Memorandum submitted by the Department
for International Development
SUMMARY
1. The political, economic and humanitarian
landscape has shifted dramatically since the IDC last carried
out an inquiry into the OPTs in autumn 2006.
2. 2007 was a difficult year. Hamas' violent
takeover of Gaza in June forced President Abbas to dissolve the
newly formed National Unity Government and declare a state of
emergency. The situation posed major challenges not only for the
Palestinian people, but also for the international community's
engagement with the peace process. However, the year ended with
renewed hope. The US-sponsored conference held in Annapolis (November
2007) provided the best hope for a sustainable solution to the
peace process since 2000. This was followed by a donor conference
in Paris in December, at which record pledges were made in support
of the Palestinian Authority (PA). The international community
has now to capitalise on the momentum created by these events.
Looking forward, the Ad Hoc Liaison Committee (AHLC) meeting on
2 May will be an opportunity to assess progress on commitments
made in Paris.
3. While we have seen some progress, particularly
on the donor front following the Paris conference, the closure
of Gaza's crossings has contributed to the collapse of its economy
and a rapidly deteriorating humanitarian situation.
4. The UK has played a prominent role in
the renewal of the international community's relationship with
the PA. DFID was one of the first donors to provide the PA with
renewed financial assistance. The UK also assisted it to produce
a Palestinian Reform and Development Plan (PRDP). This was the
document against which donors pledged $7.7 billion of support
in Paris. We are also leading a change in the way donors support
the UN Relief and Works Agency (UNRWA) from emergency commitments
to more predictable core funding, linked to institutional reform.
POLITICAL DEVELOPMENTS
5. Following a stagnant period in the peace
process, the Arab League relaunched the 2002 Arab Peace Initiative
on 27 March 2007. This offers the recognition of Israel by Arab
states in return for a withdrawal to pre-1967 borders and a just
solution for Palestinian refugees. Prime Minister Olmert cautiously
welcomed the move. The momentum created was sustained by the appointment
on 27 June of Tony Blair as the Quartet's envoy, followed by the
announcement on 16 July of a US-hosted international conference
on the Middle East (Annapolis).
6. In the following months, sustained engagement
at high levels of the US administration and a positive relationship
between Prime Minister Olmert and President Abbas created the
conditions for this conference, held in Annapolis on 27/28 November,
to be a success. It was the largest gathering of world leaders
focusing on peace in the Middle East since Madrid in 1991. The
conference achieved its stated aims of producing a document agreed
by both Palestinians and Israelis, and securing the attendance
of regional players, notably Saudi Arabia. A joint statement provided
for: the continuation of Israeli-Palestinian bilaterals, creation
of a committee to oversee negotiations, and formation of a Palestinian/Israeli/US
mechanism to follow up implementation of the road map. The parties
committed themselves to the goal of concluding negotiations before
the end of 2008.
7. Following on from Annapolis, a donor
pledging conference was held in Paris on 17 December 2007. Pledges
from the international community totalled $7.7 billion. This was
more than enough to cover the $5.5 billion funding gap identified
in the PRDP, though the amount allocated to budget support was
insufficient to meet the recurrent funding needs of the PA. The
UK was one of the first to announce a substantial pledge, encouraging
others to do the same. DFID has committed up to £243 million
over three years. This is to be linked to tangible progress in
peace negotiations, including progress on reform and the easing
of movement and access restrictions.
8. Gaza's crossings have been largely closed
by Israel since the Hamas takeover in June 2007, except for some
humanitarian supplies, selected medical cases, and very limited
volumes of commercial goods and people. Following several days
of complete closure, the border with Egypt at Rafah was breached
on 22 January 2008. Some 700,000 Gazans crossed to buy basic supplies
including food, medicines and fuel in the ten days before the
border was re-sealed. The border breach gave a temporary boost
to Hamas in terms of popularity. The PA has put forward plans
for reopening Gaza crossings on a sustainable basis with PA personnel.
