Barcelona Process and Assistance to Palestinian Society

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John Barrett (Edinburgh, West): Will the Minister comment on the possibility of co-ordinating with other organisations the monitoring of the large sums that go into this complex area? Other groups and organisations must have problems similar to those of the Government, and there may be scope to work with others in the region.

Hilary Benn: Indeed. Several existing forums aim to co-ordinate the international aid effort for the West Bank and the Gaza Strip, including the formal ad hoc liaison committee, which meets regularly. Member states are also represented by the EC. Furthermore, informal donor meetings take place in Brussels—the last one was just before Christmas—and in Jerusalem, and the World Bank and the IMF usually attend.

The hon. Gentleman has drawn attention to an important point. We and the rest of the EC have pushed for a more harmonised, pooled approach, under which donors would move away from their bilateral activities towards—I hate to use the jargon—a more joined-up attitude. That approach can help to overcome the difficulties of the Palestinian Authority, whose capacity to cope with the challenges that it faces—not least the intifada—is greatly stretched. It is a step forward to be able to deal with one organisation in which several multilateral bodies and individual bilateral donors have pooled their money. That is an issue in several developing countries, and we are pushing in that direction because we can see the benefits.

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The Chairman: Order. If no more hon. Members have questions, we shall proceed to the debate on the motion.

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Hilary Benn: The Committee has already heard quite enough from me, so I shall not make a speech.

I beg to move,

    That the Committee takes note of European Union Documents Nos. 11381/00, the mmission Communication on ''Reinvigorating the Barcelona Process'', and 14778/00, relating to the Special Report by the Court of Auditors on the management by the Commission of the programme of assistance to Palestinian Society; and welcomes the Government's approach to EC assistance to Palestinian society and supports the Government's continuing commitment to the Barcelona Process.

Mr. Alan Duncan: I begin by unreservedly condemning the attacks that took place in Jerusalem, and I am sure that all Committee members will want to join me. We welcome the Barcelona process, more formally known as the Euro-Mediterranean partnership, and look upon it as a valuable part of the relations of European Union member states with the other Mediterranean states. It has helped to create and improve dialogue and it has the potential to contribute much needed economic development to areas, especially in the middle east, where such assistance could bring real benefits.

The substance of the reports and communications before us is serious. Large sums of money and the economic future of many Palestinians are at stake. The Palestinian Authority is in desperate need of economic progress and of the stability that that will bring. If we are to see the viable Palestinian state that is required for long-term peace, the question of economic development in the Palestinian areas must be addressed. We must work to ensure that the infrastructure, power supplies, water supplies and transport links, all of which I referred to in a debate in Westminster Hall on 15 January, are in place to support a tolerable standard of living and properly functioning civic facilities.

Alongside that basic infrastructure, a functioning education and health care system must be established and maintained. All those are vital, and effective aid will help to increase trust and reduce the economically based resentment that is the enemy of progress. We have the opportunity through these programmes, if they are well implemented, to help to build hope among the Palestinians.

However, it is our duty to raise some serious issues in the context of aid, not just as trustees of public funds, but as people concerned with peace and progress in the middle east. The original reports contain worrying references to mismanagement of aid money by the Palestinian Authority, apparent mismanagement of large sums and a lack of transparency and clarity in the way in which those funds are spent. We must be sure where the money goes and what it is spent on.

Nobody objects to aid that helps to create a more viable peace process, and the EU aid referred to in these documents has the potential to do just that. However, the safeguards and assurances must be in

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place to guarantee that the money cannot find its way into the hands of terrorists or be spent on arms used to murder innocent Israeli civilians on the street. We do not want to find that this aid has funded arms shipments rather than a viable Palestinian state. It must get to the people who really need it to improve their lives, and it must be spent on basic energy, transport and other infrastructure projects.

