House of Commons - International Development

Select Committee on International Development Written Evidence

Memorandum submitted by Oxfam GB

INTRODUCTION

1. Nearly three years after the International Development Committee last reported on the development of the Occupied Palestinian Territories (OPT), Oxfam welcomes this opportunity to re-examine the challenges facing Palestinian development. It is striking how the principle obstacles to bring an end to Palestinian suffering, then identified by the Committee and also by Oxfam in its submission, have only intensified. [29]

2. While the Government agreed with most of the Committee's recommendations at the time, Oxfam is concerned that there has been a lack of pressure by the UK to help bring an end to clearly identified Israeli practices that are causing poverty and suffering in the OPT. [30]The UK government and international community must provide incentives and impetus to restart and sustain the peace process, helping to bring all actors to the negotiating table.

3. By suspending normal aid to the Palestinian Authority, the UK, the EU and a number of other international donors have arguably pushed Palestinians into far greater poverty. This, combined with the withholding of Palestinian tax revenue by Israel, threatens to create a public health disaster as vital public institutions face collapse through a lack of funds.

4. The tensions created by these actions have led to clashes between Palestinian factions and fuelled instability and violence by Palestinians and Israelis alike. This has culminated in current hostilities in Gaza, moving the vision of a viable Palestinian state and a secure Israel even further from reality.

OXFAM'S PROGRAMME

5. In the OPT and Israel, Oxfam currently has offices in East Jerusalem, Hebron, Nablus and Gaza City. With local partners, we are undertaking water and sanitation, public health promotion and food security projects in 42 villages helping to improve the lives of over 150,000 people each year.

6. In addition to this, Oxfam has provided a £300,000 grant for six electricity generators, water pipes and associated equipment to enable the Coastal Municipal Water Utility in Gaza to repair damage from the Israeli attacks that began on 27 June 2006. We are also working to alleviate suffering facing Bedouin communities from the Hebron drought.

7. We work closely with local and international organisations including the Palestine Hydrology Group, Palestinian Water Authority, the Coastal Municipal Water Utility and UN OCHA. On behalf of local communities, Oxfam undertakes specific advocacy with the Israeli Defence Forces and international actors to enable local communities to gain access to clean water and sanitation.

8. Oxfam has a substantial programme in Israel with 16 partner organisations. Oxfam works to tackle poverty and discrimination facing Israeli Arab and Jewish communities, and to highlight human rights abuses in both Israel and the OPT. This has included support for income generation schemes with minority Jewish women's organisations and support to Bedouin communities in the Israeli Negev to secure their land rights.

9. In this submission, we will address points 1, 6, 7, 9 of the Committee's terms of reference covering: suspension of international aid; controls on movement of people and goods; settlements; development assistance and political solutions. A summary of this submission is provided on Ev 108.

THE IMPACT OF THE SUSPENSION OF AID TO THE PALESTINIAN AUTHORITY AND THE IMPACT OF THE TEMPORARY INTERNATIONAL MECHANISM FOR PALESTINIAN BASIC NEEDS, AGREED BY THE QUARTET AND THE EUROPEAN COUNCIL

10. Since the suspension of international aid and the withholding of Palestinian tax revenue by Israel, poverty levels have risen to over 70%.[31] The drop in incomes is expected to reach 40% by the end of 2006 compared to 2005. The World Food Programme in Gaza is providing an additional 60,000 people with food aid. [32]

11. At least 152,000 Palestinian Authority workers have not received full salaries since February. According to the United Nations, nearly one million Palestinians are dependent upon these salaries for an income. [33]The Palestinian Authority has been unable to provide welfare payments to 35,470 of the poorest Palestinians and their families, and 5,472 pensioners. [34]

12. In spring 2006, the World Bank, United Nations agencies and many non-governmental organisations repeatedly warned international donors about the serious humanitarian consequences of suspending aid. [35]Many diplomats and international actors Oxfam consulted were aware of the consequences of suspending aid and did not believe that Hamas would change its policies for many months. Oxfam believes that a policy should not be introduced if it is expected to be ineffective and is likely to exacerbate poverty and suffering.

Household impact

13. At the end of May 2006, Oxfam interviewed villagers in Madama near Nablus about the changes in their lives as a result of the fiscal crisis.

14. The Nasser family used to receive a 420 NIS monthly cash allowance and food aid from the Ministry of Social Affairs. The family have not received any welfare payments since February but have continued to receive food aid. With debts of 5,000 NIS the family have no savings to buy cooking gas, medicine and other essential items. [36]

15. Amal Nasser, the mother of the family explained: "I have diabetes. I tremble now because of the lack of medicine. The biggest problem for us now is lack of medicine. My daughter suffers from deteriorating eyesight and needs to replace her glasses every six months. The frames are available but the Ministry of Health has no money to buy the lenses."

