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The European Commission has created a plan to renew financial assistance to the Palestinian Authority if and when a unity government is formed that receives international recognition.

According to the plan, the details of which Jerusalem has been informed, the European Union will channel its aid to a temporary mechanism to be used among other things to build up governmental and institutional capabilities for the future Palestinian state, to build a judicial system and to assist the PA's regular police force.

The mechanism for distributing the aid, which at present "bypasses" Hamas to meet humanitarian needs in the PA, will return to working with the Palestinian government when the decision is made to renew aid.

The initiative, known as the Temporary International Mechanism, was presented last week in a meeting of the Quartet in Berlin.

The EU's Commissioner for external relations, Benita Ferrero-Waldner, did not give a total figure for 2007 but said 35 million euros were in the pipeline, and that it would be an expanded version of what the EU had done so far.

The EU gave some 700 million euros to the Palestinian people last year, she said.

Ferrero-Waldner also said yesterday that these programs could get underway before the EU decides whether to provide direct aid to the unity government being formed by President Fatah and Hamas following the Mecca agreement. She explicitly held out the prospect of a resumption of direct aid if a new administration reflected the principles of the Quartet.

Ferroro-Waldner visiting region

Ferrero-Waldner will arrive in Jerusalem tomorrow at the start of a four-day visit to the Middle East. She will meet with Prime Minister Ehud Olmert, Foreign Minister Tzipi Livni, Defense Minister Amir Peretz, and opposition leader Benjamin Netanyahu.

On Wednesday she will go to Ramallah to present the initiative to PA Chairman Mahmoud Abbas and other leaders. She will also visit Cairo and Amman.

"We have to address the challenges in two time frames," Ferrero-Waldner said.

"One, new actions that can be taken soon, even before the establishment of a national unity government with which we can re-engage ... And secondly, actions that could be taken once the political conditions allow us to re-engage with the Palestinian Authority," she said.

Government officials in Jerusalem believe the commissioner's visit is intended to be a fact-finding and exploratory mission connected to the PA's attempts to establish a unity government. The officials also said they believed that if a Hamas-Fatah government was established, a debate would ensue in the EU regarding cooperation with it.

According to the officials, Britain, Germany and EU foreign policy chief Jaiver Solana, who support coordination with the United States, would object to an independent European policy and will propose operating with the framework of the Quartet in cooperation with the U.S.

In contrast, Italy, Spain and to a lesser extent France are expected to call for a change in attitude and at least a partial thawing of relations and assistance to the PA.