Middle East: The cash-strapped Palestinian Authority received an injection of $100 million from the Arab League and Saudi Arabia this week, but a promised €100 million from the EU remains stuck in the pipeline.
Sources in Gaza warn that the European aid, when it does come, may prove impossible to administer.
The Arab aid was transferred directly to the office of President Mahmoud Abbas, bypassing the Hamas-led government because it failed to meet conditions for lifting the boycott set by the European Union, the United Nations, the United States and Russia.
The EU, which donated $626.5 million in 2005 to the Palestinian Authority, and the US, which contributed $400 million, suspended their financial assistance following the election victory by Hamas in January, effectively bankrupting the authority.
Fearing a major economic meltdown, the EU has since established a Temporary International Mechanism (TIM) to operate from July to September. This aims to prevent the collapse of infrastructure built with European funds over the past decade and alleviate suffering.
Under the TIM, some €40 million has been allocated to maintain the health service by providing equipment, supplies and allowances (not salaries) to health workers. A similar amount has been set aside to pay Israel for fuel, power and water sold to the Palestinians. The remainder is to be distributed to the poor.
However, an informed European diplomatic source has dismissed the TIM. "It won't work," he said. "The Palestinian Authority will find it difficult to agree to pay health workers but not teachers and policemen who may also be in dire straits."
He said that Israel should receive no part of the money because it is holding more than $250 million in tax and tariff revenues collected since February on behalf of the Palestinian Authority. Instead of taking a portion of the EU donation, Israel should deduct from this sum the amount the Palestinians owe Israeli firms.
Both the EU and the US have asked Israel to transfer this money, which belongs to the authority. By refusing to do so, diplomats say, Israel is in breach of the 1996 economic accord reached with the authority.
The source points out that it will be very difficult to decide who should receive welfare payments. As well, after recipients have been identified, many of them will not be able to cash cheques because they do not have bank accounts.
At present, the UN Relief and Works Agency, which looks after Palestinian refugees, is providing rations and other assistance to 900,000 people in Gaza out of a population of 1.4 million. But the World Bank, which was supposed to disburse the money, has said that it is not willing to take on distribution to individuals.
In the source's view, the scheme will not work. It had been designed to "take Israel and the US off the hook," he said. "When the TIM fails, Europe will take the blame."
Brussels is dispatching a team (whose members are to be paid €1,000 a day) to monitor the scheme, including the vetting of candidates for assistance in the health sector and among the poor. Background checks will be carried out to determine that recipients have no Hamas connections. This will cause payment delays and means that the TIM could become a means of bolstering Hamas's rival, the secular Fatah movement.
Palestinians have been angered by Europe's refusal to criticise Israel over its escalating military offensive in Gaza. One reason put forward for European "passivity" is its desire to patch up the transatlantic rift caused by the US war on Iraq. A second is European determination not to antagonise Israel and the US.