EU to give 'targeted' aid to Palestinian Authority
Financial Times - 1 May 2003
By George Parker
The European Union is to introduce a system of "targeted" aid for the Palestinian Authority and end a programme that some claimed had seen money diverted to terrorist activities.
Chris Patten, EU external relations commissioner, said €80m ( $88m) would be made available to help the authority meet unpaid bills to small companies and social services providers.
The scheme replaces the current programme through which the EU paid €10m a month into the PA's general treasury account to help meet a budget shortfall caused by the Israeli government withholding tax revenues.
The EU's fraud watchdog is investigating whether some of those payments may have helped fund terrorist organisations, after concerns were raised by more than 150 members of the European parliament.
Mr Patten's spokeswoman denied that the move to stop direct budgetary aid was in any way related to allegations in the parliament that it had been misused.
She said the move reflected the fact that Israel had now resumed tax transfers to the PA, so that general assistance was no longer necessary.
Mr Patten said the scheme had been a "success" and had allowed the PA to continue as a viable interlocutor in the peace process and to maintain basic services to the Palestinian people.
Mr Patten has talked of "zero tolerance" for misuse of the EU aid budget, and says he is confident of the monitoring procedures put in place.
He said circumstances had changed, but added: "Our objectives remain the same: a stronger PA administration, better conditions for the Palestinian people and a continuing process of reform."
Mr Patten believes the "targeted" aid will help small businesses owed money by the PA. The new EU aid programme will be tied to paying invoices for services already provided by companies, and providers of social services.
Charles Tannock, British Conservative MEP, said: "The pressure we have been putting on the Commission has paid dividends. They are making sure the funding now is more ring-fenced and better audited."
Although Israel has now restarted payments, Mr Patten says the PA needs continued support because of the serious deterioration in the economy during the two years of the intifada.