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Session 2003 - 04
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European Standing Committee B Debates

Support for Occupied Palestinian Territories

European Standing Committee B

Tuesday 11 May 2004

[Mr. Kevin Hughes in the Chair]

Support for Occupied Palestinian Territories

2 pm

The Secretary of State for International Development (Hilary Benn): I welcome the opportunity to discuss the European Commission's support for Palestinian development and the middle east peace process. The United Kingdom very much values the EC's assistance to the Palestinians, 19 per cent. of which is attributed to the Department for International Development budget.

The document to which the motion refers is an amendment to European Council regulation No. 1734/94 on financial and technical co-operation with the occupied Palestinian territories. As hon. Members will be aware, following the Oslo accords in 1994 the Commission decided, in the light of the political situation in the middle east, to establish a specific budget line to aid the west bank and Gaza strip to achieve the sustainable economic, political and social development needed for the creation of an independent, democratic and viable Palestinian state. That is part of a wider package of Commission assistance to Palestinians, which includes funding from the MEDA programme, contributions to the United Nations Relief and Works Agency and humanitarian assistance and funding from various other budget lines.

There are several reasons why the regulation needs to be amended, all of which are technical. First, it must be brought into line with the recently revised MEDA and financial regulations. Secondly, as amended, it allows for decisions about programming to be made as circumstances permit, rather than on the basis of five-year programming as originally envisaged. The constantly changing situation in the Palestinian territory has made five-year programming impractical. In addition, the amended regulation requires the European Commission to provide a report reviewing the regulation before the end of December 2005, taking into account recent developments. Continuation of support is needed to further advance Palestinian reform and to make the most of the opportunity that Prime Minister Sharon's proposal to withdraw from Gaza could represent.

I should like to deal with the current situation in the Palestinian territory. Violent conflict has resulted in trauma on both sides. Since the start of the second intifada, more than 900 Israelis and more than 3,000 Palestinians have died. The costs have weighed particularly heavily on Palestinians, because the Israeli Government have imposed tight restrictions on the freedom of movement of both Palestinian goods and people. Closures and checkpoints, together with the

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expansion of settlements and the construction of the separation barrier on Palestinian land, have led to many Palestinians losing access to their livelihoods and basic services.

Over the past three years, poverty levels in the Palestinian territory have tripled. About 60 per cent. of Palestinians are living in poverty on less than $2 a day. Malnutrition rates have increased and many families are dependent on food aid. Average income levels are not yet comparable to those of the world's poorest countries, but some social indicators are.

According to the World Bank, the biggest obstacle to economic revival is lack of freedom of movement of goods and people. To improve this terrible humanitarian situation there needs to be an end to violence, closures and the occupation, so that the Palestinian economy can grow again. However, for that to happen there needs to be a resumption of trust and negotiations between the two parties.

One of the purposes of UK and EU aid to the Palestinians is to support Palestinian institution building and reform. Even at times of crisis, both the UK and the Commission have tried to maintain a balance between alleviating immediate human suffering through emergency measures and maintaining long-term capacity building of Palestinian institutions. Whatever criticisms there may be in some quarters of the European approach to the dispute, it is clear that its development assistance has sustained institutions that should one day form the basis for a reformed Palestinian government.

The Palestinian Authority has now delivered on the commitments that it made only a year and a half ago to the Palestinian legislative council. There are no more cash payments to Palestinian security personnel, which is a big step forward. There is a functioning office of the Prime Minister. The PA's budget is now published online. When the Israeli Government decided to withhold tax revenues owed to the PA, which were worth about 60 per cent. of the PA's budget, the EC's provision of budget support maintained basic Palestinian social services, prevented the collapse of the Palestinian economy and helped to maintain the PA as a viable entity.

Furthermore, as a recent European parliamentary working group inquiry found, the EC's use of conditions on budget support has encouraged reforms and improved standards of governance and transparency of Palestinian public finances. There is now a high degree of accountability with transparent budget procedures. There are lessons to be learned from the EC's approach, including the fact that, despite conflict, occupation and restrictions on movement, there can still be effective development assistance.

