EU freezes aid to Palestinian government

By Paul Taylor

BRUSSELS (Reuters) – The European Commission said on Friday
it had halted aid payments to the Hamas-led Palestinian
government because the new cabinet had not recognized Israel’s
right to exist or renounced violence.

“For the time being, there are no payments to or through
the Palestinian Authority,” Commission spokeswoman Emma Udwin
said.

She told a news briefing the European Union executive was
adopting “a policy of maximum prudence” which did not prejudge
decisions by foreign ministers of the 25-nation bloc when they
meet in Luxembourg next Monday.

German Foreign Minister Frank-Walter Steinmeier said in
Prague the Palestinian government that took office last week,
led by the Islamist movement, had not yet signaled clearly it
would meet the international community’s key conditions.

These were to recognize Israel, renounce violence and
accept past peace agreements. Hamas continues to advocate the
violent destruction of the Jewish state.

“Therefore, we have to prepare some changes in terms of
financing,” Steinmeier said.

Palestinian Deputy Prime Minister Naser al-Shaer said if
the EU wanted Hamas to change its stance, it should negotiate
with the new government and not just repeat a “broken record”
about the three principles.

The Commission and EU governments appeared keen to play
down the aid freeze and avoid responsibility for pulling the
plug on the Palestinian Authority, to which the EU has been the
main donor since its creation under the 1993 Oslo peace
accords.

A British official said he expected the Commission to
inform ministers of its decision to suspend aid to the
Palestinian government temporarily, while Udwin said it was for
ministers to take the decision.

TRIAL BALLOONS?

Diplomats said the freeze covered all direct aid to the
Palestinian government and payment of public employees’
salaries with EU funds through the World Bank, but not
humanitarian aid through international and non-government
organizations.

About 30 million euros ($35 million) in direct government
aid was currently in the pipeline, an EU official said.

The Commission released 120 million euros in direct and
indirect aid last month, before Hamas took office. EU diplomats
said talk of the Palestinian Authority running out of cash to
pay salaries at the end of April, with the risk of social
chaos, was exaggerated.

The EU redirected some aid last month to pay Palestinian
electricity bills directly to suppliers, including the Israeli
electricity company, without going through the government.

A draft statement prepared for the EU ministers, seen by
Reuters on Thursday, did not mention a suspension of aid and
said only that direct assistance to the Palestinian government
would inevitably be affected.

Ministers will also discuss what, if any, contacts the bloc
should have with the government, since Hamas is on the EU’s
list of outlawed terrorist organizations.

New Hamas Foreign Minister Mahmoud al-Zahar has twice this
week appeared to float trial balloons by talking of a
“two-state solution,” code for co-existence with Israel, in a
letter to UN Secretary-General Kofi Annan that was later
half-denied, and an interview with the London daily The Times.

An Austrian EU presidency official said Hamas seemed to be
on a very slow march toward recognizing Israel but its
statements were “three steps forward, two steps back.”

Deputy Prime Minister al-Shaer told Reuters: “It’s up to
them whether they want to help. We do know what they are after:
they want to give aid but not through the government.

“They have been repeating this broken record on the issue
of recognizing Israel and renouncing violence. Despite all our
appeals to open dialogue with them, they did not change.

“If they want something, they have to negotiate with us,
talk to us,” he said.

Mushir al-Masri, a Hamas lawmaker, urged the EU not to take
a decision which he said would represent “a boycott and
collective punishment of the Palestinian people for practicing
their democratic rights.”

(Additional reporting by Ingrid Melander in Brussels, Alan
Crosby in Prague, Mohammed Assadi in Ramallah and Nidal
al-Mughrabi in Gaza)