16. Without prescriptions from the Ministry of Health, Amal explained they were unable to afford the 500 NIS monthly cost of the medicine.

17. The local shopkeeper Shukri Qot said: "Before the current situation, I sold around 200 NIS of groceries each day, now I sell around 60 NIS a day. I have also lost around 1,500 NIS in writing off unsold stock. In two to three months, I will be forced to close. How can I survive on 60 NIS a day?"

18. Fawzi Sadqui Nasser, has taught at Madama school for over 20 years earning 2,500 NIS each month. He told Oxfam: "The teachers are always waiting for their salaries but now I have not received my salary for nearly four months. Life has become extremely difficult. The children in the family feel the situation... At school, around half the children's parents work for the PA. When you look at the children you notice a change in their faces."

19. In September, Oxfam also spoke to Nuha and Rasheed from Taiba-Jenin village. [37]Having lost his land, to the advancing Israeli wall, Rasheed works in Jenin market loading goods. His income has gradually disappeared as people in the market have less and less income to buy goods. Nuha has begun working as a cleaner. They have three children including a daughter with kidney failure. Their daughter needs surgery in Amman but neither they or the Ministry can now afford the cost. Rasheed said: "I'm waiting but I don't know if my daughter can wait. I don't have anything to sell I sold everything in the house even mine and my wife's clothes... It's killing me to have my name at the Zakat committee in the village, to wait to receive charity".

Temporary International Mechanism

20. Recognising the growing hardships facing Palestinians on 17 June, the Quartet agreed to a Temporary International Mechanism (TIM) to provide limited and direct support to the Palestinian people, bypassing the government ministries. It was agreed the EU would develop and manage the TIM. [38]

21. Oxfam understands that some governments sought to limit the scope of the mechanism, against the wishes of many other donors. [39]According to diplomatic sources in the region, the United States did not wish to make any direct payments to government workers while Britain wanted to only focus on the health sector.

22. Six months after the suspension of aid, the TIM has started to provide limited monthly payments to 56,517 government workers in lieu of salaries. This includes 11,910 front line health professionals and 44,607 of the lowest paid workers. [40]However, the mechanism excludes about 90,000 other employees who are estimated to support hundreds of thousands more people. [41]

23. The funding of the TIM is also not sufficient to meet the existing salary costs For example, the €40 million provided from the EU under the to cover the salary costs of 56,517 Palestinian Authority workers and 40,942 welfare recipients and pensioners does not cover the €228 million annual costs of salary payments for health and education workers alone. [42]In August, over €12.5 million had been spent on salary payments alone.

Essential services

24. The TIM does not cover many essential services and others are not sufficiently funded. Key government services including health, refuse collection, education, water and sanitation have been placed at breaking point. In Gaza, where the government employs a third of all employees, [43]household cesspits are overflowing for lack of funds to empty them. Refuse is piling up in the streets, as public authorities do not have the funds to collect it. Many hospitals are running short of essential medicines and reverting to emergency operations only.

25. An Oxfam assessment team visiting Gaza in August 2006 found that many major water and sewage projects had been suspended because of a lack of funding. Prior to disengagement, 95% of household water bills were paid compared to 25% today. The Coastal Municipal Water Utility, a public-private partnership, depends upon these bills to pay it workers, most of whom have now lost their salaries. In addition, municipalities and their staff who act as joint implementing partners also lost their incomes because of the embargo on the Palestinian Authority.

26. The employees at the Central Public Health Laboratory in Gaza City are in a similar position. They had not been paid for five months when the Oxfam assessment team visited. Well trained but with limited equipment, they provide a frontline defence to the spread of infectious diseases.

27. Households also pay for their solid waste collection through their water bills. As these are not being paid the Solid Waste Management Company are unable to pay most workers. The workers are doing their best to turn up to work but without an income it is difficult for the company to pay for fuel and maintain vehicles.

28. The €10 million provided to the health sector from the European Commission and £3 million provided by DFID through the mechanism does not cover the ongoing Ministry of Health running costs amounting to nearly $5 million a month. [44]The World Health Organisation reported that drugs are running short. Oxfam GB's Belgian affiliate, Oxfam Solidarite report that their NGO partners in the health sector are having to rapidly scale up activity to meet an influx of cases. Projects that relied upon joint funding through the Ministry of Health were suspended.

29. Teachers, health professionals and other civil servants began striking on 2 September over the non-payment of their salaries. One head-teacher informed Oxfam he has no budget to run his school. [45]A breakdown of the formal skill-based education system, once the pride of the Palestinian Territories, could spawn informal madrassa schools in which Islamic extremism could take root.

