CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1683-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INTERNATIONAL DEVELOPMENT COMMITTEE

 

 

DEVELOPMENT ASSISTANCE

AND THE OCCUPIED PALESTINIAN TERRITORIES

 

 

Tuesday 24 October 2006

MR MARTIN DINHAM, MR PETER GOODERHAM, MR DAVID HALLAM and MR MICHAEL ANDERSON

Evidence heard in Public Questions 1 - 107

 

 

USE OF THE TRANSCRIPT

1.	This is a corrected transcript of evidence taken in private and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
2.	The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the International Development Select Committee

on Tuesday 24 October 2006

Members present

Malcolm Bruce, in the Chair

John Barrett

John Battle

Richard Burden

James Duddridge

Ann McKechin

Joan Ruddock

Mr Marsha Singh

________________

 

Examination of Witnesses

 

Witnesses: Mr Martin Dinham, Director, Europe, Middle East and Americas Division, DFID, Mr Peter Gooderham, Director, Middle East and North Africa, FCO, Mr David Hallam, Head, DFID Jerusalem, and Mr Michael Anderson, Head of Middle East and North Africa Department, DFID, gave evidence.

Q1 Chairman: Good afternoon, gentlemen. Thank you for coming. This is our first evidence session on the situation in Palestine. You will know that the committee is visiting Palestine the week after next, and so obviously this will be a very useful opportunity really to get your views and update on what is happening. Mr Dinham, perhaps you could introduce yourself and your colleagues.

Mr Dinham: Thank you for inviting us to give evidence today. I am Martin Dinham, Director for Europe, the Middle East and the Americas, which is rather a diverse portfolio, which is shortly to be added to by China and South-East Asia, but a lot of my time is spent on Middle East issues. Michael Anderson is the Head of the Middle East and North Africa Department, which is one of the busiest in DFID. David Hallam is the Head of our office in Jerusalem. Since the committee's last report and in part guided by it, we have delegated more resources and responsibility and staffing to that office. Peter Gooderham, is the Director responsible for the Middle East and North Africa in the Foreign and Commonwealth Office, with whom we have a very close relationship, particularly close on these Middle East issues.

Q2 Chairman: Thank you for that introduction. Can I explain that the committee obviously undertook to carry out this inquiry earlier in the year before the summer recess. We asked for evidence after the election of Hamas had taken place but before the events that took place in August. On the basis of a wide variety of submissions we have received, a situation that was not good before has clearly become an awful lot worse. One thing that immediately comes through is the fact that the international community, the Quartet, suspended payments to the Palestinian Authority because Hamas did not meet the conditions that were asked of them. As far as I can gather, nobody expected Hamas to win, including Hamas themselves, so you could argue that maybe they did not make any contingency plans for winning, but the question is: did you and did anybody tell the Palestinian people when they went out to vote democratically that the consequence of electing Hamas was that a very substantial amount of essential aid money was going to be withdrawn?

Mr Dinham: I think that it was something of an unexpected occurrence for Hamas to win an overall majority and the general thinking at the time was that they would not. Having said that, we obviously thought about what the implications would be for ourselves in terms of what our reaction would be. Peter Gooderham may have something to add to what we might have said about this.

Mr Gooderham: If one tracks back about a year to the Quartet meeting that took place in New York a year ago last September, by that stage it was becoming clear that there were going to be elections and that there was a good prospect that Hamas were going to do rather well, because there had already been several rounds of municipal level elections where Hamas had performed well. So I think it was already clear to the international community by then that when the elections for the Legislative Council took place in January of this year there would be a good performance by Hamas. I think it is certainly true to say that nobody expected them, including Hamas themselves, to do quite as well as they did. In the debate that took place in the Quartet on that day in September last year - and we were participating on that occasion because we held the Presidency of the European Union and Jack Straw, who was then the Foreign Secretary, participated - there was a great deal of discussion about whether the Quartet should say things publicly about the consequences or the implications of a Hamas victory. The consensus view was that we should not, that it would be inappropriate for the international community to attempt to influence the democratic choice of the Palestinian people. So, although there were references in the statement that was issued subsequently at that meeting to the need to ensure that any government that was formed from these elections was a government with which the international community could work, which subsequently evolved into the three principles which the Quartet established at the beginning of this year as the ones that we as the international community would expect any Palestinian government to sign up to and commit itself to, we were careful not to go beyond that. As I say, that was precisely because we thought it could easily be counter-productive and inappropriate for the international community to be attempting, as it were, to influence the outcome of these elections.

Q3 Chairman: Are we not left with a problem? Again, reading the submissions we have had from a number of Palestinian sources, they said, "We went to the polls in good faith. We conducted ourselves through the democratic process that the Quartet and others claim that they think is important, and we have elected a government for a variety of reasons. It is the choice of the Palestinian people and the immediate consequence of that is a decline in our living standards, which were poor before, has turned into a near collapse as a consequence of the withholding of the payments". Is that not likely to have a rather negative effect on the perception within the Palestinian community of the kind of support that they get from the international community?

Mr Dinham: Just to clarify, although part of the international community is not putting its assistance through the Hamas Government, that is not one of the principal causes of the deterioration in the economic situation or the hardship that is being faced by the Palestinians. The key issues to do with that really are the clearance revenues which are not being transferred to the Palestinian Territories by Israel, which is something of the order of about $55-65 million per month, and also the very restrictive movement and access which is preventing the movement of goods and people within the Territories and between the Territories and through the borders with Israel and Egypt. Those are the principal problems with that. In fact, the amount of aid going into the Palestinian Territories has not gone down. Indeed, in the sense of the European Commission's contribution, it has gone up and it is likely to be quite significantly more this year than last year: €350 million it is estimated compared to €240 million last year. Although we are not putting our resources through the Hamas Government, there has not actually been a suspension of aid as such.

Q4 John Barrett: May I first ask if the Temporary International Mechanism (TIM) was envisaged prior to the election or was that something that was set up once it was apparent that Hamas had actually won overall?

Mr Dinham: The thinking on the Temporary International Mechanism as such took place really after it became clear that the Hamas government was not going to sign up to the three Quartet principles, and we realised then it would not be possible to work directly through the government and so we needed an immediate response, which we decided as being the Temporary International Mechanism.

Joan Ruddock: I wonder if we could check this for the record. We have just heard that it would not be possible to deal with the Hamas Government, but is it not the case that the UK Government does deal, and indeed many other EU states do deal, with countries that are engaged in violence in one form or another, and indeed that aid is given to some countries that do not recognise Israel?

Q5 Chairman: Is it not the case that Norway has said that they would not anticipate the same problem in dealing with Hamas?

Mr Dinham: The particular case of the Palestinian Territories is that the three principles are applying, which are: first, renouncing violence, and remember the Hamas Government is committed to the destruction of Israel; second, not being prepared to keep to the previous agreements which have been signed; and third, the recognition of Israel.

Mr Gooderham: They are: the recognition of Israel, the renunciation of violence, and the recognition of previous agreements. Those are the three principles. May I emphasise that the President of the Palestinian Authority himself, President Abbas, also abides by and is committed to these three principles. He himself wants the government, the Palestinian Authority, to sign up to these three principles. These are not principles which we have come up with to raise the bar or make it more difficult or in any sense make the task of the government impossible but quite the opposite. They are actually quite a low base from which one could reasonably expect to work.

Q6 Joan Ruddock: I wonder, Chairman, if I might have an answer to my question.

Mr Dinham: Which is whether there is any aid given to countries that have not renounced violence?

Q7 Joan Ruddock: My question was: is it not the case that the UK Government does deal with countries that are involved in violence in one way or another, and indeed that the UK Government gives assistance to some countries which do not recognise Israel?

Mr Dinham: Can I come back to you having checked on that point, on the latter point particularly?

Q8 Richard Burden: I am interested to know and to focus a little more on what you think the problem is. Is the problem that Hamas were elected without abiding by those principles; is the problem that they have not adopted those principles in theory subsequent to the election; or is the problem that they act and were acting at the time you withdrew the assistance in contravention of those principles?

Mr Dinham: I think the problem for us is, if we are talking about development, is that the point of our development programme is focused on the promotion of a peaceful resolution of the problem in the Middle East. If you have a government which is elected that refuses to renounce violence and refuses to recognise its neighbour and is committed to the destruction of Israel, it is difficult for us to be able to meet ---

Q9 Richard Burden: Are we talking in theory or in practice here? Are we talking about Hamas in government and standing for election, their theoretical position, or what they were actually doing in practice?

Mr Dinham: I think it is the fact that, having got into government, they have actually reconfirmed that those are their positions, and so we are faced with the situation of whether we can operate and we can promote peace, and therefore through poverty reduction, which is what our purpose is, with a government which is not prepared to renounce violence. It is very difficult to see how we can square that.

Q10 Richard Burden: Has Israel renounced violence?

Mr Dinham: Yes, I think Israel is not committed to violence.