PROGRESS ON
THE PEACE
PROCESS
9. Bilateral negotiations between Prime
Minister Olmert and President Abbas, and between Foreign Minister
Livni and Palestinian chief negotiator Ahmed Qurei have been continuing,
although events on the ground have led to delays. Tensions over
Gaza and increasingly fragile coalition support for Prime Minister
Olmert have served to moderate expectations that President Bush's
target of a comprehensive peace agreement by the end of 2008 will
be achieved. Palestinians perceptions of progress are even lower.
Bush has maintained his commitment to the peace process, urging
leaders to continue efforts to find a solution during his visit
to the region in January 2008. Rice is visiting regularly to keep
up momentum before a further Bush visit. The US has assigned Lt
General William Fraser to assist in monitoring the implementation
of roadmap commitments.
10. DFID contributes to the peace process
through a number of channels:
— Direct financial assistance and capacity
building support to the Palestinian Authority (PA): this helps
the PA to carry out its obligations as an effective partner for
peace in a two-state solution.
— Office of the Quartet Representative:
we continue to support Tony Blair and his team. One of the confidence
building measures (previously called "quick impact projects")
that he is championing is a DFID scheme to provide matching grants
to help the private sector develop export markets.
— Security sector reform: as part of
a wider HMG effort, the UK is helping improve security in the
OPTs through more professional and accountable security forces.
— Peace negotiations: DFID provides
practical support to Palestinian negotiators through access to
legal advice and briefing which meets high international standards.
PALESTINIAN AUTHORITY
11. Saudi Arabia facilitated the creation
of a National Unity Government (NUG) at a meeting in Mecca on
8 February 2007. After Hamas gained control of the Gaza Strip
by force in June, President Abbas dissolved the NUG and declared
a state of emergency. He subsequently swore in a caretaker government
with Dr Salam Fayyad at the helm of a cabinet of technocrats drawn
largely from civil society. Israel ended its boycott of the PA
in the West Bank, and has paid most withheld customs revenues
owed to the PA.[1]
The Secretary of State committed £3 million in December to
help the PA pay its debts to the private sector, marking the UK
out as a leader of the international community's reengagement
with the PA.
12. DFID provided technical experts to the
PA to help introduce a new planning and budgeting process, including
a Palestinian Reform and Development Plan for 2007-10 (PRDP).
This was presented in draft at the Paris donor conference in December
2007 and served as the basis for subsequent donor pledges. DFID
is finalising its 2008 support to the PA, which is likely to include
significant frontloaded budget support and expanded technical
assistance in public sector reform, security sector, and financial
controls.
13. The PA faced a serious shortfall in
budget resources in February 2008. Despite significant pledges
many major donors had not yet transferred financing to the PA
to meet essential recurrent costs such as salaries. In addition
to this the PA has a stock of arrears in both salaries and payments
to suppliers that it is keen to pay off.
14. For this reason, Prime Minister Fayyad
asked donors to bring forward their pledged and scheduled payments
to earlier in the year. Fayyad asked the UK to take an international
lead in providing financial assistance for the PA's budget so
that other donors would be encouraged to follow suit. DFID responded
with a £15.45 million contribution to the EC's PEGASE (French
acronym for Mecanisme "Palestino—Européen de
Gestion et d'Aide Socio-Economique") facility for PA February
salaries. DFID will be providing a further £20 million to
the PA through the World Bank trust fund and PEGASE by the end
of March.
15. Dr Fayyad has shown strong commitment
to bring the PA's recurrent budget deficit problem under control.
He has reduced the public sector payroll and is aggressively implementing
a PRDP commitment to reduce subsidies for unpaid utility bills,
which absorb a third of the national budget. He is introducing
measures to prevent corruption and improve the PA's budget management
systems. Because the majority of the budget is dedicated to public
servants' salaries, the government is introducing strong new management
systems for the civil service. For example, independent controllers
are being appointed to each ministry to scrutinise appointments
and staff attendance. The government is also strengthening audit
systems throughout the PA.
