Select Committee on International Development Written Evidence

Memorandum submitted by the European Commission



  1.  European Community assistance to the Palestinians began in 1971, when the first contribution was made to the budget of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). This assistance continues to this day, with international agreements between the EC and UNRWA governing the Community contribution to UNRWA in its main fields of operation, primarily health and education.

  2.  In 1980, the European Community put forward the Venice Declaration, which expressed support for Palestinian self-determination. Support from the Community budget then began for a variety of NGO projects, in sectors such as health, agriculture, and education.

  3.  Following the signature of the Declaration of Principles (Oslo accords), a first donor conference was held in October 1993 in Washington. Donors pledged more than $2 billion to the development of the Occupied Territories.

  4.  The EC pledged

250 million in grants for the period 1994-98, in addition to long term loans from the European Investment Bank. By 1998, the Community had exceeded this initial pledge with commitments of more than

400 million in the form of grants.

  5.  At the 1998 Washington ministerial donor conference, the EC pledged a further

400 million for the period 1999 to 2003. Largely because of the current emergency needs, EC pledges of financial support have in fact been exceeded. From 1994 to the end of 2002, the European Community committed approximately

1 billion in grants, and a further

500 million in contributions to UNRWA. On top of that, bilateral EU Member State assistance is estimated to amount to

2.5 billion over the same period.

  6.  Overall relations between the European Union and the Palestinians are governed in the context of the Euro-Mediterranean Process, as set out in the Barcelona Declaration of 1995. This policy seeks to create an area of peace and stability in the region, and to foster trade and cooperation between the EU and its partner countries by creating a free-trade area by 2010. The Palestinian Authority participates in the Euro-Mediterranean partnership as a full partner. As part of the Euro-Mediterranean process, the European Union concluded an Interim Agreement on Trade and Cooperation with the Palestinian Authority in 2000. The Palestinian Authority is eligible for the Community's main financial instrument for the Euro-Mediterranean region, MEDA.

  7.  The European Commission has sought to implement its financial assistance programmes in close consultation with Member States, as well as key stakeholders in the region and the main international donors.


  8.  Since the beginning of the second Intifada in September 2000, the social, economic and health conditions of the Palestinian population have severely deteriorated. This is largely as a result of Israeli restrictions on the movement of Palestinian goods and workers within and outside of the West Bank and Gaza, introduced in response to terrorist attacks and violence. In addition, the Israeli government stopped transferring customs and taxation revenue to the Palestinian Authority in 2000.

  9.  The Palestinian economy has shrunk by almost a half over the last two years, exports have contracted by 45%, unemployment has reached a level of more than 50%, and around 60% of the population are below the poverty line of US$2/day. Increasingly, families are becoming dependent on food aid and the health of the Palestinian population continues to deteriorate, with malnutrition on the increase, in particular in the Gaza strip.

  10.  To preserve some degree of social stability by contributing to the maintenance of basic public services, law and order, and a governance structure for the future, the EC and other donors increased their financial support in response to the crisis. Like other donors, the EC shifted its much of its assistance from more long-term institution-building to badly needed humanitarian assistance, support to refugees (through UNRWA), and development assistance. The Council of the European Union, together with the European Parliament, endorsed the use of budget support in this context.

  11.  The long-term objective of EC assistance has nevertheless remained, even in times of crisis : support for the creation of an independent, democratic Palestinian state. Against that background, the Commission has tried to maintain institution building support for the PA, to continue support for civil society through regional peace projects, and to promote human rights and democracy. It also continued to provide targeted institution-building support to the Palestinian Authority through specifically designed programmes (eg supporting the reform of the judiciary or a long term strategy for health management, strengthening public finances, etc.).


  12.  From June 2001 to the end of 2002, a significant part of EC assistance was provided in the form of direct budget assistance to the Palestinian Authority. This support was directed towards securing expenditures such as public service salaries, social, educational, health and other core functions of the PA.

  13.  Specific conditions were attached to budget assistance requiring the PA to carry out concrete reform measures leading to :

    —  reinforced transparency in the PA's public finances;

    —  a consolidation of all sources of PA revenue in a single treasury account monitored by the International Monetary Fund;

    —  a freeze on public sector hiring

    —  adoption of the Law on the Independence of the Judiciary

    —  adoption of the Basic Law

    —  reinforced internal financial control

    —  strengthened external audit capacities.

