"I have announced in the [European] Council a very substantial package of assistance to the Palestinians to meet basic needs, but also to support the caretaker government until the new authority takes over -- so, in the interim period," she said. "And the total value of this package that I presented is of 120 million euros."
the incoming Palestinian Authority, which will be reviewed once the new
government is in place."
But in unveiling the new financial package, she made it clear the money is intended to be used for humanitarian and administrative purposes only.
"In effect, we will pay Palestinian energy bills for them directly to the utility companies concerned, including those from Israel," Ferrero-Waldner added
A statement issued to the press ahead of today's unveiling was even more to the point: "this package is independent from any future decisions on support for the incoming Palestinian Authority, which will be reviewed once the new government is in place."
That appeared to be a direct reference to the fact that the new government is expected to include, and indeed could be led by, representatives of the Palestinian militant Islamic group Hamas.
Specifically, the EU said 40 million euros "will be earmarked to ensure the continued and uninterrupted supply of essential public services such as electricity and water."
It said another 64 million euros "will be allocated to the United Nations Relief and Works Agency [and] this emergency relief will help alleviate the hardships of the most vulnerable people in the West Bank and Gaza Strip."
The EU noted that "in addition, the European Commission is supporting the release of some of the money held over from 2005 in the World Bank Reform Trust Fund, in order to help the caretaker government meet obligations including salary payments."
The EU move comes amid much international controversy regarding Hamas' victory in the 25 January parliamentary elections. That is because Hamas opposes the Arab-Israeli peace process and does not recognize the right of the Jewish state to exist. At the same time, Hamas claims responsibility for carrying out some 60 suicide bombings since 2000 against Israeli targets.
No Money For Hamas
Both before and since the election, aid to any Palestinian government that includes Hamas has become a sensitive subject.
Prior to the vote, Washington warned it would review its aid to the Palestinian territories if Hamas won. Since then, Washington has said it would provide aid to the Palestinians only for humanitarian purposes unless Hamas joins the peace process.
U.S. envoy David Welch made that point in a visit to the West Bank town of Ramallah for talks with Palestinian officials on 25 February.
"The United States has long been a supporter of the Palestinian people, through substantial contributions of our foreign assistance funds, and as [U.S.] Secretary [of State Condoleezza] Rice has indicated to the American Congress as recently as few days ago, we continue to be devoted to the humanitarian needs of the Palestinian people and we shall remain so," Welch said
In the severest cut back of funds so far since the Hamas victory, the Israeli cabinet on 19 February approved a halt to monthly transfers of tens of millions of dollars in customs duties that Israel collects on behalf of the Palestinian Authority. That move was part of a package of tough new Israeli restrictions on Palestinians aimed at weakening Hamas.
Turning To Iran
Shortly afterward, on 22 February, Tehran said it plans to fund a Hamas-led Palestinian Authority if the West cuts off aid.
Ali Larijani, the secretary of Iran's Supreme National Security Council, issued the pledge in Tehran after a meeting with Hamas representatives. Iran has been a strong Hamas backer and, like the militant group, does not recognize Israel.
Meanwhile, some international aid officials say that the Palestinian territories are in dire need of funds, no matter who makes up the government.
International envoy James Wolfensohn said today the Palestinian Authority faces financial collapse within weeks.
Wolfensohn, the former head of the World Bank, said the crisis is looming because Israel has stopped reimbursing the millions of dollars in customs duties. And he warned that a collapse could lead to violence and chaos.
Wolfensohn made the warning in a letter to the so-called Quartet of the European Union, Russia, the United Nations, and the United States.