Another aspect, which may appear to some tangential but is relevant to EU aid to Palestine and illustrative of the need for transparency, is the question of school textbooks. School is where opinion starts, and textbooks shape the minds of millions of youngsters. We must know what steps are being taken to ensure that their content is pro-peace process, and that no polarising or racist language is used in the books that might shape the outlook of future generations for the worse. We must be sure that any way in which EU aid could conceivably be spent is monitored to ensure that it serves its intended purpose. I know that the issue of the educational content of aid is of interest to my hon. Friend the Member for Surrey Heath, and also to my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard).

About one third of DFID's aid budget is spent by EU-managed programmes. It must be a priority for the EU and for our Government to address any shortcomings in the management of aid programmes that use such large amounts of public money. They have massive potential to do good, but can also do evil or simply be wasted if the proper safeguards are not in place and carefully monitored.

In parallel, the Palestinian Authority must address its shortcomings and manage the aid granted to it with the clarity and honesty demanded by the public. Only if we make sure that the aid is properly targeted can we be sure that it will help to build the infrastructure and the basic services needed to create a viable stable state. Only then shall we see a state that is willing and able to engage fully in the peace process and engage the Israeli Government in constructive dialogue. Only then will there be genuine progress in the peace process. That is by no means the only element required for long-term peace, but it has an important role to play, and I hope that the Committee's deliberations today will contribute to ensuring that it happens.

11.14 am

Mr. Hopkins: I shall speak briefly, because unlike some of my hon. Friends, I am not an expert on middle east affairs. None the less, I should like to put my views to the two Ministers.

I welcome all that the European Union can do to help Palestinian society. It is desperate; people are suffering terribly in Palestine—and some of that is a result of the actions of terrorists from Palestine. The world needs to focus on what is happening there. It is not surprising that funds are sometimes mismanaged in a place that at times barely functions as a coherent state. Even in the best regulated states, like those of the European Union, funds are not always perfectly managed.

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We must deal with the political problem of the middle east, and not study the details of aid. It is significant that my right hon. Friend the Minister for Europe is here as well as my hon. Friend the Under-Secretary of State for International Development, because the problem is clearly political, and not just a technical aid problem. Clearly the Israelis must be pressed more strongly to accept the establishment of a Palestinian state with agreed boundaries—boundaries agreed by the Palestinians, not just imposed by one side. That will be a difficult process. Moving from the Oslo accords to where we are now has been a depressing decline, and talking about aid without dealing with the major political problems is like watching a ship listing heavily and slowly sinking, while discussing financial arrangements with the purser's office. That may sound like a trivial way to look at things, but we must do something about the fact that the ship is in peril. Major steps need to be taken internationally.

It is also important to recognise that both states—Israel and Palestine—are not political monoliths. There are peace movements within both of them, and secular democrats who want a proper modern state and do not want to give in to the extremes of religious nationalism that have taken hold in recent years. We should remember that right-wing Governments in Israel often win elections only by small majorities, against a substantial body of opinion in which there is concern about the direction taken by the Israeli Government.

On the Palestinian side, encouraging political developments have taken place in past years. Perhaps they have been overwhelmed recently by the rise in religious nationalism, but it is the despair of the Palestinian people that has given strength to the religious nationalists, extremists and terrorists. There are and have been many democratic politicians on the Palestinian side. Throughout the Arab world a high proportion of university academics are Palestinian. They have a tremendous amount to offer the world once their state is established and they can begin to live a normal life of one that is dominated and fragmented.

I have real optimism about the future of Palestine once we can establish a viable state. I also think—this has been said before—that the security of Israel depends on accepting a Palestinian state on agreed terms. Once that happens, Israel will have a secure future and the extremism that is now apparent in the Government of Israel will diminish. Democrats and peace lovers will emerge, and the same will happen on the other side. We must put more effort into working for that. The tragic events of the past six months have, I think, stirred the west to take the situation more seriously, instead of acquiescing in what happens without doing much. Pressure must be exerted on Israel, in addition to adopting measures to stop terrorism against Israel.

I am describing a simple approach, but we must not be too obsessed with the details of aid when a major political problem needs to be dealt with.

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