  14.  These achievements have helped strengthen reform of the PA especially in the fields of public finance and expenditure control. Direct budget support thus sought to combine both emergency and long-term objectives: it responded to emergency needs by alleviating the pressure on the PA budget caused by the interruption of Israeli transfers of tax revenue and the economic effects of the crisis, while at the same time advancing the reform agenda and institution building through conditions attached to the assistance.

  15.  The impact of EC support, and in particular its assistance to the Palestinian Authority, has been recognised by the international community, most recently at the Ad Hoc Liaison Committee meeting of international donors (including the EU, US, Norway, and the World Bank) in London on 18-19 February 2003:

    "Donors and the PA noted the continued critical importance of external budget support, which had prevented a collapse of the PA and injected cash into the Palestinian economy. It has also been instrumental in supporting the PA's implementation of essential reform measures. In addition it was noted that salaries of the PA and international organisations remained one of the few stable sources of income for a broad segment of the Palestinian population, and as such were an important stabilising factor in the Palestinian economy"

  16.  The World Bank has expressed the opinion, in its report Two Years of Intifada, Closures and Palestinian Economic Crisis, February 2003, that the budget support provided during this period was one of the more effective measures taken to alleviate poverty in the Palestinian population.


  17.  Following the resumption of monthly Israeli tax transfers towards the end of 2002, the European Commission adjusted its general budgetary support programme to focus on a more tailored form of support in the form of a Reform Facility. The overall level of EC financial support is maintained, but it is linked more closely to progress in reform efforts and earmarked for specific needs identified in co-operation with the PA Ministry of Finance.

  18.  One of the needs identified is to meet the backlog of arrears, mainly to the private sector and the social security system. Many small firms, already suffering from the economic effects of the closures, have folded as a result of unpaid bills. More are at risk of bankruptcy. This has led to increased unemployment, putting further pressure on public finances. There are also arrears to the health and social security systems. This has worsened the situation with respect to poverty, and public health has deteriorated.

  19.  To mitigate these effects, the Commission established with the Palestinian Ministry of Finance a new Reform Support Instrument which consists of two elements: a Finance Facility targeted on meeting arrears to the private sector and to social expenditure, linked to reform-related conditions, and a Technical Assistance component which accompanies the reform process and assists in fulfilling the conditions.


  20.  The overall package provided by the EC for 2002 and 2003 includes support to the PA, assistance to refugees, food aid, support to the health sector, the private sector and municipalities, preparation for elections, institution building and judicial reform. This package amounts to more than half a billion Euros for 2002-03.

  21.  For 2003, the programming decisions taken earlier in the year aimed to strike a balance between short term, emergency assistance and more strategic, forward-looking development support in preparation of a future democratic Palestinian state as follows:

Short term, emergency assistance

    —  Approximately

    100 million is provided in humanitarian assistance (food aid, contributions to UNRWA, etc.)


    15million emergency support to the health sector is provided through the Emergency Services Support Programme administered by the World Bank, covering recurrent non-wage expenditure to enable the Ministry of Health to continue to offer primary health care, and secondary and tertiary hospital care.

    —  The Higher Education sector is supported with

    7million, also through the Emergency Services support programme administered by the World Bank, helping the Ministry of Education to continue to provide higher education services.

    —  The private sector will benefit from a

    15 million emergency assistance programme in the form of a revolving loan fund, helping small and medium sized enterprises in the West Bank, Gaza and East Jerusalem to survive the current crisis, with agriculture and services as target sectors.

Support to the reform efforts of the Palestinian Authority

    —  A

    90 million Reform support Instrument with two element is designed to help advance the Palestinian reform process. It consists of a technical assistance component (

    10 million) which is a flexible tool to respond to specific needs for technical assistance in support of the reform process, and a finance facility (

    80million) targeted on meeting arrears to the private sector and to social expenditure, linked to the achievement of financial reform objectives. These include : further improvements to the internal audit system in PA ministries, elimination of cash in all PA payroll transactions, progress towards modernising the pension system for PA employees.

