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Co-operation framework

Since the signature of the Barcelona Declaration in 1995, the Palestinian Authority was a full and equal partner in the Euro-Mediterranean Partnership. In this framework, an Interim Association Agreement on Trade and Co-operation governing bilateral relations between the European Union and Palestine Liberation Organisation (PLO) on behalf of the Palestinian Authority was signed in February 1997. The agreement provides a comprehensive framework for co-operation and the progressive establishment of a free trade area. Since the outbreak of the second Intifada in September 2000, the implementation of the Interim Association Agreement has become more and more difficult.

In 2004, the Palestinian Authority was amongst the first partner countries to be included in the European Neighbourhood Policy. To this purpose, the European Union prepared a Country Report [190 KB] describing the overall situation in Palestine. In May 2005, the European Union and the Palestinian Authority agreed on an ENP Action Plan [50 KB] setting out jointly agreed priorities, which was updated and adopted in March 2013.

Co-operation programmes 2007-2013

Under the ENPI bilateral envelop the EU allocates funds for Direct Financial Support to the Palestinian Authority (through PEGASE), for development programmes, and for Palestine refugees (through UNRWA).


PEGASE (Mécanisme Palestino-Européen de Gestion et d'Aide Socio-Economique), was launched on 1 February 2008 and represents the European mechanism for Direct Financial Support to the Palestinian population. Building upon the Temporary International Mechanism (TIM), PEGASE supports the three year Palestinian Reform and Development Plan (PRDP) which was presented by Prime Minister Salaam Fayyad at the Paris Donor Conference in December 2007, and the current Palestinian National Development Plan (NDP) 2011 - 2013, which consolidates the achievements of the previous programmes. PEGASE covers the recurrent costs of the Palestinian Authority (salaries and pensions, vulnerable Palestinian families, arrears due by the PA to the private sector).

In  2012, the European Union frontloaded €156 million for the Palestinian Authority's recurrent expenditures. In 2013, the EU provided €168 million for Direct Financial Assistance to the PA through the PEGASE mechanism.

Development programmes

Development programmes in Palestine mainly focused on three focal sectors, in line with the priorities set by the Palestinian Authority:

  • Rule of Law, including support to Justice and security
  • Private sector and trade
  • Infrastructure, particularly for Water

Allocations in 2012 included €11 million for the private sector reconstruction, €25 million for infrastructure development in the Gaza Strip  and Area C; €27.5 million for institution-building projects in support of the Palestinian Authority and a further €8 million for projects in East Jerusalem.

In 2013 proposals for the areas of development and institution-building will be brought to the ENPI Management Committee for approval in the summer. The focal sectors will remain unchanged.

Palestine refugees

The situation of Palestine refugees continues to receive considerable attention from the European Neighbourhood and Partnership Instrument and other budgetary sources. From 2000, an annual average contribution of more than €100 million were provided to UNRWA. The European Union made annual contributions to UNRWA’s General Fund of at least €80 million for the period from 2011-2013 under a "Joint Declaration". The European Union and its Member States together are the largest donors to UNRWA. This funding is used to cover the UNRWA's crucial core programme services in the areas of Health, Education and Social Services and is essentially used to pay salaries for teachers, doctors and social workers active in the refugee camps.

Other budget lines

Beyond the bilateral geographic instrument as defined in the multi-annual Indicative Programme, Palestine is eligible for additional funds under the thematic programmes adopted for the financial period 2007-2013:

- European Instrument for Democracy and Human Rights,

- Non-State Actors and Local Authorities in Development,

- Investing in People,

- Environment and

- Migration.

The food security thematic programme has allocated €11 million both in 2011 and 2012, these funds will be mainly used through local calls for proposals for specific projects with the concept of "Linking Relief, Rehabilitation and Development."

The occupied Palestinian territory is also eligible under regional programmes such as Partnership for Peace (€10 million for 2011-2012; €5 million proposed for 2013) or the Cross Border Cooperation programmes; as well as under the  Erasmus Mundus External Co-operation Window programme , enhancing mobility and co-operation with European Union in the field of higher education and Tempus.

The European Union also provides humanitarian assistance (managed by DG ECHO) and support for specific projects. In 2012, around €42 million were committed for interventions in Palestine.

In addition to the funds mentioned above, UNRWA receives further contributions from other EU budget lines.  For the period 2007-2013 a total of €24 million have been allocated by the European Union under the food security thematic programme to UNRWA's Social Safety Net programme. In order to respond to soaring food prices UNRWA could benefit from nearly €40 million supplementary Food Aid from the Food Facility Programme to cover the period 2009-2011.

In 2012, the European Union also contributed €7.5 million through its Instrument for Stability (IfS) for UNRWA's major "humanitarian"/crisis prevention and recovery initiatives in Gaza, Lebanon and Syria.

In 2012 DG ECHO's contribution for humanitarian assistance to UNRWA amounted to €16.75 million.

Co-operation until 2006

Since 1994 and the Oslo Accords, European Union's assistance focused upon development assistance and building institutions for a future Palestinian State. A range of projects were implemented in health, education, judiciary, support to Small and Medium Enterprises, infrastructure and environment, as well as capacity building in ministries of the Palestinian Authority. However, with the outbreak of the second Intifada in September 2000 and the severe deterioration of the economic and social conditions, which put into question the viability of the Palestinian Authority, the European Union modified its assistance to respond to the new situation, as did other donors.

Firstly, the European Union increased its grant assistance from an annual average of €137 million (1994-1999) to an annual average of €250 million (2000-2005). Secondly, assistance was re-orientated to provide more direct financial support to the Palestinian Authority while at the same time continuing to assist the Palestinian Authority in preparing itself for statehood, reviving the economy and addressing urgent humanitarian needs.

In 2006, following the formation of a Hamas-led Palestinian Authority government and the subsequent decision by Israel to withhold the Palestinian tax and custom revenues they collect on behalf of the Palestinian Authority, the humanitarian and socio-economic situation in the occupied Palestinian territory deteriorated.

In response to this fiscal, socio-economic and humanitarian crisis, the Quartet (group comprising the United Nations, the United States, the European Union and Russia established in Madrid in 2002 to mediate the peace process in the Israeli-Palestinian conflict) agreed to a proposal by the European Union in May 2006 to establish the Temporary International Mechanism to ensure direct delivery of assistance to the Palestinians.

Over the period 1994-2006 the European Union provided more than €2.7 billion in support to the Palestinian people.

More information

For information on the European Union policy towards Palestine see European External Action Service website.

More information on the European Union relations with Palestine is available on the website of The Office of the European Union Representative in Jerusalem. For trade related issue see Trade Directorate-General website.

Last update: 25/07/2014 | Top