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.

Bilateral Cooperation

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, whose validity has been extended until the end of 2016. 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 annual bilateral allocation is around € 300 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 2016, EU funding through the European Neighbourhood Instrument (ENI) amounts to € 291.1 million. The bulk of it (€170.5 million) was channelled through the PEGASE** Direct Financial Support. €82 million have been allocated to UNRWA in support of Palestinian refugees. The remaining amount of € 38.6 million has been allocated to Support to governance (€ 8.1 million); Support economic enablers (€ 20 million).and support to East Jerusalem (€10.5 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 to the Palestinian Authority, ii) support to Palestine refugees and iii) development programmes.

  i) Direct Financial Support

Launched in 2008, assistance through PEGASE aims primarily at supporting the Palestinian Authority to meet its recurrent expenditure (salaries and pensions, assistance to vulnerable Palestinian families, arrears of East Jerusalem hospitals) and the delivery of public services. PEGASE is accompanied by a policy dialogue aimed at providing longer-term assistance for development. Since March 2015 a Results-Oriented Framework is the tool to measure progress of the PA's policy reforms in key sectors.

In 2015 , the contribution to PEGASE reached €178 million, of which 115 for salaries and pensions; 50 million in support to the most vulnerable Palestinian families and € €13 million for the East Jerusalem’s hospitals PEGASE is open for contributions, free of administrative charges, from Member States and other donors.

  ii) Support to Palestine refugees

The European Union - European Commission and EU Member States - is the largest donor to Palestine refugees through UNRWA .

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 between € 8 and 10 million are allocated for projects in East Jerusalem, which is a key priority to keep the two-state solution viable. In 2016 the contribution for the East Jerusalem Programme amounted to €10.5 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 European Peacebuilding Initiative (former Partnership for Peace programme); its overall objective is to facilitate the peace process by supporting 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.

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* 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