Brussels, 18/11/2005 (Agence Europe) - The agreement between the Palestinian Authority and Israel to facilitate the free movement of people and goods at the Egyptian/Palestinian border post of Rafah (EUROPE 9069), offers up new prospects for economic reconstruction of the Gaza Strip and West Bank. Although all the European Investment Bank's (EIB) projects had been frozen since the second Intifada, two initiatives, concerning loan guarantees to small and medium-sized enterprises (to the tune of 30 million euros) and electrical infrastructures (45 million in loans available), have been under examination for some time (notably in the Ecofin Council). “Anything which works in favour of improving the political situation is beneficial for the economic environment”, declared one person involved with the dossier in the EIB, adding that the tempo could be stepped up for the maturation for these projects. At this stage, however, not all of the technical problems have been overcome and no implementation date has yet been planned. On one hand the authorities in charge of the electricity sector in Palestine will have to draft a specific project for the improvement of their network, and on the other hand the EIB will have to determine the structure which will monitor the granting of loan guarantees (special bank or fund for SMEs, etc).
Our contribution will not stop with these initiatives, indicates the EIB, which is notably considering restructuring current debt for some Palestinian borrowers, as well as other financing: 55 million for infrastructure loans under own resources; 10 million in risk-capital in the form of reduced interest rate loans which need only repaid de if the project is successful; 2 million euros in technical assistance subsidies, in the form of studies by international consultants into the creation of viable projects (improving the functioning of the banking sector, for example). These studies would provide a basis for future work to build on and which would be likely to attract investors to support projects, the EIB hopes.