EN    EN EN 
EN    EN  EUROPEAN COMMISSION  
Brussels, 12.5.2010 
SEC(2010) 515 final 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying the 
 
COMMUNICATION FROM THE COMMISSION  
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
Taking stock of the European Neighbourhood Policy (ENP) 
  
Implementation of the European Neighbourhood Policy in 2009: 
Progress Report on the occu pied Palestinian territory  
 
  
{COM(2010) 207 final} 
{SEC(2010) 513 final} {SEC(2010) 514 final} {SEC(2010) 516 final} {SEC(2010) 517 final} {SEC(2010) 518 final} {SEC(2010) 519 final} {SEC(2010) 520 final} {SEC(2010) 521 final} {SEC(2010) 522 final} {SEC(2010) 523 final} {SEC(2010) 524 final} {SEC(2010) 525 final} 
EN 2   EN 1. BACKGROUND AND OVERALL ASSESSMENT  
The Palestinian Authority (PA) and the European Community first established contractual 
relations in 1997 when the EC a nd the Palestine Liberation Organi sation (PLO), on behalf of 
the PA, concluded an Interim Association Agr eement on trade and cooperation. The trade part 
of the agreement cannot be fully implemente d due to obstacles ra ised by Israel, which 
considers it incompatible with  the economic provisions of the Oslo Agreements (the Paris 
Protocol). On the basis of the agreement, the EU-PA ENP Action Plan was approved in May 
2005 for a period of three to five years.  
Meetings with the PA took place  at the level of Ministers, senior officials, the Joint 
Committee, and subcommittees, th ree of which were held du ring 2009 and the fourth just 
before the reporting period.  
This document reports on progress made in the implementation of the EU-PA ENP Action 
Plan between 1 January and 31 December 2009, although developments outside this period 
are also taken into consideration when deemed relevant. It is not  a general review of the 
political and economic situation in the occu pied Palestinian territory. In addition, for 
information on regional and multilateral sector pro cesses, please refer to the sectoral report. 
The PA has made increasing use of the ENP as a means of underpinning its state-building 
activities and consolidating the PA’s political position on its futu re international status. The 
EU expressed full support for the Government  programme "Palestine, Ending the Occupation, 
Establishing the State", adopted in Augus t 2009, which aims at building strong state 
institutions within two years, wh ile still giving priority  to the institutional reform activities set 
out in the Palestinian Reform and Devel opment Plan (PRDP) (2008-2010). The PA has 
started work on a new plan which will replace the PRDP, called the Palestinian National 
Plan 2011-2013 (PNP).  The latter is expected to be fully aligned and to translate the political 
vision of PM Fayyad’s state-build ing plan into concrete priori ties for the next three years. 
This will serve as a basis for a new ENP Action Plan. In summar y, throughout the reporting 
period the EU and the PA took further steps to wards enhancing political dialogue and reform 
within the framework of the ENP, most notably  in the fields of rule of law and public 
financial management. The first round of subc ommittee meetings enabled an implementation 
review of the Action Plan and set out the pr ogress achieved and the way forward. The ability 
of the PA to implement reforms remained lim ited as a result of the ongoing Israeli occupation. 
The 1995 Oslo Interim Agreement split the West Bank into three Areas (A, B and C) with 
different security and administ rative arrangements. Area A (mostly the urban areas and their 
surroundings) is under full PA administrative and police control. Area B (rural areas) is under 
administrative PA control, but under full Israel i security control. Ar ea C, comprising more 
than 60% of the West Bank, is under the full cont rol of the Israeli military for both security 
and civilian affairs. Moreover, due to the co ntinuing political divide  between the West Bank 
and the Gaza Strip, reforms were limited to ins titutions in the West Bank, and could not be 
implemented in the Gaza Strip, where the PA de facto  has no authority.  
The overarching objective of EU  policy towards the Palestinians is the creation of an 
independent, democratic, contiguous and viable Palestinian state, living side by side with 
Israel and its other neighbours in peace and secu rity. The Gaza conflict between 27 December 
2008 and 18 January 2009 had devastating effects on the civilian population in the Gaza Strip 
and destroyed its economic and institutional structures. It also contributed to deeper divisions between the Palestinian facti ons, and in particular betwee n Fatah and Hamas. Over 1,400 
EN 3   EN Palestinians, including more than 1,000 civilia ns were killed and more than 5,000 were 
wounded.1 In the aftermath of the Israeli military  operation, which caused major destruction 
in the Gaza strip, the hopes that the internat ional community would be able to reactivate a 
meaningful peace process faded. The efforts by Egypt to bring about national reconciliation 
between Fatah and Hamas yielded no results, par tly due to external influences on the parties. 
This situation prevented th e organisation of presidentia l and legislative elections. 
In 2009, the report of a fact-finding mission le d by Judge Goldstone, created by the United 
Nations Human Rights Council (UNHCR) to i nvestigate international human rights and 
humanitarian law violations related to the G aza conflict, contained st rong criticism of the 
actions taken both by Israeli Defense Forces and by Palestinian militant groups during the war.  
Although Israel relaxed some restrictions on movement and access in the West Bank, other  
Israeli actions in the West Bank continued to be seen as undermining the PA, hampering its 
capacity to implement reforms as well as economic development. Gaza continues to be under Israeli siege despite consistent  calls from the international community for full opening of 
crossings for both humanitarian and commercial traffic. 
2. P
OLITICAL DIALOGUE AND REFORM  
Development of enhanced political dialogue and reform  
The PA continued to make progress in th e implementation of the PRDP 2008-10, most 
notably in the areas of secu rity and public financial mana gement. Implementation of the 
PRDP in the areas of economic and private sector development, local governance - and, 
crucially, the judicial system - proceeded at a slower pace. In the area of private sector 
development this was partly due to the particul ar attention given instea d to the more urgent 
aspects of institution-building which were seen as having more immediate potential results for 
the peace process. In the judicial sphere, progress was hampered by unclear mandates and 
competition between the relevant PA bodies, a lthough there were some positive developments 
towards the end of the year.  
Currently, the PA lacks a distinct civil servi ce and public administration reform programme. 
However, the formation of the 13th government resulted in the Ministry of Planning being 
renamed as the Ministry of Planning and Administrative Development (MoPAD), a move 
which was supposed to signal a renewed commitmen t to administrative reform. In parallel, the 
PA intensified its efforts to improve its me dium-term planning and budgeting capacities and 
has embarked on preparations for th e PNP. In this contex t, a detailed sector strategy for public 
administration reform will be elaborated. The de velopment of such a strategy will serve as a 
first test for the MoPAD to exerci se leadership in this sector. 
Despite significant progress in the transparent operations of th e government, the absence of a 
functioning legislature continues to fundamentally  impede the accountability of the executive.  