16. These reforms demonstrate to donors
that the PA is serious about taking on difficult reforms and ensuring
that donor assistance is well spent. Given the political sensitivities
surrounding the OPTs, financial assistance is subject to strict
safeguards, including checks of individual recipients against
international terrorist lists. With these safeguards in place
and with the ongoing PA reform and financial management measures,
it is appropriate to again provide financial assistance for the
PA's budget. The World Bank trust fund will pool donor funds and
provide predictable and transparent budget support as part of
its monitoring of PA reform and a coordinated policy dialogue.
The impact of the international community resuming direct aid
should be a more sustainable, strong and efficient PA better able
to fulfil its obligations to the peace process and to the Palestinian
people.
ECONOMY AND
AID
17. The combined impact of the ongoing conflict
and of severe restrictions on the movement and access of goods
and people has caused the economy to contract. GDP per head has
fallen by over 40% since 1999. Both unemployment and poverty have
increased sharply. Increased transportation costs, substantial
delays and loss of efficiency have caused investment rates to
halve since 1999. Exports have fallen by almost as much, now standing
at a mere 12% of GDP. The economy is increasingly dependent on
overseas aid and remittances, and prospects for sustainability
are diminishing daily.
18. The economy in Gaza since the June 2007
closures has collapsed. Commercial exports from Gaza have been
virtually stopped since the sealing of its borders with Israel
and Egypt in June 2007. It is estimated that current restrictions
have led to the suspension of 90% of Gaza's industrial operations.[2]
Even if borders were reopened tomorrow, the Gaza economy would
take years to recover. The World Bank suggests that this has left
"little productive base for a self-sustaining economy"[3].
19. The Agreement on Movement and Access
(AMA) between Israel and the PA has not been implemented. According
to OCHA there were 580 physical obstacles (including checkpoints,
road blocks, earth mounds, trenches, fences and gates) in the
West Bank in March 2008. This is 50% higher than the 376 in August
2005, which is the baseline for the AMA. These do not include
"flying" checkpoints and age restrictions on Palestinian
movement, which have impeded the flow of materials, goods and
labour. West Bank trade with and through Israel is being further
squeezed by the completion of the separation barrier and restrictions
on trade between the West Bank and Israel. There is real concern
that even with the additional aid pledged in Paris this tightening
of the closure regime will mean further job losses and a hollowing
out of the industrial base.
20. Over recent years aid has been critical
in supporting incomes and preventing further economic decline
in the OPTs. Support from mechanisms such as the EC-led Temporary
International Mechanism (TIM) has provided ongoing assistance
to 77,000 PA employees and much-needed support to over 79,000
social hardship cases. With an average family size of six, this
assistance has directly benefited almost a quarter of the OPTs'
four million population. As a result of support by the international
community, the economic decline in 2006 was -10% instead of the
-27% predicted at the start of the year. We await final figures
for 2007.
HUMANITARIAN SITUATION
21. Since the last IDC report, the humanitarian
situation in the West Bank has continued to deteriorate. Conditions
in Gaza are of particular concern, exacerbated by severe Israeli
restrictions on the import and export of all goods and supplies.
Gaza's crossings are closed to all but humanitarian supplies and
emergency medical evacuations. On 19 September 2007, Israel declared
Gaza a "hostile entity" in response to Qassam rocket
attacks. The Israeli Security Cabinet consequently decided to
reduce fuel and electricity supplies for Gaza.
22. Since September there have been intermittent
cuts of diesel for the power station, of ordinary fuel and of
direct electricity supplies. Power cuts in Gaza currently average
about 4 hours per day, down from 8 hours per day in January and
February, as the improving weather reduces demand. The Gaza Power
Station is receiving only 70% of the industrial diesel it can
currently use. Cuts and fluctuations in supply are damaging electrical
equipment, for much of which there are no spare parts. Israel
has also imposed a token electricity cut on one power line into
Gaza.
