EU to resume direct aid to new Palestinian government

Israel was urged by the E.U. to restore the transfer of tax revenue to West Bank administration and the Euro Union said Monday it will resume direct aid to the new Palestinian government of Prime Minister Salam Fayyad.

Reacting to a dramatic new situation in the Middle East, EU foreign policy chief Javier Solana said the 27-nation bloc will resume direct aid that was frozen more than a year ago after the stridently anti-Israel Hamas movement came to power.

Solana said the EU planned to deliver aid for Palestinians in the Gaza Strip through the United Nations or an existing temporary program that bypasses the Hamas leadership there.

The bloc, however, will continue to try to isolate Hamas, which seized control of the Gaza Strip last week, prompting Palestinian President Mahmoud Abbas to dissolve the Hamas-Fatah unity government and establish a new, Fatah-led administration to govern the West Bank.

"In order to help the Palestinian people in Gaza, we will need some mechanism that cannot be a direct support" given that Hamas is sworn to destroy the Jewish state, Solana said on arrival at an EU foreign ministers meeting.

EU External Relations Commissioner Benita Ferrero-Waldner said aid to Fayyad's West Bank government can only be given if it commits to sound bookkeeping. There was no immediate word on when the EU assistance would resume.

German Foreign Minister Frank-Walter Steinmeier, the meeting's chairman, criticized Hamas for last week's violent takeover of the Gaza Strip, which left the Palestinians physically divided and under rival leaderships.

"I think that it is mainly to Hamas that we have to look when we have to point the finger at someone," Steinmeier said.

The Gaza-West Bank division has complicated matters for the EU, the Palestinians' largest source of foreign aid - about Ђ1 billion a year.

The Europeans side with the Fatah movement, calling Abbas the president of all Palestinians. Yet the humanitarian conditions in the Gaza - now ruled by Islamic Hamas, a group sworn to destroy Israel - are more dire than in the West Bank. Each territory is home to an estimated 1.5 million Palestinians.

"As far as Gaza is concerned we have to continue helping the Palestinian people," said Solana. "We cannot let them down at this moment."

The EU foreign ministers were to meet Monday with Israeli Foreign Minister Tzipi Livni. That meeting was planned long before last week's power grab by Hamas.

Ferrero-Waldner said the EU will ask that Israel release to the West Bank government taxes it has collected on trade in and out of Palestinian areas. She estimated that to total some US$850 million (EUR638.43 million).

Direct international aid from the EU, the U.S. and others evaporated in March 2006 after Hamas won parliamentary elections. Both the EU and the U.S. consider Hamas a terrorist organization. Even when it formed a coalition government with the more moderate Fatah last March, Brussels and Washington would not resume direct aid.

Fayyad was finance minister of the national unity government that collapsed last week.

He has created a Palestinian account to receive funds that bypass an international boycott of Hamas. To date only Saudi Arabia, Qatar and Norway have put money into that account

When the EU withheld aid for the Palestinian government in 2006 it established a temporary program, overseen by the World Bank, that makes regular cash payments to destitute Palestinians, including civil servants who went unpaid as the Hamas government coffers ran dry, and provides funds for fuel for hospitals and power plants.

Officials said that temporary program may be continued for Gaza Palestinians.

Under the so-called Temporary International Mechanism, the EU and its 27 member states have contributed almost EUR700 million (US$916 million) in aid for Palestinians in addition to payments through U.N. relief agencies.

In the first half of 2007 alone, EU aid through the TIM totaled EUR320 million (US$426 million).