Democracy and Rule of Law 
                                                 
1 Controversy exists over the precise  number of casualties as well as the number of civilians within those 
figures, but Amnesty International and the UN give credit to these figures.  
EN 4   EN Progress in the area of the rule of law  in the occupied Palestinian territory continued to be 
constrained by the parallel legal systems operati ng in the West Bank and in the Gaza Strip.  
Promotion of democratic governance was hamp ered by the indefinite postponement of 
presidential and parliamentary elections  that had been scheduled to take place no later than 
January 2010.  
There were increasing signs  of improvement of the justice  sector in the West Bank. In 2009, 
the number of judges was furthe r increased to 190 judges (146 in the West Bank and 44 in the 
Gaza Strip), and 158 prosecutors (98 in the We st Bank and 60 in the Gaza Strip). The courts 
started to tackle the cas e backlog, which reflects the improved security situation; however, it 
will take time to completely clear the backl og of nearly 90 000 cases. All newly appointed 
judges and assistant prosecutors we re trained at the Palestinian Judicial Institute. Electronic 
case management has been established at all co urts and the system is being linked up to the 
prosecution offices and the Office of the Attorney General. A judicial records system has been 
launched at the Ministry of Justice. Various operational policies, procedures and manuals 
have been established at the High Judicial  Council and the public pr osecution in order to 
increase the effectiveness of  both institutions. In the Hi gh Judicial Council a Court 
Administration Department, a Notary Department , a Planning Department and a library were 
established, as well as an Inspection Office which evaluates the performance of both judges 
and prosecutors.  
However, further development of the justice sector suffered as a result of the unclear 
mandates of key stakeholders in the judicial  sector and the politici sation of its leading 
institutions, mainly the judiciary (led by th e High Judicial Council), public prosecution and 
the Ministry of Justice. The work of the Palestinian Legislative Council (PLC) remained 
suspended as a result of the political split be tween the West Bank and the Gaza Strip and also 
because some members of the PLC are detained in Israeli prisons. This affected progress in 
the adoption of legislation, result ing in a continuing lack of clarity on relations and division of 
competences. The practice of referral to the m ilitary court system in the West Bank and the 
Gaza Strip, which runs contrary to the provisions of the Basic Law, also threatens to undermine the PA's achievements in the civilian justice sector. 
There are now four model courts in the West Ba nk in the districts of Nablus, Jenin, Jericho, 
and Bethlehem. The expansion and rehabilitation of  courts in other districts is also taking 
place. Automation of courts has continued su ccessfully with European Commission support. 
New computers and computer  programmes were distributed to courts to help facilitate better 
adjudication of court cases and enable better revi ew of their status, thereby increasing the effi-
ciency of the courts in case adjudication.  
As a result of these developments, recent public  opinion surveys show increased public trust 
in the Palestinian judiciary. According to statistics from the Palestinian Central Bureau of Statistics and a survey conducte d by the HJC, the public has de veloped a higher level of trust 
in the judiciary. 
In the security sector, the delivery of s upport in the form of training, equipment and 
infrastructure of the Palestinian civil police con tinued, as did the efforts in the Ministry of the 
Interior to restructure the sector. Some improve ment was noted in the reform of the security 
sector and of the security services, although th e development of institutional frameworks and 
organisational capacities still lagged be hind operational improvements. The new PA 
EN 5   EN Government placed more emphasis on the need for civilian oversight and accountability, 
although at this stage it confined itself to stating its intentions in this direction.  
Projects have started on the ce ntralisation of the budgeting process for security services in the 
Ministry of the Interior (MoI), for the establis hment of a central administration in the MoI and 
for the elaboration of a central training ad ministration. Work also progressed on the 
establishment of an internal inspectorate for the security services in the MoI in order to 
improve the oversight of the sector. The MoI agr eed, in principle, with the establishment of a 
separate Corrections Department outside the Palestinian Civil Po lice, in order to manage the 
penitentiary system. One obstacle to the establis hment of such a department is the lack of 
human resources provision by the PA for the management of this key sector. 
The PA continued its efforts to build a professi onal civil police with the help of the EU ESDP 
mission, EUPOL COPPS. The PCP Palestinian Ci vil Police developed 14 projects in the 
framework of the PRDP. The projects replaced th e Palestinian Civil Police Development Plan 
2005-2008 which expired at the end of 2008. EU POL COPPS contributed to almost all 
projects, and also helped to seek donor financ ing for particular actions . Progress was made in 
equipping and training public order forces, pr eparing for the establishment of forensic 
laboratories, building new prisons , developing IT systems for the police, initiating a project to 
rebuild destroyed police stations, developing anti-explosive units, developing maintenance 
workshops, and conducting specific training courses on forensic  evidence, stolen vehicles, 
traffic management, anti-corrup tion, special police forces a nd close protection, and the 
judicial police. The European Commission prov ided direct support for a number of specific 
activities, which made good progress in 2009, including provision of vehicles and 
communication equipment for the police, construc tion of the Jericho Police Training Centre, 
construction of penitentiary facilities in Nabl us, and other construction for security force 
headquarters in both Nablus and Jenin. 
The performance of the PA secu rity services, though not system atically evaluated, seemed to 
improve in terms of maintaining order. However, their human rights record is still in need of 
improvement (see next section). The EUPO L COPPS mission contribu tions also address 
human rights issues in its tr aining programmes for Palestinia n police officers. The EU has 
likewise supported human rights training for secu rity forces in 2009 through its "Breaking the 
Silence – say no to torture" project. 
Human Rights and Fundamental Freedoms 
The situation of human rights  and fundamental freedoms conti nued to suffer setbacks as a 
result of intra-Palestinian conflict and Israeli actions, including incursions in the West Bank 
and the continuing blockade of Gaza. Period s of calm (including five consecutive weeks 
without fatalities in Gaza in October/Novemb er 2009) alternated w ith the resumption of 
Israeli Air Force attacks and Israeli Defence Fo rce incursions into Gaza, notably in August 
and December 2009. Since the end of Gaza conflict, rockets and mortar shells were fired from 
Gaza, and arms smuggling continued Intra-Pales tinian violence in the Gaza Strip remained 
high. Furthermore, deaths linked to violent family  disputes and rivalrie s, to the manipulation 
of unexploded devices, or resulting from tunnel  accidents were regularly recorded every 
month in Gaza.   
Claims of human rights abuses by PA security services continued to be made throughout the 
reporting period. Though some of these abuses are linked to the limitations imposed by the 
occupation, a message of Palestinian political will to end these practices has already been 
EN 6   EN delivered and instructions prohibiting ill-treatm ent in detention and investigation centres are 
in place. 