Q11 Richard Burden: Where do Hamas say they are committed to violence? You were talking about renouncing it. I am just asking where does Israel renounce violence?

Mr Gooderham: The very first line of the Quartet's roadmap calls on the Palestinians to renounce violence. It is in that context that we talk about this in regard to the three principles. Of course, we certainly do not approve of the actions which Israel has taken from time to time; quite the opposite. We have taken opportunities to criticise or condemn, but the purpose of this particular principle, in the context of what we are talking about, is the fact that Hamas has itself been a terrorist organisation in the past. All right, it has signed up to a ceasefire for a period of time.

Q12 Richard Burden: When did it do that?

Mr Gooderham: They committed to that about 18 months ago.

Q13 Richard Burden: How long did they hold that for?

Mr Gooderham: Formally speaking, they have not renounced that.

Q14 Richard Burden: At the time that the aid was withdrawn, they were on a ceasefire and had been for several months.

Mr Gooderham: But they had not renounced violence.

Q15 Richard Burden: So the theory is more important than the practice. That is what you are saying?

Mr Gooderham: I think it is, yes. I think so long as you have an organisation that is committed to violent means to achieve its political ends, then, yes,

Mr Dinham: And that is the view of the UN, the Russians, the whole of the EU and the US as well as ourselves.

Q16 Richard Burden: If you look on the other side of the coin, Israel signs up theoretically to the roadmap, so theoretically they are fine. Have they abided by the principles of the roadmap and have they implemented their obligations on the roadmap in practice?

Mr Dinham: I think it is clear to say that the performance against the roadmap principles has been disappointing on all sides.

Q17 Richard Burden: So you withdraw aid to the Palestinians because theoretically Hamas is committed to violence, even though they are not actually committing violence, but you do not do anything to Israel if they are theoretically in favour of the roadmap, even if they are not abiding by their obligations under it?

Mr Dinham: You mentioned I think that we were suspending aid to the Palestinians. We are not actually.

Q18 Richard Burden: To the PA, to the Government; you are not having relations with the Government?

Mr Dinham: Yes, but the important point of our assistance is that we are seeking not to punish or affect ordinary Palestinians by not putting our money through the Palestinian Authority but putting it to ordinary Palestinians direct.

Q19 Richard Burden: Could I finish with this? Do you still agree with what you said in your response to our last report where there was some concern. The argument put forward in that report was that maybe aid was not that good an idea because of Israel's actions in the occupation that were causing such difficulties for the Palestinians. Aid was a kind of sticking plaster. What you said at that stage was: "We agree that humanitarian assistance can alleviate, but not resolve Palestinian poverty under conditions of occupation. Conventional development assistance under these circumstances is problematic, but still has a major role to play, including in supporting the Palestinian Authority (PA) to meet its peace process commitments and to build the institutions of a viable Palestinian state. The case for this kind of assistance is arguably even stronger when the peace process is not going well." Have you departed from that position, given the fact that when you think the peace process is not going well, your response now is to cut aid rather than maintain it?

Mr Dinham: Our response is not to cut aid; it is not putting aid through the Government.

Q20 Richard Burden: I was referring to aid to the Government, your response.

Mr Dinham: What we have sought to do is to provide our assistance both to meet the basic needs of the people of the Palestinian Territories and also to support those institutions that are independent of the Government, such as the Palestinian Monetary Authority and others, so that we can provide some institutional strengthening. Indeed, the point of working through the Temporary International Mechanism is so that that does not undermine the workings of the Government because we are actually putting money through that to ensure that services are still delivered through government systems, but without working through the Government itself.

Q21 Chairman: Can I come back to the Temporary International Mechanism, which was set up, and you explained the circumstances, after this election. You have also stated that a significant part of the problem is Israel's withholding of money. We may come back to that. The information we have, and this particular information comes from Oxfam, is that as a consequence of the withholding of that money, incomes have plummeted, hundreds of thousands of people have been left effectively without an income, rubbish is piling up on the streets, sewage is overflowing from household cesspits, schools are running without budgets, and the government employees are striking because they are not getting paid. That actually puts a huge strain, it would seem to me, on the Temporary International Mechanism. That is only talking generally. If you go to Gaza, the situation, according to Oxfam, is that there is now a one-month stock of food, all shipments are effectively disrupted and fishing has been prevented by the Israelis, which was a major source of income and employment. In that context, the Temporary International Mechanism really is not reaching the people who need it. Is that not the situation?

Mr Dinham: There are two matters. One is that the Temporary International Mechanism is reaching people in need. I do not think there is any question about that. It has covered so far payments to approximately 100,000 people and some of those are amongst the very poorest workers; others are social hardship cases. So there is clear evidence that it is reaching people, but it is, as was suggested, a temporary mechanism and it is not satisfactory in a sense in itself as a response. But it is not the Temporary International Mechanism or its weaknesses that are the problem. The main cause of the problems to which Oxfam refers is that the clearance revenues in a year, just to get this in perspective, amount to something like three-quarters of a billion dollars - a huge amount of money - which is currently not being transferred to the government, so they cannot pay salaries. That is the money they would use to pay salaries.

Q22 Chairman: Putting Mr Burden's point a different way, is there not a huge irony that here we have the government of Israel sitting with a huge amount of Palestinian Authority money and the taxpayers of the United Kingdom are diverting money to deal with the poverty that that situation has created? Where is the dialogue in that?

Mr Dinham: Those are the facts that one cannot deny. That is the key problem. We have encouraged and continue to encourage the transfer of those clearance revenues to the Palestinian Authorities because that is to whom they belong. That is a major issue. The second major issue is this question of the considerable restrictions on movement and access. I was in the Palestinian Territories, in the West Bank, two or three weeks ago and went to one of the checkpoints where there are enormous delays. I think those of you who were on the committee two or three years ago and visited would have seen the same thing, the back-to-back problem at one of the checkpoints where it is taking six, seven or eight hours for goods to be removed from one truck through the checkpoint on to another truck and the difficulty of labour moving around in the Territories. Those are the things that are causing very serious damage to the economy. Similarly, the closure of the border points at Rafah and Erez and Karni have also been a serious problem in getting imports and exports through, and indeed people through to work in Israel. Obviously we would prefer to be putting our development assistance direct to the Government because that is what we stand for in DFID, strengthening the institutions of government. That is what we do and that is why we are in business. It is very much against the grain for us to find ways of working around government but here we are faced with the situation of a government which will not renounce violence and will not recognise its neighbouring state and it becomes very difficult to do our job through the government.

Mr Hallam: Can I just give you a few points of information. We have been gathering some data since our memorandum was produced on levels of aid. First of all, and Martin has already mentioned this, the overall figure for aid from the EU this year is going to be higher in 2006 than it was in 2005. Secondly, the overall level of aid from the Arab world is going to be higher in 2006 than in 2005. It is just not the case that aid has been cut or that aid levels are lower or that the lack of aid is the problem.

Chairman: The economy has collapsed.

Q23 John Battle: It is food aid.

Mr Hallam: This is an important point to get across. Just in terms of the TIM, by the end of this year, the TIM will have provided $200 million in assistance from the EU directly to the Palestinian people. Most of this will have gone into the pockets of Palestinians. That is in six months and that is higher than the level of budgetary support in the whole of 2005 from the EU. I want to support the point that Martin is making that lack of aid is not the problem here. I can give one more point of information. Again, since all our memoranda were produced, the Gazan fishermen have been allowed to start fishing offshore. That is a small update.

Joan Ruddock: This is not about equipment but I just thought it might be appropriate if I came in here because of the relationship with the tax revenues, which I was going to ask about.

Q24 John Battle: In a sense, what I want to ask you runs on because I and John Barrett were the committee members who were there last time in 2003. I have just read through the report. We went not because we are the Foreign Office select committee but because we are the development select committee, and that is why it is a difficult conversation in one sense because we are trying to address poverty and alleviation of poverty. When we went, we found that there were places in the Occupied Palestinian Territories where people were poorer than in some sub-Saharan African countries. That was true in 2003 in terms of access to food, water, education and health care. We are now in the position where I think the situation is worse. For whatever reasons politically, the situation is worse. I just wonder if I could put it to you. Those factors may be ten times worse now. I respond the way I do because if the economy collapses, then the people will be on food aid, direct handouts; that would be the only way people can survive or there will be mass camps and poverty again. We saw the back-to-back situation for the lorries, which is now worse than it was in 2003 when we stood and watched it then. The combined effect of the Government of Israel's policies and what we could at best describe as an inadequate Temporary International Mechanism is actually now starting to threaten the very viability of the Occupied Palestinian Territories. In recent weeks, we have gained the strong impression, and we will see when we go, that the humanitarian situation is worsening. It is almost impossible for the economy to function Gaza. I would push this back to you and the Foreign Office and ask the question: what assessment has the Government made of the possibility of state collapse and the consequences for poor people and development in the Occupied Palestinian Territories and indeed for the whole stability of the region? Have you anticipated that as a factor because we cannot just look at it post hoc and then be told that you are increasing the food aid package.

