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Does Direct Aid to the Palestinian Authority Help the Palestinian Arabs?

March 1, 2005

The London conference of donors to the Palestinian Authority (PA), currently being convened under the auspices of the 'Quartet', is a timely opportunity to review the size and affect of international donations to the PA. Fortunately, international pressure forced the Palestinian Authority Ministry of Finance to publish summary accounts, including a breakdown of income from overseas.

The table below summarises donations given directly to the PA for the years 2003 and 2004.

 

2003 ($m)

2004 ($m)

Total ($m)

Total Expenditures of the PA

998.09

1,354.43

2,352.52

 

 

 

 

Of which, Salaries & Wages

673.31

871.22

1,544.53

 

67%

64%

66%

 

 

 

 

Overseas Donations:

 

 

 

World Bank Emergency Services Support Project

41.91

72.34

114.25

World Bank - Other Grants

 

20.00

20.00

World Bank - Loans

7.21

 

7.21

World Bank Trust - EU

 

55.80

55.80

World Bank Trust - Britain

 

6.30

6.30

World Bank Trust - Japan

 

10.00

10.00

World Bank Trust - Australia & Korea

 

1.35

1.35

World Bank Sub-Total

49.12

165.79

214.91

 

 

 

 

EU

62.79

50.00

112.79

Saudi Arabia

77.00

77.00

154.00

Norway

10.03

12.00

22.03

United Arab Emirates

21.45

 

21.45

Unites States of America

 

20.00

20.00

Libya

1.31

13.80

15.11

Algeria

9.40

 

9.40

Kuwait

7.50

 

7.50

Canada

 

7.00

7.00

Britain

 

6.00

6.00

Palestinians Abroad

2.78

2.64

5.42

Qatar

4.40

 

4.40

Bahrain

3.30

 

3.30

Tunisia

 

1.65

1.65

Japan

1.26

 

1.26

Egypt

 

3.32

3.32

South Africa

0.50

 

0.50

Sudan

 

0.86

0.86

Greece

0.15

0.13

0.28

Turkey

 

0.03

0.03

Total All Donations

250.99

360.21

611.20

As % of Expenditures

25%

27%

26%

The figures reveal that direct contributions to the Palestinians increased during 2004, maintaining roughly 25% of PA expenditures. One of the factors in this enlarged support was the establishment of the World Bank Trust Fund in April 2004. This enabled many countries to transfer money directly to the PA, assuming that the World Bank was assessing that the money was not used for illegal activity.

To date, the World Bank has not stated that assessment is one of its functions. The UK's instrument for distributing aid - the Department for International Development - finds the World Bank arrangement a particularly useful tool. This provides a simple mechanism to bypass governmental regulations, which greatly restricts direct budgetary assistance under these circumstances.

Meanwhile, it appears that much of the contributions announced by Secretary of State Rice will not be paid directly to the PA, in part because of concerns about past corruption.

Several countries have expressed a desire to help the Palestinian economy. What may appear to be surprising is the relative lack of past support from members of the Arab League, with the exception of Saudi Arabia.

In fact, the $350m of US support pledged to the Palestinians may be contingent on some 15 Arab states meeting promises, which amount to hundreds of millions of dollars and which have yet to be honoured. For example, an Associated Press report from Washington noted that Egypt, Libya, Kuwait and Iraq owe the PA over $500 million between them.

An additional factor to consider is that these figures exclude a vast empire of indirect international aid on behalf of the Palestinians. For example, a host of international charities, individual country delegations and United Nations agencies are active in the Palestinian territories. The most notable is UNRWA, whose annual statutory budget (excluding special projects) is now in excess of $400 million.

Another source of income is ECHO, the European Commission's Humanitarian Aid Department. This has given over 155 million in aid to Palestinians throughout the region since 2000. A further 34 million has been assigned for 2005.

It is necessary to put these statistics into perspective. Reports vary about the total number of Palestinians. The World Bank estimate, which has been challenged as based on incorrect assumptions, allows for around 4 million Palestinians in the West Bank and Gaza Strip.

The FPC has calculated that the Palestinians have received up to $10 billion in international support since 1993. According to Nigel Roberts of the World Bank, this is '...the highest per capita aid transfer in the history of foreign aid anywhere.'

In comparison, a Sky TV report quoting UN sources stated that the appeal for the Tsunami disaster, which killed around 400,000 people and left tens of millions homeless, has so far raised around $6.3 billion in pledges.

It is been difficult to establish a reliable estimate for the aid given to Sudan, where nearly 2 million are homeless and tens of thousands have been killed in the Darfur region. Research indicates a far lower level of international support.

How To Help The Palestinians - The Way Forward

For potential donors attending the proceedings in London, the World Bank has, in its reports, made 2 telling points. They can be seen as "large road signs", pointing to how the Palestinians can be helped out of the cycle of poverty.

First, The World Bank correctly emphasises that international aid is useful. However, even if the sums are increased very significantly, they will not alleviate poverty, unless accompanied by profound democratic reforms in the Palestinian economy and judiciary. The World Bank clearly states that "55% of those who receive emergency assistance are not needy.... 32% of the needy do not receive emergency assistance." In other words, previous aid has either been misdirected or diverted. Positive, transparent and auditable action must be taken to ensure that new aid does not suffer a similar fate and that economic progress can be made.

Secondly, the World Bank points out that poverty can be substantially reduced by acts taken on the ground. The first measure is the lifting of restrictions and closures by the Israelis. As the World Bank acknowledges, this can only happen in full, when the threat of terror is permanently rescinded.


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