EU to support reform of Palestinian Authority with new forms of aid
http://www.ipc.gov.ps/ipc_e/ipc_e-1/e_News/news2003/news2003-04/news-103.htm
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[Official arm of the PA]

Brussels, April 30, 2003

EU to support reform of Palestinian Authority with new forms of aid

The European Commission is announcing new forms of assistance to support the
reform process in the Palestinian Authority.

These will be available to the new government formed by Prime Minister
Mahmoud Abbas and will also help address the reform agenda outlined in the
Road Map on the Middle East Peace Process.

The new Reform Support Instrument is composed of an 80 million EURO
finance facility targeted on the payment of arrears to small enterprises and
social services and

+10million for technical assistance to facilitate implementation of reforms
of public finance.

These new instruments are being introduced in order to build on the
achievements of previous support for Palestinian reforms, taking into
account the Government of Israel's resumption of tax transfers which were
withheld from September 2000 to October 2002.

The current system of monthly payments of Direct Budgetary Assistance will
be discontinued.

Commissioner for External Relations, Chris Patten said: "Our Direct
Budgetary support has been a success: it has helped maintain the PA as a
viable interlocutor for future negotiations, it made possible the provision
of a basic minimum of social services to the Palestinian population, and
since it has been made available only on strict conditions, it has been a
lever to encourage important reforms to improve standards of governance,
above all transparency and accountability in management of public finances.
Now, Israel's resumption of tax transfers allows us to change the form of
our assistance - but our objectives remain the same: a stronger PA
administration, better conditions for the Palestinian people and a
continuing process of reform."

What is the new Reform Support Instrument?

Unlike the old system, in which EU budgetary support was paid into the PA
Single Treasury account for general budget expenditure to support the core
activities of the administration, the new assistance will be targeted
support, focussing on the private sector and social services. The funds will
be used to help the PA pay off arrears in these areas to Small and
Medium-sized Enterprises and the social services. In combination with the
closure policy, unpaid bills to the private sector have led to the weakening
of businesses, contributing to higher unemployment levels. Arrears to the
social sector have weakened public health provision, and increased overall
poverty among the Palestinian population. Helping the PA to pay off its
arrears in these areas will benefit the economy, by reducing pressure on
enterprises that have been starved of money due to them, and will help boost
basic social services, in particular health.

The new Reform Support Instrument will be paid in addition to a range of
other forms of assistance. Taken together, the level of assistance foreseen
for the Palestinian Territories in 2003 will be ^245million, roughly in line
with the level of aid in 2002. This figure includes ^57.75 million for
UNRWA, ^25 million in Humanitarian assistance and ^20 million in Food
aid/food security.

Other key elements of assistance this year will be:

+22 million for the Emergency Service Support Programme

Following on the successful implementation of the first emergency services
support project (ESSP I), the Commission has approved ^ 22 million for a
second project ESSP II to be implemented through a trust fund agreement with
the World Bank. Its objective is to mitigate the deterioration of health and
higher education services resulting from the ongoing conflict.

+15 million Emergency Support to the Private Sector in the West Bank, Gaza
and East Jerusalem

Building on the experience developed from two similar projects approved last
year, the Commission has also agreed to provide another ^ 15 million in
order to assist in the recovery of the private sector in the West Bank, Gaza
and East Jerusalem which has been facing an extremely difficult situation.
This decision will provide for a capital fund, in the form of a revolving
fund, to address the most urgent financial needs of Palestinian SMEs.

+2 million for the Tempus programme

This will enable Tempus to be extended to the Palestinian higher education
institutions, as already is the case for the other Euro-Mediterranean
partners. The objective is to reform and modernise higher education systems
by developing inter-university co-operation between EU countries and
eligible countries.

Also programmed for 2003:

+10 million for the Middle East Peace Process

The Middle East Peace Projects (MEPP) 2003 will provide funding to
strengthen civil society in the Middle East, in particular to support those
groups in both Israeli and Palestinian society who seek to maintain dialogue
and work for peace. It will also be made available for an initiative to
combat violence and support the victims of violence on both sides of the
conflict.

+3 million for East Jerusalem

This will support initiatives for East Jerusalem, still to be identified.

http://europa.eu.int/comm/external_relations/med_mideast/intro/index.htm

http://europa.eu.int/comm/external_relations/mepp/index.htm