International aid to Palestinians

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International aid has played a major role in the Israeli-Palestinian conflict as it has been used as a means to keep the peace process going.[1] Palestinians in the West Bank and Gaza Strip receive one of the highest levels of aid in the world.[2] Aid has been offered to the Palestinian National Authority (PNA) and other Palestinian Non-governmental Organizations (PNGOs) by the international community, including International Non-governmental Organizations (INGOs). The entities that provide aid to the Palestinians are categorized into seven groups: the Arab nations, the European Union, the United States, Japan, international institutions (including agencies of the UN system), European countries, and other nations.[3]

Contents

[edit] History

[edit] Before Oslo

Before the signing of the Oslo accords, two were the major sources of international aid for the Israeli-occupied territories of West Bank and Gaza: the donors of the West and the Arab states. Most of these programs started or developed during the 1970s, and they were further expanded during the 1980s. Because of the lack of a Palestinian state entity-partner, the majority of the sums were channeled through PNGOs or INGOs.[4] Although the stance of the donors during the pro-Oslo period is regarded by some analysts, such as Rex Brynen, as controversial and linked with phenomena, such as corruption, nationalism and factional rivalries,[5] international aid effectively financed a series of programs in the sectors of agriculture, infrastructure, housing and education.[6]

[edit] Oslo

See also: Oslo accords
Even before the signing of the Oslo accords, Shimon Peres had called for an international donors' conference, recognizing that a major US aid program for the Palestinians would have difficulties given the past U.S.-PLO relationship.
Even before the signing of the Oslo accords, Shimon Peres had called for an international donors' conference, recognizing that a major US aid program for the Palestinians would have difficulties given the past U.S.-PLO relationship.[7]

The Oslo accords, officially signed[8] on September 13, 1993, on the White House lawn, contained substantial provisions on economic matters and international aid: Annex IV of the Declaration of Principles (DoP) discusses regional cooperation and implicitly calls for major international aid efforts to help the Palestinians, Jordan, Israel and the entire region.[9]

On October 1, 1993, the international donor community (nations and institutions[10]) met in Washington to mobilize support for the peace process, and pledged to provide approximately $2.4 billion to the Palestinians over the course of the next five years.[11] The international community's action was based on the premise that it was imperative to garner all financial resources needed to make the agreement successful, and with a full understanding that in order for the Accords to stand in the face of daily challenges on the ground, ordinary Palestinians needed to perceive positive change in their lives.[12] Therefore, the donors had two major goals: to fuel Palestinian economic growth and to build public support for negotiations with Israel.[13] According to Scott Lasensky, "throughout the follow-up talks to the DoP that produced the Gaza-Jericho Agreement (May 1994), the Early Empowerment Agreement (August 1994), the Interim Agreement (September 1995), and the Hebron Accord (January 1997), [...] economic aid hovered over the process and remained the single most critical external component buttressing the PNA."[14]

[edit] 1993-2000

Between 1993-1997 the PNA faced serious economic and financial problems.[15] International aid prevented the collapse of the local economy, and contributed to the establishment of the Palestinian administration.[16] Donors' pledges continued to increase regularly (their value had risen to approximately $3,420 million as of the end of October 1997) as a result of the faltering peace process, along with the increase in needs and the consequent increase in the assistance necessary for Palestinians to survive.[17] Reality led, however, to a revision of the donors' priorities:[18] Out of concern that the deteriorating economic conditions could result in a derailment of the peace process, donor support was redirected to finance continued budgetary shortfalls, housing programs and emergency employment creation.[19] According to a more critical approach, international aid in the mid 1990s supported PNA's bureaucracy[20] and belatedly promoted the centralization of political power, but in a way that did not enhance government capacity and harmed the PNGOs.[21] In 1994-1995 problems of underfunding, inefficiency and poor aid coordination marked donors' activity, and led to tensions among the different aid bodies, and between the international community and the PNA.[22] In 1996, the link between development assistance and the success of the peace process was made explicit by the President of the World Bank, James Wolfensohn, who stated: "The sense of urgency is clear. Peace will only be assured in that area if you can get jobs for those people."[23]