Since October 2009, the Palestinian Independe nt Commission for Hu man Rights (ICHR) has 
consistently stressed the importance of security  agencies abiding by political instructions and 
in this regard noted the marked decrease in allegations of  torture in the West Bank  following 
PM Fayyad’s instructions in September 2009. Furthermore, in November 2009, for the first time in almost 11 months, ICHR was authorised to visit detention centres of the security 
agencies. In contrast, ICHR noted that the number of complaints against the Gaza Strip security agencies had in creased since November 2009. 
At the end of December 2009, about 6 831 Palestinia ns were detained in Israel. This number 
had steadily decreased throughout 2009 from 7 951 in January 2009. The decreasing trend 
was also confirmed by the drop in  the number of administrative detainees from 564 in January 
2009 to 278 in December 2009. In January 2010 there were no children in administrative detention. However, at the end of February 2010 , there were 41 Palestin ian children detained 
under the age of 16. The number of Palestinians a rrested by Israeli forces as a result of protest 
activities against the separation barr ier seemed to be on the rise.  
As for the number of violations of the right to proper legal procedures  (including arbitrary 
detentions and arrests on political grounds), th e number of complaints recorded by the ICHR 
remained high, with 198 complaints in the West Bank and 54 complaints in the Gaza Strip despite a reduction since mid 2009. While the number  of reports of torture or ill-treatment 
decreased, there appeared to have been an incr ease in the cases of unlawful arrest/detention. 
During 2009, fourteen death sentences  were issued in the West Bank and in the Gaza Strip, 
of which three were in the West Bank. Char ges were usually brought on the grounds of 
espionage, treason and cooperation with hostile parties. No im provement in the right of 
defence was noted. No executions took place in 2009. In Gaza the de facto  government 
continued to “adopt” new legal norms, and in December 2009 it announced its intention to 
introduce the death penalty  for drug trafficking, which is report ed to be a growing problem in 
the Gaza Strip. The EU consistently expressed concern at this situation. The first formal 
execution was carried out by Hamas de facto government in Gaza in April 2010, beyond the reporting period. Developments w ill be reported upon next year. Violations of media 
freedom, the right of association and peaceful assembly  were regularly reported 
throughout the year. Freedom of association rema ined weak in the West Bank and the number 
of assaults in the Gaza Strip increased. Severa l incidents of breaking and entering, explosions 
and burglaries of civil society organisations were reported in the last quarter of 2009. These 
incidents further weakened the situation of civil society organisations, which were also 
confronted with direct interfer ence from the Gaza authorities. 
The continued Israeli blockade of Gaza and th e closure of the Gaza Strip crossings, despite 
repeated calls from the international communit y, continued to have se vere consequences for 
the humanitarian situation. The ban on imports of building materials prevented the reconstruction of thousands of damaged home s inside the Gaza Strip. The main trends 
observed during the reporting period included accel eration in the expansion of settlements on 
the western side of the Barrier . In addition, expansion work was reportedly taking place in 34 
settlements, 16 of which are lo cated east of the Barrier.  
During 2009, the UN Office for the Coordination of  Humanitarian Affair s recorded a weekly 
average of eight settler-related incidents affec ting Palestinians, with an increase towards the 
EN 7   EN end of the year, following the Israeli ca binet announcement of a 10-month freeze on new 
residential constructions in West Bank se ttlements (except in East Jerusalem). 
The overall socio-economic situation of women  continued to be diffi cult during the reporting 
period. A National Committee to combat violence against women was established under the leadership of the Ministry for Women's Affa irs (MoWA) which includ es twelve different 
ministries and civil society or ganisations, with a view to drafting a national strategy to 
promote women’s rights and gender equality in  all areas of society. Honour crimes were 
regularly recorded. In the cont ext of the current socio-economi c crisis, Palestinian women, 
although they constitute the ma jority of university studen ts, remained seriously under-
represented on the labour market, w ith the female labour force part icipation rate in the fourth 
quarter of 2009 reaching only 15.1% (see also "E mployment and Social Policy"). Female 
unemployment stands at 23.8%. 
However, the Palestinian Authority has upheld  its commitment and pursued its efforts to 
improve the participation of women in political life: five women are represented in the June 
2009 Government (including one as Minister for Women’s affairs)  out of 23 ministers, and 17 
of the 132 members of the Legislative Counc il are women. Representation of women in 
political bodies is estimated at around 15%  for senior positions, and around 9% in the 
judiciary. In June 2009, the Pa lestinian Cabinet decided to introduce gender-sensitive 
budgeting and to establish gender units in minist ries and public institutions. In addition, the 
President of the Palestinian Authority signed on 8 March 2009 a degree approving the 
ratification of the Convention on the Elimina tion of all Forms of Discrimination against 
Women (CEDAW) without reservations. However,  there is no substant ial progress to report 
regarding the adoption of the Women’s Bill of Rights.  
Financial Accountability and Sound Management of Public Finances 
In 2009, the PA continued to implement substantial public financial management  reforms, 
despite the difficult political context, in line wi th priorities in PM Fayyad’s state-building 
plan. The PA underlined its commitment to increase domestic revenues, control and 
rationalise expenditure (e.g. through the launch of the ‘ Al Sieyadeh ’ programme), establish a 
research department, continue to modernis e and reinforce the Ministry of Finance, 
computerise the tax procedures, decentralise internal audit, and complete the implementation of a new accounting system. The PA is also currently preparing a comprehensive public 
financial management strategy. 
Progress continued with regard to internal audit , with the support of th e EU. The Ministry of 
Planning and the Ministry of Finance furt her integrated their planning and budgeting 
processes and a new budget information system  was launched. The Ministry of Finance 
completed the full roll-out of its new accountin g system to line ministries in August 2009 - 
earlier than initially expected - and is now developing a new procurement module for the 
system. In addition, the Ministry of Finance de veloped a yearly cash plan and the Central 
Treasury Account system was made fully operational. 
The PA's supreme audit institution, the Stat e Audit and Administrative Control Bureau 
(SAACB), produced a report of activities for th e year 2008 and is currently working on the 
preparation of the 2009 report of ac tivity (due to be published in the first quarter of 2010). In 
the absence of a functioning Palestinian Le gislative Council (PLC),  annual reports are 
delivered to the Presiden t, cabinet and legisla tive council secretariat. The audit of the PA's 
2008 financial statements is due to take pl ace in 2010. The European Commission prepared a 
EN 8   EN multi-annual assistance programme to build th e capacity of the SAACB in order to begin 
implementation in 2010. 
The PA continued to make progress in enha ncing the transparency of its finances. 
Comprehensive monthly fiscal reports conti nue to be published in a timely manner on the 
Ministry of Finance website. These reports  include data on expenditures (on a cash or 
commitment basis, broken down by nature and by function), revenues and financing sources. 
However, as regards corruption , the PA still has little to show by way of a comprehensive 
anti-corruption strategy, but it has set up a committee to pr epare a comprehensive anti-
corruption plan.  