Mr Dinham: Yesterday I read your report again of two and a half years ago. It is a very eerily accurate analysis of the situation and what needs to be done. As you say, it is very much worse now for the Palestinians on the ground. The figure we have, which the World Bank has confirmed, is that something like 70 % of households are living below the poverty line of $2 a day in this particular case.

Q25 John Battle: That is worse than most of sub-Saharan Africa.

Mr Dinham: There is no question that the economy is deteriorating. I think the World Bank is predicting a 26 % contraction of the economy this year. This is obviously something which we take very seriously. The answer, in a sense, is not for us, as David was implying, to channel in huge amounts more of aid in these circumstances because I do not think that is going to do the job. What is clear and what we say in our memorandum is that there has to be a political process in place to deal with this. There has to be a return of the two sides to the roadmap or something very like that for any of these economic issues to be tackled. I think that is why with the Government, the EU, the Americans and others there is a lot of activity on the political issues to try to do what we can to encourage the two sides together.

Q26 John Battle: What is the fall-back position?

Mr Dinham: The fall-back, in a sense, is what we are doing at the moment. What we are trying to do through our development assistance is to meet, as far as we can, or help to meet, with other donors through increased aid, the basic needs of people so that their hardship is alleviated. We are seeking to do what we can to encourage more movement, more access, and we are working with General Dayton, who is the US security representative there, to try to make the agreement for movement and access more of a reality. This was the agreement which was reached in November of last year, which tries to find ways of easing movement, particularly through the border points. One of the ideas there is to focus in particular on Karni as a key point to try to provide greater security and greater reassurance so that that can be opened and there can be more traffic going through and to work with those institutions that we can and to continue on the political process of encouraging our two partners, the Palestinian President and the Israelis, to find ways in which they can move closer together.

Q27 Ann McKechin: From the point of view of the British taxpayer, since we have started the Oslo peace process, the UK Government has invested £370 million in the infrastructure and institutions of the Palestinian Territories. What we are witnessing at the moment with the civil servants who have not been paid for over six months and the economy collapsing is the fact that any value of that investment is rapidly disappearing, and we are not likely to get any real return back from it, so we are having to start from scratch again. Given your own country assistance plan, do you consider that we need fundamentally to review our position in two areas which I think have been of concern about this investment? One is the international community's pressure or lack of pressure on Israel to comply with its Geneva Convention duties and actually provide humanitarian assistance. Second is the issue of corruption, which very much afflicted the Fatah Government prior to the elections, and which may well have contributed to the rise of Hamas. Apparently we did not see that coming, although I have to say, from my experience two years ago, nothing surprises me about Hamas (they were in effect taking over the social services of that area) and that they should be the winners in the last election. How are we assessing and how are we going to account to the British taxpayer about how we intend to invest their money in the future?

Mr Dinham: On the question of corruption, certainly there was a strong perception by those amongst the community and one of the reasons that was cited amongst the community for Fatah's failure in the polls was to do with corruption, and it is a very significant issue. I might ask David in a moment about what we think about handling that issue or what we did towards that. On the question of our challenges to Israel, I think that we have at very many levels in our relationship with Israel called upon them to exercise maximum restraint and to act within international law in respect to the humanitarian provisions thereof. In terms of what we can prepare ourselves to do next, I think that as soon as there is a government with whom we can work in the Palestinian Authority, with whom we can directly associate, obviously we would want to work with them to strengthen the institutions of the Palestinian state. That was what we were focusing on up to last year, both in terms of public financial management, public administration, civil service reform and increasing transparency and accountability, while working again with our Foreign Office colleagues and others in the international community on security sector reform as well. That is actually the key to stability of the state. There are many things that we could do, and we will want to do.

Q28 Ann McKechin: Can I press you on this point about Israel and its obligations under the Geneva Convention? In any other area of the world, what we would be demanding before we as British taxpayers paid any money towards assistance is that people who have a legal duty to provide assistance do that first. Effectively, we have let them off the hook, which in turn, you could argue, has been one of the major reasons why people have not been so keen to negotiate and not so keen to listen to the voice of the international community. We have not pressed this point and insisted that that should be the first and foremost priority here. I ask you again: if you are reassessing your country assistance plan, which clearly you are going to have to do now, is it not time for Israel to abide by the international convention to which they signed up?

Mr Dinham: Can I ask Michael to answer this question?

Mr Anderson: May I respond on the point about the lost investment first? A great deal has actually been achieved in the time since Oslo. There has been a lot of quiet institution building with the police and the various bits of the Palestinian Authority which endure. There were also returns to investments in all of the years when those investments were made in terms of the wellbeing of the Palestinian people, and in terms of sustaining the momentum of the peace process. There was a time when the budget support we had supplied was critical to maintaining the Palestinian Government at the time of financial shortfall. So I think it is not the case that all that investment has been lost. We are concerned about the decay of institutions. We are very concerned about the decay of the institutions now but preserving the value of that investment is something we are anxiously looking at. I do not think it would be right to say that all of it has been lost. On the Geneva Convention point, it is a very difficult set of circumstances. We call publicly and privately on Israel to comply with its Geneva Convention obligations. We call on all parties to comply with their obligations, and these are points which are made regularly. It is, however, the case that in a number of places in the world DFID does have to work in contexts where the humanitarian obligations are not fulfilled. Darfur is another example of the kind of place where we recognise that despite the political pressure we are able to bring, obligations are not fulfilled. In our view, it is precisely at that point that we need to help, to step in and fill the gap.

Q29 Ann McKechin: I might say, Mr Anderson, that in that case what we did with a country like Sudan is suspend the aid to the government. The international community, not the UK Government directly, but including the United States, are still providing aid to Israel. That is not quite the same set of circumstances, is it?

Mr Anderson: Obviously the political context in Israel and Palestine is quite different from Sudan. This is Peter Gooderham's territory. The Government is doing everything in its power to try to advance the peace process, and that is something which is being taken up at official level. It is being taken up by No. 10 very actively and it is receiving a great deal of attention, but the response in a place like Sudan is obviously different.

Q30 Mr Singh: Just to change the focus slightly, I am not sure what engagement DFID had with civil society organisations in Palestine or the extent to which they exist. If you did have an engagement, I am presuming that you may see that within the whole context of your support for the Palestinian Authority. Given that you are not giving that support to the Palestinian Authority at the moment, are you engaging more with civil society organisations to try to find different ways and mechanisms to support the development of a civil society?

Mr Dinham: We have a lot of contact with civil society organisations, both within the Palestinian Territories and indeed with international NGOs who are engaged in and interested in the Territories. We have a Palestine Platform which is a gathering of interested international NGOs which meets every quarter to discuss and exchange views on approaches that we should take. We are currently funding civil society on the governance side as well, to strengthen accountability and transparency with the present PA. In terms of our decision as to where we channel our funds, we looked at various ways in which we could channel our resources and decided that, given that civil society does not have the kind of stretch and range for providing service delivery as the Palestinian Authority, although obviously the Government does and that is huge, we would opt for putting the resources that we have through the Temporary International Mechanism because that is using the mechanisms of government to get through to people with the most need. We do see them as an important source of thinking and of pressure and advocacy to improve the state of government.

Mr Hallam: I could add two points. One is about now and one is about the future. Now there has been obviously a lot of attention from all the donors on civil society. There are something like 50 donors present in the Occupied Territories. The US in particular has focused its funding on civil society. In terms of funding now, my analysis in the country is that the need and capacity of civil society to deliver basic services has been met. What we do not particularly want to be doing is building up a civil society to a point where they then take the place of the Palestinian Authority of the future. Ultimately, the Government of the Palestinian Authority will be responsible for delivering most of the services. What we want to do is get back to a point where it can. That is what the conversation earlier was all about. The other point was Martin's one on working with civil society. Bearing in mind that the ultimate objective is to build up a Palestinian state, then civil society is going to have to play an important role in that. I think we are beginning to realise more clearly the importance of that role in the governance field and in holding the PA to better account. Maybe that will help to tackle some of the issues that have been mentioned earlier about corruption and perception of nepotism and so on if the Government is held better to account by civil society. We are doing a bit of work now, particularly on monitoring how the institutions of the PA are beginning to be affected by the prevailing situation. This is an avenue that I hope we can explore further when we get back on track with the PA.

Q31 Mr Singh: DFID did say in its report that "an active and vocal civil society has not yet translated into the emergence of a moderate, democratic and secular political alternative to Hamas and Fatah". Are there any signs of that? Are there any major Palestinian civil society organisations that you work with or are you relying entirely, from what I am gathering from you, on international NGOs?