Other measures

    —  The TEMPUS programme is extended to the West Bank and Gaza (

    2 million) with the objective of contributing to reform and modernisation of higher education systems by developing inter-university co-operation between EU countries and West Bank/Gaza.


    3 million have been earmarked for East Jerusalem to support an integrated development plan.


  22.  The EC supports specific initiatives to further the peace process, in particular through civil society and people-to-people contacts. For 2003,

10 million have been committed to the following components :

    —  EU Partnership for Peace Programme (

    7 million): support to local and international civil society initiatives which promote peace, tolerance and non-violence. The objective of this support is to contribute to rebuilding confidence within each society and between societies on both sides of the conflict. An important new strand of this programme in 2003 aims to bring some of our current individual activities together in a more comprehensive and visible initiative against violence and in support of victims of violence, on both sides of the conflict.

    —  Contribution to the development of ideas for resolving final status issues (in particular refugees and water) by providing factual/technical information and assistance to politicians and negotiators in developing solutions and strategies both on the European side and the parties in the region (

    2.5 million).

    —  Support to the verification mechanism for the road map (

    0.5 million): The roadmap, in its latest version, refers to the establishment of a formal monitoring/verification mechanism for the implementation of the roadmap. The EU, as part of the Quartet, has signalled its willingness to contribute to an implementation/verification mechanism by offering technical and/or logistical support.

  23.  In addition to the programme in support of the Middle East peace process, funding for civil society initiatives in support of human rights and democracy is also provided by the European Initiative for democracy and human rights for which Israel and West Bank/Gaza are focus areas.

September 2003

Annex 1


Estimated breakdown by Category of Expenditure 19941995 199619971998 19992000 200120022003 (1) 1994-
Humanitarian Aid—ECHO interventions
Emergency food aid, Post injury rehabilitation, Psycho-social support, Water, Electricity, Non-food humanitarian items, Shelter rehabilitation 55.359 6.656.696.75 18.226.2635.00 38.00156.9
Development assistance to PA + Palestinian NGOs
Infrastructure, Health, Environment, Technical assistance, Judiciary, Human rights, Food security, NGO co-financing, Private sector, Risk capital and interest subsidies for EIB operations, Rapid Reaction Mechanism 74.0868.7650.53 45.9261.6857.3 31.965.1998.74 49.75543.91
Support to the Palestinian Administration to help meet urgent current expenses
(including budgetary assistance as of 2000-01—subject to conditions on budgetary austerity, administrative and financial reform) 102520 250090 40100.0080.00 390
Middle East Peace Projects / People to People programme
Israel/Arab/Palestinian co-operation on government and civil society level 011.30 155.121.73 22.902.85 10.0088.88
CFSP Counter-Terrorism Programme
CFSP budget, training of PA security services by Member States agencies 000 7.2006.19 3.810.000.00 17.2
Assistance Grants Total:
89.08110.4179.53 99.7773.4785.78 169.2575.26236.59 177.751,196.89
EC Support to refugees through UNRWA
contribution to UNRWA's general fund31.8 32.934.235.3 38.538.340.24 57.2555.0057.75 421.24
Food Aid programme with UNRWA
Food assistance through Relief & social services, Health and Education programmes, cash assistance to Special Hardship Cases 158.212 11.9112.213 16.0617.1035.00 20.28160.75

UNRWA total:
46.8 50.751.356.3 74.3590.0078.03 581.99
Grants Total:
135.88 151.51125.73146.98 124.17137.08225.55 149.61326.59255.78 1,778.88
(1)  Amounts in italic have not been yet committed.

