APPENDIX 6: CORRESPONDENCE WITH MINISTERS
2005
EU-PALESTINE: CO-OPERATION BEYOND DISENGAGEMENT—TOWARDS
A TWO STATE SOLUTION (13521/05)[34]
Letter from the Chairman to Rt Hon Douglas
Alexander MP, Minister for Europe, Foreign and Commonwealth Office
Thank you for your EM dated 25 October 2005 which
Sub-Committee C considered at its meeting on 3 November. The Sub-Committee
decided to hold this document under scrutiny.
The Committee considers this Communication on EU-Palestinian
co-operation beyond disengagement to be very important. We are
disappointed that the Government did not provide a fuller account
of HMGs view of the Commission's proposals, particularly the suggestions
directed specifically to the Council.
The Committee would accordingly like to know the
Government's view on the Commission's proposals that the Council:
—agree a better mechanism for co-ordination
of EU actions, reflecting the Commission proposal to act as a
"clearing house";
—confirm the objective of the negotiation of
an Association Agreement with the Palestinian Authority, as well
as a number of intermediate steps; and
—consider the creation of an EU Agency for
Reconstruction in Palestine, along the lines of the EU Agency
for Reconstruction in Kosovo?
In general, the Commission also invited the Council
to endorse the objectives and priorities set out in the Communication.
Does the Government have a view on priorities in what is a long
list of desirable actions in support of the economic and political
viability of the Palestinian Authority? Should the Member States
co-ordinate their aid according to agreed priorities?
Finally, the Sub-Committee discussed the considerable
problems of corruption plaguing the Palestinian Authority. Could
the Government give a fuller explanation of the conditionality
that will be applied to the aid? In this Communication the Commission
has proposed a very considerable increase in aid to the Palestinian
Authority. Is the Government fully satisfied that there will be
sufficient control on the use of this money?
3 November 2005
Letter from Rt Hon Douglas Alexander MP
to the Chairman
Thank you for your letter of 3 November requesting
further details about the Government's position on the above-mentioned
Commission Communication. I hope this response, which has been
agreed with the Department for International Development, provides
you with a fuller account of the points that you have raised.
1.MECHANISM FOR CO-ORDINATED EU ACTIONS-CLEARING
HOUSE
We strongly support enhanced donor co-ordination
within the Palestinian territories. DFID has seconded a senior
official to James Wolfensohn's team to work on strengthening donor
co-ordination systems. Donors and the Palestinian Authority (PA)
are now close to finalising simplified local aid co-ordination
structures. These new arrangements will focus on the four key
areas of infrastructure, governance, economic and social/humanitarian
issues. The EU will act as lead donor on governance issues.
A good mechanism to co-ordinate donor assistance
is essential. In our view, the recently established joint PA-donor
Local Aid Co-ordination Committee should undertake this clearing
house role.
2.COMMISSION'S OBJECTIVE TO COMMENCE NEGOTIATIONS
IN DUE COURSE WITH THE PALESTINIAN AUTHORITY ON AN ASSOCIATION
AGREEMENT
An Interim Association Agreement on Trade and Co-operation
between the European Commission and the Palestinian Authority
came into force on 1 July 1997. We believe that this is an important
framework to contribute to the social and economic development
of the West Bank and Gaza Strip as well as to foster closer relations
between the EU and the PA, in particular in the field of economic
co-operation. We therefore welcome the Commission's renewed efforts
to ensure the full implementation of the Agreement. We also support
the Commission's proposals to overcome difficulties faced by Palestinian
and EU producers in gaining access to their respective markets
as well as to press for full recognition of the Interim Association
Agreement by Israel.
Alongside the Interim Association Agreement; the
EU and the Palestinian Authority have agreed a European Neighbourhood
Policy (ENP) Action Plan. The inclusion of the Palestinian Authority
in the ENP reflects the political importance of the EU's relationship
with the Palestinians. The Action Plan defines the way ahead for
the next three years and covers a number of key areas for specific
action. It also builds on and reflects the existing state of relations
with the Palestinian Authority and includes commitments on the
fight against terrorism and the proliferation of weapons of mass
destruction. We believe that the approach in the Action Plan rightly
combines opportunities for closer co-operation in areas of common
interest, with a stronger desire from the EU to establish a set
of shared common values. We hope that the Action Plan will provide
support and impetus to the Palestinian Authority's own reform
programme aimed at improving governance and services for the Palestinians.
In setting out jointly agreed areas for reform, the Action Plan
will also serve as an effective tool for targeting technical assistance.
Looking towards the longer-term, we support the Commission's
ambition that upon the establishment of an independent Palestinian
State, the EU should commence negotiations on a full Association
Agreement, similar to those that have been agreed with other third
countries in the region.
3.EU AGENCY FOR RECONSTRUCTION IN PALESTINE
We think the idea of creating an EU Agency for Reconstruction
in the Palestinian territories a good one, on the basis that it
may well increase the effectiveness of development assistance.