Mr Hallam: We are working with the Palestinian civil society but that statement is still true. Peter may wish to comment further. There are basically two options: Fatah or Hamas. There are then some other small groups of independents. You have probably met some people like Hanan Ashwari who are very vocal and providing a really important advocacy and holding to account role but there is no third force in Palestinian politics. We are way off that at the moment.

Q32 Chairman: As a supplementary to that, is there not a danger, and I know you do not have the hands-on information, that you have sidelined the Government, the Palestinian Authority, and you are trying to work with individual NGOs? Indeed some people, partisan perhaps, have accused DFID of putting money into NGOs that are too partisan. Is not the danger that you just finish up spawning a whole load of other dissident groups, if you are not careful, particularly groups that will say, "You are not allowing our Government to function, so we will find another way of functioning"?

Mr Hallam: I agree that is a risk and one that we need to be very careful about. Perhaps my best response to you is to say that we work incredibly closely with the British Consulate in Jerusalem on all issues that have a political dimension and we make sure that we are hand-in-hand and take the best account of their analysis.

Q33 Joan Ruddock: I wanted to come in, Chairman, earlier when David Hallam was speaking about greater and greater sums of money being supplied to the people of Palestine. It seemed to me that it went against everything that DFID stands for, that here we have an elected government, a democratic government in the PA that, as Richard Burden said, was on ceasefire and remains on ceasefire. They were elected, we know perfectly well, because they posed as the anti-corruption party and there was plenty of evidence that indeed, as DFID would wish to find in any country of the world, they were a group of people who were not going to be corrupt in government. On the one hand, we have this group with whom we cannot deal. The Israeli Government does not accept, as Ann McKechin raised, their responsibilities in respect of these people. We have the Israeli Government withholding the tax revenues that they have collected so that civil servants may not be paid. If you do not pay people, they have nothing to eat. If you have no social services, they have nowhere to go. We pride ourselves then, it seems, on picking up the pieces and giving food aid. I think that is absolutely against everything that DFID stands for.

Mr Dinham: I agree that it is an entirely unsatisfactory situation. This is the dilemma for us, that the reasons that the international community has had to increase its aid are those that you suggest. The dilemma for us is: do we therefore say we do not provide any assistance? No, we cannot because people are clearly suffering and suffering considerable hardship. The decision that we have had to take is to address the basic needs of those people to the best extent we can, not only through the Temporary International Mechanism but through our contributions to UNRWA where we are putting in £15 million for refugee assistance as well. We would, with every sinew in our bodies, much prefer to be operating through the Government to strengthen the institutions of the Government so that it can stand on its own feet, the economy can operate, the borders are open and the checkpoints do not exist. That is not the situation we are faced with and so we have this dreadful dilemma. We decided that we need to do what we can and the international community as a whole has decided that. The real answer to this is the political process and to get movement on all these things that we have been talking about. That requires us to work with all the sides, with the Israeli side and with President Abbas, and to urge those countries that have influence over the Hamas Government to encourage them to move as well.

Q34 Joan Ruddock: Why are we not addressing our influence to Israel to pay the tax revenues?

Mr Dinham: We are raising those issues with Israel on a regular basis.

Q35 Joan Ruddock: Why are we so powerful in relation to the Palestinian Authority but seemingly have no leverage over Israel?

Mr Gooderham: I think, with respect, you are exaggerating our influence with the Palestinian Authority. If I may recap, the situation we found ourselves in at the end of March this year was that we had a Hamas Government, a Hamas Palestinian Authority, but we had President Abbas who is someone who had also been democratically elected by the Palestinian people last year and whose platform we fully support. We have been doing what we can both before Hamas was elected and since to continue to give whatever political and other support we can to him to try to advance the peace process via the roadmap. He himself was clear from the outset that he was not happy with a government that was not committed to the three principles of the Quartet. It is very important to stress that. We are not going against the grain here of the Palestinian President or those who support him. The international community is at one in agreeing that this is what we need to advance towards. He has been trying in recent months to form a so-called government of national unity which would have brought representatives from Hamas together with Fatah, and maybe some independents as well, to form a new government, a government that would have been committed to the three principles and with which obviously the international community could readily engage and work, and we very much wanted that to happen. We did what we could, necessarily behind the scenes because clearly if we are too active in this process, as I implied before, it is all too likely to be counter-productive, but we have tried behind the scenes to assist in that process. We got to a point in mid-June when it looked as though things were beginning to happen and we were beginning to see the evolution of a solution to this problem when, unfortunately, the Hamas representatives in Damascus pulled the plug and vetoed the efforts that were being made by other representatives of Hamas inside the Palestinian Territories and of course by President Abbas himself. We are now in a situation where it appears that President Abbas has had to conclude that efforts to form a government of national unity are not going to succeed, that there is a block there on the part of Hamas. So he is now reflecting on the next step. We are doing everything we can to encourage him to act because I am sure we are all agreed that the sooner we can get to a government that we can work with the better.

Q36 Joan Ruddock: But, whether you get a government that you can work with or not, the fact is at this time and throughout this period there are tax revenues that have been collected which you yourselves I think have said today are in the region of $55-65 million per month. How does that compare with the amount of money going through TIM per month to pay salaries? Is it in any sense appropriate that the international community should be picking up the whole salary bill for the Palestinian Authority when the money is actually already provided for but not being handed over? What steps are you taking to resolve that position?

Mr Dinham: As a point of clarification, and it is important to make it, we are not actually paying salaries because we could not do that. We are paying allowances and we are making part payments to hardship cases. To answer your point, the amount that is not being transferred according to clearance revenues is greatly in excess of the amount that is going through the TIM.

Q37 Joan Ruddock: Precisely.

Mr Dinham: Over the period of a year, it could be something like three quarters of a billion dollars.

Q38 Joan Ruddock: So families are going hungry as they are - and often we know the heads of families are supporting quite large extended families - because the tax revenues are not delivered?

Mr Dinham: Yes. What we have said in our discussions with the Israelis is that the TIM exists as a possible channel which they may be interested in using. We have provided them with all the reassurances that we can that this money is properly audited, that it is going directly to the beneficiaries as intended, it is not going through the Hamas Government. We have spent an awful lot of time with the European Commission in designing a process which we are satisfied with from a financial management point of view. We have made those points to the Israelis to see if they would be interested in channelling their money through that. They have not so far but we are going to continue to make those points.

Q39 John Barrett: Very much building up on the points that Joan Ruddock made there, not only are people going hungry, but children are dying, they have stunted growth, a high percentage of children are anaemic, they have low birth weights and there is high infant mortality, and yet the UN agency UNICEF goes in there to deliver basic humanitarian assistance through TIM and is finding that the Government of Israel is in fact impeding its delivery process. Earlier on in the discussions the problems in sub-Saharan Africa were mentioned. The committee has been to a number of areas with similar problems where the government is helping facilitate the aid agencies. What we see here today and from the evidence of UNICEF is that the Government of Israel is impeding UNICEF's ability to provide humanitarian assistance. Can I ask what the British Government is doing to explore the problems that UNICEF are having and to find out a way forward so that they can actually deliver these very basic services?

Mr Dinham: I will answer part of that and then pass it to David. What we are doing is supporting the job being done by UN OCHA, which is the United Nations Office for the Coordination of Humanitarian Affairs, whose responsibility it is to both co-ordinate humanitarian assistance within the UN system and also to co-ordinate information about movement and access within the Territories. We are putting in two experts. We will have two experts in there to support their role. There have been cases, as you suggest, convoys of assistance and supplies being delayed or held up by checkpoints and in various different ways. When that has happened, the UN has raised those issues directly with the Israeli authorities. Often it is the case that a lot of discretion is given to the soldiers on individual checkpoints, and that discretion is used in different ways at different times, as we have experienced ourselves when we have been there. I think those of you who went on the previous visit by the previous committee may have done too.

Mr Hallam: You have already made one of my points about the two experts provided to OCHA who, by the way, I think are doing a really good and important job out there. I hope that you will have a chance to meet OCHA when you go the Occupied Territories next month. One of them is a movement and access specialist. He is an ex-British artillery officer. He then went to work in the humanitarian world. We have now seconded him over to OCHA to help them specifically on movement and access issues and to help them understand and to monitor that. Secondly, UNRWA, which is a major provider of aid, particularly in Gaza where they are particularly affected by closures, has obviously had a lot of trouble over recent months. This situation has eased but we have offered to them that if they can give us some specific details on how their operations have been affected, then the British Embassy in Tel Aviv will speak to the Israelis about that. We are waiting for more information from UNRWA. Lastly, I would say that I spent my first year in post anxiously avoiding contacts with the Israeli military. It became clear to me that I cannot do that. In order to do my job and to understand the context, I need to get to know them, and so I recently went over to Beit El and Ramallah and presented my credentials to the local IDF[1] person there. That was a really useful thing to do. He gave me lots of information and I have all the contact numbers for all the people at the checkpoints in Gaza and the West Bank. Just doing that proved a useful step.

