EU vows to speed aid mechanism for Palestinians

BRUSSELS, May 15 (Reuters) The European Union vowed today to get a new aid mechanism for the Palestinians, meant to bypass the Hamas-led government, up and running as soon as possible but said it might not be able to pay missing salaries.

EU foreign policy chief Javier Solana told reporters the 25-nation bloc was working on an internationally supervised fund to channel assistance for schools and hospitals without going through the government run by the Islamist militant group.

''We have to do it rapidly. The (European) Commission is working very hard on that but it will not be instantaneous,'' Solana said on arrival for a meeting of EU foreign ministers.

Asked whether the fund, meant to ensure suspended foreign aid reaches recipients directly, would also pay civil service salaries, he said: ''This is not decided. Very likely, salaries only related to only very basic needs such as schooling, hospitals etc.'' Some 165,000 Palestinian Authority employees have not received salaries for March and April, largely because Israel has withheld some 55 million dollars in tax and customs revenues collected on behalf of the Palestinians each month.

The EU, which announced a freeze in direct aid last month because of Hamas's refusal to recognise Israel and renounce violence, has been stung by accusations in the Arab world that it is starving the Palestinian people.

Brussels insists it is still the biggest aid donor to the Palestinians and it never paid PA salaries, only contributing a small amount via a World Bank trust fund for budget support.

That contribution was frozen last year because the PA inflated its payroll before elections in January, when Hamas swept the long dominant Fatah movement of President Mahmoud Abbas from power.

The EU continues to regard Abbas as its main interlocutor.

He will address the European Parliament on Tuesday and meet senior EU officials in Strasbourg, France.

Solana hinted that US Congressional resistance might make it impossible for the World Bank to run the new aid mechanism despite official support from the Bush administration.

''We have to talk to the World Bank and see if they want to be the agency in charge of the mechanism or not. There are other possibilities,'' he said without spelling them out.

''The US is supporting the mechanism as you know ... They have rules that are different to ours. Probably the Congress would be very much (more) restrictive on giving money to the Palestinians than we are,'' Solana added.

Palestinian Prime Minister Ibrahim Haniyeh warned the EU on Sunday against trying to bypass his government and vowed that Hamas would not make what he called political concessions in return for aid.

REUTERS AK HS1420