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Source: European Commission	17 July 2003

IP/03/1040 - Brussels, 17 July 2003

Following the recent positive developments in the Palestinian Territories and the withdrawal of IDF forces from parts of the Gaza Strip and Bethlehem, the European Commission is urgently delivering a €100 million package of financial assistance to support the implementation of the Road Map for Peace. A €30 million emergency programme to rebuild essential services will have an immediate effect on the daily lives of the Palestinian population. €40 million from the new Reform Support Instrument(1) will boost the economy by paying Palestinian Authority arrears to Small and Medium sized Enterprises. A total of €30 million in loans for SMEs will help relaunch this sector and create employment. Total assistance from the European Community budget for supporting the reform process and providing humanitarian aid to the Palestinians stands at €570 million for 2002-2003.

The Commissioner for External Relations, Chris Patten said: "I welcome the measures taken by Israel and the Palestinian Authority to begin implementation of the Road Map. This delicate process now needs to be fully supported by the international community. Regeneration of the Palestinian economy and restoration of basic public services will help build confidence and commitment to the peace process. Taking the contributions of the Commission and the Member States together, the European Union is the biggest donor of assistance to the Palestinian Territories, and will continue playing its full part in stabilizing the region and preparing for a two state solution".

· During the period of the Intifada basic public services in West Bank and Gaza have deteriorated badly, including upkeep of roads, sewers, electricity supplies and rubbish disposal. The European Commission is launching a €30 million emergency programme to help Palestinian municipalities tackle the problems. The programme will rapidly provide badly needed support to the worst affected areas - starting with Northern Gaza and Bethlehem. Work has already started in the first projects to get underway:

· €4.5million for the rebuilding of bridges, repair and reconstruction of sewage system, and other essential public works in Beit Hanoun in the Northern part of Gaza.

· €2 million to repair the road infrastructure in Bethlehem.

In addition to improving living conditions, these projects will create work and help provide an environment in which the economy can recover.

Restrictions on movement, closures and other restrictions on the Palestinian population during the Intifada have had a severe effect on the Palestinian economy. 50% of the population are unemployed, and 60% are living below the poverty level of $2 a day. The European Commission is acting swiftly to address this situation:

· A first payment of €40 million has been paid to the PA Ministry of Finance just weeks after the decision to launch the Reform Support Instrument. This facility will help pay off PA arrears to the private sector. It will both stabilise PA public finances and, at the same time, provide a jumpstart to the Palestinian economy. A further payment of €40 million later this year is conditional on continuing reform of PA financial management.

The Commission is doubling support available in loans to the private sector bringing the total available for its newly created emergency loan fund for Palestinian SMEs to €30 million. The fund is designed to ensure that SMEs weather the current crisis and provide the basis for economic development, which has to go hand in hand with the current political developments.

All of the actions above are in addition to the Commission's long-standing support to support for PA reforms in the field of public finances, rule of law, and elections, as well as support to UNRWA and humanitarian support. UNRWA provides education, health and relief and social services to Palestinian refugees in Jordan, Lebanon, Syria, Gaza and the West Bank. The European Commission has contributed over €200 million to UNWRAs activities since 2000. Humanitarian support is channelled via the European Commissions Humanitarian Aid Office (ECHO). The most recent allocation of humanitarian assistance for €10 million was made last week to support victims of the crisis in the Palestinian territories and Palestinian refugees in Lebanon. With this latest funding total humanitarian aid to the victims of the ongoing crisis has reached €107 million since the beginning of the second Intifada.

European Community Assistance to the Palestinians and the Peace Process since Oslo, including the MEDA Programme (excluding bilateral Member State assistance) in € million on a commitment basis Estimated breakdown by Category of Expenditure 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003(1) by category 1994-2003 Humanitarian Aid - ECHO interventions Emergency food aid, Post injury rehabilitation, Psycho-social support, Water, Electricity, Non-food humanitarian items, Shelter rehabilitation 5 5,35 9 6,65 6,69 6,75 18,2 26,26 35,00 25,00 143,9 Development assistance to PA + Palestinian NGOs Infrastructure, Health, Environment, Technical assistance, Judiciary, Human rights, Food securty, NGO co-financing, Private sector, Risk capital and interest subsidies for EIB operations, Rapid Reaction Mechanism. 74,08 68,76 50,53 45,92 61,68 57,3 31,96 5,19 98,74 52,00 546,16 Support to the Palestinian Administration to help meet urgent current expenses (including budgetary assistance as of 2000/2001 - subject to conditions on budgetary austerity, administrative and financial reform) 10 25 20 25 0 0 90 40 100,00 80,00 390 Middle East Peace Projects / People to People programme Israel/Arab/Palestinian co-operation on government and civil society level 0 11,3 0 15 5,1 21,73 22,9 0 2,85 10,00 88,88 CFSP Counter-Terrorism Programme CFSP budget, training of PA security services by Member States agencies 0 0 0 7,2 0 0 6,19 3,81 0,00 0,00 17,2 Assistance Grants Total: 89,08 110,41 79,53 99,77 73,47 85,78 169,25 75,26 236,59 167,00 1186,14 EC Support to refugees through UNRWA** contribution to UNRWA's general fund 31,8 32,9 34,2 35,3 38,5 38,3 40,24 57,25 55,00 57,75 421,24 Food Aid programme with UNRWA Food assistance through Relief & social services, Health and Education programmes, cash assistance to Special Hardship Cases 15 8,2 12 11,91 12,2 13 16,06 17,10 35,00 20,28 160,75 UNRWA total: 46,8 41,1 46,2 47,21 50,7 51,3 56,3 74,35 90,00 78,03 581,99 Grants Total: 135,88 151,51 125,73 146,98 124,17 137,08 225,55 149,61 326,59 245,03 1768,13 (1) Amounts in italic have not been yet committed (1) EU to support reform of Palestinian Authority with new forms of aid 30/04/03

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