Q40 John Barrett: Can I touch again on the UNICEF evidence? They were saying that Window 1, for essential supplies like health care in hospitals, is effectively not yet operational; it is just not doing the job. Do you see any light at the end of the tunnel at all? The blockage in the system is apparently being provided by the Israeli Government. Is there no movement at all?

Mr Dinham: This is on the TIM?

Q41 John Barrett: The TIM is not effective. It is in place, and we heard the discussions about funding, yet what we see is a blockage in the pipeline to deliver the very basic supply of drugs to hospitals, fuel, water and it is just not getting through.

Mr Dinham: Of the three windows that are working there are two, Window 2 and Window 3, which are essentially the responsibility of the European Commission which are in operation and are working well. The first window, which has been the responsibility of the World Bank through its ESSP[2] programme, has not got into operation as quickly. I think they have now sorted out the procurement issues around that and it is due to be operating effectively from this month.

Mr Hallam: We cannot blame the Israelis for Window 1 having not become operational. There are two specific issues that have meant that it has taken a couple of months. First, it takes time to procure drugs and hospital supplies and so on, and the money arrived in late August so there is a process that has to be gone through. The two specific issues that have meant that perhaps it has not delivered quite as quickly as I would have liked are first that there is quite a process within the Palestinian Government because, of course, the Ministry of Health operates all of these clinics. There was a process between the President's Office with our counterpart on the TIM and the Ministry of Health to decide exactly what should be procured and how and when and so on, and that took time. The second thing is that because a lot of these things have been procured locally to support the Palestinian private sector there was a process of accreditation that had to be done to make sure again that, because we are very concerned about corruption and to make sure that we know exactly how much is being spent, they basically had to be accredited and to make sure that things were to standard and so on.

Q42 John Barrett: But does this not all go back to saying that if you are not paying the healthcare workers everything is going to take so much longer? If the money is not freed up and is being held back everything will take ten times as long.

Mr Hallam: That is why we identified healthcare workers as recipients of allowances under the TIM.

Q43 Richard Burden: Education has always been very important to the Palestinians in the Occupied Territories and outside, and it is also, obviously, an area which DFID highlighted as a priority area for achieving the Millennium Development Goals. Again, going back to this Committee's previous report about three years ago, it paints a rather bleak picture of the situation in regard to what was happening to Palestinian education. It said, "In a society where half the population is under 18, the effect of closure on education is widely felt. The psychological impact on children, arising from school closure and exposure to violence, is damaging future generations of Palestinians and will only serve to perpetuate the cycle of violence and hatred." Your reply to that was that you agreed about that and noted that more than 200,000 children and 9,000 teachers had been prevented by closures and movement restrictions from attending schools. Has the situation got better or worse since?

Mr Dinham: I do not have direct facts on that, the others may have, but I would imagine the situation has got worse because the closure situation has got worse and also because the public strike which is currently going on means that schools are not currently operational, which is making a bad situation worse. We have, through the TIM, the Temporary International Mechanism, our third allocation, which was agreed by the Secretary of State a few weeks ago, of £3 million for poor Palestinian workers, many of whom are in fact teachers, which will go some way to helping that situation. But the overall situation, particularly what you say about the psychological impact of violence on children, is serious and is almost certainly getting worse.

Mr Hallam: I agree; I am sure the situation is more difficult; there are more closures now, so one would expect it to be more difficult.

Q44 Richard Burden: So what are we doing about that? You have been developing contacts with the Israeli Army about getting people through the checkpoints. How is that going?

Mr Hallam: If I might come back to the Israeli Army, my contacts are very much about DFID's reasonable access.

Q45 Richard Burden: But that is the problem, is it not? The kids and the teachers cannot get to school.

Mr Hallam: And the British Government raises movement and access with the Israeli authorities very frequently.

Q46 Richard Burden: And what has been the result? Any improvement?

Mr Hallam: Things have gone up and have gone down, largely dependent on the perception of the security environment, and so during 2005, when all the checkpoints on the West Bank, for example, went down, there were signs of optimism and the British Government was working very closely with the Wolfensohn team, particularly on movement and access issues. We are now in a new political context and security is much worse.

Q47 Richard Burden: Have there been any achievements in lifting restrictions on access?

Mr Dinham: Since the Agreement on Movement and Access was signed in November the situation is worse than before it was signed.

Mr Gooderham: As David says, it goes up and down depending on the day-to-day perception of the Israeli authorities of the security threat. The European Union, of course, has taken the lead in respect of Rafah and there is now this. Border Assistance Mission in place and we continue to work with and on the Israeli authorities to ensure that the Rafah crossing is open. We think the European Union has established a track record there.

Q48 Richard Burden: I do not think the Rafah crossing is particularly going to help teachers.

Mr Dinham: Not on the education point.

Mr Gooderham: Sorry, I thought you were asking about movement and access.

Q49 Richard Burden: Of teachers and students.

Mr Gooderham: I see, I am sorry. I do not have any information on teachers except that, as Martin says, there has been a strike for some time in the West Bank.

Q50 Richard Burden: Last Friday the Secretary of State for International Development answered a question about Israeli procedures towards foreign nationals, including those of Palestinian origin, who wanted to visit the Occupied Territories to help as teachers or sometimes as students, and in his answer he said, "Since spring 2006 the Israeli authorities have been more strictly enforcing entry procedures towards foreign nationals, including those of Palestinian origin, who wish to visit the Occupied Territories. This includes would-be teachers and students. As a result we estimate that hundreds of foreign nationals have been refused entry. Our Embassy in Tel Aviv raised our concerns with the Israeli Ministry of Foreign Affairs in August." You are also probably aware that the heads of all the Palestinian universities and higher education institutions in the West Bank have issued an appeal to the international community because they are unable to operate as educational institutions. What are we doing about that?

Mr Hallam: I can only answer that we make representation to the Israeli authorities on movement and access both bilaterally and also through the EU.

Q51 Richard Burden: Any responses? Any glimmer of hope that they are listening?

Mr Hallam: There is not a great deal of sign of it at the moment.

Q52 Chairman: Can I follow up something that Ann McKechin was pursuing? Most of my colleagues have pointed out that aid has increased because the economy has collapsed and because money has been withheld; yet the Department for International Development produced a White Paper that puts governance at the heart of its policy. How is it possible for us to engage in the Occupied Territories if we have no influence over the Government of Israel and no ability to deal with the Palestinian Authority? In any other state can you consider where DFID would have been prepared to have any budget or any programme at all if there was no government with whom they could effectively deal in order to deal with the real poverty reduction issues?

Mr Anderson: I am sympathetic with your point and the spirit behind it. I think the answer is that this is not like any other country where DFID works. This is a very different case. It is a unique case which is of enormous importance to the broader Middle East, of enormous importance to the world. The two parties are stuck in a very difficult spot, and the kind of difference we can make is by helping in whatever way we can to try to move the peace process forward. The kinds of standards that DFID would apply in many other places, apart from the fiduciary risk and financial management which we are very strict about, do not apply in quite the same way in the Palestinian Territories. It often requires us to think of very innovative ways and adopt approaches which are often against the grain but what we recognise in the political context are necessary for advancing the peace process, because advancing the peace process, no matter how frustrating, has to be the ultimate goal of this programme.

Q53 Chairman: That is a perfectly fair response but the practicalities are that the Government of Israel is pursuing policies which are undermining the functioning economy of the Palestinian people, destroying their livelihoods, destroying their ability to earn money, and the international community is picking up the bill. If we turned to the Government of Israel and said, if they pursued their policy, "Will you accept responsibility for the consequences? We are pulling out", what do you think the Government of Israel would do?

Mr Anderson: I think our best assessment is that the UK pulling out its assistance to the Palestinian Territories -----

Q54 Chairman: The Quartet.

Mr Anderson: ----- would probably not result in enormous change in Israeli policy. In fact, Israeli policies are, of course, the responsibility of the Israeli electorate.

Mr Dinham: But it would mean much greater hardship for the Palestinians themselves.

Q55 Chairman: The point I am really making is, are we not effectively letting the Government of Israel off the hook in that they are not having to deal with the consequences of the poverty that has been created? Let me also say quite plainly that, of course, everybody acknowledges that Israel has been targeted and Israel has suffered and Israel has a security problem and Israel has some clear legitimate interest in dealing with that problem, but that is not the point at issue. The point at issue is that as a consequence of that, whether it is the closure policy, whether it is Gaza and the West Bank and the withholding of revenues, it leaves ordinary people, which in your report you say you do not want to suffer, suffering inordinately. I think the words you used, following the election, were that the UK did not wish to punish ordinary Palestinians for the actions and policies of their Government, but it is ordinary Palestinians who voted for that Government and ordinary Palestinians who are suffering the consequences of this. What I am really saying is, at the very least where is the partnership between the international community and the Government of Israel in dealing with the poverty?

