EU assembly urges freeze of aid to Kenya

STRASBOURG, France (Reuters) - The European Parliament said on Thursday the bloc should freeze budgetary aid to Kenya until the crisis over President Mwai Kibaki's disputed re-election is solved.

The European Parliament "asks for the freezing of all further budgetary support to the government of Kenya until a political resolution to the present crisis has been found", the MPs said in a resolution.

Although European Union aid to Kenya is limited compared with what it gives poorer African countries, the wealthy bloc is one of Nairobi's top donors, providing 290 million euros ($425 million) between 2002 and 2007.

A further 383 million euros of EU aid to Kenya is planned for 2008-2013, a third of which is budgetary aid.

The EU is reviewing its relations with Kenya, and studying which actions to take if current African mediation efforts fail.

"All options are a possibility including an eventual partial or total freezing of aid," said John Clancy, European Commission spokesman for development and humanitarian aid.

"We are watching for developments on the ground to decide what measures should be taken and when," Clancy said, adding that the EU's priority was to support mediation.

Any decision to freeze aid would be taken by the 27 member states on a proposal by the bloc's executive Commission.

Condemning the violence in a crisis that has killed hundreds, the lawmakers said the result of the election was not credible and called for a fresh vote if a fair recount was not possible.

The parliament said it was "deeply preoccupied by the social repercussions of the current economic crisis, its detrimental effect on the country's socio-economic development and the economic consequences for neighboring countries".

Lawmakers criticized the EU executive for disbursing 40.6 million euros of budgetary aid on December 28, a day after the election. EU aid commissioner Louis Michel said the aid had been disbursed before doubts over the results had emerged.

The disputed election has dented Kenya's democratic credentials and rattled donors. Post-election turmoil, in which hundreds have been killed, has hit Kenya's economy as well as supplies to east and central African neighbors.

(Reporting by Ingrid Melander; Editing by David Brunnstrom)