23. The breach of the Gazan border with
Egypt in January relieved some immediate needs, but has had negligible
impact on the overall humanitarian situation in Gaza. According
to the World Bank, health indicators have deteriorated progressively
over the past three years. Chronic diseases have increased by
31% since 2005. 20% more children aged three years and less were
diagnosed in UNRWA clinics in Gaza with diarrhoea in the past
year. The prevalence of anaemia in children 9 to 12 months old
has risen to 69% in August 2007. Medicines are in short supply:
in February, the World Health Organisation (WHO) reported that
85 common drugs were not available and the operation room at one
of the main hospitals had closed because of a lack of supplies.
24. Power cuts are putting an increasing
strain on medical infrastructure. There is an increasing need
for patients to be referred out of Gaza for treatment elsewhere,
as medical services no longer have the capacity to deal with difficult
cases. 20-30 emergency medical cases are entering Israel through
the Erez crossing each day, and Egypt is allowing some urgent
medical cases to be admitted through Rafah. However, a number
of patients have died while waiting for permission to leave Gaza
for urgent treatment.
25. The World Food Programme (WFP) needs
to import 150 food aid trucks per month in order to meet basic
Gazan needs. Although it has faced considerable difficulties in
recent months, it is achieving this. The collapse of the commercial
and agricultural sectors has reduced wages—as of September
2007, 70% of non-refugee households earned less than $1.20 per
person per day. At the same time, severely restricted imports
have increased the price of almost every imported commodity. As
a result 1.1 million Gazans, 3/4 of the population, depend to
some extent on food aid. The World Food Programme (WFP) provides
food aid for 300,000 non-refugees, while UNRWA provides food for
850,000 refugees. This covers only 60% to 80% of calorific need.
The shortfall has to come from commercially bought items, which
have been hindered by restrictions on imports.
26. In Gaza 20-30% of wells are not operating
properly due to intermittent access to electricity and a lack
of fuel. 20% less water is being produced. 90% of tap water is
polluted. Even when there is some electricity the pumps are unable
to provide water to high-rise buildings, leading to some households
going without water for days.
27. Waste water treatment facilities remain
inadequate, with around 50 million litres of raw or poorly treated
sewage discharged into the Mediterranean per day. Infrastructure
is under severe strain. UNICEF is working to keep sewage from
backing up through manhole covers in the streets. A project to
improve sewage treatment facilities at Beit Lahia in northern
Gaza made some progress after pressure from Tony Blair, but has
encountered repeated delays because of Israeli restrictions.
28. DFID is responding to this situation
both with aid and through the political process. Our agreement
to provide £100 million to UNRWA over five years helps the
4.4 million Palestinian refugees in the OPTs and wider region.
70% of the population of the Gaza Strip are refugees who directly
benefit from this assistance. The UK also gave £3 million
in 2007-08 to the International Committee of the Red Cross' (ICRC)
work in the OPTs; helped build capacity in the UN Office for Coordination
of Humanitarian Affairs (OCHA); and continued funding the TIM.
29. The Temporary International Mechanism
(TIM) and now its successor PEGASE have been the major vehicles
for EU funding for Palestinians in Gaza. They have funded all
the fuel for the Gaza Power Plant, as well as fuel for generators
used by medical facilities and water and sanitation utilities.
They also fund the purchase of drugs and provide allowances for
Palestinian public servants and social hardship cases in both
Gaza and the West Bank. The TIM disbursed €616 million (£423
million) during 2006 and 2007. The majority of this has gone to
Gaza. €59.3 million of this was spent on essential supplies
and running costs of hospitals and health care centres. €131
million went to essential public services, including energy utilities.
€425.7 million provided for social allowances to public services
providers and social hardship cases.
