EU PEGASE aid mechanism – guide to Gaza donors – EU paper/Non-UN document

THE EUROPEAN UNION’S PEGASE MECHANISM: AT THE SERVICE OF THE PALESTINIAN POPULATION, OPEN TO ALL DONORS

a guide to donors wishing to contribute through pegase

to the early recovery and reconstruction of gaza

jerusalem, 2 march 2009

1.1 Background

In February 2008, as a response to the Paris Donor Conference and the Palestinian Authority’s (PA) Palestinian Reform and Development Plan (PRDP) 2008-2010, Commissioner Ferrero-Waldner launched the European Union’s PEGASE mechanism. It built on the experience of the Temporary International Mechanism (TIM) to provide a means for the European Commission, together with participating donors, to direct financial assistance to support implementation of the PRDP. It continued to implement TIM programmes of allowances to the PA’s civil servants and pensioners, delivery of fuel to the Gaza Power Plant, payment of social allowances to the most Vulnerable Palestinian Families and the payment of the PA’s arrears to the private sector. In addition to these programmes, PEGASE provided the vehicle for the re-launch of a comprehensive programme of development assistance, covering all four sectors set out in the PRDP.

Since 1 February 2008, the PEGASE mechanism has disbursed (at 31 January 2009) €409.2 million in direct financial support. It has also managed over €131

million in financing from 14 Member States of the EU of which 78% was disbursed in the same twelve month period. It has thus managed total commitments of financing from the EU and other donors of over €551 million. All of its programmes benefit both the Gaza population and the population of the West Bank.

PEGASE operates in close co-ordination and cooperation with other aid delivery mechanisms (UNRWA, transfers to the PA’s STA, contributions to the World Bank Trust Fund). It provides donors who wish to target their assistance to the PA with a high level of transparency and of external control and reporting.

This paper describes the way in which the European Union uses PEGASE to deliver support to the Palestinian population, both in the West Bank and in Gaza, and the ways in which PEGASE will be used to deliver vital support, immediately and during the early recovery period, as well as to stimulate the economy and reduce aid dependence. It also sets out, in outline, ways in which PEGASE could be used to assist in reconstruction in Gaza, through investment in infrastructure and equipment.

As well as describing the programmes which will be implemented, the paper sets out the systems of payment, control and audit which assure transparency, predictability and reliability to the PA and to donors.