Aid effectiveness

30. While welcoming the $500 million aid pledged to the OPT at the Stockholm donor's conference on 1 September 2006, Oxfam estimates that the Palestinian Authority stands to lose $1 billion from the suspension of aid the withholding of tax payments by Israel.

31. The 2006 UN Consolidated Appeal was nearly doubled to $385 million on 31 May, citing the suspension of aid and withholding of tax payments. [46]The actions of some donors have arguably increased the levels of poverty, thereby creating the need for a revised appeal. Moreover, current aid restrictions stop assistance being directed through the most effective channels, namely the existing authorities.

32. UNCTAD reports that the impact of the suspension of aid now has far reaching economic consequences that will not be resolved with the resumption of international aid to the Palestinian Authority. UNCTAD estimates that the suspension of aid, Israel's withholding of tax payments and restrictions on movement, could cost $5.4 billion in the two years until 2008, with 84% of jobs existing in 2005 having been lost. UNCTAD believe losses would continue even if funding to the Palestinian Authority were resumed. [47]

33. Oxfam is concerned that the diversion of international aid, has not only undermined existing Palestinian institutions, best able to deliver assistance but has actually wasted resources by creating parallel funding structures. €12 million euros has been allocated under the TIM to provide technical assistance and capacity building to the Office of the President. [48]Existing Palestinian government ministries already exist and are best able to channel this assistance.

IMPACT OF THE SEPARATION BARRIER AND OTHER CONTROLS ON MOVEMENT OF PEOPLE AND GOODS ON EMPLOYMENT, POVERTY, ECONOMIC DEVELOPMENT, DELIVERY OF ASSISTANCE

34. Israeli restrictions on movement intensified following the beginning of the second intifada in 2000. The United Nations report 518 physical obstacles to movement in the West Bank, including checkpoints, roadblocks, barbed wire fences, gates, and earth mounds across roads, known collectively as "closures." [49]This in an increase of 37% on August 2005. The World Bank estimate that the impact of the illegal Israeli Wall or Separation Barrier

[50]reduces Palestinian GDP by 2-3% each year. [51]

35. In its evidence to the Committee in 2003, Oxfam highlighted how restrictions on movement were dividing the West Bank in two separate Palestinian areas. Today, Israeli restrictions are dissecting the West Bank into three separate enclaves and many sub enclaves. This could lead to Palestinians losing 40% of the West Bank. Israel has also failed to facilitate movement between the West Bank and Gaza, further undermining the viability of an independent Palestinian state.

36. Oxfam has recently undertaken field research into the Palestinian agricultural sector to guide our programme development. [52]The agricultural sector exemplifies the impact controls on movement have had on employment, poverty, and economic development; and how these in turn, threaten to destroy hopes of a viable independent Palestinian state.

Employment

37. Farm employment has seen a significant growth in the past five years from 12 to nearly 16%.[53] Prior to 2000, Palestinian men sought jobs in Israel as these paid more than jobs in the OPT. The advent of the intifada has closed these opportunities off to tens of thousands of workers mostly from rural communities. Workers have been forced back to the land. Today, an estimated half a million Palestinians are dependent upon the land. [54]The jobs that 130,000 Palestinians were licenced to perform in Israel, bringing crucial cash to their non-industrialised economy, have disappeared and been awarded to migrant workers from third countries such as Thailand and, Ghana.

38. Issa from Beit Jala used to earn 3000 NIS each month as a hotel manager in Bethlehem but the intifada led to the collapse of the tourist industry and he returned to farming. He told Oxfam he no longer earns enough to support his family of four children and he relies upon his wife's employment with the local government to make ends meet. [55]

Economic development

39. The financial impact of these restrictions can be quantified by looking at sales figures for Nablus agricultural market. In 2004, sales were only 5% of their 1999 figure. [56]The six wholesale agricultural markets in the West Bank have either closed or dramatically reduced their operations. The World Bank estimates that transport costs have increased six to seven times on some roads. [57]

40. Zuher Ossaily, of the MD Plaza supermarket in Ramallah said: "The Israelis are pressuring us to buy their products. They are closing the towns, giving instructions to the back-to-back areas, to facilitate the movement of Israeli products. [58]Israeli products can be in Ramallah in one hour from Tel Aviv. But they need five hours to reach here from Nablus." [59]

41. Palestinian trade sources confidentially told Oxfam they believe 80% of all goods sold in the West Bank are now Israeli produce. [60]

42. One Palestinian fruit farmer explained: "Before we used to sell our fruits in the market of Bethlehem and Jerusalem, and sometimes as far as Ramallah, Qalqilya and Tulkarem. Now it is impossible to go anywhere. If we are lucky we are able to make it to the nearby Hebron market. The checkpoints have made our life miserable." [61]

43. As a result of the restrictions on movement, Israeli farmers have a competitive advantage over their Palestinian counterparts. Palestinian retailers do not establish contracts with Palestinian farmers because they cannot guarantee supplies. The ever-changing restrictions often make it impossible for Palestinian farmers to conduct business, turning the West Bank into a captive market for Israeli produce.

