The human rights group Norwegian Refugee Council recently reported that the European Union is putting Palestinian lives at risk as it continues to delay disbursement of aid to vital sectors in the occupied Palestinian territory. A large portion of the EU funding committed to Palestine, aid valued at nearly 214 million euros ($230 million) annually, has been delayed since 2021 as the bloc continues to condition the release of the money on specific changes to Palestinian school textbooks. The EU halted the transfer of the annual aid to the Palestinian Authority (PA) after Hungary’s condition to change the curriculum in West Bank schools, because it "contains incitement against Israel and anti-Semitic content" as it claimed, despite the textbooks overall being in line with UNESCO standards, as Palestinian reports say.

Oliver Varhelyi, a Hungarian diplomat and the commissioner for European neighborhood and enlargement in Brussels, proposed that the aid to the PA requires the removal of "anti-Semitism and incitement" elements in textbooks taught in Palestinian schools. The EU's annual aid helps the PA pay for 137,000 employees, run its ministries, and ensure access to water, electricity and medical treatment in Palestinian towns and villages, and numerous development projects and programs. In another step, the EU reduced its aid to the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) by 40% for the 2022-24 period, from $135 million to $82 million.

PA’s appeal

The PA reiterated its appeal to the EU to provide its pledged aid without conditions. The authority is concerned about the continuing uncertainty over the EU’s annual financial support for its budget despite holding several meetings with senior EU officials in recent months.

Palestinian Prime Minister Mohammad Shtayyeh recently met EU foreign policy chief Josep Borrell in Brussels and urged the bloc to expedite the transfer of its financial support, which has been suspended for more than 15 months. Shtayyeh pointed to a growing financial crisis caused by the drop in external support and the continuation of Israel’s deductions from the tax it collects on behalf of the PA. "We have called on the European Union to provide its pledged aid without conditions. We hope to accomplish this very soon," Shtayyeh said at the start of the PA’s weekly Cabinet session in Ramallah.

What are the consequences?

The EU aid suspension is crippling critical Palestinian sectors and services, including health care in occupied East Jerusalem, with dire consequences for patients needing treatment at hospitals. The six hospitals in occupied East Jerusalem face a financial crisis because the aid-dependent PA has been unable to meet payments for their services, jeopardizing the health care of thousands of West Bank patients.

"These restrictions punish terminally ill patients who cannot get life-saving medicine and force children to go hungry when parents cannot afford to buy food. Palestinians are paying the cruelest price for political decisions made in Brussels," said Jan Egeland, the Norwegian Refugee Council’s secretary general.

At least 500 cancer patients, diagnosed since September 2021, have been unable to access adequate, life-saving treatments at East Jerusalem's Augusta Victoria Hospital, resulting in avoidable deaths, according to the Lutheran World Federation, which operates the hospital. Patients already under the care of the hospital have endured significant delays in critical treatment. The devastating impact of the EU’s decision extends beyond health care. Since November 2021, up to 120,000 Palestinians, the majority in Gaza, have not received cash support that is critical for their survival, according to news reports. Salaries of PA employees, including teachers and health care workers, have been cut by 20%.

"The delay because of a political position is putting lives at risk every day. We appeal to European Commission President Ursula von der Leyen to release the funds immediately so that critical assistance for vulnerable Palestinians and support for basic services can continue," Egeland further added.

The Gaza Strip has been battered for years by the Israeli siege and bombardment, which has pushed much of the population below the poverty line and rendered 63% of its population in need of some form of humanitarian assistance. Some 2.1 million Palestinians, out of 5.3 million, need humanitarian assistance, according to the European Civil Protection and Humanitarian Aid Operations (ECHO). The EU is the largest donor to the PA with some $1.4 billion spent under the EU joint strategy 2017-2020, and some $886 million in humanitarian assistance since 2000. Fifteen EU member states signed a letter to the European Commission criticizing the delay and calling for the immediate release of the funds. The EU’s Foreign Affairs Council requested that the issue be referred to von der Leyen to stop further delays, but it remains unresolved.

International financial aid

The PA suffered a sharp decline in international aid to its budget from $1.3 billion in 2013 to $129 million in 2021, leaving it strapped for cash and its economy in a dire crisis. In March 2018, then-U.S. President Donald Trump’s administration signed the Taylor Force Act into law, cutting around a third of the U.S. foreign aid to the PA due to payments that the PA makes to the families of Palestinians killed, injured or imprisoned.

In August 2018, the United States cut $300 million from its contribution to UNRWA, with the U.S. State Department calling it an "irredeemably flawed operation," and reduced its direct aid to the PA by more than $200 million. Besides, in February 2019, the Trump administration stopped all U.S. Agency for International Development (USAID) support for the West Bank and Gaza Strip.

The resulting financial crisis was exacerbated by the effects of the COVID-19 pandemic, limiting economic stimulation and growth. The World Bank reported recently that foreign aid to the PA plummeted from 27% of gross domestic product (GDP) in 2008 to just 1.8% of GDP in 2021. During the nearly two years of COVID-19 restrictions, the PA relied on local resources, which are minimal when tourism is removed from the equation. This caused a wave of Palestinians to slip below the poverty line. The World Bank reported that income fell in more than 60% of Palestinian households, and 20% of the previously employed workforce found itself unemployed.

The present situation for PA accumulated debt is equivalent to "close to 65% of GDP." With debt at its maximum and foreign aid only covering around 5% of the PA’s budget, down from 15-20% of the budget, the government is in crisis.

The Palestinian economy is at its maximum potential, with no room to grow. Self-dependence and financial sustainability are not possible while Israel’s occupation continues and Israel controls borders, water sources, airspace, East Jerusalem and implements a state of de facto annexation on the ground in most of the occupied West Bank, including large areas of its fertile and resource-rich land.