EU helps cash-strapped Palestinians upgrade Gaza crossing

(BRUSSELS) - The EU signed Monday a 35-million-euro deal with the cash-strapped Palestinian Authority to build a waste-water treatment plant in the West Bank and upgrade a vital Gaza border crossing.

The agreement, signed by Palestinian prime minister Salam Fayyad and EU chief diplomat Catherine Ashton in Brussels, is part of a 300-million-euro ($397-million) annual assistance package provided by the European Uinon to the Palestinian Authority.

The deal includes 22 million euros to build a medium-scale waste-water treatment plant in the northern West Bank.

The second project, totalling 13 million euros, will upgrade the Kerem Shalom border crossing between Israel and southern Gaza as part of EU efforts to improve access of goods to the strip after an Israeli naval blockade.

The project will build and expand hard infrastructure such as inspection areas and warehouses, and supply equipment such as a weigh-bridge and x-ray machines.

"The EU will significantly contribute to the improvement of the living conditions of the Palestinian population through two separate projects in the West Bank and the Gaza Strip," Ashton said.

With Ashton hosting a donors' meeting on Wednesday, the IMF urged donor countries last week to honour their promises to the Palestinian Authority, whose economy is entering a "difficult phase" and could further deteriorate.

The Palestinian economy is experiencing a serious drop in liquid assets that has worsened since last year due to a reduction in aid from Western and Gulf countries, as well as trade and movement restrictions imposed by Israel, an IMF report said.

The report estimated a financing gap of about $500 million.

"The Palestinian Authority is facing a serious financial difficulty, a crisis indeed," Fayyad told a news conference alongside Ashton.

The donors' conference, he said, is "an opportunity for us to have a good discussion, look for ways in which that gap may be bridged."