44. Unable to travel to markets, West Bank producers also find it increasingly difficult to secure a favourable price for their goods. In Jalameh, five traders monopolise sales on behalf of large Israeli conglomerates. A Jalameh farmer reported that: "We don't even grab the products from the land because it is not worth it. The selling price is lower than the cost of production." [62]

45. In other communities, farmers now work directly for Israeli contractors. One Israeli trader visiting Zubeidat to buy vegetables explained, "I work directly for Israeli companies Agrexco and Tnuva. The prices are set by the companies directly and there is no consultation with the Palestinian farmers." [63]

46. While profits from the sale of fruit and vegetables have declined, the price of agricultural imports has seen a sharp rise. Farmers in Jalameh reported that 20 kilos of fertilisers doubled in price to 120 NIS over a five year period from 2000. In Idhna, the cost of fodder also doubled in the same period. [64]

47. While the Palestinian balance of agricultural trade stood at around $20-30 million in the years up to 1971, today the territory imports food worth $262 million. [65]

Permit restrictions

48. In addition to physical obstructions, Palestinians increasingly face a whole host of differing permit requirements, military orders and residency restrictions. Restrictions are often changed without notice, sometimes on the basis of verbal orders. The restrictions occur at all geographical levels, at field level, village level, district level, West Bank level and international level.

49. The Nasser family from Madama, previously discussed, were recipients of social welfare. Issa, the head of the family has a disability and is not able to work. Issa explained to Oxfam that his family used to own a number of fields on the edge of the village but the Israeli Defence Forces refused to allow him access to all but one field on security grounds, cutting off a vital source of income. [66]

50. To move around the West Bank, Palestinians have to provide permits at checkpoints allowing them to cross into other areas. Palestinians from each area are unable to move to other areas. The United Nations report that Israeli policies are slowly fragmenting the West Bank into three separate zones. Permit restrictions are constantly changing and becoming ever more restrictive.

51. Nowhere is this most apparent than in the Jordan Valley. The Jordan Valley is the most fertile of all the Palestinian territory. It makes up over a third of the OPT. Israel has declared the area a security zone. Palestinians who do not have residency papers are refused entry. Farmers who were originally born in other parts of the West Bank, fear that they will be removed despite the fact they own farms and have lived within the Valley for many years.

52. In September 2005, the Israeli military issued a new order prohibiting the export of fresh produce from the West Bank except through nine checkpoints. The penality for violating the new restrictions is five years imprisonment. [67]

The Wall

53. The Wall has created specific movement problems for Palestinians. On completion the Wall will engulf nearly 10% of West Bank land including East Jerusalem. [68]The planned 703 kilometres of Wall has already removed 536,200 dunums of agricultural land. [69]If the Wall is completed it is estimated that 60,500 Palestinians in 42 villages will be caught between the Wall and the 1967 armistice line. [70]

54. The village of Jayyous has seen the Wall traverse six kilometres inside the village from the 1967 green line, separating farmers from two-thirds of their land and six wells. [71]A military order was posted on a tree in September 2002 and Israeli villagers and international volunteers were powerless to stop the Wall's construction.

55. A complex permit regime exists to enable villagers to access their land through a series of gates in the Wall to farm their land. However, obtaining a permit is so onerous and the opening of the gates so limited that many villagers can no longer farm their land. On its visit to Jayyous in February 2006, Oxfam saw abandoned greenhouses and withering crops, as farmers are prevented from reaching their land.

56. When land is untended, the Israeli authorities routinely apply historic land laws from the Ottoman and British mandate periods, to turn Palestinian land into state land. This is what is occurring in Jayyous. Shareef Mohammed Omar Khalif, from the Jayyous Land Defence Committee said, "We will be refugees in our own homes without our land." [72]

Humanitarian delivery

57. Hundreds of containers of humanitarian supplies have been held at the Karni crossing. On 8 July, the UN reported 230 containers of food were waiting to cross at Karni. [73]Although food is available in Gaza, on several occasions, the United Nations have reported that bakeries have stopped baking bread for lack of flour and some essential commodities disappeared from the shops. Oxfam workers in Gaza report having to hunt for basic commodities in local shops. [74]Sometimes, the crossing has been closed for weeks at a time. Effectively, the Israeli authorities are turning supplies on and off at will, making life difficult for Palestinians.

