EU `paymaster' wants seat at peace talks

The European Commission yesterday insisted that, as paymaster to the Middle East peace process, the EU should no longer be excluded from the main talks table and that it should be given a leading role in the distribution of aid.

While not questioning the "leading" role of the US as peace broker, the Commission's vicepresident with responsibility for relations with the Mediterranean, Mr Manuel Marin, said the time had come for an upgrading of the EU's "complementary" role.

In a paper for Foreign Ministers on the future economic and political role of the EU in the process, the Commission points out that the EU and member-states have contributed £1.3 billion to the Palestinians from 1994 to 1997.This is 54 per cent of Palestinian overseas aid receipts, compared to the US contribution of 10 per cent.

Mr Marin says EU funding should continue beyond the end of the year when the current programme runs out as it has provided an indispensable element in the albeit tentative survival of the process.

He admits, however, that the EU's massive programme to the Palestinians has failed economically. This has been largely due to the stifling impact of Israeli-enforced closures of the West Bank and Gaza following terrorist attacks - for 21 per cent of effective working days in the 199396 period. During that time, neither workers nor goods could reach their jobs nor markets.

Representing losses to the Palestinian economy in 1996 of 7.4 per cent of GDP, the closures have "more than invalidated the international donor efforts", says the Commission.

GNP per capita in the West Bank and Gaza has declined by 35 per cent since 1993, unemployment has doubled in the same period to 42 per cent, and private investment crashed to one quarter of its previous level.

The EU's recent diplomatic effort has been focused through its special representative, Mr Miguel Angel Moratinos, who has helped

set up a code of conduct aimed at building confidence.

Yesterday's paper reiterated the EU concern that the main obstacle to progress lies in the Israeli government's reneging on its Oslo commitments. Mr Marin said Israel must also clear obstacles to Palestinian economic development.

But it is also highly critical of the Palestinian National Authority (PNA) and the "cloud of financial suspicion surrounding its management of public resources".

The PNA "has not responded with the necessary diligence to the requirements of its own constituency, especially the Palestinian Legislative Council, for more transparency and accountability", the paper says.