European Commission’s, Javier Solana's, announcement of a likely release of 40 million euros in aid to Palestinians a couple of days ago must seem to be of the rarer type of good news for Palestinians these days. The commission, he said, will continue “to alleviate a difficult financial and economic situation.” The release of funds will be accompanied by a set of conditions Mr. Solana added.

The EU High Representative for the Common Foreign and Security Policy of the EC, Javier Solana, who spoke at a press conference following his meeting with PM Ahmed Qurei in Brussels, said he was considering the release of the frozen funds after having been assured by the visiting delegation, which included the Minister of Finance, Salam Fayad, and the chief-negotiator, Saeb Erekat, of greater transparency within the management of the Palestinian National Authority’s finances.

Calls for reform, especially in finance, have been made by the international community, most prominently by the Quartet, in addition to major agencies working on the ground, such as the World Bank. Reform plans are oft-cited as a precondition for continued financial support to the PNA. The appointment of Salam Fayad, a former IMF senior official, as Finance Minster is often attributed to such pressures.

Calls for reform have also been made from within; some 300 members of the Fatah party recently “resigned” in protest to the poor progress in that regard and Qureia continues to threaten his resignation if his demands for increased transparency over the transfer of funds to security service personnel are not answered by President Arafat. The World Bank in its assessment of the Palestinian Economic Crisis, “Twenty-Seven Months – Intifada, Closures and Palestinian Crisis,” published in May 2003, concluded that though the PNA’s fiscal position remains precarious, their collapse had been averted by emergency budget support from donor countries, which accounted for some 60 percent of an extraordinary, sustained donor effort, disbursing around US$1 billion in 2002. It noted that the budget support had been justifiable on political/institutional grounds and recommended that PNA budget support be continued.

The enormous international aid packages are frequently criticized, among others, by those working in relief and development for effectively serving the Israeli army in its occupation of Palestinian territories by meeting what should actually be the occupier’s obligation of providing for health, education and welfare, in addition to paying for the damages created by recurrent Israeli military operations. Some International organizations have started to examine pulling back on their financial support in the territories, as the extent of this dilemma is being realized.

As necessary and indispensable the sustained support to the Palestinian people undoubtedly is, direct PNA budget support is increasingly raising reservations on the ground for the ingrained downside that comes with it. The reservations are not triggered by the concern over corruption or the PNA’s compliance with its various “security” obligations alone, which have been the decisive issues for the international donor community so far. Rather the concern lies with the legitimization and justification the continued upholding of an almost virtual Palestinian National Authority lends to the Israeli policy both inside and outside the occupied Palestinian territories. A legitimization based on the false assertion that it is fighting an establishment that is solidly in control of its domain, and responsible for all that emanates from it.

The described scenario has in a sense provided the Israeli government with an “equal opponent,” and a false pretense that has been sufficient for the some of the International community, especially the US, in conveniently “concealing” what is nothing other than a continued occupation identical to the pre OSLO days.

Despite the frequent and strong condemnation of the PNA by the US and Israel for not doing enough for security, or being involved in activities incompatible with the accords it signed, it has been effectively saved from collapse by the continued budget support and the recent Israeli resumption of VAT transfer that Israel collected on its behalf. This seems to suggest that its existence is politically and strategically of more benefit than is admitted. Whether this is also the case for the occupied Palestinian population is questionable.