58. In June 2006 only one Oxfam partner in Gaza was able to continue reconstruction of Gaza's water network because of a lack of cement. Similarly in August, UNDP reported that $70 million worth of infrastructure are on hold because of the shortage of materials. These projects could create 875,000 paid work for Palestinians. [75]

59. Across the West Bank, the United Nations reported 99 access incidents were filed by humanitarian organisations in August 2006. [76]Oxfam co-ordinates closely with the Israeli Defence Forces at checkpoints but by their very existence delays our work. On 15 August, in two separate incidents on the same day, Oxfam personnel were confronted by firing from Israeli soldiers at the Al Shamalayeh checkpoint. The checkpoint is used mainly by governments, international organisations and non-governmental organisations Other international NGO vehicles were involved in one of the incidents.

International trade

60. The movement of Palestinian goods internationally is an equally difficult experience for Palestinians. In Gaza, the closure of checkpoints means that fresh produce quickly deteriorates. As the local market cannot absorb all of these cash crops, exporters are forced to donate crops and destroy goods.

61. Transaction costs for Palestinians wishing to export produce are up to 70% higher than Israelis exporting identical produce. Palestinians face a host of different regulations, including approval stages that do not always appear to be linked to security. At Tel Aviv airport, Palestinians are only able to export produce via cargo planes. This causes yet further delays and extra costs for producers. [77]

62. In importing and exporting goods, Palestinians increasingly rely on Israeli intermediaries. They do not pay purchase taxes and customs duties to the Palestinian Authority, creating losses to the economy of 3% GDP a year. [78]

63. The Israeli authorities flout the implementation of the 1994 Paris Protocol Trade Agreement that is designed to govern the economic relations between Palestinians and Israelis on the basis of reciprocity. After 12 years, Palestinians are still prevented from free access to Palestinian and international markets while Israeli goods have free access to the OPT.

64. Under the Protocol, Israel recognises the rights of the Palestinians to conclude international trade agreements. However, the Israeli government discourages Palestinians from agreements with third countries. It refuses for example to accept EC origin certificates destined for the Occupied Palestinian Territories. There is also evidence of the Israeli authorities replacing Palestinian-EC certificates with Israel-EC certificates prior to export.

65. Palestinian farmers Oxfam interviewed regularly claimed that Palestinian produce was reclassified as Israeli produce at checkpoints. Farmers in Jalameh and Ramallah explained the ease with which Israeli traders could make the switch, as the Palestinian Authority had no control of the produce beyond the checkpoints. [79]

THE CONTROL THAT THE NETWORK OF SETTLEMENTS IN THE OCCUPIED TERRITORIES HAS OVER THE BASIC CONDITIONS FOR THE DEVELOPMENT OF THE PALESTINIAN ECONOMY: AGRICULTURAL LAND, WATER, MOVEMENT OF PERSONS AND GOODS, ENVIRONMENTAL IMPACT

66. Since 1979, Israel has constructed over one hundred settlements in East Jerusalem and the West Bank where 446,000 Israelis live in violation of International Humanitarian Law[80]. Israel is continuing to expand these settlements, despite international condemnation. [81]

67. Article 49 of the Fourth Geneva Convention prohibits the transfer of civilians into an occupied territory. The Hague Regulations prohibit permanent changes to occupied territory, unless required on the grounds of military necessity.

68. Israel applies a separate system of law and government to settlements. It provides a package of household and commercial incentives to encourage Israelis to live in the West Bank. The geographical area of settlements extends beyond the built environment through a series of closed military zones.

Agricultural land

69. The Jordan Valley includes 400,000 dunums of prime agricultural land but Palestinians farm only 50,000 dunums. Israeli settlements cover 40,000 dunums, and over 300,000 dunums of land have been designated a closed military zones to protect the settlers and establish a security buffer against Jordan.

70. The Israeli settlement of Agraman has been built close to the village Zubeidat in the Jordan Valley. It stops villagers farming to the West of the village while Road 90 blocks farming to the East. Land on the other side of Road 90 has been classified as under Israeli administration through the Taba Agreement in 1995. The agreement was designed as an interim step leading to Palestinian statehood.

71. Restrictions affect famers across the West Bank. In Masha village close to Azoun, Mr Hani Amer's farm is located between Ilkana settlement & She'are tikva settlements. His poultry and nursery houses have been demolished by settlers, authorities refuse his request to rehabilitate or replace the ruined properties. The IDF allocated a narrow path to his land, with a gate at the end for which only he has keys. Permits are required to visit his land. Mr Amer complained to Oxfam that not only do these restrictions make it extremely difficult to farm but friends have difficulty gaining access and fear settler attacks if they do visit.