3. ECONOMIC AND SOCIAL REFORM  
Macroeconomic framework and functioning market economy 
Following GDP growth of 2.3% in 2008, prelim inary data show the Palestinian economy 
expanding by around 6.8% in 2009, with the most significant increases being seen in 
construction, social services and services i ndustries. However, this represents only a 3.7% 
increase in GDP per capita. The economy benefitted from the partial relaxation of border restrictions with Israel  and easing of restricti ons on internal trade in the West Bank, as well as 
from improvements in the security situation which have brought an increase in commercial 
activity (see section on trade). However, the overall growth pattern does not yet indicate significantly higher output based on private investment in produc tive sectors. The substantial 
increase in Palestinian imports fr om Israel and little change in the value of Pale stinian exports 
to Israel are also indicative of rising donor-f unded consumption rath er than sustainable 
economic growth. The Palestinian economy wa s largely unaffected by the global economic 
crisis, due to restricted external trade links , heavy dependence on inte rnational aid (over one 
third of GDP) and the low economic development base following years of political strife.  
The more positive outlook is due mainly to th e economic performance of the West Bank, 
where security improved, the number of obstacl es to movement was reduced, Israel issued 
several hundred new business permits to Pales tinians, and the first significant investments 
following the Palestinian Investment Conference of 2009 were launched. Real GDP growth in 
the West Bank is projected to have risen to 7% in 2009 from 5% in 2008, while in Gaza real 
growth is set to have risen to 1% of GDP in 2009 from -5% in 2008, although this reflects a 
continuing decline in per capita  terms. Due to the continuing blockade of Gaza, the black 
market has expanded, partly operating through a series of tunnels at the Egyptian border. 
The inflationary pressure, which peaked in mid-2008, has gradually subsided, mainly owing 
to the decline in internati onal food and fuel prices, whic h fell to 2% by mid-2009, while 
inflation still remains higher in Gaza due to th e supply effect of the blockade. Real incomes 
also rose due to the depreciation of the  shekel  against the dollar, which accounts for a large 
part of remittances and donor aid, which fell sharply in the first half of the year. The overall 
fiscal deficit will expand in 2009 to -29% of  GDP from -23% of GDP in 2008, while the 
recurrent fiscal balance, excluding emergenc y spending in Gaza, will narrow to 18.5% of 
GDP in 2009 from 20% of GDP in 2008. The aut horities' strategy is to  consolidate public 
finances in order to reduce re liance on internationa l aid and to encourage private sector 
growth. At the same time, they aim to make  public expenditure more effective by shifting 
resources away from wages and subsidies and to wards investment. To this end the Palestinian 
Authority has maintained controls on governme nt employment and wages, and substantially 
EN 9   EN reduced utility subsidies. Its response to the wa r in Gaza at the beginni ng of the year, coupled 
with the ongoing blockade imposed by Israel on normal commercial traffic with the Gaza 
Strip, continues to have serious fiscal consequences for the PA. 
The Palestinian Authority took legislative meas ures in 2009 to addre ss credit shortages to 
businesses due to the high risks of investing in  the local economy. The Palestinian Monetary 
Authority introduced a new re gulation requiring banks to re duce their ratio of foreign 
investment/total deposits to 55 % (from the current 65%). Partly  as a result of  the regulation 
and the improved security environment, private sector credit in the West Bank rose by a third 
in the first half of 2009, while in Gaza there was a fall in private sector  credit due to weak 
investment demand. Although private sector acti vity picked up in 2009 in the West Bank, a 
sustained economic recovery still hinges on the further removal of restrictions on movement 
and access and an enabling political and re gulatory environment for investment.  
In real terms, GDP in the occupied Palestinia n territory (oPt) is still well below the level of 
ten years ago and the region remains mired in p overty. The overall poverty rate in the oPt is 
57%, with an estimated 80% of people in G aza living below the poverty line. The overall 
social situation also remains difficult and th e war in Gaza in January 2009 led to a serious 
worsening of the humanitarian situation in the Strip.   
Employment and social policy 
The unemployment  rate decreased slight ly from 27.9% in the 4th quarter of 2008 to 24.8% in 
the 4th quarter of 2009. It stood at 18.1% in th e West Bank and 39.3% in the Gaza Strip in the 
4th quarter of 2009. Still, accord ing to ILO standards, the la bour force participation rate 
remained low and stagnated at 41.5% in the 4th quarter of 2009, compared with 41.4% in the 
same period in 2008. The unemployment rate of women is estimated in 2008 at 23.8%. The Palestinian Authority continued to work with the Internationa l Labour Organisation (ILO) on 
developing an employment st rategy and upgrading the labour market information system. 
As regards social dialogue , the tripartite committee was es tablished in July 2009. The ILO 
organised a roundtable discussi on in October 2009 to revita lize the Palestinian national 
tripartite committee. 
On social protection and the fight against  poverty , the European Commission finalised a 
tender for technical assistance to the Ministry  of Social Affairs in October 2009 on the 
implementation of an enhanced social protec tion system. Since February 2009, the Ministry 
of Social Affairs has been responsible for th e development of a poverty-based cash assistance 
scheme. To this end, it adopted in July 2009 a poverty-based targeting methodology with a 
view to setting up a centralised database of poor households. Finally, in December 2009 the 
Ministry of Social Affairs presented its  national programme fo r social protection. 
No progress can be reported on the adoption of an action plan fo r the reform of the pension 
system  and on establishing the le gal framework for a new pension system. However, a 
number of technical consultations took pl ace throughout 2009 on ensuring the sustainability 
of the reform, and the Palestinian Authority is  working on a pension reform action plan. The 
development of a sustainable law on retirement  as well as the reinfo rcement of the capacities 
of the Palestinian Pension Agency are key prio rities of the two-year  governmental programme 
“Palestine, Ending the occupation, establ ishing the State” adopted in August 2009. 
EN 10   EN Promotion of sustainable development  remains difficult and is further complicated by the 
constraints imposed by the Israel i military occupation. In Ar ea C of the West Bank, the PA 
has very limited control over its natural reso urces and agricultural lands. Due to Israeli 
restrictions, the development of the population is confined to the existin g cities and villages 
with too little suitable  space for demographic growth, whic h leads to irrational land use and 
unsound environmental management. In the Gaza strip, more than two years of effective 
blockade coupled with the widespread destruct ion from the Gaza conflict have left tens of 
thousands of homes damaged or destroyed and caused further deterioration of already over-
loaded water, sanitation and electricity networks.  
4. TRADE -RELATED ISSUES , MARKET AND REGULATORY REFORM  
Bilateral trade between the EU and the oPt co ntracted slightly duri ng the reporting period: 
exports from the oPt to the EU slowed down, but less significantly than in the previous year 
(by 9.4% compared to 48.2%), wh ile EU exports decreased by 14.5%. 
