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