ join a new Palestinian government after the January 25 elections.

They want a democracy whereby the EU and the US decides what the Palestinians do!

The United States and the European Union blacklist Hamas as a ‘terrorist organisation’ and were behind a Quartet statement, including the United Nations and Russia, opposing Hamas’ participation in the elections unless it disarms and recognises Israel’s right to exist as a state.

The EU and US positions vis-à-vis Hamas adopts the Israeli official policy and tries to force it on the Palestinians putting Palestinian President Abbas ‘in a very difficult position’.

‘It will be complicated for the European Union to continue financing Palestinian Authority activities if Hamas continues to play a negative role in the process and will not renounce violence,’ threatened EU foreign policy chief Javier Solana on December 18.

Solana has no problem with Israel for not renouncing violence against the Palestinians!

‘The taxpayers in the European Union, members of the parliament of the European Union, will not be in a position to sustain that type of political activity,’ Solana added.

The World Bank representative in the West Bank and the Gaza Strip, Nigel Roberts, told Israeli online daily Ha’aretz on January 10 that the PNA’s lack of responsibility ‘forced the Bank, supported by the European Commission,’ to freeze 60 per cent of funding the PNA’s operational budget.

However Roberts warned also that the PNA ‘is facing a crisis that could unable it, as early as next month, from paying the salaries of at least 130,000 officials and members of its security forces.’

The PNA ‘is on the verge of functional bankruptcy; its failure to pay the hundreds of thousands of employees will make them unable to buy their basic daily needs, which will directly affect thousands of suppliers and merchants who earn their living from the employees,’ he added.

A donors’ conference in London in December refused to pledge aid to the PNA until after the legislative elections.

Palestinian Central Bureau of Statistics (PCBS) said that there was an increase of nine per cent in the number of unemployed persons between the 2nd and 3rd quarter of 2005 while the consumer price index increased in the Occupied Palestinian Territories (OPT) by 1.93 per cent during October 2005.

However the Palestinian masses are refusing to be blackmailed or bullied by the imperialist powers.

They are determined that under their democracy they will elect who they want and that those elected will form part of the government, whatever the EU-US bandits say or do.