EU weighing direct funds to Abbas

THE BALTIMORE SUN

BRUSSELS, Belgium -- The European Union is considering making direct payments to the moderate Palestinian Authority president, Mahmoud Abbas, as a way of supporting him while trying to maintain financial pressure on Hamas, the anti-Israeli political party that swept to power in elections last month.

The idea was raised this week by the European Union's foreign policy chief, Javier Solana, after a conference call with other members of the so-called Quartet - the United States, Russia and the United Nations - that has been promoting peace efforts between Israel and the Palestinians.

"We have to have a mechanism of financial support to President Abbas," Solana said. "We have to find a way to finance him and his structures because of his responsibilities as president of the Palestinian Authority and as the primary interlocutor with the international community."

If accepted by fellow Quartet members, the channeling of payments directly to Abbas would be a reversal in policy, which until now has focused on strengthening Palestinian government institutions in preparation for an eventual Palestinian state.

In 2003, when Yasser Arafat still led the Palestinian Authority, the United States worked to wrest control of the purse strings from him and pushed for the creation of the position of prime minister to decentralize power and weaken the presidency.

"The general approach of trying to build up Abu Mazen's authority and resources to counter the power of the Hamas-led government is something that has been out there since the elections," said Martin Indyk, director of the Saban Center for Middle East Policy at the Brookings Institution, using the name by which Abbas is informally known.

A senior State Department official said that the United States had not seen Solana's proposal but that while European and U.S. tactics may differ, their common approach in general would be to use their leverage to persuade Hamas to change its position. He said it was too soon to say whether the idea of circumventing a Hamas-led government and aiding Abbas would accomplish that objective.

The prime minister's job was created for Abbas, who quit after only four months because Arafat refused to give up control of the Palestinian security forces. Now, with the post soon to be held by a Hamas leader, Ismail Haniyeh, Hamas is reminding Abbas of his own arguments for a powerful prime minister.

Many Palestinians regard any effort to reconcentrate power as an effort to undermine their democratic choice. There are also other arguments against strengthening Abbas, since he accomplished little when Fatah was in power and the election has weakened his position.

Nor is it clear that the United States would go along with such a plan. "The devil is going to be in the details," Indyk said. "It's one thing to provide funding to Abu Mazen, but if he is just a conduit of money to Hamas-led ministries, it's not something the United States is going to cooperate with."

The European Union began providing direct budgetary assistance to the Palestinian Authority in 2000 after Israel, trying to isolate Arafat, froze monthly transfers of tax and customs receipts collected for the Palestinians under an economic protocol signed in 1994.

Europe's direct payments - which totaled more than $200 million from 2000 to 2002 - led to the establishment of a World Bank-monitored trust fund, which is now used by most international donors to disburse funds to the fledgling Palestinian government in return for its willingness to meet certain standards of improved fiscal governance.

One of the first benchmarks was the establishment of a single treasury account under the Palestinian Authority's Finance Ministry to increase openness and control over spending and take money away from Arafat's personal dominion.

Directing payments to Abbas, even through the World Bank as the European Union is proposing, would undo those steps.

But the Quartet is scrambling to find a way of continuing financial support for the Palestinian Authority without providing direct assistance to a Hamas-led government. Israel's refusal to continue transferring about $50 million in monthly tax and customs receipts to the authority and Iran's vague offer of financial support have only increased the urgency, European officials say.

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