A new EU-Palestine Action Plan was approved in May 2013 setting the agenda for economic and political cooperation with the EU.
The legal basis for the EU’s relations with the Palestinian Authority is the Interim Association Agreement on Trade and Cooperation signed with the PLO on behalf of the Palestinian Authority.
The European Commission is the biggest donor of financial assistance to the Palestinians.
The European Neighbourhood Instrument (ENI) is the main EU financial instrument for 2014-2020. Aid to Palestine has been programmed annually until 2014, when a first bi-annual Single Support Framework for the period 2014-15 was adopted. The Single Support Framework is in line with the Palestinian National Development Plan 2014-16 and follows up on the priorities of EU cooperation with Palestine developed through the last years.
The indicative financial bilateral allocation under the ENI for the period 2014-2015 will be in the range of €508-€621 million. Targeted priority sectors of EU cooperation are: support to governance at local and national levels; support to private sector and economic development; support to water and land development.
In 2014, EU funding through the European Neighbourhood Instrument (ENI) amounted €309.5 million. The bulk of it (€170.5 million, including financial contributions from Austria and Luxemburg) was channelled through the PEGASE Direct Financial Support. €87 million have been allocated to UNRWA in support of Palestinian refugees. The remaining amount of €52 million has been allocated to Support to governance (€13 million); Support for investment, trade and vocational training (€10.5 million); Hebron Wastewater Treatment Plant (€15 million); Support to Area C (€3.5 million) and support to East Jerusalem (€10 million).
From 2007-2013, the European Neighbourhood and Partnership Instrument (ENPI) was the main EU financial instrument to fund development cooperation programmes with the Neighbourhood partner countries (including Palestine).Under this instrument, Palestine benefitted of a baseline amount of €300 million per year for bi-lateral cooperation distributed among i) direct financial support programme, ii) support to Palestine refugees and iii) development programmes.
i) Direct Financial Support
Launched in 2008, PEGASE* backed the three-year Palestinian Reform and Development Plan (PRDP) outlined by Prime Minister Salaam Fayyad at the Paris Donor Conference in December 2007. Assistance through PEGASE aims primarily at the Palestinian Authority to meet its recurrent expenditure (salaries and pensions, assistance to vulnerable Palestinian families) and the delivery of public services. PEGASE is accompanied by a policy dialogue aimed at providing longer-term assistance for development in line with the Palestinian National Development Plan (current one covering 2014-16).
In 2013 and 2014, €168 million of direct financial assistance to the PA were provided under PEGASE, including a new window to support East Jerusalem’s hospitals with €13 million.
ii) Support to Palestine refugees
The European Union - European Commission and EU Member States - is the largest donor to Palestine refugees through UNRWA .
For the period 2011-13, the EU made annual contributions to UNRWA’s general fund of at least €80 million. In 2014 a new joint declaration between the EU and UNRWA was signed, bringing the baseline EU contribution to UNRWA to €82 million yearly.
Together with its member states, the EU is the largest donor to UNRWA. The funding is used to cover UNRWA's crucial core programmes in the areas of health, education and social services – including salaries for teachers, doctors and social workers active in refugee camps.
UNRWA receives further contributions from the EU Humanitarian Aid and Civil Protection department; through the food security programme and the Instrument contributing to Peace and Security.
iii) Development programmes
EU-funded assistance programmes to Palestine are in line with priorities set by the Palestinian Authority and focus on three main sectors:
- rule of law, including support to justice and security and local governance
- private sector and trade
- water infrastructures and land development
In addition, every year €8 million are allocated for projects in East Jerusalem, which is a key priority to keep the two-state solution viable. In 2014 the contribution for the East Jerusalem Programme amounted to €10 million.
Other Budget lines
Palestine is also eligible for funding under the following EU’s thematic programmes, such as the European Instrument for Democracy and Human Rights (EIDHR - €1.5 million annually)or the Non-state Actors and Local Authorities thematic programme.
Together with Israel and Jordan, Palestine participates to the Partnership for Peace programme; its overall objective is to support the peace process and to provide a solid foundation at civil society level for a just and lasting settlement in the Middle East. The programme receives an annual contribution of €5 million.
* This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue.
* Mécanisme Palestino-européen de Gestion de l’Aide Socio-économique