Annex 2

ProjectEU Donors LocationType and source of damages estimated DateEstimated
Loss in
share in the

1.  International Gaza Airport
Spain, Germany, Sweden
(the runway's tarmac was financed by Egypt for some 6 million Euro)
Rafah, Gaza StripThe airport was targeted three times
by helicopter shelling, high caliber mortar and tank/bulldozer intrusions: On 4 December 2001, the runway was damaged by 1-1.5 metre deep trenches of 3 metres width all along the runway (3.2km). On 15 December 2001, surveillance equipment (including the radar station and arial antenna) was destroyed and buildings (passengers, maintenance, fuel hangars) were damaged by IDF shelling. The Terminal has become impossible to utilise. On 10 January 2002, the runway suffered further destruction from bulldozers so that it has to be completely reconstructed. (Pictures available)
4 & 15 Dec
2001, 10 Jan


2.  Palestinian Broadcasting Corporation Germany, Denmark, France, European Commission Ramallah, West BankDuring the current re-occupation of Ramallah, the IDF entered the PBC's main broadcasting studios and set off explosive devices effectively destroying the whole building and all studios. Much of the equipment, such as complete recording and radio studios, control and editing rooms, was destroyed in the subsequent fire. 19 Jan 2002

3.  Palestinian Civil Police CampsEuropean Commission Gaza Strip5 camps financed by the EC in 1994-96 of the civil police, incl. construction & equipment, totally destroyed (Al-Mograga Camp, Tel Al-Hawa Camp in Gaza, Rafah Camp, Jabalia Beach Camp and Al-Twam Camp) by IDF bombing and shelling from helicopters, ships and tanks. Aug-Dec


4.  Jacir Palace Inter-Continental Hotel European Investment BankBethlehem, West Bank During the October 2001 and March 2002 occupations of Bethlehem, the IDF also occupied the Intercontinental Hotel for 10 days each time. The Hotel was used as a firing position and severely vandalised and damaged, incl guest rooms, doors and all sorts of equipment, and the renovated old palace. It is noteworthy that damages on the outside facade—which may have resulted from Palestinian shooting—only amount to some 50,000 Euros, while the inside and other damage that was definitely caused by the IDF exceeds 900,000 Euros. 19-29 Oct
2001, 8-18
March 2002


5.  Counter-Terrorism Programme, Forensic Laboratory EU: France, Greece, SwedenGaza City The laboratories and infirmary were destroyed by successive 400kg bombings on the night of 6-7 December 2001, 12 December 2001 and 13 December 2001. All construction and equipment of the labs have been completely destroyed. It is worth noting that the building was clearly identified as a civil building with red crosses and crescents. 6-7, 12 and
13 Dec 2001


6.  Gaza
France, The Netherlands, European Investment Bank Gaza Strip, south of Gaza CityInstallation site and temporary offices (offices and office equipment), financed by the Netherlands and France, were hit by IDF shelling and subsequently razed by IDF bulldozers. The IDF returned on site to finish the demolition of all buildings including temporary accomodation built by the contractor as site-offices 17-18 Sep


7.  Palestinian Central Bureau of Statistics—PCBS Germany, Sweden, European CommissionRamallah, West Bank During the night of 5-6 Dec.2001,
IDF entered the PCBS headquarters
in Ramallah, damaging and confiscating office equipment, computers, video equipment. Numerous documents have been reported destroyed or missing after
the IDF incursions. Pictures available.
5 Dec 2001

8.  Civil Police Anti-Riot GearThe Netherlands Gaza Strip and West BankDuring several Israeli air raids on Palestinian police stations in the
West Bank and Gaza Strip, most of the Dutch funded anti-riot gear of the Palestinian civil police was destroyed. This includes protective clothing, helmets, boots, handcuffs, weapon shields and weapon sticks.
the intifadah


9.  Red Crescent AmbulancesEuropean Commission/ECHO Jenin, West BankThe Red Crescent ambulance was attacked and destroyed by the IDF in Jenin on 4 March 2002, reportedly by a rifle-mounted grenade. The Head of the Red Crescent Emergency Service in Jenin, Dr. Khalil Suleiman, was killed in the assault, while two other PRCS staff were seriously wounded and burned and remain in Hospital. The ambulance was one of 6 financed by ECHO (for PRCS through ICRC) with the project ECHO/TPS/210/2000/20001 dating back to October 2000. The ambulance had been delivered to PRCS in January 2001. Both the International Committee of the Red Cross and the EU have protested this attack, which is a grave breach of the IVth Geneva Convention. 4 March


10.  Green Palestine Forestry
The NetherlandsBeit Lahia, Gaza Strip IDF bulldozers completely razed a
100 donum nursery of the Ministry of Agriculture (MoA) near Beit Lahia, which contained more than 500,000 tree seedlings, green houses, forestry equipment and irrigation infrastructure. Part of it was financed in the framework of the Dutch-funded Green Palestine Forestry project. Total material damages: 718,000 Euro of which 53,000 Euro was Dutch-funded.
3 Oct 2001

