Foreign Ministers Ali al-Shami of Lebanon, Ahmet Davutoglu of Turkey and Walid Moallem of Syria
Foreign Ministers Ali al-Shami of Lebanon, Ahmet Davutoglu of Turkey and Walid Moallem of Syria Photo by Reuters
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Turkey signed a deal Thursday with its Arab neighbors of Syria, Jordan and Lebanon to establish a cooperation council to create a zone of free movement of goods and persons among them.

Turkish Foreign Minister Ahmet Davutoglu emphasized that the deal should not be seen as an alternative to the European Union and invited all other interested countries to join .

Turkey is still eager to join the EU, Davutoglu said, but added that the bloc could not and should not restrict the Muslim country's relations with its neighbors.

The four countries signed the deal at the Turkish-Arab Economic Forum, where officials from Arab nations burst into applause as Turkey's prime minister walked to the podium. Turkey's popularity in the Middle East has risen amid disputes over Israel's Gaza blockade and United Nations sanctions against Iran.

Meanwhile, the European Union said Thursday that it planned soon to grant duty-free access for Palestinian products.

EU Trade Commissioner Karel de Gucht said such a deal would "improve the access of Palestinian exports to the EU (and) help revamp the private sector in the Palestinian Authority."

De Gucht's comments were released Thursday after he met with Palestinian Economy Minister Hasan Abu-Libdeh, who said the duty-free access would help the state-building process we are undergoing with the assistance and guidance of close friends such as the EU.

No EU capitals have opposed such a move, likely to take effect within months. The issue carries mostly political significance. EU trade with the Palestinian Authority was only 71 million euros ($85 million) in 2008.

Last month, the EU announced that it would rethink the future size of its 300 million euro aid budget for Palestinians if no progress is made towards peace soon.

The aid is supposed to prepare the Palestinians for a peace treaty with Israel that will give them their own state, but "if that isn't coming then I can see a number of questions", said Christian Berger, the EU's representative in Jerusalem.

The annual assistance given to the Palestinians over the past 16 years represents the EU's highest per capita foreign aid program. The current seven-year budget, part of which funds United Nations support projects, is locked in until 2013.

EU Ambassador to Israel Andrew Standley said discussions on the next seven-year budget would start soon and focus on how best to spend the money.

There was a debate about whether it should be spent mostly on reducing poverty or more should be devoted to projects that advanced EU geopolitical goals, he said.

After 16 months without negotiations of any kind, Israel and the Palestinians began indirect talks last month on a peace treaty via United States mediator George Mitchell.

"If there's a breakthrough then I guess there's a likelihood that our support will be increased," Berger told reporters at a briefing of EU delegation heads.