House of Commons - International Development

Select Committee on International Development Fourth Report

4 The EU response to the Hamas election victory

The decision to create a Temporary International Mechanism

101. The decision not to fund a Hamas-led government after it was established in March 2006 led international donors to find alternative means of channelling aid directly to Palestinians, bypassing the government. Giving evidence to us, Alan Seatter explained how the European Commission had foreseen a potential crisis if Hamas won the elections and had started to consider the best way to assist under such circumstances. The Temporary International Mechanism (TIM) was proposed by the External Relations Commissioner on 9 May, approved by the Council, and subsequently by the Quartet[159] on 16 and 17 June respectively, and began operations on 26 June.[160]

102. The key objectives of the TIM are:

To relieve the current socio-economic crisis in the OPTs;
To have a quick impact on the lives of Palestinians by ensuring that essential services continue; and,
To facilitate the maximum level of support from the donor community as well as the resumption of Palestinian revenue transfers by Israel.[161]

103. Evidence from Oxfam suggests that some governments sought to limit the scope of the mechanism, against the wishes of other donors. According to diplomatic sources in the region, the United States did not wish any direct payments to be made to government workers while the UK wanted to focus only on the health sector.[162] Mr Seatter confirmed that there had been discussions among the member states and the Quartet about the scope and breadth of the proposed mechanism.[163] However it seems that EU member states were sufficiently satisfied with the outcomes of these discussions to put bilateral funding through the TIM.

104. The TIM is based on three windows:

Window I supports the provision of essential supplies and running costs for hospitals mainly through the World Bank's Emergency Services Support Programme;
Window II supports the supply of utilities—mainly fuel and primarily in Gaza;
Window III supports vulnerable Palestinians through the payment of social allowances to the poorest and to key workers in the essential services—mainly health care workers.

105. At the July 2006 G8 meeting in St Petersburg the request was made to expand assistance through the TIM as a means to address the humanitarian situation in Gaza. On 20 September the TIM mandate was expanded and extended until the end of 2006 although the TIM Management Unit told us that it would probably be needed well into 2007. The total European Commission contribution to the TIM was €104 million up to October 2006.[164] The major part of this was equally split between Windows II and III. DFID has allocated £12 million to the TIM, £6 million of which is allocated to essential health supplies and water, sanitation and power services.[165] Other member states have also made contributions. The total non-EC contribution was €87.5 million in October 2006.[166] This was the first time member states had joined such a structure established by the Commission.

The operation of the TIM

106. On our visit we met with the European Commission Office and the TIM Management Unit. We were told that Window I for emergency services—including medical supplies—had been slow to get going and by the time of our visit had only disbursed small amounts of funds. The Director of the World Bank office in Jerusalem explained that the delay in getting Window I operational was due to the need to ensure that procurement of drugs followed proper procedures: irregularities were known to have occurred under the previous Fatah government, so extra care was now being taken. Mr Seatter assured us that US$23 million, or about half the total funds for Window I, had been made available to the World Bank in August and that he expected this to be disbursed by the end of November.[167] However, in November OCHA informed us that about 100 of the basic essential drugs out of 400 were still not always available.[168] The shortage of drugs means that, even if all other aspects of the health service were functioning properly, the full range of treatments cannot be carried out. Chapter 5 explores in more detail the current situation in the health sector.

107. It is clear that there have been delays in getting Window I of the Temporary International Mechanism fully operational. We understand the need for caution in the procurement of supplies of drugs and accept that the European Commission would have faced the same problems as the World Bank if it had administered Window I. However these problems could have been anticipated and alternatives considered to ensure the continued supply of medicines. We believe that the TIM's objective of ensuring that essential services continue has not thus far been met in relation to the supply of essential drugs.

108. Window II for public utilities focuses mainly on the delivery of fuel for hospital generators, water pumps and water treatment plants in Gaza. This Window has delivered regular supplies of fuel to hospitals and public health centres since the bombing of the Gaza power plant by Israel. The fuel supplied under Window II has been purchased from Israel. Israel would normally supply about 60% of Gaza's fuel requirements. Repairs to the generator have now been made and it is hoped that it will be working at 50% capacity by the end of 2006 and full capacity by mid-January 2007.[169] Despite continued power shortages, the demand for Window II will decrease in 2007 with more power being generated in Gaza. Window II was a timely response to the bombing of the Gaza power plant. It is working well in difficult circumstances and fulfilling its objectives.

109. The TIM Management Unit reported that the first phase of Window III for payments to low income workers, essential services and social hardship cases, had been entirely funded by the EC. The second phase would be funded by contributions from member states as well. Payments under Window III were made on the basis of a list of proposed recipients provided by the Office of the President and verified by auditors. The money was being cleared through HSBC and paid out through local banks directly to the recipient's bank account or in person. The idea was to create a simple and easy to administer system. The TIM Management Unit assured us there were systems in place to ensure there were no leakages of funds to the wrong hands.[170]

110. By the end of October the TIM had made four payments to all 12,000 employees in the public health sector totalling €360; 50,000 low-income cases and 5,500 pensioners had received €270; and 40,000 social hardship cases had received an allowance of €270.[171] In total about 100,000 Palestinians had received some payment through the TIM. The average size of Palestinian families is six so the estimate is that about 600,000 Palestinians will have benefited through the TIM Window III.

