Select Committee on International Development Written Evidence

Memorandum submitted by Dr Rosemary Hollis, Head, Middle East Programme, Royal Institute of International Affairs


  After the start of the "Oslo Process" the stated intention of the EU and member countries, including the UK, was to channel financial assistance to the Palestinians through the Palestinian Authority (PA) in the form of development aid. The idea was to assist with the development of the Palestinian infrastructure, including roads, an airport, a port, hospitals and so on. From the start there were some political obstacles to this strategy. For example, pending a final status agreement, the Israelis wanted an arrangement by which they could monitor traffic through the airport and the sea port in Gaza. Eventually such arrangements were devised at least at the airport. Plans for another airport in the West Bank remained on hold pending a final status agreement. Meanwhile, the agreements signed between the Palestinians on economic cooperation and development gave the Israelis an effective right of veto over any infrastructure planning in the PA areas which would affect the Israelis, which was almost all of them. Even so, some investment, through aid, went ahead.

  After the start of the Al Aqsa Intifada in September 2000, Israeli military actions in the West Bank and Gaza destroyed much of the Palestinian infrastructure. Meanwhile, normal economic life in the Palestinian areas has been catastrophically disrupted (as detailed in international reports by bodies such as the World Bank) necessitating a shift away from development assistance to humanitarian aid disbursements.

  1.  It is difficult to see how the destruction of EU/UK funded infrastructure projects can be prevented while the conflict persists and pending a political settlement. Complaints by the EU or member states to the Israeli government do not seem to be effective in the face of the conflict. International aid agencies and NGOs are now operating in the occupied territories on an emergency basis, not in terms of long term development projects. One way in which that aid is disbursed is through emergency assistance to the PA for the payment of civil servant salaries (including medics, teachers, staff at the various ministries, the security apparatus and ministers). This is an effective way to channel support to the families of government employees, who may be the only bread-winner for perhaps 10 other people. Alternative sources of employment are unavailable. Funding jobs is also presumably preferable to simply distributing food and clothing and thereby rendering even more of the population dependent on charity. Also, were it not for this support, the PA could have disappeared long ago. This aid therefore serves to keep in play the only potential negotiating partner that the Israelis can look to. The recent decision to ban support reaching Islamic charities, notably those run by Hamas and Islamic Jihad, has been only partly ameliorated by new disbursements from the PA. More could be done to substitute the work performed by the Islamic charities. It is certainly politically counterproductive to end the Islamic charitable functions without supplying a substitute.

  2.  Customs duties and taxes on goods reaching the Palestinian economy from or via Israel render the prices of such goods much higher than would likely be the case if the PA fixed its own duties in line with income levels and purchasing power in the Palestinian economy. Meanwhile, Palestinians are prevented from capitalising on what would be comparatively low labour costs by being tied to the Israeli economy and thence Israeli price and tax levels. A form of protectionism for Palestinian produced goods and services could help the Palestinian economy, but would certainly undercut their Israeli competitors and thereby incur resistance on the Israeli (and possibly also the Jordanian) political front. Controls on the movement of goods and people from one Palestinian area to another and between all of them and Israeli controlled territory inflate the costs of goods, reduce efficiency, and frequently impede normal economic activity on a day to day basis. People find difficulties showing up for work regularly and at regular times, they cannot trade easily between areas and perishable goods for export may never reach their markets before going rotten.

  3.  The wall or security fence has separated farmers from their land and has meant the confiscation of Palestinian property, including productive farming land.

  4.  The settlements are linked by specially built roads, which take up more land and which are not open for use by the Palestinians in the West Bank. This road network has carved up the West Bank into Israeli and Palestinian populated areas, making passage between the settlements and Israel easier, but between Palestinian areas much more difficult. Settlers consume much more water per capita than the Palestinians, but Israeli regulations prevent the Palestinians from drilling new wells and sharing access to existing ones. The nomad or bedouin communities have been deprived of freedom of movement and they are penned into ever more restricted areas or actually moved into newly designated areas with scarce resources.

  5.  The EU and the UK government recognised relatively early the need to improve transparency and accountability in the PA finances. A major study undertaken in the late 1990s with EU funding, under the auspices of the US Council on Foreign Relations and a US-European board of prominent figures, resulted in a comprehensive reform plan which has been partly implemented and forms the backdrop to more recent measures urged by the Quartet in accordance with "the Road Map". The PA budget has been managed more efficiently and transparently, under Salam Fayed, and its finances are channelled through a single account monitored by the World Bank/IMF. Since the start of the Intifada, however, PA data files and records have been destroyed or confiscated in Israeli military operations and its income has plummeted, rendering it dependent on aid. Meanwhile, efforts to introduce new Palestinian-legislated measures to manage development and provide safeguards for private sector activity have been impeded by the conflict. The problem of the leadership style of President Arafat, with overlapping ministerial responsibilities and his interference in their decisions has not been fully resolved. Yet the insistence by the Quartet, and especially the United States, that the reform agenda be used to sideline Arafat in favour of an appointed Prime Minister acceptable to the US and Israelis has discredited the reform programme in the eyes of ordinary Palestinians. Efforts by the UK government, spearheaded by DFID, to enhance the governing and negotiating capacity of the PA bureaucracy has been effective behind the scenes. This work could be wasted if the PA is driven to collapse through the Israeli preoccupation with removing Arafat and/or forcing the PA to imprison Hamas.

  6.  Civil society organisations and Palestinian NGOs have been funded through the international donor community to mount activities that engender skills and promote civil society. They have managed to keep going despite all the difficulties impeding normal economic and social life. However these organisations face some specific problems. Islamic organisations, which perform needed welfare functions are now discriminated against because of their Islamic character (and thence fears that they are the vehicle for terrorism). This strategy flies in the face of the actual character of the Palestinian civil society. In these circumstances there is a danger that the secular Palestinian NGOs could come in for increasing criticism in the community as agents of the West (which is increasingly seen as anti-Islamic in orientation and facilitating the occupation). Possibly, if Hamas activities are to be banned, then funds should be made available to new grass roots organisations, including those with an Islamic orientation, on some basis which links them in to a national endeavour to build Palestinian civil society but bars them from pursuing violence.

  7.   To conclude: There is only so much that can be achieved pending a resolution of the conflict. In the meantime, UK assistance to enhance the capacity of the PA to govern effectively and manage its accounting transparently should be continued. To lose the PA (which overlaps with the PLO) is to lose the only national leadership the Palestinians have in the West Bank and Gaza and the only potential negotiating partner available to Israel. (The PLO is of course the recognised representative of all Palestinians, in the West Bank, Gaza and beyond, in the region and across the world, and Arafat remains its Chairman—to sideline Arafat therefore has ramifications well beyond Ramallah!) Support for civil society organisations and activities should also be continued, and in a way that recognises the place of Islam in Palestinian identity and provides some vibrancy and hope at the grass roots level. In all this, the UK can disassociate itself from those in Israel who want to reduce the Palestinian leadership to local authorities operating in individual cities and enclaves, under continued occupation. To keep alive the prospect and viability of a two state solution to the conflict the Palestinians need their governing authority to speak for the national cause and take on the task of government in the state that is promised.

September 2003

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