30. The UK provided £14.9 million to
the TIM over 2006 and 2007, with another £15.45 million in
February 2008 through PEGASE. The EC has also provided funding
for Gaza through the EC Humanitarian Office (ECHO)—€66.3
million (£50 million) in 2007, as well as a further €79.8
million (£60 million) to UNRWA.
31. During the Secretary of State's visit
to the OPTs in December 2007, he encouraged interlocutors including
President Abbas, senior PA Ministers and Israeli Defence Minister
Ehud Barak to address the humanitarian situation as a matter of
urgency. Together with the Foreign Secretary, he has issued three
public statements on the crossings closures and humanitarian impacts,
appealing to all parties to avoid civilian casualties and urging
Israel to reverse its decisions to reduce electricity and fuel
supplies to Gaza. We do not believe that humanitarian supplies,
whether provided through humanitarian agencies or by the commercial
sector, should be subject to any restriction. Without any presence
in Gaza, the Israeli Government is unable to monitor humanitarian
needs or the impact of restrictions.
SETTLEMENTS AND
OUTPOSTS
32. In 2006, construction work began on
a police station in the E1 area east of Jerusalem, accompanied
by roads and other infrastructure. On 24 September 2007, the Israeli
Army ordered the expropriation of Palestinian land surrounding
four West Bank villages in E1 (this became public on 9 October).
If the barrier is completed along its current route and a settlement
is built in E1, Jerusalem would be encircled by settlements, threatening
the prospects for the establishment of a territorially contiguous
Palestinian state with access to Jerusalem. Israeli investment
in the public infrastructure needed for the E1 settlement (eg
police station, road) is continuing, which indicates that international
pressure has not yet stopped the E1 plans.
33. The Israeli NGO Peace Now reported in
2007 that there were over 470,000 settlers in the West Bank. The
2003 Roadmap called for a complete settlement freeze and the dismantling
of all outposts erected since 2001. Since then, no significant
progress has been made on removing inhabited outposts in the West
Bank. During 2007, work was started on 1,019 new units, work continued
on 2,493 and 1,149 were completed. In December, the Israeli media
reported that the 2008 national budget would include nearly £13.5
million for infrastructure work for 740 housing units in the OPTs.
34. The Annapolis conference had no impact
on the rate of settlement construction. Following the unexpected
announcement in December 2007 of a tender to build 500 new homes
in Har Homa and 240 in Ma'ale Adumim, Prime Minister Olmert issued
an instruction that Ministers and officials should submit all
proposals for settlement construction to him and Defence Minister
Barak for approval. Since then, Prime Minister Olmert has denied
new permits for construction in West Bank settlements (including
those that Israel intends to keep in a two-state solution but
not including East Jerusalem, where 250,000 Israelis live). Barak
also announced a compensation package to tempt the 80,000 settlers
living east of the barrier to move west.
35. In February, the Supreme Court accepted
Olmert and Barak's commitment to evacuate the Migron outpost by
August 2008 and move it, possibly to an existing settlement. On
6 February, in response to a Peace Now petition against the Haresh
and Hayovel outposts, the Supreme Court granted the State 60 days
to present a plan for the enforcement of demolition orders in
the outposts. Vice Premier Ramon told the Knesset State Control
Committee in February that Olmert wants to reach an agreement
with West Bank settlers on the fate of unauthorised outposts,
but warned that the Government would dismantle the outposts by
force if necessary.
36. However, construction in the West Bank
approved prior to Olmert's instruction continues, as does unauthorised
building in outposts. In February, Israeli media reported new
construction in the settlement of Eli north of Ramallah and in
the northern Jordan Valley settlement of Maskiot. On 9 March Prime
Minister Olmert approved the construction of 330 housing units
in Givat Ze'ev, a settlement of 10,000 on the "Israeli"
side of the barrier but 5 km across the Green Line. The Palestinian
perception of unchecked settlement expansion in conjunction with
no discernible progress on the peace talks has led to widespread
scepticism about the Israeli Government's intentions.