Mr Gooderham: I think you make a very fair point. This is the dilemma, as Martin has alluded to. I am not going to pretend that we are particularly comfortable with the situation we find ourselves in. As we have said repeatedly, we continue to make representations to the Israeli Government, in respect of both the clearance revenues and the movement and access issues and other issues that are affecting the daily lives of the Palestinian people, and we are not alone. Others in the international community are doing similarly, but the dilemma is, as I was trying to explain in an earlier comment I made, that the way to get round that, the way to get over that, is to have a Palestinian Government with whom we can work and with whom Israel can work, and that is what we have to achieve. We have had some frustrations along the way over the previous months but we are now under the impression that President Abbas is resolved to act and to take decisions to bring about a government that is committed to the three principles and with which we and others, including Israel, can then work. From that we would then want to see very rapid progress. I know that the Government as a whole and the Prime Minister in particular is strongly committed to then pressing very hard to see progress, but that has been the blockage, that has been the obstacle in our way during the course of most of this year. It has been frustrating and I think you make a perfectly fair point, that the situation we find ourselves in is not satisfactory and not one that we are comfortable with or want to see in place for a day longer than it has to be.

Q56 Chairman: All I can say is that on a number of occasions you have said that "we have made strenuous representations to the Israeli Government", but you take action against the Palestinian Authority. It is action against the Palestinian Authority and representations to the Israeli Government, which apparently do not yield much response. There is a difference.

Mr Gooderham: It is our considered view, and we are not alone, that the way to bring about change in respect of the Israeli Government is through engagement and dialogue and that is what we remain committed to. As I say, we are not alone in that. That is the view of the international community broadly. We have explained why we have difficulty with the current Palestinian Authority. We had no difficulty with the previous Palestinian Authority, with whom we worked perfectly normally, and we have no difficulty with the Palestinian President and we would very much like to get to a place where we have no difficulty with the next Palestinian Authority Government, but unfortunately we are stuck in the situation where we are and we need to try and move that on.

Mr Dinham: We are working with the PLO which is responsible for the Negotiation Affairs Department, which we have been working with for some time because the PLO, of course, recognise the Road Map and a peaceful solution to the problems. We have been working with them to try and do whatever is possible to rekindle this process. As Peter says, we have no problem working with those representatives of the Palestinian people who want to see a peaceful solution to the problem.

Q57 Mr Singh: It is very interesting when you say that we need a Palestinian Government that does this, this and this. Yes, we do, but we also need an Israeli Government at the same time which does not continue to trample over the human rights of the Palestinian people. Is it not an irony that, in an era when we have seen the coming down of the Iron Curtain, the falling of the Berlin Wall, the opening of the Bamboo Curtain, in the Middle East, along with the walls of hatred and mistrust we have a physical barrier now? Do we not need an Israeli Government which does not do this kind of thing in Palestine? What is the impact that this barrier is having on our aid, development policies, the economy of Palestine and the general wellbeing of the Palestinian people?

Mr Dinham: It is one of the aspects of the movement and access problem, a very serious aspect. We have made our position very clear about the separation barrier, which is that its establishment on Palestinian territory, on Palestinian land, is contrary to international law and we have made those representations to the Israeli Government. It has the effect of cutting off some ten per cent of the Palestinian population, which is something like 400,000 people, so those that fall on the west side of the wall are stuck. It has had quite an impact on the social fabric of communities. I visited a farmer near Qalqilya whose farm was on one side of the wall and whose home and family were on the other side, and only he could go through to look after the land, which was becoming very difficult because his family could not. He never knew whether the entrance through the wall was going to be open or not, so the impact on the life of people in the Territories of the barrier is quite excessive. As the Chairman was saying, Israel certainly has a right to its own security and we do not dispute that, but a separation barrier on Palestinian land having the impact on Palestinian people that it has is not satisfactory at all.

Q58 Mr Singh: Are there any examples of the impact it has on the work of DFID?

Mr Dinham: Not in the sense of it having an impact on projects and activities that we are doing, but in the sense that we are there to try and help the economy and relieve poverty it is one of the things which is standing in the way of that, so it is in the way of our mission.

Q59 Mr Singh: Why can we not get the Israeli Government to abide by the Agreement on Movement and Access which it signed in 1985, was it?

Mr Hallam: 2005.

Q60 Mr Singh: Why can we not get them to agree to anything?

Mr Dinham: I think they would answer that the security situation for them is such that they cannot meet the requirements of the Movement and Access Agreement. If you look at the Movement and Access Agreement, the points in it show that if there is a particular problem at a particular crossing that might mean that goods and services cannot go through that crossing but then they should be immediately transferred to another crossing where there is not a problem. Those are the kinds of practical issues which are addressed in the Movement and Access Agreement, but I think the Israelis have taken a blanket view of the security situation which for them is such that they cannot move on movement and access issues at the moment, and we have sought to find technical and technocratic ways of trying to alleviate that, and obviously there is a dialogue on the political front as well.

Q61 Richard Burden: I would like to ask you a couple of questions about trade, but before doing that can I pursue you a little bit more when you said that the UK specifically and the international community more generally worked very successfully and had no difficulty working with the previous Palestinian Government. Would you say the same about the Israeli Government, that they did not have any difficulty working with the previous Palestinian Government?

Mr Gooderham: In the day-to-day sense, of course, there were problems that proved difficult to resolve on one side or the other, but the two institutions, as it were, on the Israeli and the Palestinian side were in dialogue and there were meetings from time to time. It was not entirely satisfactory; we are not trying to suggest that it was a harmonious relationship, but there was not a difficulty in the fundamental sense.

Q62 Richard Burden: Was Israel prepared to negotiate with the previous Palestinian Government?

Mr Gooderham: Yes.

Mr Dinham: The example really is the Agreement on Movement and Access which was signed last November and it followed disengagement, and Jim Wolfensohn had -----

Q63 Richard Burden: Disengagement was not negotiated.

Mr Dinham: Disengagement was not, but the role of the Quartet, and their representative there was Jim Wolfensohn, was to try and build on this disengagement process and to try and use that, even though it was not negotiated, in a way where a positive outcome could come of that, particularly looking at movement and access issues. Indeed, Secretary Rice was there in the final stages of signing that agreement to ensure that it was brought to fruition. So there was a point towards the end of last year when there was a successful negotiation and that was very positive, and there are a lot of very positive aspects to that agreement. Before the Hamas Government, there were points where there was agreement and negotiation and it was up and down a bit but that was a different place from where we are now.

Q64 Richard Burden: I am just trying to work out the approach that you have been articulating, how you want to secure change and where that is leading and what is likely to happen. We know from a number of questions that long before Hamas was elected the closures were increasing, not decreasing, the settlements were increasing, not decreasing. There were problems in students and teachers getting to schools and colleges and a barrier was being built in defiance of international law on Palestinian land and, though it has not been given in evidence so far, you probably agree with me that there was some frustration on the Palestinian side about the difficulty of getting the Israeli Government to the negotiating table. If your approach is right and these polite representations to the Israelis and more direct pressure on the Palestinians work, what assurances do we have from the Government of Israel that their approach next time will be any different from the approach they had last time?

Mr Dinham: We do not have any direct assurances of that nature, but we believe that working as far as we can with the Israeli Government, both in dealings with them publicly and privately and discussing some of these issues, as we have done with President Abbas and as we were in the past with the previous Palestinian Authority, is the way to try and engineer change.

Q65 Richard Burden: If we just look at trade issues and the Karni crossing, the World Bank reports that a number of the difficulties there are to do with poor management of the border at Karni, and you made some comments of that kind before, but what actually needs to happen at Karni? What does Israel need to do and what do the Palestinians need to do?

Mr Dinham: I think there are two areas. One is to provide sufficient security - for the Palestinian side to be able to provide sufficient security to provide reassurances to the Israelis, and the other thing is -----

Q66 Richard Burden: What does that mean? What do they need to do?

Mr Hallam: The Palestinian side needs to be able to convince the Israeli side that they will be safe operating Karni.

Q67 Richard Burden: What would be a reasonable thing for the Israelis to ask them for, given the situation that the Palestinians have been talking about? What would it be reasonable for the Israeli state to say, "To satisfy the security concerns this is what you have to do" What have they actually been able to do?

Mr Hallam: General Dayton, the US Security Coordinator, is working closely with the Israelis and the Palestinians to try and work out exactly what will do and has a plan. I am not a security expert so I cannot tell you what does and what does not have to be done, but there is a plan, there are things that could happen to make things better. There have been terrorist attacks on Karni, so it is not an imaginary risk.

Mr Anderson: If I can fill in some of the detail? The security of premises needs to be much better than it has been with proper security guarding. More important than that, we need much improved detection systems for any goods going across.

Q68 Richard Burden: The Palestinians need to have those?

Mr Anderson: Yes, on the Palestinian side they need the right kinds of large scanners and detection systems to ensure that weapons and bombs are not getting through. From the Israeli perspective, there have been a number of attacks and they are worried quite rightly about a bomb coming through and exploding on the Israeli side. The detection has to happen on the Palestinian side and the Israelis are very concerned about security, so they will have a high level of scrutiny. They will want to see that is is being done to the very highest of standards. That is what has to be achieved.

