The European Union and the Palestinian Authority on Friday agreed on emergency financial support to meet the Palestinians’ most urgent financial needs as Israel’s destructive war on Gaza continues.
European Commission President Ursula von der Leyen said:
Israelis, Palestinians and the entire region deserve peace, security and stability. The two-state solution is the best way to ensure this. With this joint strategy, we are supporting the Palestinian Authority’s reform efforts. Together, we are laying the groundwork for economic and political stability in the West Bank. And we are setting the foundations for the reconstruction of Gaza. We need an immediate and enduring ceasefire. And we must prepare for the day after.
The strategy aims to stabilise the Palestinian Authority as well as the economy in the West Bank. Combined with a substantial and credible Palestinian Authority reform programme, it lays the foundations for recovery and resilience.
The strategy also aims to create better conditions for the reconstruction of Gaza as soon as the situation in the enclave allows. As a first step, the EU will provide short-term emergency financial support to the Palestinian Authority to meet its most urgent financial needs and support its substantial and credible reform programme.
Financial support of €400 million in grants and loans will be provided in three instalments between July and September 2024, subject to progress on the Palestinian Authority’s reform programme. Short-term financial support will pave the way for the implementation of the Comprehensive Palestinian Recovery and Resilience Programme.
Funding from other donors will also be required; the Commission therefore proposes to establish a coordination platform for Palestinian donors from autumn 2024 to the end of 2026. The Commission will submit a legislative proposal for the programme in early September so that disbursements can begin before the end of the year, provided all conditions are met.
Palestinian Authority reform strategy to ensure sustainability
The multi-year support programme should enable the Palestinian Authority to achieve fiscal equilibrium by 2026 and ensure its long-term financial sustainability thereafter. The programme will be contingent on the implementation of a reform programme in line with the Palestinian Authority’s own strategy. It will begin in autumn 2024 and run until the end of 2026.
The Palestinian Authority’s reform strategy aims to ensure fiscal sustainability, modernise Palestinian administration and governance, fight corruption, strengthen the rule of law and transparency, reform social welfare and education systems, improve the business environment and strengthen the foundations of a market economy.
All disbursements will be made contingent on the Palestinian Authority’s progress towards agreed reform milestones. The resources required for the reconstruction of Gaza are not foreseen as such in this Programme and must be identified separately as part of the broader collective efforts of the international community.
The Palestinian Authority and the Commission have agreed to establish a donor coordination platform to streamline support to the Palestinian Authority in cooperation with key international partners.
In addition, the programme is designed to promote improved economic and financial relations between Israel and the Palestinian Authority, including regular payment of tax revenues due to the Palestinian Authority and the lifting of restrictions on the access of Palestinian workers.