Some progress was registered in respect of obstacles to trade  and economic development 
related to movement of goods a nd access to the occupied Palest inian territory. The easing of 
internal movement that began in May 2009 conti nued until the end of the year. The towns of 
Nablus, Ramallah, Qalqilya, Jericho and Jenin are more accessible than in previous years, with most checkpoints physically still in place, but with traffic flowing relatively easily. In 
Nablus, the gradual removal (or significant easing) of existing checkpoints, road blocks and 
permit requirements that used to surround the c ity means that in terms of movement and 
access the Nablus economy is now more or less in a similar situation to that of other cities in the West Bank. One recent improvement in the northern West Bank was the opening of the Jalameh crossing in October on a trial basis fo r vehicles from northern Israel; this became 
official in November 2009. As regards external  movement, the situation at the commercial 
crossing points with Is rael remained unchanged in the West  Bank, with continuing significant 
delays and high costs for most traders, in part icular around Tarqumiya. The Israeli authorities 
are currently working on a pilot project to exte nd opening hours and to clarify procedures for 
the crossings. Progress was made with respect to the issue of PA-Jordanian trade relations, in 
the form of support from the European Commis sion for a Trade Corridors Facilitation project, 
which was completed in October 2009. Apart from  items regarded as ‘humanitarian’ by Israel, 
legitimate commercial trade between Gaza and th e outside world is essentially non-existent 
owing to the current Israeli blockade. Israeli obs tacles to the implementa tion of the trade part 
of the Interim Association Agreement create high er costs and delays for EU exporters and PA 
importers. The blockade also contributes to the diversion of direct EU-PA trade to indirect 
trade (via Israeli importers), which is more  costly for Palestinian economic operators. 
During the reporting period work towards establ ishing a “dispute settlement mechanism” for 
an effective resolution of trade disputes in the framework of the IAA continued. As regards 
the possibility of proceeding with  the gradual liberalisation of tr ade in agricultural and fishery 
products with the EU, the European Commissi on stands ready to examine ways of making 
better use of the current trade concession and of entering negotiations  based on the Rabat 
roadmap in due course. In September 2009, the PA submitted its application to become an 
observer in WTO and engaged in a process of consulta tions with other WTO members both in 
Geneva and locally. 
In June 2009, the PA adopted the protocol on Pan-Euro-Mediterranean cumulation of origin 
The PA customs, with EU assistance, has been implementing an automated system for 
EN 11   EN customs  data "ASYCUDA World” to enhance its operational capacity. In addition, the PA 
Government in November 2009 adopted the “Al Siyadeh" programme, aimed at introducing a 
single window approach to border manageme nt and a single file approach to revenue 
collection, with the all  tax and non-tax revenues being uni fied under a single revenue 
administration. To this end a steering committee was set up in December 2009.  
Concerning free movement of goods and technical regulations, the PA started the process 
of upgrading the quality infrastructure by fina lizing the needs assessment and formulating a 
support programme in January 2009. The need s assessment framework was approved by the 
Palestinian standardisation body. The metrology committee composed of the representatives 
of private and public sectors w ill review the law on standards and metrology and discuss plans 
to establish a separate accreditation body. The Palestinian Authority has selected 
pharmaceuticals and construction products as its pr iority sectors. An EU technical assistance 
project will begin in 2010. It will focus on sta ndards institutions, testing laboratories, and 
training in conformity as sessment and certification. 
In the sanitary and phyto-sanitary  area, during 2009, TAIEX supported the participation of 
the PA in several events and seminars on veteri nary education, animal welfare, animal health 
and food safety issues.  
The Government programme “Palestine: E nding the Occupation, Establishing the State” 
contained a number of measures to improve the overall  business climate . As a result, the 
Palestinian Authority worked during the repor ting period on a new comp any law designed to 
simplify and reduce the necessary  steps for registering a company. A consultative task force 
on company law was set up in December 2009. 
In the field of financial services , the Palestinian territories were less affected by the global 
economic and financial crisis (even though th is led to diminished remittances from 
Palestinians working abroad) than by the Gaza crisis, the ramifications of which contributed 
to undermining the public's confidence in the ba nking system in the Gaza Strip during a large 
part of the year. The lack of foreign currency, which is not allowed in by Israel, leads to an 
increase in the hoarding of fo reign currency - thereby creating a vicious circle; such practice 
also indirectly supports black ma rket activities that benefit the de facto  authorities. However, 
the Palestinian Monetary Authority has continued to regulate the Palestinian banking sector and is aiming to gradually implement the Basel II  principles for effec tive banking supervision. 
It began implementing a corporate governan ce code in February 2009. The Palestinian 
banking system saw an expansion in the numbe r of bank branches from 190 in late 2008 to 
207 by the end of 2009, which has increased public acce ss to banking services.  
Other Key Areas  
In the August 2009 programme of the 13
th government, "Palestine,  Ending the Occupation, 
Establishing the State", the PA reaffirms its objective of amending the Tax Law with a view 
to broadening the tax base, increasing inco me tax collection and improving the business 
environment. In this context, the PA also inte nds to conduct field visits and surveys in order 
to detect non-registration; closely monitor a ny request for exemption to be granted under the 
"investment promotion law"; coordinate with th e general attorney and courts on tax related 
issues; increase tax compliance of low income tax payers and modernize the tax management 
system. No progress was made on the unification of tax administ rations in the West Bank and 
Gaza Strip due to the political situation. 
EN 12   EN The draft unified law on public procurement  was further reviewed during the reporting 
period, but is currently awaiting approval by the Cabinet.  
In the area of statistics , the PA cooperated fully over th e reporting period in the regional 
working group bringing together representatives of the statistical offi ces of Egypt, Israel, 
Jordan and the PA which aims in particular  at defining a work programme to reduce 
asymmetries in the future. In the framework of the National Strategy for the Development of Statistics  2009-2013, the Palestinian Central Bureau fo r Statistics (PCBS) is closely involved 
in the current Palestinian planning efforts, especially the ongoing de velopment of monitoring 
and evaluation systems. The PCBS particip ated actively in the MEDSTAT II programme, 
which focused on institutional capacity building and ended in September 2009. 
On enterprise policy , the PA continued to implement th e Euro-Mediterranean Charter for 
Enterprise. A bilateral seminar on the Char ter was held in December 2009. The National 
Economic Policy Group, with representatives fr om both the private and public sectors, was 
created in 2009 in order to institute a nationa l policy framework via consultation. The Private 
Sector Coordination Council continued to promote public-private dialogue. However, 
monitoring of the results of the dialogue is limited. The PA c onsulted the private sector in its 
process of drafting new economic laws. A c onsultative task force was established in 
December 2009 with a view to revising company la w. The PA also starte d developing tools to 
create an enabling environment for Small and Medium Sized Enterprises (SMEs) and a review of the SME framework and the development of a policy framework was launched in 2009.  