Q69 Richard Burden: And who is the one to do that at the moment? Given the fact that you have this problem of talking to the Government who is actually going to install the scanners?

Mr Anderson: Two or three days ago the President's Office issued a decree bringing the border agency under his direct control, and so it is independent and is the entity which can run this, and the Presidential Guard has been made responsible for guarding Karni, so it is entirely under the President's Office now. That is the vehicle through which General Dayton is looking to provide international assistance to ensure that all the infrastructure systems and training is in place to provide security guarantees. The Israelis will need to have confidence so they can allow Karni to open up.

Q70 Richard Burden: And what have the Israelis got to do?

Mr Anderson: The Israelis, of course, are going to have to co-operate with this and sign off. They will have to commit to keeping their half of the border crossing open provided that the Palestinians deliver the right level of security. They will have a high level scrutiny early on to ensure that nothing is getting through which poses a security threat.

Q71 Richard Burden: Is there anything the Israelis should be doing now before that process is completed by the Palestinian side?

Mr Anderson: General Dayton is working with the Israelis very closely, he is working with the IDF and he is working with the border people to go through all of the details, and one of the key issues is sharing information to give the Israelis assurances along the way, so they will need systems for monitoring the way in which the Palestinian security is carried out.

Q72 Richard Burden: What you are saying is what the Israelis need to do to monitor the Palestinians' obligations. What I am asking you is what does the British Government think now the Israelis should be doing to build --- you talk about the need to build confidence on the Israeli side about what the Palestinians are doing. What do the Israelis need to do to build confidence on the Palestinian side now rather than monitoring what the Palestinians are doing?

Mr Anderson: It is to co-operate very closely with General Dayton who is bringing the two sides together.

Q73 Richard Burden: Will they ever do it.

Mr Anderson: They will clearly have to once they have the right kind of security assurances.

Q74 Richard Burden: So until they are satisfied, according to their criteria, that they have got the right level of security, the British Government is saying that they should not open the border?

Mr Anderson: Obviously, we encourage Karni to be open as much as possible. It is inevitably the case that the IDF will receive intelligence about possible security threats. When that happens they will at times want to close down the border, but we encourage them to keep their bar at a level that will keep it open as much as possible. General Dayton is working with them closely to try promote that as well.

Q75 Richard Burden: Can you tell me what the current status of the EU Palestine Association Agreement is?

Mr Hallam: It exists. It is in place.

Q76 Richard Burden: Has it been suspended?

Mr Dinham: It is in place.

Q77 Richard Burden: Is it working?

Mr Dinham: The effectiveness of the Association Agreement has always been dependent on the movement of goods and services and the ability for exports and imports to move freely in and out of the Palestinian Territories. So even in the past, although the Association Agreement should have been, and should be, a force for strengthening the economy, the agreement itself is fine in theory but in practice it has been very difficult for the Palestinians to export much of their product or move it within the Territory or export it to countries adjoining.. I met a farmer in the Jericho Valley who had spent 16 years trying to export bananas to Jordan, and for the first time this year he has succeeded, but it is not easy.

Q78 Richard Burden: Can you tell me what the status of the EU Israel Association is?

Mr Dinham: Again, that is in place.

Q79 Richard Burden: In your evidence to us you say, in paragraph 52, "Palestinian development is helped through Israel's Association Agreement with the EU". What is the evidence for that?

Mr Hallam: The evidence is, shall we say, relative in that we know from economic analysis how much the Palestinian economy is dependent on the Israeli economy, and therefore if Israel's economy grows that has a positive impact on the Palestinian economy. On the basis that the EU Israel Association Agreement has beneficial effects on the Israeli economy, which I do not think is in doubt, the assumption is that it therefore has a beneficial effect on the Palestinian economy.

Q80 Richard Burden: But is that happening at the moment? Is it having a beneficial effect at the moment?

Mr Hallam: At the current time the Palestinian economy is in a bad way.

Mr Dinham: That is in one part because of the smaller number of Palestinians who are allowed to work in Israel.

Q81 Richard Burden: Which is back to access.

Mr Dinham: The figures are that there were 170,000 workers there in the late 1990s, something like 44,000 last year, and the Israeli Government has actually said that it wants to bring that number to zero by 2007.

Q82 Richard Burden: 2007?

Mr Hallam: End of.

Q83 Richard Burden: Can you tell us what Israel's obligations are under the EU Israel Association Agreement?

Mr Hallam: The main point of it is that it is a trade agreement and it also enables dialogue and co-operation at a political level. Associated with the agreement there is a conversation that happens between the EU and Israel. It covers political issues as well as trade issues.

Q84 Richard Burden: Do they have any human rights obligations, for example?

Mr Dinham: Yes.

Mr Hallam: Those obligations are mentioned in the agreement.

Q85 Richard Burden: What are we doing to ensure that what the international community expects of them, the conditions, we may say, that are in those agreements, are abided by by Israel?

Mr Hallam: I am afraid I am going to be very mean to my colleague Peter and hand over to him because this is very much his patch.

Mr Gooderham: I fully understand the thrust of your questions. There are mechanisms under the Association Agreement and the subsequent Action Plan under the European Neighbourhood Programme which enables us to raise human rights issues with the Israelis, which the European Union has done. It has already had one session and to do that and no doubt has used subsequent engagements for the same purpose. Our judgment is that on balance it is worth pursuing this agreement and the mechanisms that exist under it because it gives us the opportunity to work through the European Union, of course, to raise the issues of concern that we have with Israeli policies.

Q86 Richard Burden: In our last report, you may recall, conclusion 23 said, "Movement restrictions have caused" - and this is three years ago - "an unacceptable situation whereby an EU trade agreement is obstructed by a party (Israel) which itself benefits from preferential EU trade terms", and the suggestion there was that whilst that situation pertained that was a pretty unfair situation and that there should be action taken to ensure that Israel abided by that agreement or it should be suspended. What is your view on that now? As things do appear to have got worse rather than better despite the constructive engagement you had, are you reconsidering that at all?

Mr Gooderham: As I suggested in my previous answer, we continue to take the view that on balance it is important to keep these agreements in place, to use the opportunities that they present to make our representations to the Israelis.

Q87 Richard Burden: What have they achieved?

Mr Gooderham: I cannot say that we have had particular results yet but it is a mechanism which we believe over time will enable us to have the sort of dialogue with Israel which will facilitate resolution of the sorts of issues that you are referring to, particularly on the human rights front. That is the position we have taken, the position that other European Union Member States have also taken, that we think that on balance it is more important to remain engaged and to make use of the instruments that we have available to try to influence Israeli Government actions and policies rather than to walk away from them.

Q88 Richard Burden: Without suspending the agreements what mechanisms have you got for implementing the agreements because Israel has got some obligations within the agreements, has it not: to respect human rights, to respect free movement, to respect all the principles on which the EU family of agreements is founded? What are the mechanisms within those agreements to ensure that the obligations are followed?

Mr Gooderham: They are agreements that essentially are about dialogue, they are essentially about one set of States and another State coming together to discuss issues of mutual concern, in this case, on our side, human rights issues. That is the nature of these agreements. They are no different in the case of Israel than they are from any of the other Association Agreements that the European Union has with various countries.

Q89 Richard Burden: You see, if you are a Palestinian sitting in a refugee camp in Gaza and you do not have access to clean water because of the fact that the water supplier has been bombed, you do not have electricity because it has been bombed, your kids cannot go to school because the schools are shut, let us say you are a farmer and you cannot get your produce out because of the movement restrictions, and you are told that as far as you are concerned, for movement to happen the Government that you elected, despite the fact that it was not engaged in violence at the point of being elected, has got to sign up in theory to conditions, a lot of which it is abiding by in practice, before the international community will even talk about it, but if you are on the Israeli side, even though it is established that you are not abiding by agreements, that you are not carrying out your obligations in practice and you are stopping an EU association agreement with another country, in other words, Palestine, from being effected properly, and you hear that the international community's response to that is to continue to make representations without any enforcement mechanisms whatsoever, if you were that Palestinian, would you not be justified in feeling that the international community is guilty of just a smidgen of double standards?

Mr Gooderham: With respect, I do not think you are comparing like with like.

Q90 Richard Burden: That is the nature of double standards, is it not?

Mr Gooderham: I think we have tried to explain, my colleagues and I this afternoon, why the international community as a whole, not just the UK and I keep coming back to that, and why indeed President Abbas himself, have attached such importance to the principles of -----

Q91 Richard Burden: Are you saying, and this is quite important, that President Abbas has actually endorsed the cutting off of aid to the Palestinian Authority, or has he rather said, "You should not be doing it like this"?

