EU Package For Palestinians As Israel Tax Transfers Re-Start

by Lorys Charalambous, Tax-News.com, Cyprus

06 May 2003

The European Commission has announced a 90m euro "Reform Support Instrument" to assist the Palestinian Authority under its new Prime Minister Mahmoud Abbas in addressing the reform agenda outlined in the Road Map on the Middle East Peace Process.

Previously, the EU had been paying 10m euros a month to support the Authority after Israel suspended transfers of tax in October 2000. The transfers have now been re-started, allowing the EU to direct its largesse elsewhere. Most of the monthly 10 million euros had been devoted to paying the salaries of 120,000 civil servants.

The new Reform Support Instrument is composed of an €80 million finance facility targeted on the payment of arrears to small enterprises and social services and €10 million for technical assistance to facilitate implementation of reforms of public finance.

Commissioner for External Relations, Chris Patten said: "Our Direct Budgetary support has been a success: it has helped maintain the PA as a viable interlocutor for future negotiations, it made possible the provision of a basic minimum of social services to the Palestinian population, and since it has been made available only on strict conditions, it has been a lever to encourage important reforms to improve standards of governance, above all transparency and accountability in management of public finances. Now, Israel's resumption of tax transfers allows us to change the form of our assistance - but our objectives remain the same: a stronger PA administration, better conditions for the Palestinian people and a continuing process of reform."

In February, the European Anti-Fraud Office launched an investigation into allegations that EU money had ended up in the hands of Palestinian extremists. At a press conference, Chris Patten's spokeswoman, Emma Udwin, denied emphatically that the change in funding was linked to the investigation.

Recommended