The Palestinian Investment Promotion Authorit y established contacts w ith stakeholders to 
build a future comprehensive strategy for entrepreneurship. The Annual Best Micro- Entrepreneur Award for Palestine was institut ed in 2009. Plans for 2010 include the launching 
of the SME strategy, with th e specific aim of supporting ne w companies through business 
incubators, industrial zones and business parks,  and the holding of an investment conference 
for SMEs. On skills development, the PA will pa rticipate in the higher learning pilot project 
in 2010 which aims to spread entrepreneur ship learning across all the faculties.  
5. E
NERGY , ENVIRONMENT , TRANSPORT , RESEARCH AND DEVELOPMENT  
Due to the political situation, the provision of transport operations is mostly confined to the 
national territory. Nevertheless, the regulatory reforms of the pa st years in the road sector 
have led to the adoption of legislation on driving licences, operating licences and 
roadworthiness testing, in line with internationa l standards. In 2009, the Ministry of Transport 
updated its transport agenda, known as the Strategy for Transport Sector 2010-2012, and 
recommended measures to improve road manage ment mainly through the establishment of an 
independent roads regulator, the reduction of the impact of road traffic on the environment 
and the introduction of a number of road safe ty measures, including the re-education of 
drivers. In order to pursue this agenda, the Ministry drew up a new regulation for the Higher 
Traffic Safety Council in November 2009 and is currently reviewing its licensing activities for 
private and public transport.  
The Israeli Government's decision to re-activ ate the Joint Transport Office, as a way to 
promote transport cooperation, is  still pending. Damage in th e transport sector following 
Israeli attacks in the Gaza Strip is es timated at approximately EUR 160 million. 
EN 13   EN The occupied Palestinian territory remained heavily dependent on Israeli energy imports. In 
2009, the PA adopted the energy action plan 2009-2011.  In implementing its energy policy, 
the PA developed plans for sector reform. In 2009, the President approved an electricity law 
which will reform the Pales tinian electricity landscape, inter alia  by establishing a regulator. 
The law requires the adoption of complementary legislation, which is being drafted. On the basis of the Palestinian electricity master pl an, plans for new electricity generation capacity 
and interconnection projects were developed both for Gaza and the West Bank. Following the completion of feasibility studies, the PA prepar ed agreements for the construction of a Gaza-
Egypt link and additional West Bank-Jordan elec tricity links. With a view to implementing 
the latter interconnection, the PA  continued work on four electri city substations in the West 
Bank. Rehabilitation of electricity netw orks in the West Bank continued. 
The PA enhanced its policy to promote the us e of renewable energy sources and wants to 
increase its share of electricit y generation to 20%. It initiate d a pilot wind energy project for 
the Hebron hospital with support from the EU.  
The trilateral energy cooperation between the Palestinian Authority, Israel and the European 
Commission, which was re-launched in 2008, was st alled by the Gaza conflict. The aim is still 
to establish a joint energy office and to facilitate proj ects of common interest, such as the joint 
Israeli-Palestinian “Solar for Peace” initia tive. In 2009, an EU-funded study to support the 
“Solar for Peace” project was completed. The European Commission encouraged partners to fully re-activate the trilateral cooperation. 
In the field of climate change , a climate adaptation strategy wa s designed with the support of 
the UNDP. Some steps were taken to promote ad aptation measures in the water sector, such 
as re-use of treated effluent for agriculture purposes and constructio n of rain harvesting 
cisterns. 
The state of the environment  in the Gaza Strip remains a sour ce of serious concern. There is 
a continued need for better sewage connection,  wastewater treatment , waste collection and 
landfills, in both the Gaza Strip and the West Bank.  
In the West Bank, the construction of environm ent-related infrastruc ture did not always 
progress due to the non-issui ng of related permits by the Israeli Civil Administration. 
However some permits were released for wastew ater treatment plants in Nablus, Hebron, and 
Jenin. Some activities also took place to conn ect previously unconnected rural areas to 
drinking water supply. 
In the Gaza Strip, it is impossible to pr oceed with the reconstruction of damaged 
infrastructure or the building of new infrastruc ture due to the conti nuing restrictions on the 
import of construction materials. 
The offices of the Environmental Quality Authority (EQA) and the Palestinian Water 
Authority (PWA) in Gaza remained closed, although the EQA offices in the West Bank 
continued to operate.  
Bylaws on the management of waste water and on nature protection are in preparation. The 
EQA reviewed the PA's national environmental strategy and finalized a first draft. Work 
continued on preparing a nationa l strategy for solid waste. The PWA's Reform Action Plan 
was approved by the PA's Council of Ministers. Environment strategies and legislation still 
need to be updated.  
EN 14   EN Following an internal audit, the PWA issued a draft concept paper for capacity building. 
Reviving administrative implementation capacity remains a major challenge.  
Representatives of the PA participated in activit ies as part of the EU Water Initiative and in 
preparing a strategy for water in the Mediterranean (which failed to get approval at the recent 
ministerial meeting of the Union for the Mediterranean).  
Cooperation and information exchange took place between the European Commission and 
oPt, including on water, pollution reduction in the Mediterranean region and environmental 
reporting. 
The EU-PA environment subcommittee me t for the first time in April 2009. 
In the field of civil protection,  the PA took part in a new pha se of activities of the Euro-
Mediterranean Programme on Prevention, Prepar edness and Response to Natural and Man-
made Disasters, which was la unched in 2009, conti nuing the process of  strengthening civil 
protection activities in the regi on, enhancing capacities at regi onal, national and local levels, 
and promoting institutional cooperation. Hereby, further steps were taken to bring the PA 
closer to the European Civil Protection Mechan ism, contributing at the same time to the 
development of a civil protection culture in the region based on an integrated approach 
covering disaster prevention, preparedness and response. 
In the information society sector, the Mini stry of Telecommunications and Information 
Technology is responsible for en forcing the Telecommunications Law. The proposal to set up 
an independent Palestinian Telecommunicatio ns Regulatory Authority to that end was 
expected to be adopted in late 2009. Due to the political uncertainty it is foreseen that this 
would only be approved in 2010. 
For the fixed line market, the Palestine Telecommunications Company (Paltel) still holds a 
monopoly. Paltel's internet and da ta services are offered vi a a number of subsidiary 
companies. Local loop unbundling has still to be regulated.  
