The German government will be giving Palestine 70 million euros this year, of which 40 million will be earmarked for development. That's intended to help build up infrastructure and state institutions, as well as for the start of a joint technical research program on such projects as solar energy.

The German foreign minister, Guido Westerwelle, announced the financial support at the end of a meeting of the German-Palestinian Coordination Council on Wednesday in Berlin.

"Our aim is a Palestinian state as part of a two-state solution," he said, "and we support the development of that state not just theoretically, but also practically." Germany, he said, was a friend and partner for the Palestinian people and for the Palestinian Administration in Ramallah.

The commission was founded in 2010 as a balance for the regular consultations between the German and Israeli governments.

'Palestinians under occupation'

Germany is supplying Israel with another submarine

The Palestinian prime minister, Salam Fayyad, praised Germany's assistance and the EU's Middle East policy. He said he was pleased that the EU now had a single line on the issue, which was to support his policy of creating state institutions and preparing the infrastructure of a future state. But, he added, the international community must pay more attention to what was happening in the Occupied Territories.

"The reality is: in Gaza and on the West Bank there are 4.5 million Palestinians who live under occupation, and that must end," he said. "We have a political conflict: that's the reality and that's what one has to deal with."

Fayyad, who is highly regarded in the West, mentioned particularly the violence of Israeli settlers against Palestinians, and the excesses of Israeli security forces in dealing with Palestinian demonstrators. But he said he was particularly worried about increasing pressure being put on the Palestinian residents of East Jerusalem.

No disagreement in the German government

Westerwelle denied media reports of disagreement between him and the Chancellor, Angela Merkel, over Middle East policy. The Spiegel news magazine had reported that the two disagreed over the delivery of a submarine to Israel. Merkel had approved it after some hesitation, but the Foreign Ministry wanted to win concessions from Israel towards the Palestinians in exchange.

The magazine also reported that Merkel was annoyed at the ministry's upgrading of the Palestinian mission in Berlin. Westerwelle insisted that the government agreed fully on its policy. The Palestinian delegation was now formally classified as a mission and the Palestinian representative, Salah Abdel Shafi, was now entitled to call himself an ambassador.

Fatah reached a fragile agreement with Hamas in Cairo

"We wanted this upgrading of the Palestinian institutions," said Westerwelle, "and this is an important aim on the way to a two-state solution."

Lame duck prime minister

Although Fayyad is so well thought of, he is a lame duck leader. His job will soon be taken over by the PLO head and president, Mahmud Abbas. That was part of the agreement between the two main parties in Palestine, Fatah and Hamas, which was reached in Cairo earlier this year. Abbas will lead a transitional government of national unity, which will be in office until elections planned for later this year. But the reconciliation process between the two parties, which have been at loggerheads since the last elections in 2006, has stalled in the last few weeks - much to the annoyance of most Palestinians, who want the two sides to come together.

The Palestinian Administration, which has been running the lives of the Palestinians since 1994, has been coming under increased pressure from its own people. Many of them think it cooperates too closely with the Israeli government and does its dirty work for it. That has led to non-violent demonstrations in the Palestinian territories, modeled on those of the Arab Spring, at which mainly young people, together with foreign and Israeli supporters, protest against the confiscation of their land and the expansion of Israeli settlements.

Author: Bettina Marx / mll

Editor: Andreas Illmer