EU appeals to US, UN, Russia to create international fund for Palestinians

The EU - the largest source of aid for the Palestinians - has prepared an emergency package of Ђ34 million (about US$43 million) for education and health care it would like to see disbursed through the proposed fund, said EU External Relations Commissioner Benita Ferrero-Waldner.

It would be jointly run by the EU, the US, Russia and the UN, who form the so-called Quartet of four sponsors of the Middle East 'road map' to peace plan.

Ferrero-Waldner said it would enable the international community to continue not having direct contact with Hamas - which the EU and the United States consider a terrorist organization - while ensuring that aid continues to flow to ease the dire living conditions of the Palestinian people.

The fund, she told reporters, "could be used maybe also by Arab and other donors. And even also by Israel," as there will be guarantees "aid does not go to Hamas."

The United States and the EU have cut their direct assistance to the Palestinian Authority. This has greatly aggravated the already desperate financial plight of the Palestinian government.

Additionally, Palestinian banks have shied away from handling aid funds from the United States, fearful the U.S. government will see that as a breach of its policy not to have any dealings with the Palestinian Authority.

Ferrero-Waldner said the main causes for the dire financial situation of the Palestinians were Israel's decision to halt transfers of import taxes it collects on behalf of the Palestinian Authority and the refusal of the Hamas government to commit to peace.

The tax transfers that now do not reach the Palestinian Authority total some US$50 million (Ђ40.5 million) a month.

Ferrero-Waldner left Friday for Egypt to discuss the EU plan for an international aid fund with President Hosni Mubarak and senior members of his government. After that she will go to New York for a Quartet meeting next week.

She said the EU proposed no role for Palestinian President Mahmoud Abbas in the distribution of aid from the proposed fund but is keen to use him "as a liaison" to keep up pressure on the Hamas government to recognize Israel and renounce violence.

The EU and its 25 member states are the biggest donors of aid to the Palestinians, granting some Ђ500 million (US$634 million) a year in all manner of aid. Half of that comes from the EU budget, according to the AP.

Since the emergence of a Hamas government, the EU has studied various options with a view to continuing aid without dealing with the Hamas government. It has concluded that that is very difficult.

In a recent report, the European Commission predicted a crisis in the Palestinian territories in the next two to three months, including "greatly increased unemployment and poverty levels, and possibly the breakdown of law and order."

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