As regards the wireless markets, a second Palestinian mobile phone operator started 
operations in November 2009. The deal to allo w a second Palestinian mobile phone operator 
was spelt out in a bilateral ag reement between the PA and Isr ael in 2008. This is one of the 
largest foreign investments in the Palestinia n economy, which will inject EUR 500 million in 
investment and EUR 250 million in fiscal revenue for the PA, and create thousands of jobs. In 
order for this project to become fully operational,  a further 1 MHz of fre quencies needs still to 
be released by the Israeli author ities, so as to increase the sp ectrum currently available to the 
mobile operator from the pr esent 3.8 MHz to 4.8 MHz.  Israel has provided assurances that it 
will assign the full 4.8 Mhz fre quencies required for the company to operate successfully. 
Palestinian consumers also  use Israeli operators. 
As regards the audiovisual  sector, the Ministry of Inform ation drafted a new broadcasting 
law which imposes certain restrictions on me dia freedom. The status of this draft is 
unconfirmed. 
In the area of research and technology , the major challenges identified by the  PA are the 
lack of both a national science and technology policy a nd a system of fina ncing research. The 
existing research centres are not centres of excellence and there is a lack of cooperation 
between industries and universities. Scientific research and development is focused mostly on 
EN 15   EN energy issues (renewable resources, energy sa ving techniques, etc.). The main Palestinian 
body that is active in this area of research and development is PERC (the Palestinian Energy 
Research Centre). In 2009, the PA established a contact point for the 7th Framework 
Programme (FP7). Participation by Palestinian researchers in the calls for interest in FP7 has 
increased, but is still relatively low (43 Palestin ian applicants, of which seven are mainlisted) 
- mainly in agriculture, envir onment and ICT themes - for a contribution of about EUR 0.5 
million. 
An appropriate information st rategy to facilitate and promot e adequate participation of 
Palestinian research organisations in the R& D Framework Programmes and joint projects has 
yet be implemented. It is necessary to ensure a policy-driven dialogue in order to determine 
the particular priorities and the specific ne eds of PA. Palestinian RTD centres are also 
expected to participate in ERA-WIDE call, for which the deadline is for January 2010.  
6. PEOPLE -TO-PEOPLE CONTACTS , EDUCATION AND HEALTH  
The Ministry of Education and Higher Educ ation has begun implementing the Education 
Development Strategic Plan (EDSP) fo r the period 2008-2012, focusing on delivering 
equitable access to education  for all, enhancing the quality of education, developing capacity 
in the field of public financial management, improving the cost-effectiv eness of investment 
programmes and improving the acce ss to and quality of TVET. A consultation process with 
civil society and schools on curricula and textboo k reviews began in 2009,  while the Ministry 
prepared an evaluation of subj ect performance in schools in order to better target quality 
performance improvements. With EU financia l support considerable advances have been 
made in the implementation of the national teacher education strategy, including the identification of the role, responsibilities  and composition of the Commission for the 
Development of the Teaching Profession (CDTP) . The CDTP will provide national leadership 
on setting the standards of teaching and lear ning, enhancing the status of teachers and 
encouraging a national sense of valuing and engaging in education. In addition, a new 
monitoring and evaluation depart ment was established in the Ministry in 2009 to oversee 
monitoring activities at central , district and school/community levels and to develop 
performance assessment tools.  
The EDSP remains focused on improving access to  education and enab ling investment in 
infrastructure and equipment to meet the de mands of a growing sc hool-age population, as 
well as on the recruitment of additional teaching staff. While a significant number of reforms have been introduced to address quality issu es, implementation must remain focused on 
resource prioritization and capacity  development at all levels.  
Improving access to vocational education and training,  as well as the quality of such 
training at secondary level and tertiary levels, remains a key policy priority under the EDSP, 
alongside that of adapting traini ng provision to the needs of the labour market. The review of 
the TVET strategy has made good progress since July. An awareness campaign to increase 
student participation in voca tional training was la unched by the Ministry in summer 2009. 
Formal training remains largely limited to the traditional fields of metalwork and 
construction, with a consequent need to expa nd provision to new professions in tourism, 
business administration, health a nd pre-school education, as well as  investment in the training 
of trainers and teachers through the developmen t of in-service training. In order to improve 
work on enhancing employability, upgrading of  skills and development of the local economy, 
EN 16   EN and to optimize donor investment, there is a need to promote in terministerial coordination 
between the Ministries of labour and education and higher education. 
The Tempus programme continued to suppor t the development and reform of higher 
education with two projects selected under th e second call for proposals for Tempus IV. 
Palestinian students and sc holars benefited from scholar ships under Erasmus Mundus, 
including 56 grants for student  and academic mobility. The Mi nistry of Education and Higher 
Education organised a Tempus  information day in December, which included a video 
conference link with interested universities from  Gaza. In addition, the Ministry identified the 
introduction of the three-cycle system in line wi th the principles of the Bologna Process as a 
priority for higher education as a way to improv e university research capacity. In spite of the 
limitations on mobility imposed by the occupa tion, Palestinian universities and higher 
education institutions used Tempus IV to adva nce inter-university and regional cooperation. 
Palestinian universities are encouraged to participate in the J ean Monnet programme. 
In the area of youth,  Palestinian young people and youth orga nisations continued to benefit 
from the opportunities offered by the Youth in  Action Programme, through youth exchanges, 
voluntary service and cooperation ac tivities in non-formal education. Palestinian participation 
in Euro-Med Youth III during the period 2006-8  was given a positive evaluation in July 2009, 
while the Ministry of Youth and Sports made a policy commitment to participate fully in 
Euro-Med Youth IV. However, the national yout h policy remains weak and the capacity to 
mobilize structured investment  for youth development is hamp ered by the absence of a youth 
law. 
In terms of cooperation with civil society , the European Union's Partnership for Peace 
Programme (PfP) continued its s upport for projects that contri bute to conflict resolution and 
mutual understanding in several areas. In Fe bruary 2009, a seminar was held for European, 
Israeli and Palestinian NGOs in Ireland to enable them to learn from peace-building 
experiences before and during the Irish peace process. As in th e previous year, the European 
Commission organised eight training seminars  for NGOs to upgrade their capacities in the 
field of project cycle management and form ulation, monitoring and evaluation, as well as 
communication. However, the political situati on continues to seriously impede project 
implementation, principally because of the obstacles to free movement and access. 
In the area of culture , Palestinian organisations participated  actively at regional level in the 
new Euro-Med Heritage IV  programme. However, the Israeli decision not to allow cultural 
events to be held in East Jerusalem as the designated Arab Capital of Culture for 2009 has 
prevented the Palestinians from expressing thei r identity in the areas in which they live. 
