WRITTEN QUESTION E-1472/01

by Cristiana Muscardini (UEN) to the Commission

(18 May 2001)

Subject: Financial support for the Palestinian Authority

Following the statement by the Ambassador Pierre Schori on the situation in the Middle East and the Palestinian question, the humanitarian situation in the Palestinian territories has been arousing great interest, as has the economic crisis, which has become unacceptable.

On 26 February this year the EU decided to increase the Cash Facility fund by 60 million, paid directly to the Palestinian Authority, in addition to the 30 million already paid.

Can the Commission therefore:

1. confirm that the aid actually reached the Palestinian people in need;

2. ask for a detailed account of the aid obtained by the Palestinian Authority as a result of international cooperation;

3. ascertain that effective measures to combat corruption and promote transparency have been taken by the Palestinian Authority?

Answer given by Mr Patten on behalf of the Commission

(27 July 2001)

In the light of the worsening situation in the Palestinian territories and the continued Israeli freeze of clearance revenue transfers to the Palestinian Authority, the Commission decided on 13 December 2000, to establish a new special cash facility of 90 million - under budget line 47-100 (MEDA). A first tranche ( 30 million) of the new instrument was disbursed on 23 January 2001 in the form of a reimbursable advance.

On 13 March 2001, the Commission decided to convert the remaining 60 million of the special cash facility into direct budgetary aid. This decision intended to implement the conclusions of the General Affairs Council meeting of 26 February 2001, which called for the Union to make full use of the funds available under the special cash facility to avoid the economic and institutional collapse in the Palestinian territories. This intervention should take place in the framework of a concerted international effort - under the auspices of the Ad Hoc Liaison Committee - and subject to the Palestinian commitment to take measures, inter alia, to fight corruption and increase democratic transparency and good governance. The Commission and the Palestinian Authority signed the Addendum to the Financing Agreement on the Special Cash Facility-II transforming the latter into budgetary aid on 31 May 2001.

The above-mentioned assistance is aimed at supporting the austerity budget of the Palestinian Authority by securing expenditures such as public service salaries, social, educational, health and other core functions of the Palestinian Authority. The adoption and execution of this austerity are being monitored by the International Monitory Fund and constitute a pre-condition for the disbursement of the aid. In addition to the Union, other donors, including Norway and several Arab countries have also contributed to the budgetary support.

Furthermore, the disbursement of this budgetary aid is also subject to the adoption by the Palestinian Authority of a number of measures intended to improve financial management, increase transparency, fight corruption and ensure the effective implementation of the austerity budget. These measures range from reforms in the management of the payroll of the Palestinian Authority to the launching of the reform of the pension system.