111. Window III has focused on making allowances to health care workers. Other groups of civil servants are not receiving any form of income. As a result, most of the civil service has been on strike because they have not received a salary since March. In particular the public hospitals in the West Bank have been closed,[172] and in September police officers in Gaza protested against the non-payment of their salaries.[173]

112. Window III is making a useful, if limited, contribution to health care workers, social hardship cases, low income cases and pensioners. It is not a substitute for, or equal in value to, salaries or normal welfare arrangements. In the current circumstances, it is helping to meet the basic needs of some groups of people. There are many public sector workers who do not receive anything through the TIM and who are worse off as a result of the fiscal crisis facing the PA. The strikes throughout the civil service demonstrate their dissatisfaction.

THE POSSIBILITY OF INCLUDING CIVIL POLICE IN THE TIM

113. There are approximately 80,000 security sector staff in the OPTs[174] of whom about 19,000 are in the civil police.[175] We were impressed by the work being undertaken by the EU Co-ordinating Office for Palestinian Police Support (EUCOPPS) in helping to develop a civilian police service not allied to any faction in areas administered by the PA and we were disappointed that important facilities and capacity had been destroyed by Israeli military action.

114. On our visit we raised the possibility of paying allowances to the civil police through the TIM. We were told that the feasibility of this was being discussed but, at the time, there were insufficient funds to extend the TIM although further discussions would be held at the end of 2006. Rafiq Husseni, Chief of Staff to the President, expressed concerns that there were many different groups in the security sector including those who reported to the President and that these would not be eligible for TIM funds which might cause some tension between forces loyal to the President and those reporting to the PA. More recently the US and the UK have declared their intention to bolster the Office of the President and his security forces.[176] This 'pragmatic' intervention carries with it the danger of further inflaming Hamas-Fatah rivalries.

115. We recommend greater donor co-ordination to facilitate the work of the EU Co-ordinating Office for Palestinian Police Support (EU COPPS) which we believe can play an important role in developing policing skills and a non-factional approach to promoting law and order. We are also pleased that discussions are taking place between the EU and the Office of the President about the possibility of the security services being paid an allowance through the TIM. In highly inflammatory situations it is important that the civil police feel they are in a position to carry out their duties effectively and do not abuse their position because of economic hardship. However, any decision to fund the civil police, or the security forces of the Office of the President, will need to take account of the rivalry between Hamas and Fatah security forces and potential misdirection of funds to international terrorism.

REVENUES WITHHELD BY THE GOVERNMENT OF ISRAEL

116. The EU has recommended that the Government of Israel consider putting the revenues it is withholding through the TIM.[177] The Secretary of State told us that he had suggested this on his recent visit to the OPTs.[178] We have been told that the GoI is reluctant to do so because it does not believe there are sufficient guarantees that the funds will not be used for terrorist purposes. At the time of our visit, the Chief of Staff to the Palestinian President did not consider this a good idea either because the funds would be needed in future for back payments of salaries. Any decision to pay the withheld revenue through the TIM would have to be taken with the agreement of the Palestinians because it is their money. Recent talks between President Abbas and Prime Minister Olmert have raised the possibility of this happening.[179] As we have said, a way must be found to repay the revenues withheld by the Government of Israel. The Temporary International Mechanism offers one possible mechanism.

Extending the TIM

117. Discussing the future of the TIM, Alan Seatter of the European Commission told us there were funds up to the end of 2006. More resources became available in January and the EU plans to propose to the Quartet that it be extended.[180] The European Commission recognises that the Temporary International Mechanism is, and can only be, an inadequate response to the present financial crisis in the OPTs. We agree that it is a means of helping the poorest and alleviating the suffering of the Palestinian people in the short run. The problems we have identified, including the delays in getting Window I off the ground, as well as the limited number of civil servants who receive payments, will need to be addressed when the TIM is extended. In the absence of a solution to the current fiscal crisis we support the continuation of the TIM. However, we insist that it must be temporary and if it persists beyond the current year there is a very real risk that the Palestinian Authority may be fatally undermined. This would set back not only the realisation of Palestinian rights to govern themselves in the West Back and Gaza but also the prospects for peace.

159 Composed of the EU, US, Russia and the UN. Back

160 Qs 172-174 [Mr Seatter] Back

161 TIM Management Unit, Implementing donor contributions to TIM, 14 August 2006, p 5. Back

162 Ev 101 [Oxfam] Back

163 Q 174 [Mr Seatter] Back

164 Ev 79 [DFID] Back

165 Ev 75 [DFID] Back

166 TIM Management Unit, Information Documents on TIM, 8 November 2006. Back

167 Q 180 [Mr Seatter] Back

168 Q 234 [Mr Shearer] Back

169 TIM MU, TIM Window II Progress Report, November 2006. Back

170 Full details of the system can be found in TIM MU, Implementing donor contributions to the TIM. Back