After 1997, there was a reduction in the use of closure policy by Israel, which led to an employment growth and an expansion of the West Bank and Gaza economy.[24] After the signing of the Wye River Memorandum, a new donors' conference was convened, and over $2 billion was pledged to the PNA for 1999-2003.[25] Nevertheless, overall donor disbursements fell in 1998-2000, and the 1998 disbursements-to-commitments ratio was the lowest since 1994.[26] As for international institutions, they began to play a bigger role in the international funding process, in spite of the decline in the absolute value of these institutions' total commitments.[27] After 1997, the need for donor support for the current budget and employment generation programs receded due to the PA's improved fiscal performance, and attention was focused instead on infrastructures to the detriment of institution building.[26] Donors' activity was also characterized by a decline in support for PNGOs, and by a preference to concessionary loans (instead of grants) with generous grace periods, long repayment periods and low interest rates[28]

[edit] 2000-2006

The second Intifada led to one of the deepest recessions the Palestinian economy experienced in modern history.[29] In those two years, Palestinian real GDP per capita shrunk by almost 40 percent.[30] The precipitator of this economic crisis was again a multi-faceted system of restrictions on the movement of goods and people designed to protect Israelis in Israel itself and in the settlements.[29]

One of the many frustrations of the crisis was the erosion of the development effort financed by the international community, since the overwhelming emphasis in donor work was now directed towards mitigating the impact of the economic and social crisis. A collapse of the PNA was averted by emergency budget support from donor countries. Despite a significant increase in donor commitments in 2002 compared with 2001, commitments to infrastructure and capacity-building work with a medium-term focus continued to decline. In 2000, the ratio was approximately 7:1 in favor of development assistance. By 2002, the ratio had shifted to almost 5:1 in favor of emergency assistance.[31]

The barrier route as of July 2006
The barrier route as of July 2006

Yasser Arafat's death in 2004 and Israel's unilateral disengagement from Gaza created new hopes to the donor community. In March 2005, the Quartet on the Middle East underscored the importance of development assistance, and urged the international donors community to support Palestinian institution building,[32] without however ignoring budgetary support.[33] The Quartet also urged Israel and the PNA to fulfill their commitments arising from the Road map for peace, and the international community "to review and energize current donor coordination structures [...] in order to increase their effectiveness.[32] The international community's attempt in late 2005 to promote Palestinian economic recovery reflected a long-standing assumption that economic development is crucial to the peace process and to prevent backsliding into conflict.[34] Although a mild positive growth returned in 2003 and 2005, this fragile recovery stalled as a result of the segmentation of the Gaza Strip, the stiff restrictions on movements of goods and people across the borders with Israel and Egypt, and the completion of the Israeli West Bank barrier.[35] As the World Bank stressed in December 2005, "growth will not persist without good Palestinian governance, sound economic management and a continued relaxation of closure by GOI."[36]

[edit] 2006-

On January 25, 2006, Hamas won the Palestinian legislative elections; the Islamist organization assumed power in March 29, 2006, without accepting the terms and conditions set by the Quartet.[37] Hamas' stance resulted in a near cessation of direct relations between most bilateral donors and the PNA, with only some multilateral agencies and a few donors continuing direct contact and project administration.[38]