Water

72. The Taba Accords regulate the distribution and use of water resources between Israel and the Palestinian Authority. The Accords allocate around eighty per cent of West Bank water resources to Israel.

73. Under Taba, water management was delegated to the Joint Water Committee. With equal numbers of Palestinians and Israelis, the Committee is presented as a model of cooperation, but decision by consensus means in reality decisions are controlled by the Israeli authorities.

74. Israel has allowed the drilling of 19 new wells since the 1995 agreements, enabling Palestinians to access around 50% of the water available under the Taba Accords. However, Israel has refused to allow the drilling of new wells for agricultural purposes and generally forbids Palestinians in the West Bank from maintaining old agricultural wells.

75. Settlers do not need to obtain approval from the Committee for sinking wells. They are able to sink wells much deeper wells than Palestinian wells, causing nearby Palestinian village springs to regularly run dry. Hydrologists express concern that over-pumping by settlers threatens the long-term viability of the West Bank water table.

76. In the summer months, even Palestinian villages and towns connected to the Israeli water network often find the taps run dry because Israeli authorities divert water resources to settlements. Palestinians consume around 100 litres of water a day, while Israeli settlers can consume up to five times as much water.

77. Around 200 West Bank villages with a population of over 200,000 people are not connected to any water network. Beyond harvesting rainwater, villagers are often forced to buy water from Israeli settlements. Private Palestinian water tankers travel to the settlements to buy water at prices between five and 15 times higher than settlers buy water from the Israeli government. Prices have grown even higher as a result of Israeli restrictions on movement.

78. Surveys in June and July 2006 by the Water and Sanitation, Hygeine Monitoring Program of which Oxfam is a member, found that 22 communities were denied access to tankered water at fixed checkpoints and water was delayed to a further 35 communities at mobile checkpoints. [82]

79. On 12 September 2006, Israeli settlers attempted to stop an Oxfam water truck from entering Suseya village near Hebron by covering the road with metal spikes. The driver was able to continue his delivery after repairing his vehicle. While Oxfam rarely faces settler violence, it continues to be a common occurrence facing our partners and beneficiaries.

80. Access to water is another competitive advantage Israeli farmers have over their Palestinian counterparts. Only 7.3% of West Bank land is irrigated while around 50% of Israeli agricultural land is irrigated consuming over one billion cubic metres of water a year. [83]

81. In the 1980s, Israel subsidised water production by 250 million NIS a year. Water for the agricultural sector continues to cost around half the amount that Israeli consumers paid, encouraging over production.

Movement of Persons and Goods

82. Settlements also have an impact on the movement of goods. Palestinians are either restricted or denied the use of over 700 kilometres of roadway in the West Bank. Israel claims that its "closure" regime is intended to guarantee the safety of settlers.

83. Produce grown in Israel receives preferential customs rates from the EU under the EU-Israel Association Agreement but produce from settlements pays the full duty. Campaigners believe that no settlement products should be sold internationally, as they are recognised illegal entities. Israeli businesses in the OPT have admitted to using false Israeli addresses to benefit from the customs regime. [84]

84. Regulatory authorities appear to have been less than vigorous in seeking to clamp down on these practices or to help retailers distinguish settlement products. It is often difficult to obtain clarity about the regulatory regime. [85]

THE ROLE OF DEVELOPMENT ASSISTANCE IN SUPPORTING POLITICAL SOLUTIONS

85. The OPT have received over $7 billion in development assistance since the Oslo Accords were signed in 1993. High levels of development assistance have been required to address the impact of the Israeli occupation. However, development assistance on its own will never bring an end to poverty and suffering, only a fair negotiated political settlement can do this. This requires sustained pressure from the UK and the international community.

86. The increasing poverty and suffering facing Palestinians in itself increases the tensions and frustration that help fuel insecurity and violence.

87. The UK has pursued some innovative and constructive approaches to development assistance in an effort to move the peace process forward. Oxfam particularly welcomes the UK initiative to establish the Negotiation Support Union to the PLO, providing technical expertise to help Palestinians negotiate more effectively. However, the lack of sustained pressure on the part of the international community to keep the peace process on track has led to few opportunities for the PLO to actually use the NSU in negotiations.

88. Similarly, the support that DFID and the Foreign Office provide to projects addressing freedom of movement are welcome and target one of the causes of poverty.

89. Oxfam wishes to see a balanced approach to development in the OPT. No one economic sector, geographic area or type of development must be prioritised over any other. Development aid must be used to target the poorest Palestinians.

