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After TIM: EU Offers A Refreshing Suggestion For Future Aid

June 29, 2007

President Mahmoud Abbas has dismissed his Hamas rivals from the Palestinian parliament. He has appointed the internationally respected and independent Salam Fayyad as Prime Minister. Together with a Hamas-free emergency cabinet, these are the moves that donor countries have been waiting for.

In spite of an international boycott of the Hamas government, aid to the Palestinians grew from about $1 billion in 2005 to more than $1.2 billion in 2006, according to UN Office for the Coordination of Humanitarian Affairs.

For the past year or so, TIM has been the favoured method of transferring money to the Palestinians, for all its apparent failings. However, even Fayyad admits that this system still allows for funds to run through to Hamas.

The Funding for Peace Coalition (FPC) has continually reported on aid siphoned off toward corruption and violence. Even with TIM, this trend has continued in the past year. And the blame cannot be laid solely at the Hamas doorstep. As a simple example, in May 2007 Israeli security services detained Khaled Shwish - one of the founders of the Fatah Al-Aqsa Martyrs' Brigades and wanted for the responsibility for the murder of 8 Israeli civilians. For years, he has received a salary from the PA as well as a vehicle.

To rub home the point, during the recent fighting in Gaza, American trained members of the Fatah Presidential Guard joined Hamas troops. "Storm" jeeps, provided by Israel and America to the PA have been pictured in the hands of Hamas fighters. And once the dust settled, all the Fatah weaponry was in Hamas hands.

TIM calls for accountability and transparency, but it does not set out to convert those principles into general practice. As the FPC has warned, donors cannot afford buy peace blindly.

The EU, USA, and Canada have now announced that they wish to find ways for aid money to flow once again directly to the Palestinian Authority (PA). The question is how.

Prior to the year of Hamas rule that decimated the already weak Palestinian institutions, reforms in the Palestinian Finance Ministry were starting to take hold. Encouragingly, the Palestinian Ma'an media network has recently reported that the EU is planning to recharge those policies.

The Palestinian finance minister, Dr Salam Fayyad, and European Commissioner Representative, John Kjaer, signed an agreement to re-launch the European Assistance to the Palestinian finance ministry. Initially the European Union will provide funding for a €4 million project to support the finance minister in ensuring that Palestinian taxpayers' money is spent efficiently and that all expenditure is accounted for according to international standards.

Is this what the Quartet is beginning to refer to as the new economic principles to drive forward the peace process? Peoples of the region must wait and see.

Meantime, western donors must learn, and learn quickly. As in previous years, much of the contributions of 2006 have either gone up in smoke (literally) or landed in the arms of their own enemies. The Fayyad / Kjaer agreement offers some small hope, although not enough on its own.

Below is the full article from the Ma'an Agency:

EU resumes aid to the Palestinian ministry of finance

Date: 11 / 06 / 2007 Time: 12:17

Bethlehem - Ma'an - The European Union announced on Monday that it is to renew economic support to the Palestinian ministry of finance.

On Monday, Palestinian finance minister, Dr Salam Fayyad, and European Commissioner Representative, John Kjaer, signed an agreement to re-launch the European Assistance to the Palestinian finance ministry.

Initially the European Union will provide funding for a €4 million project to support the finance minister in ensuring that Palestinian taxpayers' money is spent efficiently and that all expenditure is accounted for according to international standards.

The EU was formerly one of the largest financial supporters of the Palestinian finance ministry. However, following the success of the Hamas government in the January 2006 elections, the EU withdrew aid to the Palestinian government. Following the withdrawal of aid the Hamas government struggled to function and was often unable to pay employees.

The EU stated in a press release, "With the establishment of the National Unity Government and the appointment of a Minister committed both to the Quartet principles and the development of sound public financial management, the European Commission has decided to renew its assistance to the Ministry of Finance."

Dr Salam Fayyad said, "This support for the Ministry's internal audit and internal control departments will help me ensure that we work in accordance with the best international standards, and that the government can give every Palestinian taxpayer the assurance that their money is being legally and honestly spent."

Kjaer urged the EU to exert pressure on Israel to release the tax revenues owed to the Palestinians.

Although this limited resumption of aid to one ministry of the Palestinian government does not indicate a full acceptance of the Palestinian coalition, it marks a discernible change in policy of the EU.

Salam Fayyad is a non-Hamas minister and member of the Palestinian Third Way party. Hamas, the democratically-elected choice of the Palestinian people in 2006, remains listed as a terrorist organization by the EU, US and Israel, among others.


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