37. The UK is very concerned about recent
reports of Israeli settlement activity around East Jerusalem,
including the announcement of new housing tenders for Har Homa
and Givat Ze'ev. We continue to raise our concerns on continuing
settlement activity with the Israeli Government at all levels.
The Prime Minister, Foreign Secretary, and Development Secretary
have all made clear our concerns about the recent Har Homa announcement
to Prime Minister Olmert, Foreign Minister Tzipi Livni and Defence
Minister Ehud Barak. The UK Ambassador in Tel Aviv raised the
issue of settlements with the Ministry of Foreign Affairs on 21
February. The UK then raised the issue of Givat Ze'ev with the
Ministry of Foreign Affairs in March. Such actions threaten the
viability of the Palestinian state.
DFID AID PLEDGE
38. The UK demonstrated its support to the
Palestinian people by agreeing to provide up to £243 million
over three years at the December 2007 donor pledging conference
in Paris. This is to be linked to tangible progress in peace negotiations,
including progress on reform and the easing of movement and access
restrictions.
39. The continued commitment of the PA to
reform underpins DFID's increasing funding to the PA. The UK has
been a lead donor on strengthening the institutions of a future
Palestinian state, and is seen by the PA as a strong and valued
partner in this area. This is in line with DFID's core approach
in the OPTs—to build the capacity of the PA, so that it
may become a legitimate partner in a two-state solution. UK funding
supports the Palestinian Reform and Development Plan, which includes
priority sectors such as health, security and education. All of
our support is provided in accordance with internationally established
aid effectiveness and fragile states principles. The UK will provide
financial assistance to the PA through internationally respected
organisations such as the European Commission's PEGASE and the
new World Bank trust fund.
40. Over the pledge period of 2008-10 DFID
will also increase our support to the private sector and for infrastructure
if restrictions on land use and movement and access allow. Organisations
such as the World Bank and OCHA will update on progress made in
easing restrictions, which have not yet been relaxed. DFID has
already launched a programme with the World Bank providing matching
grants to allow Palestinian businesses to increase their knowledge
of and competitiveness for export markets.
41. In order to address the growing humanitarian
needs in the OPT, the region, and the wider needs of Palestinian
refugees DFID's core funding to UNRWA will increase from £15.6
million in 2007-08, to £19 million in 2008-09 and then progressively
to £23.4 million in 2011-12. In total, the UK will give £100
million over five years. Around 10% of this funding (approximately
£10 million) will be linked to UNRWA achieving targeted improvements
of its management and service delivery.
42. The DFID programme will retain the ability
to respond flexibly to the changing situation on the ground. Although
it retains the support of President Abbas, Fayyad's government
is fragile due to its lack of a political base, while a major
Israeli incursion into Gaza could derail the peace process and
increase humanitarian needs. If the PA's commitment to reform
or to the peace process changes, funding channels such as the
ICRC, UNRWA and indirect funding to basic services through the
TIM's successor, PEGASE, all offer alternatives.
DFID spend for Palestinians is as follows:
Financial Year
| UNRWA | TIM/
PEGASE
| Direct
assistance |
Development
| Other
humanitarian |
Total
|
2005-06* | 14.985 | -
| 10 | 5.1 | - |
30 |
| 2006-07* | 15 | 11.875
| - | 3.1 | 0.2
| 30.2 |
| 2007-08^ | 15.6 | 18.45
| 24~ | 2.55 | 3
| 63.6 |
* Statistics for International Development 2007
^ Latest figures from DFID internal financial forecasting.
Not yet all paid.
~ Includes £20 million for World Bank Trust Fund, £3
million for private sector arrears and £1 million for civil
police support.
