EU to give €1.6bn to Palestine amid Israel’s expanded Gaza offensive

Good morning from Luxembourg where EU foreign ministers are about to start talks on Ukraine, the Middle East, and relations with African states and the Western Balkans.

Following that meeting will be the first ever EU-Palestine high-level dialogue. Here, Laura reports on the European Commission’s €1.6bn financial support package for Palestine. And our tech correspondent reveals a pitch for the EU to impose an “Amazon tax”.

Difficult conditions

The EU is set to unveil €1.6bn in support for Palestine today, but it’s unclear how much of that money will actually reach Palestinians amid the ongoing war in Gaza, writes Laura Dubois.

Context: The EU is the biggest direct donor to the Palestinian Authority, sending around €400mn per year in addition to humanitarian assistance to the wider region. Since early March, Israel has blocked aid from entering the Gaza Strip, after a ceasefire deal with Hamas collapsed.

The EU’s commissioner for the Mediterranean, Dubravka Šuica, told the Financial Times that Brussels would announce a new package of €1.2bn in grants and up to €400mn in loans from the European Investment Bank and the European Fund for Sustainable Development for the Palestinian Authority.

The announcement comes as Šuica, EU chief diplomat Kaja Kallas and humanitarian commissioner Hadja Lahbib host Mohammad Mustafa, prime minister of the Palestinian Authority, for the first high-level political dialogue between Palestine and the EU in Luxembourg today.

Šuica said that around €620mn would be financial support for the authorities, and some €576mn for the “resilience and recovery for the West Bank and Gaza”.

The money comes with strings attached: “It comes with milestones and reforms because we think it is also important for them to be strong, to be reliable, to be credible,” Šuica said.

The reforms would address “fiscal sustainability”, remove “obstacles for small and medium-sized businesses” and “ensure that infrastructure is installed”.

“The main goal from our side [is] to have democratic and transparent governance . . . that means both the West Bank and Gaza,” Šuica added.

The European parliament has previously called for greater scrutiny on funding to Palestine, after a controversy around textbooks issued by the Palestinian Authority which contained content deemed hateful.

But the conditions set out by Šuica clash with the brutal reality that Palestinians are facing on the ground.

Israel has expanded its offensive in Gaza, bombing one of Gaza City’s main functioning hospitals yesterday, and has cut off supplies of food, fuel, medicine and humanitarian aid to the 2.2mn people living in the strip. It has also repeatedly launched operations in the West Bank, and in the past destroyed or confiscated EU-funded structures there.

Some member states believe that the EU money should be disbursed as soon as possible, as Palestinian Authority employees have not been paid for months.

Šuica acknowledged that the situation was difficult. “I know that everything is about political will. Everything is about Israeli steps,” she said. “At the same time, Europe cannot stand still and do nothing.”

“The final goal is to have a ceasefire called . . . but now it’s over. But we still think that there is space for negotiation.”

Chart du jour: Scale-up

European missile champion MBDA has faced intense pressure to deliver its products faster, but like other European defence contractors, it has struggled with the costs of expansion and strained supply chains.

Big Tech tax

The EU should respond to US tariffs with a comprehensive digital services tax, the European services workers union argues in a letter to the European Commission seen by Barbara Moens. 

Context: The EU hopes to negotiate a deal with US President Donald Trump on tariffs, but is already preparing retaliatory measures in case they fail, including a possible tax on digital advertising revenues that would hit tech groups such as Amazon, Google and Facebook. Unlike trade in goods, the US enjoys a large surplus with the EU on services.

In a letter to the EU’s tech chief Henna Virkkunen and economy commissioner Valdis Dombrovskis, the workers federation UNI Europa argues for a comprehensive digital services tax to “level the playing field and protect Europe’s social model”. 

The union refers to the proposal as an “Amazon tax”, claiming the Seattle-based group is the most significant example of a “double unfair economic advantage” for US tech giants in the EU, through avoiding taxes and winning profitable public contracts.

The levy could raise some €37.5bn annually, the union says.

But it’s unlikely Europe can replace US Big Tech anytime soon, for example by revising public procurement policies to buy more from European companies — due to the lack of European alternatives.

That is also why Germany, Ireland and some other countries have cautioned against Brussels hitting Big Tech as part of any retaliation to tariffs.

What to watch today

1. EU foreign ministers meet in Luxembourg.

2. Palestinian Prime Minister Mohammad Mustafa attends EU-Palestine high level political dialogue.

3. EU holds fourth accession conference with Albania.

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