BRUSSELS (PNN) – By Fairoz Odeh –
Palestinian Prime Minister Mohammad Mustafa signed a new financial support agreement with the European Union on Friday during a ceremony with European Commissioner for the Mediterranean Dubravka Šuica, on the sidelines of the High-Level Conference in Support of the Palestinian Authority in Brussels.
The conference, attended by representatives of around 60 countries and international organizations, reaffirmed broad international backing for the Palestinian Authority while exploring ways to support economic recovery, institutional reform, and stability in the occupied Palestinian territories. Several cooperation and funding agreements were also signed between the European Union and participating partners.
The meeting aimed to mobilize political and financial support for the Palestinian Authority, strengthen international coordination to assist the Palestinian government in implementing reforms, promote economic development, and ensure the continuity of essential public services amid mounting challenges facing the Palestinian territories.
Speaking after the signing ceremony, Mustafa said the agreement reflected the strength of the partnership between Palestine and the European Union and marked an important step in helping the Palestinian government confront severe economic and financial challenges, strengthen national institutions, and improve public services.
He said the war in Gaza had caused "unprecedented destruction and immense human suffering," while policies of annexation, settlement expansion and movement restrictions were intensifying across the occupied West Bank, including East Jerusalem, undermining prospects for a two-state solution.
Mustafa said the Palestinian economy had contracted by nearly 30% since October 2023, with unemployment reaching 50%. He added that Israel's continued withholding of Palestinian clearance revenues had deprived the government of vital financial resources and pushed the economy to the brink of collapse.
Despite the crisis, Mustafa said his government had continued implementing a comprehensive reform agenda in cooperation with the European Union, citing progress in public financial management, social protection, and the modernization of school curricula in line with UNESCO standards. He also pointed to the holding of municipal elections and the government's call for legislative elections scheduled for November.
The prime minister urged international partners to take further political and economic measures to support the Palestinian Authority, including providing predictable and urgent financial assistance, ensuring the uninterrupted flow of humanitarian aid and Gaza reconstruction efforts, and expanding international recognition of the State of Palestine.
He also called for a review of the Paris Economic Protocol, arguing that it no longer provides a viable framework for the Palestinian economy. Mustafa proposed establishing an independent customs system, upgrading the Palestine Monetary Authority into a fully-fledged central bank, and potentially introducing a Palestinian currency linked to the euro or the U.S. dollar.
"The success of reform and recovery efforts depends on the existence of an appropriate political and economic environment," Mustafa said, stressing that strengthening Palestinian institutions and advancing the two-state solution represent an investment in regional stability and lasting peace.
For her part, European Commissioner for the Mediterranean Dubravka Šuica reaffirmed the European Union's commitment to supporting the Palestinian people and their institutions, emphasizing the importance of deepening cooperation with the Palestinian government to advance reform, development, and stability.
Opening the second ministerial meeting of the donor group for Palestine, Šuica and Mustafa both stressed the need to reinforce the Palestinian Authority amid the deteriorating humanitarian and economic conditions in Gaza and the occupied West Bank.
Šuica said the Gaza ceasefire remained fragile after months of war, while civilians continued to face worsening humanitarian conditions. She added that the occupied West Bank was under increasing pressure due to settler violence and the deepening financial crisis affecting the Palestinian economy.
"The stability of the Palestinian Authority is essential for peace and stability in the region, and it is also in Israel's interest," she said, highlighting the importance of maintaining reforms in public finance, governance, and the business environment.
The commissioner announced that the European Union would continue implementing its €1.6 billion multi-year support programme aimed at strengthening Palestinian recovery and resilience. She also confirmed the continuation of the PEGASE mechanism, which has provided more than €3.8 billion in assistance since 2008 with contributions from 21 donors.
Šuica further announced new financial commitments for Gaza, stressing that humanitarian needs—particularly in water and sanitation—could not be delayed. She called for accelerating early recovery efforts through the Team Gaza Initiative, which seeks to mobilize approximately $1 billion to restore essential services, rebuild critical infrastructure, and strengthen governance.