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Brussels, 17 December 2007
European Community assistance to the Palestinian Authority (PA) began in 1971 with the first contribution to the regular budget of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). Since the Oslo Agreements in 1993, European Commission assistance has focused upon providing critical support in key sectors, including the building of institutions for a future Palestinian State. A wide range of projects has been implemented in such sectors as health, education, infrastructure, environment, judiciary, support to small enterprises and capacity building in ministries of the PA.
The outbreak of the Second Intifada in 2000 caused a serious deterioration in the economic and social conditions of the territory. Economic growth stagnated and poverty increased. While the economy grew with 48% percent between 1994 and 1999, currently GDP per capita is almost 40% below its 1999 level. In response to this, the European Commission adapted its support. Firstly, grant assistance increased from an annual average of €137 million (1994-1999) to an annual average of €250 million (2000-2005). Secondly, the assistance was re-orientated to help revive the economy and addressing urgent humanitarian needs, whilst still continuing to assist the PA in preparing itself for statehood.
Political changes in 2006
Following the formation of a Hamas-led government after the January 2006 elections, the humanitarian and socio-economic situation deteriorated even further. As Israel no longer paid the so-called clearance revenues (Palestinian customs duties and value added taxes ), representing 60% of PA's regular revenues, the budget of the Palestinian Authority faced a severe crisis.
In response to this, the Quartet agreed to a proposal by the European Commission in May 2006 to establish a mechanism to ensure direct delivery of assistance to the Palestinians. This mechanism was labelled the 'Temporary International Mechanism'.
The Temporary International Mechanism (TIM)
The TIM was established in June 2006 by the European Commission. Initially established for a period of three months, the TIM's mandate has been extended several times and its current mandate ends on 31 March 2008. The European Commission, 15 EU Member States, Norway, Switzerland, Australia and Canada have contributed to the TIM.
The TIM provides support through three 'windows':
In 2006 the Commission disbursed through the TIM €107.5 million and in 2007 the total Commission contribution to the TIM will be €348 million. In addition donors have contributed an amount of €72 million to the TIM in 2007. Overall Member States and Commission have contributed 98% of total TIM funds (€607 million). As of today, €485 million has been disbursed by the TIM.
With an average family size of 6, over 1 million Palestinians benefit from direct financial assistance from the TIM.
By ensuring the functioning of the Gaza Power Plant, TIM helps provide access to electricity, water and health care to over 1.3 million people in the Gaza Strip.
The TIM is implemented by the TIM management unit in East Jerusalem in the closest possible co-operation with Member States' experts, independent experts and a team of auditors. Comprehensive verification and audit procedures have been developed so as to ensure that funds are spent correctly. Since the formation of the PA Government under the leadership of Prime Minister Fayyad, the TIM is implemented in close co-ordination with the PA government.
Other Actions in support of the PA
Commission support in 2006 and 2007 to the Palestinians has not been limited to the TIM. The UNRWA, responsible for providing social services to over 4 million Palestinian refugees, received EC support for an amount of €110 million in 2006 and €101 million in 2007.
In addition, the Commission has been providing support for:
All these actions, together with the
TIM, have brought the Commission assistance to the Palestinians in 2006 to an
amount of €340 million in 2006 and €550 million in 2007.
 Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Spain, Sweden and the UK.