Mr Gooderham: I did not say that. What I said was that he himself advocates the establishment of a government, whether it is the existing government that comes forward with a different set of policies or whether it is a new government, that is committed to the three principles. That is what he wants to see, and that is what we want to see as well.

Q92 Richard Burden: Does he think you are going about it the right way to achieve that?

Mr Gooderham: We hope so. That is certainly the view of the whole international community. We are in extremely good company with a lot of other countries who take the same view and also the President of the Palestinian Authority takes the same view.

Q93 Richard Burden: You are saying that he takes the same view about your approach to aid to the Palestinian Authority?

Mr Gooderham: He has made it clear that he wants to see a government in place that is committed to -----

Q94 Richard Burden: Of course; that is not in dispute. What I am asking you, because you appear to be implying that he takes the same view as you regarding the cutting off of aid to the Palestinian Authority and on your approach to things like the EU Israel Association Agreement and so on, is, does he or does he not take the same view? There is no dispute that he wants to see a different government; of course he does.

Mr Gooderham: We certainly have no impression that he has any difficulty with the proposition that funding directly to the Palestinian Authority in the current circumstances is all too likely to lead to that funding then being siphoned off to Hamas for purposes that would certainly be unacceptable to our Government and to many others as well. We have worked with the President and his Office on the establishment of the temporary international mechanism -----

Q95 Richard Burden: No, that is different, is it not? Working with the President's Office to try to find a way of alleviating the problem is different from claiming he is endorsing your position.

Mr Gooderham: I was actually trying to put it the other way round.

Q96 Richard Burden: I know you were but I would like an answer to the question I asked.

Mr Gooderham: I was trying to suggest that we were endorsing his position. As I have tried to make clear, he is clear himself that he wants to see a Palestinian Authority government that is committed to the three principles. That is something which the international community supports him in and which consistently it has made clear.

Q97 Richard Burden: I agree with you.

Mr Gooderham: That is the situation. I do not think it is the other way round.

Q98 Joan Ruddock: I want to move on to another subject, but they are all inter-related, are they not? This conflict is about land, about territory. It is about who controls that part of the world. One of the key issues that we know from conflicts around the world and is predicted increasingly to be at the heart of territorial conflicts is water. It is essential for human life; everyone has to have it. We have got some extraordinary figures and I wonder if you will find these a surprise or whether they are common knowledge. Palestinian use of water amounts to 83 cubic metres per person per year. Israeli use is 333 cubic metres, and Israeli settlers' use is 1,450 cubic metres - the most extraordinary difference and disproportionate use of a critical natural resource. I wonder if you feel comfortable with those figures and they strike you as being real. How far do you think conflict over water is central to continuing conflict and may possibly be a stumbling block to resolution?

Mr Dinham: It is an absolutely fundamental issue, there is no question of that, and those figures do not surprise us but they are very stark. As I mentioned before, we have been working with the Negotiation Affairs Department which at various stages has been looking at what are called the final status issues, and much of the practical work on that has been around water and about the availability of water supplies and what the final status issues are. Water is a fundamental part of the final status agreements and the work that we have been doing with the Negotiation Affairs Department through the Negotiations Support Unit has been looking at the details of the water problem: where the wells are, where water access has been obstructed. One of the figures I would add to the ones that you have, and I think was mentioned in your previous report, was that I think there have only been 13 wells dug between the 1960s and the 1990s during a period when a lot of the other wells had dried up, so the availability of water is a very serious problem.

Q99 Joan Ruddock: But is it not true that Israel gets a considerable amount of the water that it uses from the Palestinian Occupied Territories and indeed that Israel is the heaviest user of water in the whole of the Middle East?

Mr Dinham: I think that is true.

Mr Anderson: That is right.

Mr Hallam: The West Bank area, the Judean Mountains, is an important aquifer for Israel and the Occupied Territories.

Q100 Joan Ruddock: So the Palestinians have restricted access to the water supply and limited because of the absence of new wells, is that the case, but the Israelis are drawing water from the Palestinian Occupied Territories?

Mr Dinham: Yes.

Q101 Joan Ruddock: What is DFID doing, or does it feel it can do anything in the circumstances, to ensure that there is an adequate supply for the Palestinians, and they also believe that there is contamination of water supplies, which is very serious because of the breakdown of some of the other aspects of their society?

Mr Dinham: As with so many of these issues that we have been discussing, they all come back to the political process and trying to find a way in which the parties can get to discussing the key areas for the final status negotiations. This is a key one and we have seen that our most useful contribution to this has really been to try and prepare the factual ground from a technocratic point of view, to avoid getting involved in the emotional part of the discussion but actually to look at what would be in the negotiating brief on the Palestinian side, and so the best possible resolution of the issue could come out of a final discussion. It seems to us that there will not be any particular movement on this, as on many of the other issues, until you wrap it into a political process, which is what is desperately lacking.

Q102 Joan Ruddock: In the TIM that we talked about earlier what provision is there in that mechanism for water?

Mr Dinham: In our second tranche, which was through the First Window of the TIM, we are providing assistance to the operation and maintenance for water supply, sanitation supplies and electricity supplies, so that is one of the ways in which we are helping in a fairly modest way to ensure that water, such as there is, is made available to people who are really in desperate need of it so there is a mechanism through the TIM to do that.

Mr Hallam: We were instrumental in setting up this part of the Window by inviting the World Bank to prepare work that will enable us to put money into it. We have put £1.5 million into water and sanitation.

Q103 Joan Ruddock: It would be quite interesting to find out exactly what that had provided for in terms of whether it is new wells, whether it is maintenance of the existing pipes, whether it is delivery to households and how many hours a day the Palestinians do have access to water.

Mr Hallam: We can get you details of what the money has been earmarked for. I should say that the money only went out a couple of weeks ago, so things are being procured and things will happen.

Mr Dinham: But access to water is two to three hours a day.

Mr Hallam: In Gaza it is, yes.

Mr Dinham: And six to eight hours of electricity.

Q104 Joan Ruddock: Pretty grim?

Mr Dinham: Yes.

Mr Hallam: Could I also just add that there is a project that we are working on with the Foreign Office, particularly on pollution monitoring, and it is a project that is joining up Palestinian and Israeli and Jordanian water counterparts to talk and learn more about pollution.

Q105 Chairman: With the imbalance between the water on the West Bank and Israel's requirements for water being as great as it is, how do you envisage the two-state solution working where Israel is potentially dependent on water from an independent Palestinian state whose security threat will inevitably lead to, at the very least, suspicion? Does it not rather suggest that that is a fundamental obstacle?

Mr Dinham: It is one of several very tough issues which are going to have to be brought to the table. The important thing is to get a basis on which people start talking and then you can start to deal with those issues, but it is going to be difficult. If you look around the world water is often a huge issue of controversy and dispute and all the rest of it, but in most places it is possible to come to a solution, so as long as the will is there and people are talking then we are hopeful that we can find some technical solutions to it and we would obviously want to help with that if we were asked to do so.

Q106 Joan Ruddock: But arguably the case here is that there is a total inadequacy of supply for the Palestinians so, although water, of course, can reasonably be traded, - Scotland and Wales provide quite a lot of water for England - in this case, to satisfy Israel's needs might be extremely difficult if the Palestinians were not to self-deprive.

Mr Dinham: It will be a tough negotiation.

Mr Anderson: It is even slightly more complicated than that because many of these water resources are regional in nature and so Jordan and Syria and so on will have to be brought into the picture in some kind of sharing agreement.

Q107 Chairman: Thank you. We are debating in the House on Thursday the White Paper, which I mentioned, the focus on governance. I will be surprised if some of these issues do not surface in that. We are also just about to publish a report on conflict and this is probably the most difficult and intractable issue we face. DFID does actually have a Strategic Conflict Assessment Tool which is supposed to help inform policy-making and how you deal with conflict. Has that been applied in the context of Israel and Palestine or is it being applied?

Mr Anderson: We did, not a full conflict assessment, but a preliminary conflict assessment, several years ago which is now out of date and we have just put in place new conflict adviser within the team. We are looking at analysing conflict with some partners that have been analysing conflicts in the region, and also within the Palestinian Territories, which is one of the issues that we need to take forward. Increasingly DFID is seeking to combine the Strategic Conflict Assessment Tool with what we call the Drivers of Change Tool to try to understand the political incentives that operate. We have been doing some work on understanding the alignment of political forces within the Palestinian Territories as well, without which conflict issues cannot be understood fully.

Chairman: Thank you very much. This has inevitably been a fairly tough exchange because we are going to visit Palestine in the next couple of weeks and obviously we will want to see the situation on the ground. I have been to Israel and parts of Palestine but quite a long time ago. Other members of the Committee have been there in the last three years, and by the sound of it we are going to find a worse situation. I hope our report can be constructive but I do thank you for giving us your views, and it is very important that we have both Departments here. Thank you all very much for taking the time and trouble to be here.

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[1] Israeli Defence Force

[2] Emergency Services support Programme