There are risks of extra bureaucracy and duplication, which would
need to be addressed. It is particularly important that such an
Agency complements existing and proposed donor structures, works
closely with the Wolfensohn team and contains staff who are skilled
in civil policing, governance, institutional development and donor
co-ordination. It is also important that the Agency is fully in
touch with diplomatic efforts on the Middle East Peace Process
and that its structure is relatively light. Once the Commission
decides to take forward its planning for the Agency we will liaise
with it on its plans to help to ensure that our concerns are addressed.
4.PRIORITIES
It is important that EU Member States co-ordinate
their aid according to agreed priorities. Pooled and harmonised
funding arrangements within the Palestinian territories are already
beginning to develop momentum. These include the World Bank's
Reform Trust Fund, through which a number of donors including
the UK provide budget support to the PA. The EU Coordinating Office
for Palestinian Police Support (EU COPPS) brings together policing
expertise from across the EU to support the capacity development
on security. The new Infrastructure Facility should do the same
for infrastructure. It is particularly important that future donor
assistance is focused on responding to the various priorities
identified within the PA's forthcoming three-year Medium Term
Development Plan (MTDP).
We support the various economic priorities identified
in the Commission's Communication through both our provision of
budget support to the Palestinian Authority and of technical assistance:
The Government's approach is particularly centred on support for
four of the Commission's economic priorities:
—In providing specialist assistance to
the building up of Palestinian capacity in customs administration
and border controls. In particular, we are contributing to the
EU's "third party" monitoring role at the Rafah checkpoint
that will enable the direct export of Palestinian goods. The Government
fully recognises the importance of improved access, trade and
movement to Palestinian economic viability and the possibility
of successful future peace negotiations;
—To improve the management of public finances
by providing budget support (both directly through bilateral funding
and indirectly through our 18% contribution to EC funding) in
response to the Palestinian Authority's attainment of agreed financial
reform benchmarks. The purpose of the existing budget support
instrument is to support Public Financial Management reforms and
better planning and budgeting. Future European donor efforts centred
around a redesigned budget support instrument will rightly ensure
a greater focus on Palestinian identified priorities and increased
aid predictability;
—In providing support to the private sector
through supporting the domestic enabling environment for investment
and various initiatives to support domestic enterprise (for example,
the establishment of loan guarantee schemes); and
—In developing bilateral and regional trade
relations at the point of final status negotiations. In the meantime,
we along with other EU Member States will work closely with the
Commission in supporting James Wolfensohn's efforts on improving
movement, access and trade.
We will also continue to ensure that all-important
needs are covered through the Ad Hoc Liaison Committee. The Commission's
political priorities that the UK Government focuses on are:
—Improving security, as progress on Palestinian
delivery of their security commitments is crucial. The EU should
continue to work closely with the US Security Co-ordinator (General
Dayton has been appointed as successor to General Ward to lead
on the enhanced mission) and the Palestinians on this. The EU
is committed to continued and enhanced support for Palestinian
civil policing (eg through EU COPPS) in order to help build the
necessary security environment in Gaza following Israeli disengagement;
—Making public administration more effective
as it is vital that the Palestinians develop credible and effective
institutions in order to develop effective control of Gaza and
the northern West Bank. Only then will the Palestinians in these
areas enjoy a greater quality of life and the Israelis benefit
from greater security. This in turn should create an environment
where both sides can make progress on their Roadmap commitments;
and
—Addressing the refugee issue beyond immediate
humanitarian needs through our support for the current UNRWA external
review.
5.CORRUPTION ISSUES
Much of the Commission's support to the PA has been
through providing budget support through the multi-donor Reform
Trust Fund. Disbursement of funding is conditional on the achievement
of benchmarks for reform, progress against which is carefully
monitored. These conditions have helped the PA improve its financial
control and management and reflect the EU's commitment that aid
should be properly accounted for, used for the intended purposes
and represent value for money. Donors also agree that there is
a need to refocus a future Trust Fund. In order to address structural
change, the new programme will need a set of broader conditions
encompassing development planning, recurrent expenditures and
reforms that address the size and efficiency of the civil and
security services.
The European Anti-Fraud Office (OLAF) has recently
completed an investigation into alleged irregularities concerning
EC budget assistance to the PA. This investigation found no conclusive
evidence of support of armed attacks or unlawful activities financed
by EC contributions to the PA budget. However, primarily due to
the fact that audit capacity in the PA was still underdeveloped,
OLAF felt that the possibility of misuse of its budget could not
be excluded. Strengthening audit is one of the requirements under
the Reform Trust Fund.
29 November 2005
34 Communication from the Commission to the Council
and the European Parliament: EU-Palestinian cooperation beyond
disengagement-towards a two-state solution, Ref. COM (2005) 458
final, Brussels 5.10.2005. Back
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