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Wednesday, October 16, 2013

U.S. Foreign Aid to the Palestinians

Jim Zanotti
Specialist 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 approximately $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 in apparent support of at least three major U.S. policy priorities of interest to Congress:

• Preventing terrorism against Israel from Hamas and other militant organizations.

• Fostering stability, prosperity, and self-governance in the West Bank that inclines Palestinians toward peaceful coexistence with Israel and a “two-state solution.”

• Meeting humanitarian needs.

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. Through its provision of aid to the Palestinians, the United States faces challenges in bolstering PA leaders in the West Bank without compromising their domestic popular appeal or encouraging authoritarian behavior. Longtime PA Prime Minister Salam Fayyad, who was praised by many Western officials—including several Members of Congress— as a champion of reform and transparency, resigned in April 2013. Fayyad was replaced by a government that may be more sensitive to the preferences of PA President Mahmoud Abbas than those of international donors. Congress and the Obama Administration also face challenges in addressing humanitarian needs in Gaza while monitoring the status of Hamas’s rule there amidst regional flux and increasing instability along the border in Egypt’s Sinai Peninsula.

From FY2008 to the present, annual regular-year U.S. bilateral assistance to the West Bank and Gaza Strip has averaged around $500 million, including annual averages of approximately $200 million in direct budgetary assistance and $100 million in non-lethal security assistance for the PA in the West Bank. In line with Obama Administration requests, funding levels declined slightly in FY2013, with the new baseline of overall annual assistance closer to $440 million. Because of congressional concerns that, among other things, U.S. aid to the Palestinians might be diverted to Palestinian terrorist groups, the aid is subject to a host of vetting and oversight requirements and legislative restrictions. Additionally, since FY2011, Congress has taken various forms of action in response to Palestine Liberation Organization (PLO) initiatives in the United Nations and other international forums aimed at increasing international recognition of Palestinian statehood outside of negotiations with Israel. The PLO reportedly agreed to put these initiatives on hold as they resumed talks with Israel in the summer of 2013. 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).

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 pledges those governments make. The PA remains dependent on external donor assistance to meet its budgetary needs—especially its large public payroll—and it also seeks foreign investment to jumpstart its private sector. Even if the immediate objectives of U.S. assistance programs for the Palestinians are met, the long-term utility of U.S. aid in encouraging regional stability and Palestinian economic and political self-sufficiency might depend to some extent on progress toward a political solution that addresses Palestinian national aspirations and Israeli security demands.

Date of Report: September 30, 2013
Number of Pages: 34
Order Number: RS22967
Price: $29.95

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