EUROPEAN COMMISSION
MEMO
Brussels, 11 December 2013
EU Direct Financial Support to the Palestinian Authority
The EEAS and the Commission welcome today’s report from the Court of Auditors on the
EU Direct Financial Support to the Palestinian Authority (PA) through the PEGASE
Mechanism. They welcome in particular the Court's conclusion that the Commission and
EEAS have succeeded in implementing this support in spite of difficult circumstances and
that there is no evidence of corruption or mismanagement. PEGASE has the confidence of
Member States, 16 of whom have contributed to it, together with Switzerland and Japan.
Co-operation with the Palestinian Authority takes place in very particular circumstances, in
the context of Israeli occupation, with an Authority which does not have the powers of a
state government and where part of the Palestinian territory, the Gaza Strip, is run by de
facto authorities with which the EU has no relations.
By helping the Palestinian Authority to meet its wages and pensions bill for essential
service providers and pensioners, and pay for social allowances to most vulnerable groups,
the EU is making a tangible contribution to the preparation for a two-state solution to the
Israeli-Palestinian conflict.
The report makes a number of recommendations on how to improve our co-operation with
the PA. The Commission and the EEAS agree to review the PEGASE mechanism and take
the recommendations made by the Court into account.
Some of these recommendations are being implemented. Both institutions already review
the mechanism on a regular basis, taking account of changes on the ground (for example
discontinuing one component on fuel deliveries to the Gaza Power Plant and adding others
as circumstances change – Private Sector Reconstruction in Gaza following Operation Cast
Lead and more recently support to East Jerusalem hospitals). Based on an assessment
carried out in 2011, the Commission started providing in 2013, a comprehensive support
to the PA for Civil Service Reform, an issue raised by the Court. PEGASE will ensure close
links between this action and the CSP programme, facilitating stronger leverage over
policy dialogue.
Performance indicators will be introduced in the areas suggested by the Court, bearing in
mind that many of the elements required to fulfil these indicators lie partly or wholly
outside the control of the Palestinian Authority. The Commission and the EEAS do not
consider strict conditionality to be desirable or effective in these circumstances. Ultimately
sustainability of the EU’s assistance in this field can only be ensured by political progress
on intra-Palestinian reconciliation and, above all, by an end to the Israeli occupation.
MEMO/13/1132
The Commission and the EEAS have actively sought to ensure Israeli co-operation.
Numerous meetings have been held between the Office of the European Union
Representative (West Bank and Gaza Strip, UNRWA) with the Israeli Ministry of Defence,
as well as in the framework of EU-Israel, Association Committee, Association Council and
in the Political Dialogue with Israel. The EU Delegation in Tel Aviv has also been involved.
A clear EU position in this regard has been defined by Council Conclusions of May 2012
and December 2012.
The PEGASE Mechanism is accompanied by an extensive set of verification measures,
which the Court itself described as robust, also recognising that the funds channelled
through PEGASE are reaching the intended beneficiaries. While this has led to heavy
control structure, a necessary balance has to be found between efficiency and security.
The issues surrounding the civil servants who are not able to work in Gaza are complex in
the circumstances prevailing in the Gaza Strip. The Commission and the EEAS consider
that the PA must continue supporting its workers in Gaza as a key element of maintaining
its presence in Gaza and the unity of a future Palestinian State. A solution has to be found
that take account of the concerns raised by the Court, while allowing the PA to continue
supporting its employees in Gaza.
The Commission and the EEAS believe that the delay in salary payments on a number of
occasions by the PA in 2012 was due to the overall financial difficulties of the PA and not
to the number of eligible beneficiaries under PEGASE, nor to lower contributions from
Member States.
The Commission has also responded earlier this year to the recommendation to reduce the
cost of administering PEGASE DFS by:
• using competitive tendering for contracts: two new contracts have been signed for the
audits required by the mechanism before and after every payment exercise; a call for
tenders for technical assistance for the PA has been launched.
• bringing “in house”, at the Office of the European Union Representative (West Bank and
Gaza Strip, UNRWA), the management of the PEGASE database that was previously
outsourced.
2