The donor states to the Palestinian Authority have pledged to give $1.8 billion this year, but a study by The Media Line suggests they will give significantly less.
Two important issues are being discussed at the donors conference, which is being held in London: the reforms in the PA and the financial assistance the PA will receive on behalf of the donating countries and the Supreme Committee for Coordination of Assistance. This committee held a meeting during which the Palestinian budget proposal for 2003 was approved. As part of this budget proposal, the PA requested assistance for the sum of $1.8 billion, out of which $1.25 billion is for 2003. The Palestinian Minister for Planning and Regional Cooperation Nabil Sha’ath stated this to the Palestinian Daily, Al-Ayyam, on Saturday. According to Sha’ath, “The [Palestinian economic] plan and the distribution of money were both approved. Out of this sum $590 million will be paid in cash to the government, the Education and Health Ministries and to the municipalities…we also have commitments of $1.45 billion from the donating countries, out of which $800-$900 million will be provided [in practice].”
According to estimates of the World Bank, the PA needs $1.1 billion in order to prevent a general collapse of their economy, and to overcome the human crisis in the Gaza Strip and the West Bank. Nigel Roberts, Project Manager of the World Bank in the PA stated, “This sum will just about cover the daily bare necessities…it is meant to cover emergency assistance in the areas of food, development of poor vicinities, establishing new workplaces and paying salaries to PA workers.”
Nabil Sha’ath assumes that the Palestinians will not receive the full sum they were assured of receiving from the donor countries, and is not hesitant in stating this. This assumption relies primarily on past experience. According to a World Bank report from 1999, the international community pledged to transfer $2.4 billion to the PA as part of the Oslo agreements (October 1993). Thirty-eight states, as well as a number of international organizations, also pledged to donate money, increasing this sum to $3.4 billion, which was to be distributed over a period of five years (1994 – 1998). Unfortunately, this World Bank report only includes data from the first three years (1994 – 1996). Yet, even so, the general picture is clear – the total sum of assistance promised to the PA was around $2.5 billion, but out of this sum the PA received no more than $1.35 billion.
Following are a few examples of financial pledges versus actual assistance during the years 1994 – 1996:
Belgium pledged to donate $20.5 million, but in effect contributed only $8.8 million; The European Union pledged $310.7 million, but gave $177.4 million; France pledged $65 million and gave $24.5 million; Germany pledged $93 million and gave $58.4 million; The World Bank pledged $140 million and gave $52 million.
However, even more prominent are the following organizations and countries who pledged to donate money, but in actual fact gave nothing at all: The Arab Fund pledged to donate $110 million, The European Investment Bank – $130 million, The International Finance Corporation – $48.75 million, Czechoslovakia – $3 million, Cyprus – $2.2 million, Iceland – $0.9 million, India – $2 million, Indonesia – $4 million. The list also includes Russia, although at the time Russia did not even promise to donate to the PA.
According to the World Bank report, the donors’ effort has been criticized for falling short of fulfilling its promise with delays in committing funds. Furthermore, sluggish performance in implementing projects tends to be the rule, rather than the exception. In reality, unforeseen events, including acts of violence and delays in the peace process negotiations, have complicated the implementation of the donors’ assistance plans.
It is clear that without resolving key political and security issues, the donor community and the private sector will be reluctant to supply the required investment capital. Some clarity and resolution regarding the direction of the peace process is necessary to sustain the donors’ effort.
For this reason the PA, over the last two months, has been trying to reach an agreement with the terror organizations, mainly with Hamas and the Palestinian Islamic Jihad, to stop terror activities. According to the London-based daily, Al-Hayyat, the PA recently came up with a new proposal to implement a cease-fire for a year. Mahmoud ‘Abbas “Abu Mazin”, secretary of the PLO’s operating committee and Arafat’s deputy, stated in a radio interview on “The Voice of Palestine” a few days ago that, “At present there are talks to reach a written agreement [with Palestinian organizations] for a year-long cease-fire…the aim of the Cairo meetings should be a [written] agreement and not [just] talks.” Yet the two main terror organizations, Hamas and the Palestinian Islamic Jihad, jointly announced their rejection of the proposal and emphasized they will continue active opposition against the “continuous escalating Israeli aggression.”
The Palestinian intifada which started in September 2000 caused a harsh deterioration in the Palestinian economy. Against the backdrop of the unstable security situation, it is hard to believe there will be a rapid influx of foreign investments in the Palestinian economy, despite recent commitments made in the London conference. This being the case, the difficult security situation is causing a decline in the rate of assistance, causing an additional economic deterioration, which in turn brings about desperation in the Palestinian society. It is a short way from there to an escalation in terror.
Thus we have a vicious circle, and it’s hard to see the end of it.