The European Community has agreed to a $300 million package to compensate Israel and the Palestinians in the West Bank and Gaza Strip for their economic losses arising from the Persian Gulf war.
The 12 E.C. foreign ministers on Tuesday approved a $210 million loan to Israel and a $90 million grant to the Palestinians.
The “symmetric” aid to both Israelis and Palestinians, first proposed by Foreign Minister Hans-Dietrich Genscher of Germany, was approved in principle last month, but no amount was set at the time.
The amount was the subject of debate Monday by the E.C. foreign ministers, who were acting on a proposal submitted by the European Commission, the E.C. executive body. An initial proposed sum of $335 million, mentioned over the weekend by French Foreign Minister Roland Dumas, apparently was scaled back by reducing the Palestinian grant by $45 million.
At the same time, the E.C. agreed to subsidize the interest on the Israeli loan in the amount of $40 million from its own budget. The loan will be offered at prevailing market rates.
It is intended to help Israel restore its balance of payments, which suffered from reduced exports and a sharp drop in tourism attributable directly to the Persian Gulf crisis.
The Palestinians are to be compensated for the economic losses they suffered as a result of prolonged curfews and other restrictions, which kept them from their jobs in Israel proper, and the loss of remittances from Kuwait, where many held jobs.
Their aid will be channeled through Palestinian banks and agricultural cooperatives. It will be earmarked to improve economic and social conditions, including the construction of Palestinian schools and hospitals in the territories.
The European Commission also proposed to facilitate the entry of more Palestinian agricultural products into the European market.
There were no conditions attached to the aid package. But diplomatic sources here said the E.C. foreign ministers share the French view that it is “time for Israel to accept the presence in the territories of a representative of the E.C. Commission.”
Israel objects to an official E.C. presence in the territories on the grounds that it would imply diplomatic recognition of some future Palestinian entity in the West Bank and Gaza Strip. Israel argues that the E.C. Commission already has diplomatic representation, in the person of Gwyn Morgan, who has ambassadorial status and an office in Tel Aviv.
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