We are incorporating the UK pledge into internal DFID funding
requests over the pledge period. In Paris, our provisional framework
for the next three calendar years was set out as follows:
|
| Calendar Year | Total framework
(Paris Pledge)
| UNRWA
Component |
|
| 2008 | Up to £62m |
£19m |
| 2009 | Up to £85m |
£20m |
| 2010 | Up to £96m |
£22m |
|
| | |
The exact breakdown of the Paris pledge will be linked to
progress on the peace process, including PA reform and movement
and access. The UK expects to provide substantial financial assistance
to the PA, in order to support PRDP priorities and build the capacity
of a future Palestinian state. The decision to provide additional,
"frontloaded" budget support in the first quarter of
2008 may require adjustments to these calendar year allocations.
Annex 1
QUARTET OFFICE CONFIDENCE BUILDING MEASURES (CBMS)
1. The CBMs are a set of interventions or projects that
have been hindered by political blockages. The Quartet Representative
is focusing his attention on removing these blockages. All CBMs
are covered in the PRDP. The Quartet office does not run projects
or manage any project funds. Many CBMs involve sensitive negotiation
with the Government of Israel (GoI) and the PA, and are a work
in progress.
2. CBMs are intended to create positive change on the
ground for Palestinians and build confidence in the peace process.
Current CBMs being taken forward by the Quartet office are:
— Gaza sewage: the World Bank has been working to
repair the sewage treatment plant at Beit Lahiya since 2004. Israeli
restrictions halted the import of essential spare parts. The Quartet
office is working with GoI to get vital equipment into Gaza to
avoid a repeat of the sewage flood in March 2007. It is also looking
to enlarge agreement beyond this project to cover all water and
sanitation equipment entering Gaza.
— Industrial Parks: Turkey is sponsoring building
an industrial park in Tarqumiya, in the northwestern West Bank.
Germany is interested in a similar project in Jenin, and Japan
has been working on an agro-industrial park near Jericho. The
Quartet office is helping identify a site that meets Palestinian
needs for the first (possibly in Area C); providing advice to
the PA on a site and lobbying donors for support for the second;
and working with the GoI to establish infrastructure links via
Jordan to the third.
— Bethlehem tourism: the Quartet office is working
with the PA and GoI to improve access to Bethlehem for tourists
through the main checkpoint. No donors are involved.
— Housing initiatives: the Quartet office is helping
to create a market for mortgages in the West Bank, ensuring that
any new housing estates are linked to public infrastructure and
lobbying donors for support to build new houses. The US (eg Overseas
Private Investment Corporation) and UK are considering providing
support.
— Municipal Development and Lending Fund (Denmark,
World Bank, Italy, Germany, France and the Netherlands): lobbying
donors for support to ensure that local government needs are fully
funded.
— Facility for New Market Development: DFID and
the World Bank have created a project to provide matching grants
to small and medium-sized businesses. DFID has committed £3
million over three years. The World Bank has committed $1.2 million
so far. These are aimed at developing their capability to enter
and successfully compete in new markets, and to enhance their
export potential. This will launch in May 2008. The Quartet Office
has offered to help secure further donor support if needed.
— Telecommunications: the Quartet office is working
with the GoI to secure permission for additional bandwidth for
a second mobile phone operator in the OPTs, which will raise up
to an additional $100 million for the PA on an annual basis. No
donors are involved in this.
— Access to Jordan: the Quartet office is encouraging
the GoI to extend opening hours and improve imports and exports
of goods and movement of people through the Allenby and Damiya
Bridges.
Annex 2
PALESTINIAN REFORM AND DEVELOPMENT PLAN (PRDP)
1. The objective of the PRDP is to consolidate all PA
policy making, planning and resource allocation processes into
a unified procedure. This should ensure efficient and effective
allocation of resources and match ministry plans with available
budget. The PRDP does this by:
— Improving the content, prioritisation and quality
of national planning and by linking it to national policy goal
and targets;
— Allocating and linking medium-term recurrent and
development budgets to agreed policy priorities;
— Improving planning, budgeting and reporting processes
and formats; and
— Improving transparency, accountability and coordination
in policy making, planning and budgeting processes.