11.  UNRWA schools and clinicsEuropean Commission and Member States West BankDuring the March 2002 invasion of several West Bank refugee camps,
the IDF occupied, partially demolished and used as temporary detention centres several UNRWA schools and clinics.
March 2002

12.  Gaza Solid Waste Landfill SiteGermany Deir al-Balah, Gaza StripAn IDF operation on the landfill site caused damage to re-cultivated areas at the eastern part of the landfill. Damages include dispersal of 6000 cbm of waste material, destruction of access road, 1800 sqm of final cover and plantation, damaging of high pressure pipes. 13 Aug 2001

13.  Multisector Review ProjectEuropean Commission East-JerusalemOn 6th February 2002 at around
5.30 p.m., Israeli security forces entered the premises of the MSR's office located in Beit Hanina and arrested two employees present in the premises. They confiscated all the project files and took most of the equipments (the main server, around
7 computers and supportive items such as fax and copy machines). In addition, employees reported that the Israelis took personal belongings, including a laptop.
6 Feb 2002

14.  Schools— Construction
& Equipment
European CommissionTulkarem
& Jenin, West Bank
Two schools damaged by IDF
shelling and shooting: Parts of Khadoori school (Tulkarem governorate) have been destroyed
by IDF tank shelling on 8 May 2001. The main damages were in the fac"ade, staircases, adjacent rooms and corridors. The school has since been hit by gunfire several times, doors and equipment have been damaged. Banat Jenin School (Jenin Governorate): IDF shelling during the fall caused the destruction of 70 metres of external boundary, and all windows.
8 May 2001,
Oct 2001


15.  Peace Project— Cooperation North—Jenin: cross-border partnership of Palestinian and Israeli cities European Commission, GermanyJenin, West Bank On 2 December 2001, the bombing of the Jenin Governor's office destroyed all files and equipment of the peace project's Secretariat, which was housed inside the building of the Governor. 2 Dec 2001

16.  Municipal Infrastructure Development Project GreeceQalqilya, West Bank Throughout the town of Qalqilya, IDF incursions damaged 4 main roads funded by Greece through a World Bank programme. In total, some 1,500 metres of paved roads were damaged by tank movements and excavations, including damage to surface, sewage network, manholes and basecoarse. Dec 2001

17.  Ex-Detainess Retraining Project European CommissionRamallah, West Bank From 8 December 2001 to 25 February 2002, IDF forces occupied the project offices on Irsal Street in Ramallah in vicinity of the Presidential compound. During this period the project offices were pillaged and much of the interior (doors, desks, etc) damaged. In addition, computer equipment, laptops, fax-machines etc were apparently stolen. Dec 2001-
Feb 2002


18.  Al Bireh Upper North Sewerage and Pumping Station GermanyAl Bireh, West Bank IDF operations in October and November 2001 caused several damages to the equipments as well
as to already completed

construction work.

During the IDF occupation from 12 to 15 March 2002 as well as from 29 March to 27 April 2002, sewage pipes and manhole covers were damaged.
18 Oct-
6 Nov 2001
March-April 2002


19.  Municipal Support ProgrammeEuropean Commission Rafah, Gaza StripThe project-financed access Road at Rafah, linking Road 86 at western Rafah with the Tel Al-Sultan Area, was destroyed by repeated IDF tank incursions and bulldozer works. Jan 2002

20.  The Austrian Housing ProjectAustria Khan Younis, Gaza StripSeveral shellings and machine-gun fire from the nearby IDF position and the Israeli settlement damaged the residential building. Temporarily, up to 50% of the apartments had to be evacuated. Throughout
the intifadah


21.  Halhoul Road RehabilitationItaly Halhoul
Hebron, West Bank
IDF partially destroyed road and dug earth mounds to close access. Road still blocked and closed, inaccessible for any repair work or transport. May 2001

