The European Union (EU) has decided to earmark 45 million euros (56 million U.S dollars) in aid for Palestinians, the bloc's top diplomat said here Wednesday.
The move came days after the United States announced it was withholding 65 million U.S. dollars of its 125-million-dollar grant to a UN relief agency for Palestinian refugees.
Speaking to reporters alongside Norwegian foreign minister Ine Eriksen Soreide ahead of an international donor meeting, EU foreign policy chief Federica Mogherini said the fund aimed to support the Palestinian presence in East Jerusalem, as well as "the building of a democratic and accountable Palestinian state."
Mogherini and Soreide were hosting the first-ever extraordinary meeting of the Ad Hoc Liaison Committee (AHLC) in Brussels on Wednesday.
The AHLC, set up in 1994, serves as the principal policy-level coordination mechanism for development assistance to the occupied Palestinian territory. It seeks to promote dialogue between donors, the Palestinian Authority, and the Israeli government.
Mogherini said the meeting was the first opportunity for relevant parties to sit together since the December announcement by U.S. President Donald Trump on Jerusalem.
"The basis and objective of our engagement is, and remains, the two-state solution with Jerusalem as the future capital of both states -- the State of Israel and the State of Palestine," Mogherini said.
"There is no alternative that would be both politically viable and sustainable and that would fulfill the legitimate aspirations of both parties, including the legitimate security concerns of Israel," she added.
Echoing Mogherini, Soreide, whose country chairs the AHLC, underlined that "we are in a very difficult situation in the region," alluding to the Trump administration's decision on Jerusalem and its threat to cut aid for Palestine.
"In this difficult time we have to start building some trust, we need to have the parties, all the stakeholders, around the table," she said.
Washington has threatened to cut financial support to the Palestinians until Palestine agrees to return to peace negotiations with Israel, which have been stalled for four years.
The Palestinians have rejected the United States as the mediator in the Israeli-Palestinian peace process after Trump announced in December that the United States would recognize Jerusalem, the disputed holy city, as Israel's capital.
Trump said last Thursday at the World Economic Forum held in Davos, Switzerland that Jerusalem was removed from the agenda of the Middle East talks.
He said the Palestinians can get financial aid from the United States only if they agree to resume peace negotiations with Israel.