EU aid policy will not solve the Palestinian economy by Alexandra Gerasimčiková


The financial institutions of the European Union poured 1.4 billion euros into Palestine in an attempt to revive economic development. But with the possibility of a negotiated Israeli-Palestinian peace seeming a long way off, Europe urgently needs a new aid model that better matches the realities on the ground.

BRUSSELS – European Union financial institutions are increasingly focusing on Palestine to help drive sustainable development, create jobs, promote growth and support post-pandemic recovery. But despite massive flows of investment – mainly in the form of lending to the Palestinian private sector – the EU continues to ignore the structural obstacles to the development of Palestine. Instead, its aid bolsters the Palestinian banking system and sustains an economy broken under occupation.

According to a recent EU review investments in Palestine since 2014, continued contributions from “European Team– the EU, its member states and public development banks, including the European Investment Bank and the European Bank for Reconstruction and Development – ​​amount to €1.4 billion (1, $5 billion). Three-fifths of this amount has been committed over the past two years, with loans accounting for 71% of the total, or €1 billion.

The EIB, which recently opened an office in Jerusalem for the West Bank and Gaza, is the largest investor, with 372.3 million euros, or more than a quarter of all European funding for Palestine. The EU provided €77.1 million through instruments such as technical assistance, guarantees and investment grants from the European Fund for Sustainable Development. The other major contributors are Sweden (279.5 million euros), France (253.2 million euros) and Germany (166 million euros). Since the EU basic development aid to Palestine in 2020 was around 241 million euros, these sums are significant.

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