EU Releases Aid, PA on Verge of Financial Collapse

The European Union was releasing on Monday, February 27, emergency aid to the cash-strapped Palestinian Authority as an international envoy warned that the PA would financially collapse within two weeks.

EU Releases Aid, PA on Verge of Financial Collapse

"Today I will announce a very substantial package of assistance to meet basic needs," European External Relations Commissioner Benita Ferrero-Waldner told reporters, said Reuters. The EU funds, estimated at 120 million euros ($142 million), will include 40 million euros to pay energy bills and 64 million euros channeled through the UN Relief and Works Agency for Palestinian refugees (UNRWA). "In effect we will pay electricity bills for them, direct to the utilities concerned, including in Israel," Ferrero-Waldner said.

The EU has also decided to unblock 17.5 million euros in funding, the only payment that will be made directly to the PA to help pay salaries. The PA is dependent on foreign aid and on tax revenues collected by Israel on its behalf to pay its 140,000 employees and keep its ministries and institutions functioning.

The EU, which is the biggest provider of aid to the Palestinians, and the US have threatened to cut off of aid to the Palestinians after Hamas's landslide election win. Washington has already demanded the return of $50 million in aid to prevent it falling into Hamas's hands. Since 1993, the Palestinians have received around $1.5 billion from Washington.

Hamas has rejected threats of a fund cut-off as blackmail and said it would seek assistance from Arabs and Muslims, both at the grassroots and government levels.

Imminent Collapse

In a related development, international envoy James Wolfensohn warned that the PA risks a financial collapse within two weeks. "Unless a solution is found, we may be facing the financial collapse of the PA within two weeks," he said in a letter to the Quartet of international peace mediators, a copy of which was obtained by Reuters.

Wolfensohn, who is expected to brief the Quartet on his finding on Wednesday, March 1, said the caretaker Palestinian government still faced a funding gap of $100 million this month, mainly because of Israel's decision to withhold monthly tax revenues.

Israel has frozen the monthly transfers of tax revenues it collects on behalf of the Palestinian Authority, worth around $50 million. The projected gap in March, Wolfensohn said, will be $12 million to $70 million, despite emergency aid from the EU, the World Bank, Saudi Arabia, Russia and Norway.

He said the PA will need $60 million to $80 million next week to begin to pay the February salaries of about 140,000 employees. Wolfensohn believes that even if the PA survives with emergency funding, a financial crisis could ensue in the long term and fuel violence.

Unemployment in the Palestinian territories runs high, at 22 percent with around half of the population living in poverty. In the Gaza Strip, many Palestinians live on an average of $2 a day. Wolfensohn, the former World Bank president, has urged the Quartet to develop a long-term funding plan once a Hamas-led government is in place.

"I know I do not need to tell each of you that the failure to pay salaries may have wide-ranging consequences -- not only for the Palestinian economy but also for security and stability for both the Palestinians and the Israelis."

 

Last Mod: 20 Eylül 2018, 18:16
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