EU says Israel key to avoiding Palestinian crisis

The Palestinian government has warned of economic collapse within months, after Israel froze tax revenues and Western nations cut direct aid to the Palestinian authority following the victory of Islamist militant Hamas in elections in January.

The salaries of 165,000 officials were not paid in March, and the Palestinian authority's president Mahmoud Abbas is on a tour this week in Europe to convince donors to release aid. "The real question is Israel withholding Palestinian customs and tax revenues ... withholding them means that basic services won't be delivered, salaries cannot be paid and families will suffer," Benita Ferrero-Waldner told the European Parliament.

"Israel has also increased the closure of territory in the West Bank and into and out of Gaza. Addressing these problems will do more to help the Palestinian people than any measure the EU can take," Ferrero-Waldner said.

She added that the aid given by the EU in the past covered less than 10 percent of the salary bill.

"The key to preventing a humanitarian disaster in the Palestinian territory lies with Israel and the Palestinian authority, not with the international community," she said.

The European Commission, the EU's executive arm, said this month it had halted direct aid payments to the Hamas-led Palestinian government because the new cabinet had not recognised Israel's right to exist or renounced violence.

The EU, the biggest donor to the Palestinians, with an average of 500 million euros ($620.6 million) a year, has not suspended humanitarian aid.

Ferrero-Waldner said the suspension of direct aid was not definitive, and stressed that the EU was looking for alternative solutions. EU officials met Abbas to continue some aid projects through his office.

She said the international community was not trying to create parallel structures but was looking at the possibility of establishing an international supervision mechanism to facilitate the control of funds to meet basic needs, for instance in the health and education sectors.

Before Hamas took office, the European Commission released 120 million euros in direct and indirect aid last month, including to pay electricity bills directly to the suppliers. Ferrero-Waldner said 100 million euros had already been paid.

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