22.  Ain el Sultan Irrigation Scheme BelgiumJericho, West Bank IDF armoured vehicles ran over and destroyed parts of the irrigation network in Ain El Sultan near Jericho. The 300 mm PVC pipe needs to be replaced over 60 metres. Steel cover of one hydrant box needs replacement. Some 200 meters of the other 200 mm PVC pipe along line (D) needs replacement. 12 Sep 2001

23.  Jabalia Sewerage & Water Project SwedenGaza StripDamages due to IDF attacks in Beit Hanoun area. 14 Sep 2001

24.  Water Supply Jenin & Water Management Tulkarem GermanyWest BankDuring the occupation by IDF from 1 to 23 April 2002, the water supply network was damaged. Several sewage pipes were unearthed, damaged and broken. 1-23 April


25.  Al Bireh Wastewater ManagementGermany Al Bireh, West BankDuring the occupation by IDF from 29 March to 21 April 2002, sewage pipes and manhole covers were damaged by tanks and bombardment. After the withdrawal of the IDF the treatment plant had to be restarted again to stabilize the biological process. 29 March-
21 April


26.  Housing projects in Rafah and Beit Jalaa Belgium (gvt of Vlanderen)Gaza Strip and West Bank Damages by IDF plus further damages by Army after rehabilitation had occurred with full demolition.

27.  Ramallah presidential compoundFrance West BankIDF smashed, destroyed or stole radio communication equipment frequently used by the Police force working on the premises. 29 March-
18 May


28.  Bethlehem municipalityFrance, Sweden West BankDuring the siege of Bethelehem, IDF squattered the Peace Centre and destroyed much all around the city, traffic lights, Manger Square paving stones, fruits and vegetables markets, Paul VI Street. April 2002

29.  Gaza Electricity networkSweden Gaza StripA major transformer in a sub-station was punctured by exploding amunitions, the level of damages needs to be assessed by a technician from the Isreali manufacturer, the damages range from 250,000 Euros up to 1,100,000 depending if the transformer casing can be fixed or has to be fully replaced.

30.  Jenin Southern entrance roadDenmark West BankIDF tanks and heavy vehicles such as troop carriers damaged the asphalt layer plus soldiers dropped grenades into opened manholes to destroy sewage lines, however the extent of damages needs to be verified later on as access beyond the municipality boundaries is now prevented by IDF.

31.  Salfeet Wastewater ManagementGermany West BankDuring the IDF occupation in April 2002, the new engine of one of the water pumps at Al-Matwi spring (serving as water supply for Salfeet) burned out completely when its electronic devices were destroyed by IDF. 2-4 April


32.  Several municipalitiesFrance West Bank and Gaza StripThe French government supplied equipment for street lighting and traffic lights in seven major municipalities, much of this equipment was destroyed by tanks and other bulky military vehicles while manouvring.

33.  Bethlehem cultural centreFinland West BankApril 2002, during the siege of Bethlehem IDF inflicted substantial damages to the cultural center, mainly equipment and documents. April 2002

34.  Ministry of Education Finland West Bank and Gaza StripIDF incursion, damages to office equipment and computers. March-April


35.  Employment Generation Programme V GermanyGaza StripA school building in Khan Younis was damaged during a bombardment by IDF. April 2002

36.  Jabalia Ministry of Social Affairs Storehouse EC, SwedenGaza Strip The storage area was used to store World Food Programme (WFP) commodities. Despite the fact that the storage area was well marked as a WFP warehouse, the IDF proceeded to destroy the doors of the warehouse using tanks. The owner of the building witnessed dynamite sticks being placed in various parts of the building and at approximately midnight, several blasts were heard, followed by a large explosion from a projectile dropped from a helicopter. The building collapsed and everything left in it, including 413 metric tonnes of wheat flour, 107 metric tonnes of rice and 17 metric tonnes of vegetable oil, was destroyed. 30 Nov 2002
at 23.00


37.  Falamiah Integrated Agricultural Project FranceWest Bank (Qalqilya) Integrated agricultural project including roads, pumping station, reservoir and irrigation network. The Israeli wall ("security fence") cuts the access to the pumping station and different damages have been inflicted to the pipes in many different places during the construction of the wall. Therefore, it is considered that the project is partly useless and that the loss reaches around 60% of the total expenditure. 2003



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