[edit] Notes

  1. ^ Keating (2005), 2
  2. ^ Palestine Human Development Report (2004), 113. According to certain analyses, Palestinians are the largest per capita recipients of international development assistance in the world (Lasensky [2004], 211, Lasensky-Grace [2006]). Hever (2005), 13, 16, and (2006), 5, 10 refutes this assessment, arguing that Israel is the biggest recipient of total foreign aid in the world. Turner (2006), 747, underscores that the US provides Israel with annual bilateral funds of US$654 per person, which is more than double what the Palestinians receive in multilateral aid.
  3. ^ Palestine Human Development Report (2004), 116
  4. ^ Since 1970 the role of the the INGOs (and in particular of the Northern NGOs) in the delivery of aid was strengthened (Hanafi-Tabar [2005], 35-36).
  5. ^ For instance, Jordan's disengagement from its administrative role in the West Bank just after 1990, and the discontent of some Arab states-donors for the PLO's stance during the First Gulf War resulted in the Organization's almost complete breakdown (Brynen [2000], 47-48).
  6. ^ Brynen (2000), 44-48
  7. ^ Peres had stated: "So I came up with the idea for an international donors' conference. The aid itself didn't radically change how the Palestinians negotiated, but we both knew it would be crucial to the implementation of the agreement (Lasensky [2002], 92)."
  8. ^ Before the signing ceremony, President Bill Clinton and Secretary of State Warren Christopher spoke in very clear terms about America's commitment to provide economic support to the Palestinians. Israeli foreign minister Shimon Peres told Palestinian officials that he had already secured commitments from European countries to give them aid (Lasensky [2002], 93 and [2004], 219).
  9. ^ Annex IV (paragraph 1) of the Declaration of Principles on Interim Self-Government Arrangements: "The two sides will cooperate in the context of the multilateral peace efforts in promoting a Development Program for the region, including the West Bank and the Gaza Strip, to be initiated by the G-7. The parties will request the G-7 to seek the participation in this program of other interested states, such as members of the Organisation for Economic Cooperation and Development, regional Arab states and institutions, as well as members of the private sector."
  10. ^ 22 donor states, major international financial institutions, and states neighboring the West Bank and Gaza (Frisch-Hoffnung [1997], 1243).
  11. ^ Aid Effectiveness (1999), 11; An Evaluation of Bank Assistance (2002), 2; Palestine Human Development Report (2004), 115
  12. ^ Palestine Human Development Report (2004), 113
  13. ^ Lasensky-Grace (2006). According to Yezid Sayigh (2007), 9, "starting with the first international donor conference in October 1993, foreign aidwas intended to demonstrate tangible peace dividends to the Palestinians as well as provide economic reconstruction and development to build public support for continued diplomacy.
  14. ^ Lasensky (2002), 94 and (2004), 221
  15. ^ Poor economic performance in these years was the product of many factors, such as the low public investment and the contraction of the regional economy, and they were aggravated by the effects of Israeli closures, permits policies, and other complex restrictions on the movement of people and goods (Aid Effectiveness [1999], 15; Brynen [2000], 64; Le More [2005], 984).
  16. ^ An Evaluation of Bank Assistance (2002), 24; Rocard (1999), 28; Roy (1995), 74-75
  17. ^ Palestine Human Development Report (2004), 115
  18. ^ As USAID director Chris Crowley stated, "the political situation often drove the aid disbursement process (Lasensky [2002], 96-97)."
  19. ^ An Evaluation of Bank Assistance (2002), 25; Brynen-Awartani-Woodcraft (2000), 254
  20. ^ According to Brynen (2005), 228, "closure [...] exacerbated the tendency of the PNA to use public sector employment as a tool of both political patronage and local job creation. The public sector payroll thus continued to expand at a rapid rate, growing from 9% of GDP in 1995 to 14% by 1997 [...] This sapped public funds needed for investment purposes and threatened to outstrip fiscal revenues."
  21. ^ Frisch-Hoffnung (1997), 1247-1250
  22. ^ The Palestinians construed the shortage of aid funding as a form of punishment and as attempt of the donors to impose their own agenda, while US officials blamed "intra-PLO politics, the Palestinian leadership's resistance to donors' standards of accountability, and inexperienced [middle] management (Ball-Friedman-Rossiter [1997], 256; Brynen [2000], 114; Brynen-Awartani-Woodcraft [2000], 222; Lasensky [2004], 223; Roy [1995], 74-75)."
  23. ^ Ball-Friedman-Rossiter (1997), 257
  24. ^ GDP grew by an estimated 3.8 % in 1998 and 4.0 % in 1999, and unemployment fell to 12.4 percent in 1999, almost half its 1996 peak (Aid Effectiveness [1999], 14).
  25. ^ Lasensky (2002), 98; Lasensky (2004), 225; Rocard(1998), 28
  26. ^ a b Donor Disbursements and Public Investment, UNSCO
  27. ^ Palestine Human Development Report (2004), 117
  28. ^ Aid Effectiveness (1999), 18-20; Brynen (2000), 74; UNCTAD (2006), 18
  29. ^ a b Disengagement (2004), 1
  30. ^ Overview (2004), 6
  31. ^ Twenty-Seven Months (2003), 51
  32. ^ a b Quartet Statement - London, March 1, 2005, Jerusalem Media and Communication Center
  33. ^ As Rodrigo de Rato stated, "substantial external budget assistance is necessary to allow the PNA to continue to function and mobilize political support."
  34. ^ Sayigh (2007), 9
  35. ^ According to the World Bank, "the incompatibility of GOI's continuous movement proposal with donor and PA funding criteria, allied with GOI's commitment to protecting access to Israeli settlements, translate to a continuing high level of restriction on Palestinian movement throughout much of the West Bank (Overview [2004], 6, 9)."
  36. ^ The Palestinian Economy (2005), 1-2
  37. ^ According to the Quartet, "all members of the future Palestinian government must be committed to non-violence, recognition of Israel and acceptance of previous agreements and obligations, including the roadmap."
  38. ^ Sayigh (2007), 17; Two Years after London (2007), 30

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