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Source: United Kingdom
11 July 2007

Press Release
11 July 2007
UK leads the way in resuming direct aid for Palestinian Authority
The UK has underlined its support for the Palestinian Authority with a contribution of £3 million to allow it to begin paying off its private sector debts, Douglas Alexander, Secretary of State for International Development, announced today.

A month after Hamas’ takeover of Gaza and the establishment of a new Government by President Mahmoud Abbas, today’s announcement makes the UK one of the first countries to resume direct financial assistance to the Palestinian Authority.

Douglas Alexander said:
      "The recent conflict in Gaza has compounded the hardships faced by the millions of ordinary Palestinians in trying to live normal lives. People in Gaza need humanitarian supplies, but they also need to be able to go to work and earn money to put food on the table.
      "Helping the Palestinian Authority to pay its debts increases Palestinian companies’ ability to continue trading, and so to invest and employ more people. This will boost the economy, and demonstrates our clear support for the new Government.
      "This is only a first step. I call on other donors to step up and enable the new Government to support the Palestinian people as soon as possible.
      "The UK is working with President Abbas and Prime Minister Fayyad as they seek to make the Palestinian Authority more responsive to the urgent needs of all Palestinians. But ultimately the only way to guarantee the long term welfare of the people is for all sides to give up violence and work towards a two state solution."

Israel responded to the election of Hamas in January 2006 by withholding customs revenues owed to the Palestinian Authority, worth £30 million a month. In response to greater insecurity, Israel also increased restrictions on movement and access of goods and people. As a result, the economy contracted by around 10% in 2006. The combined effect of reduced domestic tax revenues and withholding clearance revenues was to render the Palestinian Authority bankrupt.
The Palestinian Authority was therefore unable to pay salaries or debts of around £225 million for the supply of goods and services. Firms throughout the West Bank and Gaza are struggling under these unpaid debts, holding back much needed investment and job creation.

The UK’s decision will give a much needed boost to the private sector which has suffered during the economic crisis over the last year. It also allows the Palestinian Authority to pay the salaries of public workers more easily rather than divert scarce funds to paying off the debt.

The funds will be channelled through the Palestinian Authority’s Ministry of Finance which is headed up by the new Prime Minister. An international accounting firm will ensure the money is strictly used for its intended purpose. It will check the authenticity of all unpaid invoices which the UK agrees to pay on behalf of the Palestinian Authority. Once payment has been made, the firm will undertake another audit to make sure correct procedures were followed throughout.

Fact Box
      • There are 1.3 million Palestinians living in Gaza and a further 2.5 million in the West Bank. These are known collectively as the Occupied Palestinian Territories (OPTs). 72% of children and 32% of pregnant women in Gaza suffer from anaemia (WHO April 07); 70% of the population in the OPTs are not connected to a sewerage network; 34% are food insecure (WFP Jan 07); unemployment is at 28%, with Gaza at 35% (OCHA April 07).
      • Following the election of Hamas in January 2006 the UK and EU did not stop giving aid to the Palestinians. Britain gave £30 million in 2006 – the same amount it had given in 2005 and our aid will rise to £30.6 million in 2007. Total EU aid went up from £379 million in 2005 to an estimated £472 million in 2006 – a 25% increase.
      • To avoid giving aid directly to the Hamas-led Government the European Commission set up the Temporary International Mechanism (TIM) in June 2006. This has so far channelled £188 million in aid (including £15 million from the UK) to help those living in Gaza and the West Bank. It has:
          • Paid for over 57 million litres of fuel for the Gaza Electricity Company and generators at hospitals and water installations. This has kept essential services working for 1.3 million people living in Gaza.
          • Paid allowances to help 150,000 public sector workers and the poorest Palestinians. This means that around 1 million Palestinians are in families directly benefiting from the TIM.
          • Paid for essential drugs and equipment in hospitals and primary healthcare facilities.
          • Paid for essential maintenance and repair work for water, sanitation and electricity services.
      • The international community does not recognise Hamas because it has failed to accept the three principles set out by the UN, EU, US and Russian (known as the Quartet). These are: renouncing violence, recognising the state of Israel and accepting past agreements. President Mahmoud Abbas has accepted these principles.
If you are a member of the media and would like more information please call the DFID press office on 00 44 20 7023 0620 or e-mail If you are a member of the public please contact our Public Enquiry Point on 0845 300 4100.

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