90. Currently, development projects in the OPT focus on urban as opposed to rural areas. Funding for the agricultural sector by both the Palestinian Authority and the international community has been weak. Historically, only 2% of donor assistance has been provided to the agricultural sector despite its significant role in the Palestinian economy, its critical role in ensuring food security, and recognition of its importance in any strategy for economic growth and poverty reduction. [86]

91. Politically inspired conditions on aid have fuelled a power struggle between Palestinian factions triggering insecurity in the OPT. [87]Aid should be provided on a politically neutral basis through the existing legitimate institutions.

92. Oxfam would also like the international community to replace food aid with cash assistance. Despite ongoing restrictions on movement, food is available in the OPT. The problem is a lack of money to purchase it. Some food aid schemes appear poorly targeted, leading to the sale of aid in local markets. Cash assistance schemes would act as trigger for growth in the local economy and help households meet important non-food needs.

SUMMARY

93. Poverty is increasing rapidly in the Occupied Palestinian Territories. Freedom of movement is increasingly constrained by Israel; illegal Jewish settlements are expanding and the Wall is lengthening, annexing Palestinian land and thereby destroying livelihoods. The suspension of international aid and Israeli tax transfers to the Palestinian Authority, has left key services and hundreds of thousands of Palestinians without an income. Together, these actions risk turning the clock back on Palestinian development by three decades. [88]

94. With local partners, Oxfam is helping at least 150,000 Palestinians each year gain access to clean water and sanitation. This includes advocacy with the Israeli Defence Forces to enable local communities to gain access to clean water and sanitation. Oxfam also undertakes advocacy with Israeli partners to highlight the costs of the conflict to Israel.

95. Nearly one million Palestinians have been left without a regular income as a consequence of the suspension of aid and tax payments. The Temporary International Mechanism (TIM), established to provide direct assistance to Palestinians, fails to meet the basic needs of hundreds of thousands of people. In creating a separate funding channel, it wastes resources and erodes the effectiveness of the Palestinian Authority, critical to the establishment of a Palestinian state.

96. Restrictions on the movement of goods and people have intensified following the start of the Palestinian intifada in 2000. Agriculture provides one example of how these restrictions have artificially configured the Palestinian economy in Israel's favour. Hemmed in by hundreds of physical obstacles and an Israeli permit regime, Palestinian farmers can no longer compete with their highly subsidised Israeli and international counterparts. Palestinians have become a captive market for Israeli products. Israeli buyers can demand artificially low prices from Palestinian farmers who are unable to reach local markets. Palestinian farmers are frustrated in their attempts to export to distant markets by physical obstacles such as Israeli military checkpoints and a much more complex set of bureaucratic paperwork than their Israeli counterparts. In addition they are denied the use of Gaza airport and seaport on Israeli security grounds.

97. Israel fails to implement provisions of the Paris protocol governing trade relations between the two neighbours. The Palestinian Authority places no obstacle to the sale of Israeli goods in its areas, but Israel uses bureaucracy, security concerns and subsidies to its own farmers to create conditions under which Palestinian farmers cannot sell their goods to their nearest neighbour.

98. In Gaza, Israel's repeated closure of the Karni crossing point since disengagement has lost agricultural exporters millions of dollars. [89]Humanitarian agencies and importers alike have been unable to get hundreds of containers of food aid and supplies into the territory, halting humanitarian work and economic development alike.

99. Illegal settlements are similarly constraining Palestinian development. Settlement expansion is encroaching on Palestinian land in East Jerusalem and the West Bank. Under occupation, Palestinians wells are running dry as nearby settlers extract precious water. Water that is often resold to Palestinian villages. Settlers have running water from their household taps 365 days a year through the Israeli Mekorot network, while their Palestinian neighbours have to use wells, tankers and jerry cans.

100. Settlers privately admit reclassifying agricultural produce as grown in Israel to obtain EU trade preferences. The EU and Member States are failing to stop this practice.

101. Oxfam welcomes DFID's support for the Negotiation Support Unit, humanitarian monitoring by UN OCHA, and projects to tackle freedom of movement. The work of the World Bank and UN OCHA to publicise the impact of Israeli occupation policies and the suspension of aid is impressive.

102. The international community is, however, failing to meet the needs of some of the poorest Palestinians who are equally important stakeholders in a lasting political solution. Donors should target key drivers of poverty reduction, including agricultural development. Food aid should be gradually replaced by cash allowances to the poorest Palestinians.

103. Development assistance will never be successful unless the occupation ends and this requires incentives and impetus from the UK and the international community. International aid, including budgetary support, should not be necessary in a previously middle-income economy with a highly skilled population. To unleash Palestinian potential, the international community must press for a peaceful settlement that will allow inward investment to flow.

