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Wednesday, January 26, 2011

U.S. Foreign Aid to the Palestinians

Jim Zanotti
Analyst in Middle Eastern Affairs

Since the establishment of limited Palestinian self-rule in the West Bank and Gaza Strip in the mid-1990s, the U.S. government has committed over $3.5 billion in bilateral assistance to the Palestinians, who are among the world’s largest per capita recipients of international foreign aid. Successive Administrations have requested aid for the Palestinians to support at least three major U.S. policy priorities of interest to Congress. 
·         Combating, neutralizing, and preventing terrorism against Israel from the Islamist group Hamas and other militant organizations. 
·         Creating a virtuous cycle of stability and prosperity in the West Bank that inclines Palestinians—including those in the Hamas-controlled Gaza Strip— towards peaceful coexistence with Israel and prepares them for self-governance. 
·         Meeting humanitarian needs and preventing further destabilization, particularly in the Gaza Strip. 
Since June 2007, these U.S. policy priorities have crystallized around the factional and geographical split between the Fatah-led Palestinian Authority (PA) in the West Bank and Hamas in the Gaza Strip. From FY2008 to the present, annual U.S. bilateral assistance to the West Bank and Gaza Strip has averaged over $600 million, including annual averages of over $200 million in direct budgetary assistance and over $100 million in non-lethal security assistance for the PA in the West Bank. Much of this assistance is in direct support of PA Prime Minister Salam Fayyad’s security, governance, development, and reform programs aimed at building Palestinian institutions in advance of statehood. Additionally, the United States is the largest single-state donor to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which provides food, shelter, medical care, and education for many of the original refugees from the 1948 Arab-Israeli war and their descendants—now comprising approximately 4.8 million Palestinians in Jordan, Syria, Lebanon, the West Bank, and Gaza. Since UNRWA’s inception in 1950, the United States has provided the agency with nearly $3.9 billion in contributions. However, whether UNRWA’s role is beneficial remains a polarizing question, particularly with respect to its presence in Hamas-controlled Gaza.

Because of congressional concerns that, among other things, funds might be diverted to Palestinian terrorist groups, U.S. aid is subject to a host of vetting and oversight requirements and legislative restrictions. U.S. assistance to the Palestinians is given alongside assistance from other international donors, and U.S. policymakers routinely call for greater or more timely assistance from Arab governments in line with their pledges.

Prospects for stability in the West Bank appear to hinge on improved security, political and economic development, Israeli cooperation, and continuation of high levels of foreign assistance. A power-sharing or unity government meant to address the problem of divided rule among Palestinians would not be eligible for U.S. aid if Hamas is included in the government and does not change its stance towards Israel. Even if the immediate objectives of U.S. assistance programs for the Palestinians are met, lack of progress towards a politically legitimate and peaceful twostate solution could undermine the utility of U.S. aid in helping the Palestinians become more cohesive, stable, and self-reliant over the long term.

Date of Report: January 13, 2011
Number of Pages: 25
Order Number: RS22967
Price: $29.95

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