As P.A. Financial Crisis Looms, Europe’s Hard Line Starts to Waver

With the Palestinian Authority facing the prospect of a financial crisis when Hamas takes power in two weeks, the European Union, the P.A.’s biggest donor, is wavering on its commitment not to fund a government led by the terrorist group. The question of whether to continue funding the Palestinian Authority is constantly on the minds of E.U. diplomats as they weigh their commitment to the principles of the diplomatic “Quartet” — composed of the European Union, United States, United Nations and Russia — overseeing the Israeli-Palestinian peace process. The Quartet has declared that it will not support Hamas unless it recognizes Israel’s right to exist and renounces terrorism, yet also feels it has a humanitarian obligation to the Palestinian people.

With Hamas showing no indication that it’s ready to accept the Quartet’s conditions, the possibility of P.A. bankruptcy is looming.

A World Bank report released Thursday estimates that a reduction of E.U. aid, combined with Israel’s decision to withhold P.A. tax revenue, will cause a deep economic depression in Palestinian areas.

Aware of the coming crisis, P.A. President Mahmoud Abbas had embarked on a grand fund-raising tour of Europe this week. He met with Austrian Chancellor Wolfgang Schuessel in Vienna on Monday and was to address the European Parliament and meet with E.U. leaders in Brussels.

But Abbas never made those later meetings: He cut short his trip Wednesday to deal with fallout from Israel’s military siege of a Jericho jail.

Following Hamas’ Jan. 25 victory in P.A. elections, the West initially appeared united in its refusal to deal with a group committed to the destruction of its neighbor. Russia promptly shattered that consensus, however, saying it had never considered Hamas a terrorist group and inviting its leaders to Moscow for talks

E.U. officials told JTA they’re hoping for a shift in Hamas’ stance at a March 28 Arab League summit in Khartoum, Sudan.

If not, E.U. officials are desperately seeking ways to continue providing aid by working around Hamas, perhaps channeling money through Abbas — who is staying on as P.A. president, though he has little clout — U.N. relief agencies and non-governmental organizations. However, interviews with top-level diplomats in Brussels show the Europeans believe they’ll have to channel part of the aid through a Hamas-led Palestinian Authority.

For critics of the E.U.’s cash flow to the Palestinians, the cliche of a Europe that coddles Arab terrorists could be realized.

“The notion that the E.U. would stand fast on anything, including boycotting Hamas, I find slightly absurd,” observed a key British participant in longtime European efforts at Mideast peacemaking.

“The idea that with patience, goodness will prevail, is almost too nauseating for some of us to think about,” the Briton said, asking that his name be withheld because he is still active in high-level politics.

Abbas told European leaders they should keep the money flowing because Hamas will soften its violent rhetoric “step by step” if given some time, E.U. officials told JTA. Israeli officials consider that approach naive, and believe only economic pressure has a chance of moderating Hamas.

Abbas’ case was not helped by the Palestinian reaction to the Israeli raid on the Jericho prison. Palestinian gunmen set fire to a British Council center in Gaza City, attacked other U.K.-owned property and kidnapped at least nine foreigners, including two Frenchmen, who were released a day later.

“If this were to go on, of course, there would be a breakdown of our help, and the first that would suffer would be the Palestinians themselves,” said Benita Ferrero-Waldner, the E.U.’s external relations commissioner.

Ferrero-Waldner gave the Palestinian Authority $143 million, including more than $20 million to pay civil servants and P.A. security forces, in late February — after Hamas’ election, but before the terrorist group took power.

In fact, the E.U.’s initial hardline posturing seems to be have been abandoned, judging from Ferrero-Waldner’s statement last weekend, at an E.U. Council of Foreign Ministers meeting in Salzburg, that “We want to keep the door open.”

Why the waffling?

Jana Hybaskova of the Czech Republic, chairwoman of the European Parliament’s Delegation for Relations with Israel, says the European Union views balance, not a heavy hand, as the key to pushing Hamas toward moderation.

“Across the spectrum in the E.U., from the socialists to the most right-wing parties, nobody wants the Iranization or Iraqization of the [Palestinian] territories,” explained Hybaskova, who predicts that the European Union might keep some money flowing to the P.A. security forces to prevent instability.

But there’s no unanimity on policy: Some European leaders, such as German Chancellor Angela Merkel, have nothing but rebukes for Hamas, while E.U. diplomats such as Ferrero-Waldner and foreign policy chief Javier Solana sound more inclined to appease the group.

“Our foreign minister has made it very clear that this is not the time to even think about the possibility of how to give money to the P.A.,” one German diplomat confided, “but other ministers would probably give a carrot to Hamas if it shows some signs of compromise.”

The new E.U. member states from the former Eastern bloc are considered more sympathetic to Israeli concerns about Hamas-sponsored terrorism. Diplomats say the Scandinavians, followed by the French, Spanish and Belgians, are the driving force behind the carrot approach.

“We must avoid suffocating the Palestinian territories. That would lead to economic, social and security chaos,” French Foreign Minister Philippe Douste-Blazy said at the E.U. meeting in Salzburg. The council consists of ministerial-level government representatives from each E.U. country, and is the most powerful decision-making body in the 25-member union.

Emma Udwin, spokeswoman for Ferrero-Waldner, denies that her boss’ February aid package marked a softening of the E.U.’s stance on withholding money from Hamas.

“We did what we could to meet the immediate basic needs of the Palestinians, since half of them live in poverty,” she said.

Some analysts, like Emanuele Ottolenghi, a fellow at Oxford University, say the European Union is hypocritical, willing to let millions of people die in places like Sudan and the Congo while continuing to prop up a Palestinian Authority that has wasted millions of dollars in international aid on corruption and support for terrorism.

“If the money stops flowing, so what?” he asked. “The Palestinians have to bear the consequence of their own vote.”

Meanwhile, some wonder how the European Union will keep the Palestinian Authority on oxygen without creating a rift with the United States. The Bush administration has said it plans to increase humanitarian funding to the Palestinians, but has maintained its refusal to deal with a Hamas-led Palestinian Authority.

Richard Whitman, head of the European program at Chatham House, a London-based think tank, said it suits U.S. diplomacy to take a tough stance against terrorism while the Europeans — perhaps with tacit U.S. approval — keep the Palestinian territories from descending into mayhem.

“The E.U. believes it has a more reasonable approach than the U.S., one that brings financial stability,” he said. “Throwing money at problems drives an awful lot of European approaches to difficult problems. It’s a strand of the European DNA.”

An American Jewish Committee delegation in Europe this week has been discussing the issue in meetings with European leaders.

“What I’m seeing right now is a great deal of internal debate among E.U. officials and foreign ministers about how they can, with minimal or no pain inflicted on the Palestinian people, not give aid and comfort to Hamas, and they will frankly admit that they have not figured out,” said Jason Isaacson, the AJComittee’s director of government and international affairs.

“There’s a powerful sense in Europe of faith in a Hamas change and redemption, which does not exist in Washington,” he said. “But the evidence against the possibility of redemption is so overwhelming that people who want to believe that Hamas will moderate are looking hard for any signs of it, and they convince themselves they see those signs when they don’t exist.”