RECOMMENDATIONS

104. The UK and the international community must provide incentives and impetus to restart and sustain the peace process helping to bring all actors to the negotiating table. Oxfam supports initiatives that call for an international conference to seek a comprehensive and durable solution to the conflict in accordance with international law. Oxfam believes that international institutions including the UN Security Council and Middle East Quartet must ensure that this event takes place.

105. The UK and the international community must address violations of human rights abuses by all actors, whether government or non-state actors. We would encourage the Committee to examine the impact of increased violence by Palestinian and Israeli actors on development and the efforts of the UK and the international community to address violence against civilians on all sides of the conflict.

106. The UK and the international community must immediately resume aid payments to the Palestinian Authority and Israel must transfer withheld Palestinian tax revenue. The European Union and its Member States have responsibilities under EU law to ensure that aid is not guided by or subject to political considerations. [90]

107. The UK and the international community must support a balanced approach to development, including the agricultural sector that will better target the poorest communities.

108. The UK and the international community should consider programmes that combat the unfair competitive advantage of Israeli industrial sectors and agricultural sectors over their Palestinian counterparts.

109. Food aid should be replaced by cash assistance to the poorest Palestinians.

October 2006

29 House of Commons International Development Select Committee, Development Assistance and the Occupied Palestinian Territories, 5 February 2004. Also See: Oxfam, Memorandum to the International Development Select Committee-Development Assistance and the Occupied Palestinian Territories, August 2003. Back

30 House of Commons International Development Select Committee, Government Response to the Committee's Second Report-Development Assistance and the Occupied Palestinian Territories. Back

31 UN OCHA, Humanitarian Monitor July 2006, Jerusalem, 24 August 2006. The United Nations estimated that 70% of the population were in poverty in July 2006. They pointed to a 9% rise in poverty for public workers between July 2005-April 2006. Other United Nations reports note poverty in Gaza has risen to 78%. Other agencies, including the World Bank report increases in poverty using different variables. The World Bank report that poverty has risen from 44% of the population at the end of 2005 to an expected 67% by the end of 2006. Back

32 UN World Food Programme, WFP warns of deteriorating humanitarian situation in Gaza, press release 28 August 2006. Back

33 UN OCHA, Assessment of the future humanitarian risks in the occupied Palestinian Territory, 19 April 2006, East Jerusalem, pg 2. Back

35 See: UN OCHA, Assessment of the future humanitarian risks in the occupied Palestinian Territory, 19 April 2006; World Bank, The impending Palestinian Fiscal Crisis, Potential Remedies, 7 May 2006; Oxfam International open letter to the Quartet, 6 April 2006, numerous meetings and discussions between Oxfam and British and EU diplomats and aid officials in London, Brussels and Jerusalem in March, April and May 2006.AAPARAThe impact of the suspension of budgetary support to the Palestinian Authority was already clear to DFID. In its 2004 Country Assistance Plan for Palestinians, DFID highlighted the consequences of a funding crisis in the PA: "Collapse of the PA could be caused by a political or financial crisis. The budget gap threatens the PA's ability to maintain services and to function at all. PA debts are large and its borrowing options constrained. Operating expenditures are at austerity levels. Without increased donor financing to the budget, the PA may not be able to pay staff salaries which maintain the welfare of a high proportion of Palestinians. Staff would quickly stop coming to work, poverty and unemployment increase and the PA could face public demonstrations (maybe violent). PA collapse would leave the peace process without a future Palestinian government, making a two state solution impossible to conclude." Back

36 1 Israeli NIS (shekel) is equivalent to around 12 GB pence. Back

37 The names of these interviewees have been changed on their request. Back

38 The TIM was initially narrowly defined to cover the Palestinian medical supplies and salary costs for the health sector, and water and power needs in Gaza following the Israeli military attacks in June 2006. Over recent months its scope has gradually expanded to cover 44,607 low income public sector workers across all ministries, 35,470 of the poorest Palestinian families and 5,472 pensioners. The first payment to poorest families will start on the 24 September. On 18 September, the World Bank agreed to provide $46.6 million to help cover non-salary costs of the health, education and social services sectors through its existing ESSP trust fund. This scheme effectively allows the World Bank to purchase items on behalf of ministries but no money is transmitted to ministries. The UK is supporting this scheme. DFID has requested that the scheme be extended to cover power, water and sanitation. On 20 September, the Quartet meeting agreed that the mechanism would be expanded. Donors are meeting on 10 October in Brussels to discuss the expansion. As of 25 September The European Union has collectively provided Euro 182 million to the TIM. Back

39 See for example: Anne Penketh, "Fears of regime change policy after US cancels Palestinian pay talks" The Independent, London, 9 June 2006. Back