EU Pledges $435 Million to Ailing Palestinian Authority — With Conditions for Reform

The European Commission announced on Friday that it would provide 400 million euros ($435 million) in “short-term emergency financial support” to the ailing Palestinian Authority (PA) on the conditions that it address corruption, reduce unnecessary expenditures, and fix its educational curriculum, which has been widely condemned for promoting antisemitism and hatred of Israel.

The money will be disbursed in the form of grants and loans in three payments between July and September, the commission said in a statement, to address a Palestinian economic crisis which, some European officials fear, could lead to the collapse of the PA.

A “Letter of Intent” between the commission — the primary executive arm of the European Union (EU) — and the PA outlines the specifics of the funding and the agreed upon conditions needed to be met by the latter to secure the cash injection.

The conditions are aimed at “modernizing institutions, strengthening the rule of law, and reforming the social security system,” among other major reforms, according to the document.

The Letter of Intent mentions specific guidelines for the PA to adopt. To fight corruption, the EU is requiring the PA to enforce a mandatory retirement age for civil servants and to reduce government expenditures by 5 percent, among other measures.

It is unclear whether the EU’s demands to reduce government expenditures and reform the social security system will impact the PA’s so-called “pay for slay” program, which makes official payments to Palestinian prisoners held in Israeli jails, the families of “martyrs” killed in attacks on Israelis, and injured Palestinian terrorists. The European Commission makes no mention of the nine-figure Palestinian fund, which critics argue is a financial reward for terrorism and reportedly comprises nearly 10 percent of the PA’s budget.

The emergency funding for the PA is not intended for rebuilding Gaza, according to the commission.

In order to receive the payments, the EU is also requiring the PA to modernize its education curriculum.

For years, studies by both nonprofits and governmental bodies have shown that Palestinian textbooks for schoolchildren promote antisemitic incitement and violence.

Last year, the European Parliament passed a resolution calling on the European Commission to suspend aid to the Palestinian Authority’s educational system until antisemitic and violent themes are removed from textbooks issued to K-12 students.

Although the EU has provided over 1.2 billion euros in external aid to the PA between 2021-2024, the PA faces an impending economic crisis as a result of financial corruption, mismanagement, and an economic shock related to the Israel-Hamas War. According to a recent report from the World Bank, the PA is operating at a $682 million deficit, which is expected to increase to $1.2 billion by the end of 2024. 

The EU makes clear in its conditions for the PA that it is unhappy with the current Palestinian government. One of the aid conditions, for instance, requires the activation of a “citizen’s complaint mechanism” and that the PA address complaints at the cabinet level.

The president of the European Commission, Ursula von der Leyen, hailed the cash infusion as an important step toward a two-state solution to resolve the Israeli-Palestinian conflict after the Israel-Hamas War in Gaza concludes.

“Israelis, Palestinians, and the entire region deserve peace, security, and stability … With this joint strategy, we are supporting the Palestinian Authority’s reform efforts,” she said in a statement. “Together, we are laying the groundwork for economic and political stability in the West Bank.”

Mahmoud Abbas, the aging president of the PA, has refused to hold elections since taking power in 2005 and has repeatedly been accused of corruption and embezzlement.

The commission’s announcement came one day after Israeli’s parliament, known as the Knesset, on Thursday easily approved a motion to reject Palestinian statehood west of the Jordan River.

The American Jewish Committee (AJC) applauded the EU’s decision to attach conditions to PA funding.

“We welcome today’s significant announcement by the EU to, for the first time, tie all funding to the Palestinian Authority on its ‘progress towards the agreed-upon reform milestones,’” the group wrote on X/Twitter. “Urgent reforms include stopping salaries to terrorists and ending antisemitic incitement in PA textbooks.”