Internal review of EU aid for Palestine results in clean bill

Internal review of EU aid for Palestine results in clean bill
Credit: European Union / Trésor Malete

The European Commission published on Tuesday the results of its review of EU's financial assistance for Palestine, announced two days after Hamas's terrorist attack on Israel on 7 October.

The attack prompted some EU member states to suspend or cancel their financial assistance and grants to the Palestinian Authority or other Palestinian beneficiaries over concerns that the funding might have been diverted to the EU-designated terrorist organisation. The Commission decided to carry out a careful review before taking any decisions.

The still ongoing Israel – Hamas war disclosed that Hamas has built up an extensive military infrastructure of underground tunnels and an arsenal of rockets and other weapons that must have required external funding, reportedly from Iran but also in the form of monthly cash payments from Qatar with Israel’s agreement.

The review findings and conclusions, published in a 19-pages document, showed according to the Commission that the safeguards in place are effective but could be improved on certain points. Work is now ongoing on the design of EU's future support to the Palestinians in view of the changing and still evolving situation.

The EU is the largest international donor of aid to the Palestinians,” commented European Commission President von der Leyen. “After the terrible events of 7 October, a careful review of our financial assistance was necessary. This review has confirmed that the safeguards in place are effective.”

The review covered the entire development portfolio, including support programmes to the Palestinian population, the Palestinian Authority, the United Nations Relief and Works Agency for the Palestinians (UNRWA), and grants to civil society organisations. It did not cover humanitarian assistance. In total, EU funding for Palestine amounts to indicatively €1.177 billion during 2021 – 2024.

Two-step approach

A two-step approach was followed in the review. First operational screening took place to assess the feasibility of projects in the light of the new situation on the ground. Under this step, the review has identified a list of non-feasible infrastructure projects in Gaza for an amount of €75.6 million, which cannot be implemented because of the war.

This money will be reprogrammed in support for Palestinians in light of new priorities to be identified on the ground.

As part of the second step, the Commission carried out a risk assessment, for which all implementing partners were requested to provide information about their control mechanisms in place. The Commission identified the need of additional measures, such as the inclusion of anti-incitement clauses in all new contracts and the monitoring of their strict application at all times.

For grants including partners, the beneficiary will have to inform the Commission of the name of the organisations and composition of the board. Partners will be required to sign the anti-incitement clause and restrictive measures clause.

Following allegations of incitement to hatred and violence in two contracts with civil society organisations, the Commission decided to suspend payments until satisfactory clarifications have been received from them. Their names have not been disclosed.

As reported in October 2021, the Israeli government decided to outlaw six Palestinian civil society organisations operating in the West Bank over alleged links with a terrorist organisation. Two of them were receiving EU funding.

According to a Commission spokesperson, similar allegations of misuse of funding in the past were found unsubstantiated. EU’s funding of Palestinian civil society is an important element in EU’s support to the two-state solution.

Salaries and family allowances

The review report covers also the PEGASE programme, the main tool since 2008 for direct financial EU assistance to the Palestinian Authority. The beneficiaries of this assistance are eligible civil servants, pensioners, and poor and vulnerable families. A description of the checks carried out ex-ante (screening) and ex-post (audits and controls) under PEGASE is annexed to the review (Annex 2).

In an audit in 2013, the European Court of Auditors (ECA) found that in the Gaza Strip a considerable number of civil servants were being paid without going to work and providing a public service due to the political situation in the area. In its follow-up in 2017, the auditors found that a decision had been taken to discontinue the funding of civil servants' salaries and pensions in Gaza.

However, no documentation on the implementation of the decision on salaries and pensions was received by ECA at the time of the follow-up. In its review, the Commission asserts that only beneficiaries in the West Bank are eligible and civil servants in Gaza have not been eligible since 2017. In Gaza, the PEGASE programme is limited to cash transfers to vulnerable families.

Another issue, which still might spark controversy, is the payment of family allowances. The Commission writes that first-degree relatives of beneficiaries are not directly screened and that the Commission could consider more extensive screening to reinforce existing safeguards without explaining why. However, this has to be agreed with the Palestinian Authority.

The Authority has a family fund for payments to convicted security inmates in Israeli prisons or their families if they have been killed and are considered as “martyrs”. Israel sees this as an incentive to terrorism. The fund is not financed by the EU and inmates are surely not beneficiaries. It was not immediately clear from the Commission review if this issue is linked to the Commission's more extensive screening.

M. Apelblat

The Brussels Times

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