EU: The European Commission halted direct aid to the newly-formed Hamas-led Palestinian Authority yesterday, prompting a deeper financial crisis in the territory. The EU's executive arm said it was halting the payments because the new Palestinian cabinet had not recognised Israel's right to exist or renounced the use of violence.
"For the time being, there are no payments to or through the Palestinian Authority," said a commission spokeswoman. She described the commission's policy of halting direct aid payments as one of "maximum prudence" ahead of a meeting of EU foreign ministers on Monday, when the ban on direct aid is likely to be formally agreed.
The EU is the biggest aid donor to the Palestinian Authority, providing about $600 million (€495 million) a year. Direct aid makes up just a portion of EU funding for the Palestinian territories, as much of its aid is also given out by agencies such as the UN. The commission said $36.9 million (€30.5 million) was at stake in the immediate future, but its decision would not affect humanitarian aid sent through UN relief agencies.
The Hamas-led government, led by prime minister Ismail Haniya, now faces a serious financial crisis. Last month's salaries for 140,000 Palestinian Authority employees have yet to be paid and, so far, few alternative sources of financing have emerged to take the place of EU money. Reacting to the decision to cut direct aid payments, Mr Haniya said the EU was "punishing the Palestinian people for practising their [ democratic] choice.
"This is a continuation of hasty decisions . . . that will increase the suffering of the Palestinian people and provide a cover for the Israeli occupation". Palestinian foreign minister Mahmoud al-Zahar warned the EU that the action would harm its credibility.
The EU's decision to cut direct aid comes as the Hamas leadership gave conflicting signals over its willingness to compromise over a "two-state" solution with Israel, which would imply recognition of the Jewish state.
One senior Hamas official said yesterday that Mr Haniya planned to present a proposal to the Palestinian president Mahmoud Abbas on the issue. However, senior Hamas officials later denied reports that their new government was ready for a "two-state" solution with Israel.
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