The accusation has from time to time been made that funding intended to promote reform and sustain some sort of service provision in the Palestinian territory has funded terrorism. However, each allegation has been taken very seriously and investigated thoroughly and, so far, none has been proved. Of course, the UK and the EC deplore violence, and we have vocally condemned the

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Palestinian suicide bombings. We are also critical of heavy-handed Israeli military action in breach of international law, which destroys lives, homes and livelihoods. It has also damaged many projects funded by the EU.

The recent International Development Committee inquiry and the letter from the Chairman of the Select Committee to the European Scrutiny Committee raised that issue and the matter of compensation. The EC maintains an audit of damage to projects financed by the EC and member states caused by Israeli security measures. The EC could try to seek compensation, although that could be difficult legally if the assets had passed to the PA when they were destroyed, as is almost always the case. There is therefore a need to be realistic and to engage in activities that are more likely to bring about benefit to Palestinians. So far, compensation has been paid on only one occasion.

As for seeking guarantees that infrastructure will not be damaged, I am not convinced that that would lead to much more protection; having said that, if the Israeli withdrawal from Gaza goes ahead, the EU may well want to look into seeking guarantees that infrastructure into which investment has been made will not be destroyed again.

In addition to providing aid, the Commission has a role in supporting the EU in participating in the Quartet and the international taskforce on Palestinian reform; in monitoring and supporting the implementation of Palestinian civil reforms; and in guiding the international donor community in its support of Palestinian reform. In summary, although there is always room for improvement, we are confident that the EC spends its development assistance to Palestinians wisely, that there is scope for development assistance to contribute not only to improving ordinary Palestinians' lives in the short term but to advancing the peace process, and that there is need for continued support.

I now come to the future and the possible Israeli withdrawal from Gaza. Prime Minister Sharon's withdrawal plan presents both opportunities and risks for the peace process. Quite how that process will develop following the Likud referendum is not yet clear. However, we welcome the withdrawal of settlers and the Israeli defence forces from Gaza. Such a plan could offer a real opportunity to get back to the implementation of the road map. That is why the UK and the EU have urged the Palestinian Authority to react positively to this initiative, and to begin to take the necessary steps so that it can take full responsibility for law and order for Gaza after Israeli withdrawal.

We are also pressing Israel to co-ordinate the withdrawal from Gaza with the Palestinian Authority, and to extend the plans for evacuation of settlements and the IDF to the west bank. A ''Gaza first and last'' policy will not provide the basis for lasting peace. As hon. Members will be aware, we are at a critical juncture in the process. We all have a stake in the peace process, and the Palestinian Authority will need support in the period after withdrawal, if it occurs—especially in the areas of law and order and further

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security sector reform. Now is not the time to stop aiding the Palestinians in achieving sustainable economic, political and social development.

The task now is to try to create a virtuous circle of stability and prosperity, with Israeli withdrawal; Palestinians taking responsibility for law and order; economic regeneration following the easing of movement restrictions; and people's lives improving as confidence in the process builds. There really are no credible alternatives to the outcome that most of the world wants, which is two states living side by side in peace, security and harmony.

Success matters now more than ever because the clock is ticking for a two-state solution. Lack of international engagement or maintaining the status quo are simply not options in the current circumstances. The EU has a vital role to play in helping to make that happen, including through development assistance provided by the European Commission, which is the subject of today's debate.

The Chairman: We now have until 3 o'clock for questions to the Secretary of State. I remind the Committee that questions should be brief and asked one at a time. There is likely to be ample opportunity for all Committee members to ask several questions; I remind them that questions during the debate should relate to the objectives and effectiveness of EU assistance to the occupied territories of the west bank and Gaza strip. Questions and debate on the broader issues around the Arab-Israeli conflict will not be allowed.


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