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EU Releases Aid, PA on Verge of Financial Collapse
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"Today
I will announce a very substantial package of assistance to meet
basic needs," Ferrero-Waldner said. (Reuters).
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BRUSSELS,
February 27, 2006 (IslamOnline.net & News Agencies) – The
European Union was releasing on Monday, February 27, emergency aid to
the cash-strapped Palestinian Authority as an international envoy
warned that the PA would financially collapse within two weeks.
"Today
I will announce a very substantial package of assistance to meet basic
needs," European External Relations Commissioner Benita
Ferrero-Waldner told reporters, said Reuters.
The
EU funds, estimated at 120 million euros ($142 million), will include
40 million euros to pay energy bills and 64 million euros channeled
through the UN Relief and Works Agency for Palestinian refugees (UNRWA).
"In
effect we will pay electricity bills for them, direct to the utilities
concerned, including in Israel," Ferrero-Waldner said.
The
EU has also decided to unblock 17.5 million euros in funding, the only
payment that will be made directly to the PA to help pay salaries.
The
PA is dependent on foreign aid and on tax revenues collected by Israel
on its behalf to pay its 140,000 employees and keep its ministries and
institutions functioning.
The
EU, which is the biggest provider of aid to the Palestinians, and the
US have threatened to cut off of aid to the Palestinians after Hamas's
landslide election win.
Washington
has already demanded the return of $50 million in aid to prevent it
falling into Hamas's hands. Since 1993, the Palestinians have received
around $1.5 billion from Washington.
Hamas
has rejected threats of a fund cut-off as blackmail and said it would
seek assistance from Arabs and Muslims, both at the grassroots and
government levels.
Imminent
Collapse
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"Unless
a solution is found, we may be facing the financial collapse of
the PA within two weeks," warned Wolfensohn. (Reuters).
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In
a related development, international envoy James Wolfensohn warned
that the PA risks a financial collapse within two weeks.
"Unless
a solution is found, we may be facing the financial collapse of the PA
within two weeks," he said in a letter to the Quartet of
international peace mediators, a copy of which was obtained by
Reuters.
Wolfensohn,
who is expected to brief the Quartet on his finding on Wednesday,
March 1, said the caretaker Palestinian government still faced a
funding gap of $100 million this month, mainly because of Israel's
decision to withhold monthly tax revenues.
Israel
has frozen the monthly transfers of tax revenues it collects on behalf
of the Palestinian Authority, worth around $50 million.
The
projected gap in March, Wolfensohn said, will be $12 million to $70
million, despite emergency aid from the EU, the World Bank, Saudi
Arabia, Russia and Norway.
He
said the PA will need $60 million to $80 million next week to begin to
pay the February salaries of about 140,000 employees.
Wolfensohn
believes that even if the PA survives with emergency funding, a
financial crisis could ensue in the long term and fuel violence.
Unemployment
in the Palestinian territories runs high, at 22 percent with around
half of the population living in poverty. In the Gaza Strip, many
Palestinians live on an average of $2 a day.
Wolfensohn,
the former World Bank president, has urged the Quartet to develop a
long-term funding plan once a Hamas-led government is in place.
"I
know I do not need to tell each of you that the failure to pay
salaries may have wide-ranging consequences -- not only for the
Palestinian economy but also for security and stability for both the
Palestinians and the Israelis."
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