IRIA News

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The European Union has announced a comprehensive three-year financial assistance package worth $1.8 billion to the Palestinian Authority (PA).

The funding aims to support governance reform, bolster reconstruction efforts in the West Bank and Gaza, and reinforce the EU’s long-standing backing of a two-state solution to the Israeli-Palestinian conflict.

This package, announced ahead of a high-level meeting in Luxembourg between EU foreign ministers and Palestinian Prime Minister Mohammad Mustafa, was unveiled by Dubravka Suica, the European Commissioner for the Mediterranean region. The aid spans from 2025 to 2027 in the form of investments and other humanitarian projects.

Aid for reforms

The $1.8 billion commitment is broken down into three main components. Of the total, $697 million will go directly to the Palestinian Authority to meet immediate financial needs and maintain essential services for citizens. However, this support comes with strings attached, with the most important one being governance reforms.

“We want them to reform themselves because without reforming, they won’t be strong enough and credible to be an interlocutor, not only for us, but an interlocutor also for Israel,” Suica told media reports.

Today we had the first-ever EU High Level Dialogue with the Palestinian Authority.
We discussed the war in Gaza and our support to the Palestinian people.

My joint press conference with Prime Minister Mohammad Mustafa ↓ https://t.co/r7kjVWiORc

— Kaja Kallas (@kajakallas) April 14, 2025

The EU’s emphasis on reform is not without precedent. The Palestinian Authority has long faced criticism, both internally and externally, for inefficiency, corruption, and an increasingly autocratic style of governance.

With the last Palestinian legislative elections held in 2006 and no democratically elected leadership since the expiration of that four-year mandate in 2010, the call for democratization is growing louder.

Aid for resilience and recovery

In addition to direct support to the PA, another $648 million is allocated for “resilience and recovery” projects across the Palestinian territories, including Gaza, the West Bank, and East Jerusalem.

These funds are earmarked for critical sectors such as water, energy, and infrastructure, and will be disbursed “once the situation on the ground allows,” about the ongoing war in Gaza.

The final component, up to $432 million in loans from the European Investment Bank, will be made available to boost the Palestinian private sector. These loans are contingent upon approval from the EIB’s governing body but mark a significant step toward economic sustainability.

The EU has already contributed about $1.5 billion between 2021 and 2024, with more than $1 billion of that already allocated. The new pledge reinforces the bloc’s role as the largest international donor to the Palestinian people. “We are investing now in a credible manner in the Palestinian Authority,” Suica emphasized.

Israel continues attacks

The EU’s announcement comes amid ongoing violence in Gaza and deteriorating humanitarian conditions. Since the collapse of a short-lived ceasefire on March 18, broken unilaterally by Israel, military operations have escalated. Israel, citing national security concerns, has targeted hospitals and medical infrastructure, which Palestinians have used as shelters and for treatment.

A recent Israeli air strike destroyed parts of Al Ahli Arab Hospital, the last fully functional hospital in Gaza City, including its intensive care and surgery departments.

The Israel Defense Forces (IDF) claimed the hospital housed a “command and control centre used by Hamas.” Gaza’s civil emergency service reported no casualties, but one child died during the “rushed evacuation process,” according to the Episcopal Diocese of Jerusalem, which runs the hospital.

The organization added it was “appalled” at the bombing on the morning of Palm Sunday and the beginning of Holy Week. Surrounding buildings, including St. Philip’s Church, were also damaged.

The Gaza health ministry said the building was “completely destroyed,” forcing the displacement of patients and staff. The IDF stated it used “precise munitions” and “aerial surveillance” for the attack. It said that it issued “advanced warnings.” A doctor reportedly received a call, “All patients and displaced people must go out. You have only 20 minutes to leave.”

Switzerland’s foreign ministry stated, “It is essential to protect civilians and infrastructure such as hospitals, which must neither be used for nor targeted by military operations. A lasting ceasefire is indispensable. Hostages must be released, and humanitarian aid must be facilitated without obstruction.”

The EU’s High Representative for Foreign Affairs, Kaja Kallas, echoed those concerns, saying, “Israel has the right to defend itself, but its current actions go beyond proportionate self-defense.”

In early March, Israeli Prime Minister Benjamin Netanyahu announced a blockade on desperately needed aid to Gaza, citing it as leverage to pressure Hamas into agreeing to a phased ceasefire. That move violated the original ceasefire terms, which stipulated that the first phase would continue automatically until a second-phase agreement was reached.

Political deadlock in Palestinian leadership

The division among the Palestinian leadership further complicates matters. Despite multiple announcements, new elections have failed to materialize due to enduring rivalries between Fatah, which controls the West Bank, and Hamas, which governs the Gaza Strip. The European Union is pushing for reforms within the PA, hoping it might eventually become a viable governing body for both the West Bank and Gaza.

This goal, however, is far from certain. Israel has rejected the notion of transferring control of Gaza to the Palestinian Authority post-conflict. The Netanyahu government remains firmly opposed to the EU-backed two-state solution.

Regional efforts

The regional powers are also ramping up diplomatic and humanitarian efforts. In a joint statement following a meeting in Doha, Egyptian President Abdel Fattah Al Sisi and Qatari Emir Sheikh Tamim bin Hamad Al Thani expressed “grave concern over the continued escalation in the Gaza Strip” and emphasized “the importance of continuing joint efforts to achieve an immediate and sustainable ceasefire.”

They affirmed their support for Palestinian national reconciliation and the Gaza reconstruction plan proposed by Egypt and backed by the Arab League. “The two sides have expressed their grave concern, and stressed the importance of alleviating the suffering of the brotherly Palestinian people,” their statement read.

The European Union’s $1.8 billion commitment to the Palestinian Authority marks a significant geopolitical move aimed at addressing both the humanitarian crisis and the structural governance issues plaguing the Palestinian Territories. It reaffirms the EU’s role as a key player in the Middle East peace process and underscores the need for democratic reform and reconciliation among Palestinian factions.

As the situation in Gaza remains volatile, and with regional and international actors stepping up efforts to mediate and rebuild, this funding package may represent a turning point, or at least a meaningful attempt to steer the region away from perpetual conflict and toward lasting peace.