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Aiding the Palestinians While Waiting for Hamas

NGOWatch Analysis

June 14, 2006

By Flavius Mihaies

With deteriorating conditions in the Palestinian Territories following the cut off of both direct aid to the Hamas-led government 1 and most tax revenues collected by Israel, the Quartet of international mediators -the United States, Russia, the European Union, and the United Nations- agreed on May 8 to create a temporary international aid mechanism that would bypass the Palestinian government and funnel funds to Palestinians. The fund is intended to be in place by the end of June.

Yet, the relevance of the mechanism and how it should work is still being debated. The Quartet faces a difficult dilemma: aiding the Palestinian people yet keeping pressure on Hamas. The United States and the European Union consider Hamas as a terrorist organization. Channeling aid directly to Palestinians will require a new kind of donor coordination structure in order to deal with a host of economic, political, and legal issues.

The United States and the European Union positions

At first reluctant to set up an aid mechanism that might relieve pressure on the Hamas government, the United States then delegated its design to the European Union. However, the United States law requires more rigorous restrictions on aid flow than the European Union. (The Journal of Turkish Weekly, 6/12/06). On May 23, the Congress adopted the Palestinian Anti-terrorism Act. Under this act, the United States is able to provide only limited humanitarian assistance (food, water, medicine, and sanitation).

Who would channel aid?

France proposed that the World Bank act as an intermediary agency between donors and the Palestinian Authority presidency, led by Mahmoud Abbas, but this proposal was rejected by the United States. The Bank said that establishing such a mechanism would take months rather than weeks (Le Monde, 5/10/06).

It has also been suggested that United Nations agencies and NGOs could directly channel aid to Palestinians. Yet, some argue that reliance on United Nations agencies and non-governmental organizations is not a valid alternative. According to Doctors without Borders (Medecins sans Frontieres, MSF), NGOs "do not have the competence, the means or the responsibility to act as a substitute for the Palestinian Authority" (MSF Press Release, 4/13/06). Similarly, the United Nations claims that it is not capable -neither by mandate nor by capacity- to replace the Palestinian Authority or the quality and scope of its services (Yahoo News, 5/13/06).

Who would receive the money? Humanitarian versus misuse risks

One out of four Palestinians is on government payroll. That quarter of the population is running key public services. Should the payment of their salaries be included in the mechanism? The United States and Israel are opposed to this option (Associated Press, 5/31/06). Money, it is feared, might end up in the hands of Hamas and would not be used to finance health and education but terrorism (Ria Novotsi, 5/10/06). But some in the European Union argue that if the mechanism is limited to humanitarian and emergency aid, such as medical goods and equipment, it will be of little use if, for example, doctors and nurses do not get to work because their salaries have not been paid (Jerusalem Post, 5/31/06). Others in the European Union want money to go to the educational system as well. But this raises concern that money would go to pay the salaries of teachers who are teaching curricula drawn up by the Hamas-led education ministry (Jerusalem Post, 5/31/06). The United Nations and the World Bank go even further. They argue that paying only health and education salaries but not covering the wages of the security forces might create social tension and unrest (World Bank Report, 5/7/06, Reuters, 5/31/06).

The Quartet has also to sort out who will contribute. The European Union wants Arab countries to fund the aid mechanism. Yet, despite the solidarity rhetoric, the mechanism does not seem desirable for Arab regimes since, in their view, the successful functioning of the Hamas government sends a message of encouragement to opposition groups in their countries, proof that an Islamic government can rule (Hareetz, 5/12/06).

The European Union seeks to obtain Israeli release of at least $54 million tax revenues that Israel monthly collects on the Palestinian Authority's behalf. Additionally, agencies, NGOs, and companies, including banks, that might become involved in the mechanism want guarantees that they would not face sanctions related to US anti-terrorist laws (Gulf Times, 5/23/06). Therefore, any proposal for the aid mechanism would need the support of the Quartet countries.

External factors challenging the process

Two external factors might challenge the setting up of the mechanism, assuming that Hamas sticks to its current position and does not renounce terrorism. A financial crunch and recent clashes between the two rival factions controlling the government, Fatah and Hamas, could lead to civil war that, in turn, might jeopardize the implementation of the aid mechanism. Second, on May 25, Palestinian Authority President, Mahmoud Abbas gave Hamas an ultimatum to accept a proposal for negotiations leading to a Palestinian state alongside Israel or to face a referendum in July (Al Jazeera, 5/26/06). The passage of the referendum could be a step toward meeting international demands and could clear the way for the West to restore aid to the government, potentially rendering the mechanism obsolete (Gulf Times, 6/1/06).

Meanwhile direct humanitarian aid continues

While direct aid to the Hamas-led government has been stopped, U.S. and European Union direct humanitarian assistance to Palestinians via NGOs and U.N. agencies in Gaza and the West Bank have not been affected. On May 23, the European Commission agreed to a new emergency aid package worth €34 million or about $43 million (EUobserver, 5/15/06). Similarly, with its own mechanism already in place to deliver around $254 million in humanitarian aid to Palestinians in 2006, the United States conducts its aid programs independently of the Quartet (Jerusalem Post, 5/16/06).

Yet, the European Union and the United States humanitarian combined aid package falls short of their annual total aid in the recent few years. For example, in 2005, the European Union and the United States channeled $600 million and $400 million, respectively, to Palestinians (BBC News, 4/7/06).

In conclusion, putting together an international aid mechanism to bypass a democratically elected -if terrorist- government is a complex political process involving a web of national and international actors with different roles and mandates, including governments, international organizations, banks, companies, and NGOs, each having its own agenda. The process can take time and will be difficult to implement. An alternative would be for Hamas to recognize Israel, to foreswear violence, and to accept previous Israel-Palestinian agreements. This decision would permit foreign aid to be quickly resumed and would thus benefit those most concerned and in need: the Palestinian people.




1. Direct aid to the Palestinian government is a fraction of the total aid that the international community has been channeling to Palestinians, but it covers key expenses, including security forces, health workers, and teachers' salaries. Palestinians are today the largest per capita recipients of foreign aid in the world.