EU pledges 400 million euros for Ramallah, subject to progress on PA reform
European Commission head touts measures to get Palestinian Authority’s finances in order as helping ‘lay the groundwork for economic and political stability in the West Bank’
The European Commission said on Friday it would provide the Palestinian Authority with 400 million euros ($435.5 million) in emergency financial support in the coming two months amid concerns within the European Union that the Ramallah-based body could collapse.
The money will be disbursed in the form of grants and loans in three payments between July and September, subject to progress in the implementation of the reform agenda of the Palestinian Authority, the Commission said in a statement.
It had earlier signed a letter of intent with the PA setting out a strategy to address its budgetary and fiscal situation.
“Together, we are laying the groundwork for economic and political stability in the West Bank,” European Commission President Ursula von der Leyen said.
The PA’s finances have been in disarray for years as donor states have cut back funding that once covered nearly a third of its $6 billion annual budget, demanding reforms to tackle corruption and waste.
But Palestinian officials say the situation has worsened sharply since thousands of Hamas-led terrorists attacked Israel on October 7, killing nearly 1,200 people and kidnapping 251, sparking the war in Gaza. Israel subsequently withheld a portion, earmarked for Gaza, of the tax revenue it collects on behalf of the PA. That tax revenue is the PA’s main source of funds.
The PA welcomed the new European funding, calling it “an important step to contribute to alleviating the stifling financial and economic crisis that our people are going through, which worsened after the Israeli aggression on Gaza.”
Basic infrastructure has worsened, government employees are being paid a fraction of their salaries and health services are collapsing, officials say.
These are signs of a deep financial crisis that has crippled the administration led by PA President Mahmoud Abbas in the Israeli-controlled West Bank, prompting questions over its future even as the United States and other countries are pressing for a “revitalized” Palestinian Authority to run the Gaza Strip when fighting there ends.
“The financial situation of the PA is dire at this point in time and it’s in nobody’s interest if it collapses. It’s clear they need more money,” said a senior EU diplomat ahead of a monthly foreign ministers meeting in Brussels on Monday.
