EU angry that aid is going up in smoke

European leaders sent Israel a sharp note of complaint Monday, protesting damage worth more than $15 million that Israeli troops have inflicted recently on European-funded aid projects in Palestinian-ruled territories.

As Palestinians awaited the next round of Israeli retaliation, following a suicide bomber attack in Jerusalem on Sunday that killed one and injured 125 Israelis, European foreign ministers threatened to seek reparations for the deliberate destruction of the Palestinians' port, airport, and radio station.

The protest came as European Union officials battled, apparently unsuccessfully, to stem the current two-week wave of violence, and privately expressed frustration that Washington is keeping its distance from the new crisis.

The US special envoy to the region, Gen. Anthony Zinni, has not visited Israel since the beginning of this month, and his truce mediation efforts are on hold.

European negotiators hope that if they could calm the spiral of retaliatory violence between Israelis and Palestinians, they could "bring about an engagement of everybody, including the United States" to implement the security and other measures proposed by former US senator George Mitchell, says one European diplomat in the Middle East.

"Events seem to be pushing us further and further away from this end," the diplomat adds. "We are really just trying to see if it is possible to manage down the level of violence. It is hard to see what we can do beyond that."

As the situation worsens, however, Europe and the United States appear to be diverging on how to treat the president of the Palestinian Authority, Yasser Arafat. President Bush accused him last week of "enhancing terrorism" in connection with a boatload of weapons seized earlier this month by Israeli commandos. Gen. Zinni was reported in an Israeli newspaper Sunday as having compared the Palestinian leader to a Mafia boss - although Zinni later denied the report.

The EU ministers meeting Monday, on the other hand, "sent a firm message of support for Arafat," according to a spokeswoman for Javier Solana, the EU foreign policy and security chief.

"We need more Palestinian authority, not less," said the spokeswoman, Cristina Gallach. "Without the authority we end up with Palestinian anarchy. We consider him (Arafat) the legitimate representative."

That is by no means a view shared by the Israeli government, where the possibility of jailing or exiling Arafat is under active consideration. Israel's retaliatory attacks in recent months have been squarely aimed at Arafat's government, undermining his authority.

Those attacks, by rocket, tank fire, and explosives, have resulted in $15.6 million worth of damage to projects funded by the European Union, which is the largest aid donor to the Palestinians, according to an EU report sent to the Israeli government on Monday.

The most damage has been done to Gaza airport, which has been shelled, mortared, and bulldozed three times over the past two months. It is among several PA properties targeted by Israel in a campaign to punish Arafat for not stopping attacks on Israeli civilians. Israeli troops also rendered Gaza's port inoperable, and blew up Palestine Broadcasting Corporation headquarters Jan. 19 for what Israeli officials described as inciting further attacks. Some $3 million worth of equipment donated by Germany, France, Denmark, and the European Union was destroyed.

The list of damage also includes nearly $700,000 worth of destruction at the Inter-Continental Hotel in Bethlehem, whose construction had been financed by the European Investment Bank. Israeli troops used the hotel as a firing position during their 10-day occupation of Bethlehem last October. Damage to the facade, caused by Palestinian shooting, accounted for only $45,000, the EU report found. The rest resulted from Israeli army vandalism.

"We see no relation between these projects and the fight against terrorism," said Ms. Gallach. "Our taxpayers cannot understand why the money they gave for projects ended up destroyed," she added. "But we clearly understand that what is at stake is not 17 million euros but peace in the area."

EU officials acknowledge that the value of the damage is small by comparison with overall European aid to the Palestinians, totaling 3.2 billion euros ($2.9 billion) since 1994, more than half all international assistance.

The scale of the physical damage to EU funded projects also pales beside the economic losses the Palestinians have suffered as a result of Israeli security and punitive measures, such as blockades on Palestinian areas. Since the current Intifada began in September 2000, the World Bank estimated recently, the Palestinians have lost some $2.5 billion in gross national income because of the closures, which prevent Palestinians from leaving their towns and villages in search of work or business.