US unblocks $500M for Palestinians

State Department spokeswoman Nuland says aid money frozen by Congress for months freed up as PA faces worst economic crisis in years

The United States has quietly unblocked almost $500 million in aid to the Palestinian Authority which had been frozen by Congress for months, a top US official said Friday.

 The news that the funds had finally been freed up came after US President Barack Obama met top Israeli and Palestinian leaders in a landmark visit to Israel and the West Bank earlier this week.

"To date, we have moved $295.7 million in fiscal year 2012 money… and $200 million in fiscal year 2013 assistance," State Department spokeswoman Victoria Nuland told reporters.

The Obama administration also notified Congress in late February that it was seeking a further $200 million to fund US Agency for International Development (USAID) programs for the Palestinians, he said.

The first sum comprises some $195.7 million, allocated under the 2012 fiscal year budget for USAID economic, development and humanitarian assistance, as well as a further $100 million earmarked specifically for narcotics control. The second sum of $200 million unblocked and available to the Palestinian Authority will come under the 2013 budget and be spent for direct budget support.

The Palestinian Authority is facing its worst economic crisis in years, in part because of a failure by donors to deliver pledged funds. But its finances were plunged further into chaos after president Mahmud Abbas won upgraded UN observer status at the UN General Assembly in late November.

Congress froze the US administration's requests for funds.

And Israel, which also strongly opposed the move, said it was suspending monthly transfers of the tax and tariff revenue it collects on behalf of the Palestinian Authority (PA) in the wake of the decision. It did, however, transfer $100 million in a one-off payment in late January.

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