2. The current PRDP will be implemented over January
2008 to December 2010. The PRDP is a yearly planning process,
covering a rolling three year period. The PRDP for 2009-11 will
be developed during 2008, and will seek to build on the PRDP for
2008-10. It will do this by improving training for PA staff, consultation,
budget processes (eg a new budget circular) and conducting more
detailed sectoral analysis.
3. Gaza remains an integral part of the PRDP. However,
progress on development projects in Gaza identified by the PRDP
is severely constrained at the moment. Meanwhile, the PA will
continue to try and provide services for Gaza in sectors such
as education, health and water and sanitation. It will pay salaries
for PA workers, provide payments for social cases and take forward
infrastructure projects where possible (especially in water and
sanitation).
Annex 3
PEGASE[4]
1. The European Commission has repackaged its aid, to
show that it is moving on from the Temporary International Mechanism
(TIM)—a temporary, indirect support designed to bypass PA
systems—to a more direct but flexible funding arrangement,
closely aligned with PA systems. It has called this PEGASE, and
launched it on 21 January 2008.
2. PEGASE will have five windows, covering a range of
disbursement mechanisms, offering a sliding scale of control:
— paying allowances direct to public sector workers
and poor people. This corresponds directly to Window I of the
TIM;
— providing flexible, unearmarked budget support
paid directly into PA's Single Treasury Account (STA);
— payments into sub-accounts of the STA which will
require both PA and EC signatures for release;
— reimbursement of expenditures already made by
the PA (as developed through DFID's private sector arrears programme);
and
— direct procurement of technical assistance from
suppliers.
3. The two most significant changes are that the TIM
(window 1) no longer has to be renewed every three months (allowing
longer financial commitments to be made and hence more predictability);
and that the EC is offering a variety of mechanisms to channel
direct assistance.
Annex 4
FRAMEWORK AGREEMENT WITH UNRWA
1. In December 2006, DFID's Secretary of State signed
a Memorandum of Understanding with UNRWA, which commits DFID to
providing regular annual funding totalling £100 million over
five years. It lays out a performance assessment framework based
on UNRWA's strategy.
2. The performance framework provides for a joint assessment
by DFID and UNRWA, in close cooperation with the EC, of UNRWA's
performance in the last quarter of each year. This uses a set
of agreed benchmarks in eight core areas of UNRWA's performance
as set out below. Around 10% of DFID's funding is linked to the
achievement of these benchmarks.
3. Although other donors such as the EC and US also use
similar indicators to gauge successful performance, in order to
strengthen internal rationale for providing more funding to UNRWA,
no other donor has committed to providing firm, predictable additional
funding as a direct reward of good performance.
Area | Benchmark for 2007
|
Health | An increase in percentage of cases of non-communicable diseases monitored and treated at UNRWA facilities (from 8% in 2005 to 15% in 2007).
|
| Education | (i) Measures for average contact time per pupil established.
(ii) An increase in pass rates of students in the national exams in Lebanon (from 53% in 2004 to 60% in 2007)
|
| Technical & Vocational Training | An increase in the percentage of graduates employed 12 months after graduation (from 78% in 2004 to 83% in 2007).
|
| Microfinance | Measures for the number of informal sector clients accessing the microfinance programme established.
|
| Planning | Approval of biennial budget (08-09) based on strategic priorities substantiated by data, consulted with Advisory Commission members.
|
| Organisational development | Monitoring & Evaluation system of programmes and projects in place.
|
| Stakeholder relations | Advisory Commission members and UNRWA agree that Advisory Commission meetings provide effective consultative forum.
|
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1
Except for deductions made for unpaid utility fees, insurance
claims and funds held up in international court cases. Back
2
The Palestinian Private Sector Co-ordination Council Back
3
AHLC doc Sept 2007 Back
4
(French acronym for Mecanisme "Palestino-Européen
de Gestion ey d'Aide Socio-Economique") Back
| 
