More talks on boosting international aid to the Palestinian Arabs

December 27, 2004

Several international newspapers have reported on proposals for massive new aid packages for the Palestinian Arabs. The size and substance of the programmes are being compared to the Marshall Plan for the Japanese after the Second World War.

The Funding For Peace Coalition does not question the global community's priorities in stressing the Palestinian territories over other regions, suffering from strife, poverty or natural disasters. Specific sections of Palestinian society are economically backward. However, as the World Bank confirms, many residents of the Palestinian territories have been prohibited from obtaining the aid which is available, while those receiving aid are not necessarily the ones in need.

Nigel Roberts, the World Bank's director for the West Bank and Gaza, summarised the situation succinctly:

But donors are also able to see that all their spending over the last four years has yielded very little, and they want to exercise some leverage over the situation.

Before there is another conference and before another euro or dollar of taxpayer's money is handed over, the Palestinians must be urged to inaugurate deep financial, judicial and structural reforms. With those policies leading the way, Israel along with the global community can be better assured their own necessary measures will be productive. Only then will the issues surrounding hardened poverty in Gaza, Jenin and elsewhere be resolved.

The following report of the aid plan appeared in the International Herald Tribune and the New York Times.

Talks open on big boost in aid to Palestinians

By Steven R. Weisman

The New York Times

WASHINGTON: The Bush administration has opened discussions with European and Arab countries on a four-year aid package of $6 billion to $8 billion for the Palestinian Authority that would be contingent on steps by Israel and the Palestinians to improve security and freedom of movement in Gaza and the West Bank, according to American and Palestinian officials.

The aid package, to be funded by the United States, Europe, Arab countries and other donors, would be the largest per capita international aid program since World War II, according to the World Bank. American and other officials said the package was the subject of intense discussions at a donors meeting on Dec. 8 in Oslo, intended to bolster recent signs of progress in the Middle East.

According to participants, the aim of the Oslo meeting was to help moderate Palestinian leaders after the death of Yasser Arafat and to prepare for the implementation of Prime Minister Ariel Sharon's decision to pull settlers and forces out of Gaza and parts of the West Bank.

To support the new Palestinian leaders and send a signal to European and Arab leaders to step up their own aid programs, the United States announced in Oslo that it would add to the $200 million it contributed indirectly to the Palestinians this year by channeling another $20 million directly to the Palestinian Authority.

"What you are seeing is a new effort to coordinate with Europeans and the Palestinians on these issues," a senior administration official said. "The question is whether it will be possible after the Palestinian elections to reorganize Palestinian forces and get them to restore order. The answer so far has been no. But now there is a chance."

No pledges were sought at Oslo, participants said. Instead, the discussion focused on what aid might be realistic if Palestinian elections occurred successfully, and if voting was followed by Palestinians cracking down on militant groups attacking Israelis and Israelis lifting scores of road blocks and checkpoints to ease the transit of goods and people in Palestinian areas.

"We are looking at the possibility of another $500 million a year or more, but it has to be in the context of conditions permissive to a much deeper development effort," Salam Fayyad, the Palestinian finance minister, said in a telephone interview from Qatar.

"That cannot happen unless conditions on the ground improve substantially."

Other officials said the target for the Palestinians was an additional $500 million to $1 billion a year. Currently, international aid to Palestinian authorities has risen already to about $1 billion a year, so the increase would be 50 to 100 percent. Despite the large aid amounts in recent years, economic conditions have plummeted and a lot of the funding was deemed wasted amid donor complaints of poor accounting practices.

A large portion of the funding in recent years has gone not for development but to help the authority meet its payroll of 130,000 employees - a major jobs program that has prevented destitution from more than a million Palestinians.

Donors have been increasingly unhappy that so much of their money has gone to keep the Palestinian authority afloat, however, and not to long-term economic improvement. But they say that Fayyad has instituted reforms improving accountability and increasing tax collections.

"He's taken a number of measures establishing tighter control over public finance," said Nigel Roberts, the World Bank's director for the West Bank and Gaza. "But donors are also able to see that all their spending over the last four years has yielded very little, and they want to exercise some leverage over the situation."

As part of an increase in aid, the United States would probably be called upon to increase its own funding and also pay more attention to European and Arab views in the peace talks as they demand a say in return for their own funding increases.

The Palestinians have already started courting Arab countries for the money. This week, Fayyad has been accompanying Mahmoud Abbas, who succeeded Arafat as Palestinian president and is on a tour of Gulf countries, some of which have not come through on past pledges.

Fayyad and Abbas are arguing that Arab countries can afford to be more generous because of high oil prices. In an important gesture to one donor nation, Abbas has also apologized to Kuwaiti leaders for Arafat's failure to denounce Iraq's invasion of their country in 1991.

"If you have those things in place, plus improved internal governance by Palestinians, then you can legitimately go to the donor community and say, 'Maybe your $1 billion a year hasn't produced much, but we think there's a case for doing even more in the next three or four years,"' said Roberts, of the World Bank.

"This is going to require a huge push for the donor community," Roberts said, adding that while the Palestinians have instituted many reforms, many more are needed to establish the rule of law and eliminate payoffs and corruption.

As for Israel's myriad checkpoints and road blocks in the West Bank, the Bush administration has long been pressing Israel to remove them to make the elections easier to conduct. But Israeli leaders plan to do so for only a three-day period before the voting.

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