The Palestine Territories are to receive 120 million kroner of Danish aide over the next three years, foreign minister Villy Søvndal said today in an interview with Politiken newspaper.

The announcement comes ahead of Søvndal’s meeting today with his Palestinian counterpart, Riyad al-Maliki.

In the interview, Søvndal announced that 45 million kroner would be handed over in the first year to support the Palestinians in paying pensions and salaries, as well as funding anti-poverty programmes.

But while Denmark will now formally refer to Palestine in future dealings, the foreign minister stopped short of unilaterally recognising it as a state as Iceland did last November.

“One can either be focussed on the symbolic gestures in this conflict, or one can contribute by actually getting something done on the ground,” Søvndal said. 

While the government’s official policy is to work toward recognising Palestine as a state, Søvndal added that a political solution on statehood was best addressed through the EU.

With the continuing encroachment by Israel into the West Bank, Søvndal wants consumers to be more aware of products that are derived from settlements in the West Bank that are considered illegal under international law.

But Søvndal acknowledged that no solution to the conflict between Israel and Palestine could be found as long as Palestine continued to pose a military threat to Israel.

“From the Palestinian side, it is necessary that they stop their rocket attacks on Israel,” Søvndal said, adding that it was expected that the Palestinian Authority use the funds to build their state and improve the security of the region. “There is an interest on both sides to develop economically and socially. But everyone knows how long and complicated the history is between them.”

Denmark’s funding is far from enough to save Palestine from the financial hardship it faces. This year it has a budget deficit of over 2.5 billion kroner and debt to banks of about 5.5 billion kroner.

But despite financial efforts by EU states such as Denmark to improve the standards of living for Palestinians, the success of the projects is far from guaranteed. Part of a two million kroner renewable energy project in the West Bank, funded by the EU, was placed on a demolition list this January and will leave 400 people without electricity.

While the Israeli authorities claim the hybrid solar and wind projects were constructed without the correct permits, Euractiv reports that the demolition orders arrived after a confidential and critical EU report into settlement building by Israel and the demolition of Palestinian homes in the West Bank.

The sum is a drop in the ocean compared to the over one billion kroner that the EU has pledged to spend on Palestine in the coming year. Last week the EU pledged 250 million kroner to build a waste water treatment plant in the West Bank and improve border crossings.