EU boosts Palestinian ties by meeting finance chief (Roundup)

By Shada Islam Apr 11, 2007, 11:11 GMT

Brussels - The European Union on Wednesday vowed to help streamline Palestinian finances, boosting the international credentials of the new Palestinian unity government which includes the militant Hamas group and the moderate Fatah movement.

The EU pledge, made to Palestinian Finance Minister Salam Fayad in talks in Brussels, also paves the way for a slow resumption of direct aid to the beleaguered Palestinian Authority.

Following up a decision by EU foreign ministers last month to open contacts with non-Hamas members of the new Palestinian government, Ferrero-Waldner said Fayad - a well-respected technocrat - was a 'long and valued partner.'

Ferrero-Waldner said the EU continued to demand that the new Palestinian government must recognize Israel, renounce violence and abide by past peace treaties.

But a 'further factor is the words and actions of the government and ministers,' she underlined.

The commissioner said she was also ready to meet Palestinian Foreign Minister Ziad Abu Amr and Information Minister Mustafa Barghouti. The bloc has long maintained contacts with Palestinian Authority President Mahmoud Abbas.

Fayad told reporters the platform of the new unity government 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, adding: 'We do not think of the government in terms of ministers, we work as one team.'

The EU decision to open talks with some members of the Palestinian cabinet has been criticized by the Israeli government and some Palestinian ministers who say the bloc must not discriminate against Hamas.

Hamas, however, is on an EU blacklist of international terrorist organizations. The bloc cut off all direct aid to the Palestinian Authority last year after the formation of a Hamas-led government.

However, Ferrero-Waldner said the EU was now ready to help the Palestinian finance minister - 'who wants peace by peaceful means' - to put his house in order.

'We are looking for accountability and transparency from the Palestinian ministry of finance,' Ferrero-Waldner said at a joint press briefing with Fayad.

The EU was ready to provide the Palestinian finance ministry with technical assistance to ensure financial rules and regulations complied with international standards, said Ferrero-Waldner.

Current EU humanitarian aid flows to the Palestinians through the so-called 'temporary international mechanism' which pays out funds to poor Palestinians and provides finances for health and other basic services would also continue, she said.

But a 'possible EU re-engagement' 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.'

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.

The EU move to open talks with Fayad and others is in recognition of what diplomats view as 'some progress' made by the Fatah-Hamas government in meeting western demands.

While the Palestinian government has not explicitly recognized Israel, its decision to abide by past agreements signal 'implicit recognition' of the Jewish state, some some EU diplomats.

The EU has cautioned, however, that in addition to political conditions attached to a resumption of direct aid to the Palestinian Authority, aid flows can only restart once the government improves existing financial structures.

'We will not shirk our responsibility...but we need assistance to get on our feet,' said Fayad.