EU Palestinian Aid gone Awry?

The allegations couldn’t have come at a worse time.

With the US now calling the shots in the Middle East mediation process and pulling off a coup by securing the freedom of Palestinian leader Yasser Arafat, the EU has found itself reduced to the sidelines of a process in which it had wanted to feature prominently.

The latest accusations are a further blow to what is seen as the EU’s diminishing influence and role in the Middle East.

Analysts also fear that the damaging allegations could further widen the gap between a Bush administration that favours Israel and an EU traditionally sympathetic to the Palestinian cause.

In a 100-page report submitted to the EU in Brussels, Israel says that the Palestinian Authority allocated $9 million (9.9 million euro) of European Union funding to pay the salaries of "terrorists" from Palestinian President Yasser Arafat’s Fatah faction.

Not true, say Palestinians and EU

The Palestinians have dismissed the accusations as "lies, forgeries and fabrications" and indicated Arafat’s public statements condemning violence as evidence of his commitment to peace.

European Commission spokesman Gunnar Wiegand said the Commission ruled out the possibility that EU community aid financed Palestinian terrorists but promised to look into the matter.

"These are serious allegations and therefore we will look into them in a serious way," he told the Commission's daily briefing.

EU prime donor for the Palestinians

The EU remains the chief financial backer of Arafat’s Palestinian Authority.

According to the Commission, the EU gives some 10 million euro to the Palestinian Authority monthly, most of which goes towards education, health and other social sectors.

In addition, the European Commission has also approved 3.5 million euro in emergency humanitarian aid to the Palestinian territories, on top of the 5 million allocated at the beginning of April.

The Commission has said, "the aim of this decision is to help meet the needs of vulnerable Palestinians in both the West Bank and Gaza, particularly in Jenin and Ramallah".

He said there are comprehensive regulations in place to monitor and control EU aid to the Palestinian Authority.

The funds are managed by the Humanitarian Aid Office (ECHO), which falls under the responsibility of Commissioner Poul Nielson.

The EU strongly criticised Israel during its recent operation "Defensive Shield" when it rolled into Palestinian territories and destroyed infrastructure - such as the airport in Gaza – which was built with EU money.

Allegations unsettle EU

Though Brussels says that it can account for the money that it has been pumping into the Palestinian areas, the allegations by Israel have nevertheless rattled EU diplomats and officials.

So much so that External Relations Commissioner Chris Patten plans to place the issue high up on the agenda when he meets EU foreign ministers in Brussels next Monday.