The PA continued to implement its health  reform agenda, in particular on the basis of the 
2009 work plan under the National Health St rategic Plan 2008-2010 and the Palestinian 
Reform and Development Plan. Stakeholder cons ultations started in order to establish a 
systematic process for monitoring progress w ith the health reform agenda. There is no 
progress to be reported yet on the reform of na tional health insurance law. Managing public 
health remained problematic in 2009, because of the split between the Gaza strip and the West 
Bank, the Gaza crisis and the Isra eli restrictions on the import of goods and the movement of 
persons in and out of Gaza. L ack of access to medicines, medi cal spare parts, specialised 
medical training and certain types of special ised health care impacted heavily on the 
availability of quality services  for Palestinians in Gaza. The political and socio-economic 
situation in the territory continues to impact on the mental health of the Palestinians. The 
Palestinian Authority took measures to comb at influenza A (H1N1), including through 
EN 17   EN awareness campaigns and vaccination. In Octo ber 2009, the PA participated in the newly 
established EU enlarged health information committee. It continued participation in the 
‘Episouth’ network on communicable diseases  for the EU, Mediterranean and Balkan 
countries. 
7. FINANCIAL COOPERATION – 2009  KEY FACTS AND FIGURES  
The ENPI allocations for the Occupied Palestinian Territory for 2009 amounted to EUR 352.8 
million. Due to the continuing emergency situ ation in West Bank and Gaza there is no 
National Indicative Programme covering the period 2007-2010. Most assistance is channelled 
through the PEGASE Mechanism, which is gear ed towards supporting the achievement of key 
policy objectives as outlined in the Palestinian Reform and Development Plan (PRDP), namely 
governance, social development, economic and private sector development and public 
infrastructure. The aim of PEGASE is to enable  the Palestinian Authority to become the fully-
fledged government of a future Palestinia n state by moving away from the emergency 
assistance provided under the Temporary Implementation Mechanism towards a more strategic 
development agenda through institutional capacity-building and social and economic 
development, in support of the Government programme "Palestine: Ending the Occupation, 
Building the State".  
The EU also provided significant funds to th e United Nations Relief and Works Agency for 
Palestine Refugees in the Near East (UNRWA), which is responsible for health, education and 
social service provision to the Palestine refug ee population in West Ba nk and Gaza, as well as 
in neighbouring countries. In addition to providing EUR 66 million for UNRWA's General 
Budget, this agency allocated EUR 1 million for support to the organisation's internal reform 
plan and EUR 10 million for specific projects aime d at improving the quality of education in 
UNRWA schools. Additional support  to UNRWA was also provided,  in particular to help 
address problems caused by the Gaza crisis, including support from the Instrument for 
Stability as noted below. In  total, UNRWA in 2009 benefite d from record EU budgetary 
commitments of EUR 169.7 million. 
Implementation of the measures covered by the 2007 and 2008 financial years is underway. 
Progress is being made in the provision of infr astructure facilities for the Palestinian Civil 
Police and for significant qualitative reforms in the education sector and technical assistance 
to PA ministries which have a vital role to pl ay in state-building, such as the Ministry of 
Social Affairs, the Ministry of Finance (inc luding customs), the Ministry of Planning and 
Administrative Development and in the judici al sector. Projects aimed at reinforcing 
Palestinian schools and hospitals in East Jeru salem are also being implemented, along with 
support for the Central Elections Commission and Palestinian Central Bu reau of Statistics. 
Significant support is provided to the private sector, in particular  through the European 
Palestinian Credit Guarantee Fund. 
Direct financial support, provided through th e PEGASE mechanism, amounted to EUR 218.6 
million in 2009. Of this overall budget, EUR 150.5 million was allocated to the payment of 
salaries for civil servants and pensioners , EUR 28.5 million for social allowances to 
vulnerable Palestinian families and just unde r EUR 40 million for fuel for the Gaza Power 
Plant. In addition, EUR 10.5 million was allocated for projects in the governance and social 
development sector, EUR 18 million for infrastr ucture and EUR 22 million for assistance to 
re-launch legitimate private se ctor activity in the Gaza Strip, and EUR 4.5 million to support 
Palestinian institutions in East Jerusalem. A sum of EUR 1.5 million was also provided to 
EN 18   EN support the EXACT Initiative on regional wa ter use and the Office of the Quartet 
Representative. 
In addition to this bilateral al location, the occupied Palestinian territory continues to benefit 
from co-operation activities financed under th e ENPI multi-country and regional programmes, 
in particular the "Partnership for Peace" initiative for civil society organisations, as well as 
horizontal thematic programmes, such as the European Instrument for Democracy and Human 
Rights (EIDHR) and the DCI programmes: Non- State Actors and Local Authorities in 
Development (NSA/LA), Investing in People a nd the Food Security programme. The latter 
provided the oPt with EUR 14.48 million under it s ‘Linking Relief with Rehabilitation and 
Development’ component, divided between an  allocation of EUR 5 million for UNRWA’s 
Social Safety Net Programme and EUR 9.48 m illion currently being tendered for water and 
sanitation projects. 
Other EU Instruments supplemente d the ENPI assistance package, in particular the Instrument 
for Stability and the Food Facility, both of which provided significant sums (EUR 20 million 
and EUR 39.7 million respectively), taking account of the situation in the Gaza Strip in 
particular. The Food Facility allocation was made to UNRWA, covering 2009 and 2010. The 
Palestinian people also benefit from humanita rian assistance (of EUR 19.3 million) provided 
by DG ECHO; (the aid does not go to  the PA and also covers refugees in Jordan, Syria and 
Lebanon). A pilot project for a total of EUR 1 million was approved in order to provide 
micro-finance for beneficiaries working in the ag ricultural sector. The oPt is also eligible to 
participate in the Cross-Border Cooperati on (CBC) Mediterranean Sea basin programme 
(EUR 173.6 million for the whole programme in the period 2007-13). The priorities of the 
programme are: socio-economic development, renewable energy, cultural dialogue and local 
development.  
The EU is the largest single donor to both the PA and UNRWA and it plays a major role as a 
reliable and punctual provider of support.  In 2009, the European Commission Technical 
Assistance Office for the West Bank and Gaza St rip ensured the coordination of assistance 
activities with the PA in part icular at the level of EU Member States and has been 
instrumental in establishing a Vademecum  on EU Local Aid Co-operation in the oPt, in active 
partnership with Member States' representatives  in situ . As a result a detailed division of 
labour has been drawn up between the Europ ean Commission, the Member States and the 
Palestinian Authority which takes account of best practices adopted in the field of 
development co-operation in recent years with  different Member States and with the 
Commission being responsible for co-ordin ation in specific priority sectors. 
The EU Heads of Cooperation are developing EU s ector fiches for the focal sectors which are 
to receive EU financial assistance in the comi ng years. The proposed focal sectors for the EU 
as a whole are: security, justice, public fi nancial management, local government, health, 
education, social protection, priv ate sector development, agricu lture, water, energy, refugees, 
Jerusalem and budget support. Work is ongoing in  close cooperation with the Ministry of 
Planning and Administrative Development, which is leading the process of the development 
by the PA of 23 sector fiches which will in form the Palestinian National Plan 2011-2013 
(PNP).