The European Commission says it is setting aside 120 million euros ($142 million) in funds for the Palestinians. The move is aimed at preventing a worsening of the Palestinian Authority's dire financial situation.
Hamas' victory in Palestinian elections has put the EU in a tight spot
Speaking in Brussels on Monday, EU external relations commissioner Benita Ferrero-Waldner said the union's executive arm would release the funds to help the Palestinian Authority's transition government pay for its basic needs, such as energy bills and salaries.
"Today, I will announce a very substantial package of assistance to meet the basic needs" of the Palestinians, the commissioner told reporters ahead of Monday's meeting of the 25 foreign ministers at which she will speak.
Palestinian Hamas supporters demonstrate near the Gaza Strip
The Palestinian Authority is in serious need of funds since Israel imposed sanctions including a freeze on paying customs duties worth some 42 million euros ($49.9 million) a month, on the incoming Hamas-led government. Israel is refusing to deal with the hard-line Islamist group Hamas, which it considers a terrorist group.
Averting financial disaster
Breaking down the total EU funds, Ferrero-Waldner said that 40 million euros would be used directly for the Palestinian Authority's energy bills. Additionally, there would be 64 million euros in direct aid channeled through UN agencies. On top of that, the commission aims to release 17.5 million euros from a World Bank trust fund to pay the transition government's salaries.
The European Union is the biggest provider of aid to the Palestinians but it was put in a delicate position after Hamas, which figures on the bloc's terror blacklist, scored a clear victory in last month's legislative elections.
Outgoing Palestinian President, Mahmud Abbas
EU foreign ministers are to discuss the situation but are not expected to take a clear position on Hamas until the new government is formed and has clearly outlined its position on recognizing Israel, renouncing violence and working peacefully for a two-state solution.
Ferrero-Waldner said the commission was releasing the funds because "we see the political necessity to support Mahmud Abbas", the Palestinian leader and overseer of the outgoing government.