EU demands "transparency" in Palestinian finances

Apr 11, 2007, 9:59 GMT

Brussels - The European Union on Wednesday vowed to help streamline Palestinian finances but said it had no immediate plans to resume direct aid to the Palestinian unity government.

'We are looking for accountability and transparency from the Palestinian ministry of finance,' EU external relations commissioner Benita Ferrero-Waldner said at a joint press briefing with Palestinian finance chief Salam Fayad.

Ferrero-Waldner said the EU was ready to provide technical assistance to Fayad's ministry to ensure financial rules and regulations complied with international standards.

But a 'possible EU re-engagement' of with the Palestinian government, including a resumption of direct assistance, would not occur 'overnight,' she cautioned.

Fayad told reporters his department was making progress in consolidating its grip on Palestinian finances but said current foreign aid to the territories only covered 25 per cent of needs.

'We are looking for external assistance to bridge the gap of nearly one billion euros for 2007,' said Fayad, adding: 'This is a very difficult time for Palestinian people.'

The EU - and other international donors including the United States - froze all direct assistance to the Palestinian Authority last year following the formation of a Hamas-led government.

Hamas is classified as terrorist organization by both the EU and the US. Both Brussels and Washington have said direct aid to the PA will only resume once Hamas recognizes Israel, renounces violence and agrees to abide by past treaties.

Ferrero-Waldner insisted on Wednesday that the EU remained committed to the three conditions but said the bloc was ready to cooperate with non-Hamas ministers like Fayad in the new unity government who were working for 'peace through peaceful means.'

Fayad told reporters, however, that the platform of the new unity government - including Hamas and Fatah members - included a commitment to abide by all agreements entered into by the Palestine Liberation Organization.

'I am hopeful that the world will look at this position and meet us half way,' said Fayad.

Despite the freeze in direct aid to the Palestinian government, the EU has been channelling humanitarian assistance to the territories through non-governmental bodies.

The aid includes direct payments to vulnerable Palestinians and help for the health sector and the provision of basic services.