b i t t e r l e m o n s. o r g
    March 22, 2004 Edition 11                       Palestinian-Israeli crossfire
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  Foreign aid and the conflict
. From hostility to opportunity        by Yossi Alpher
Israel's disengagement plans provide the aid community with a new and unique opportunity.
  . Not a prop for the peace process        by Ghassan Khatib
The international donor community dangled foreign aid as a carrot and stick before the Palestinian Authority.
. You can't turn back the clock        an interview with Dov Sedaka
There was a disguised threat to leave, but largely to pressure Israel to let them get the job done.
  . Underpinning a peace process        an interview with Salem Ajluni
Some might say that the donors have fueled the conflict.

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From hostility to opportunity
by Yossi Alpher

International aid is not new to the Palestinians. Nor is Israel's problematic attitude toward that aid.

Back in the pre-1967 days, when Israelis contemplated the role of UNRWA (United Nations Relief and Works Agency for Palestine Refugees in the Near East) in the Palestinian refugee camps across the green line in Gaza and the West Bank, the impression was overwhelmingly negative. UNRWA, it was argued, contributed to Palestinian incitement and violence against Israel, and by its very existence prolonged the existence of the refugee issue, hence extended the conflict. But after the Six-Day War and the beginning of an Israeli occupation that in some forms and areas continues to this day, Israeli attitudes quickly changed. UNRWA, it was discovered, also fed, clothed and educated Palestinians--functions that would have to be born by the Israeli occupier unless it cooperated with the UN organization.

Since then international aid to the Palestinians has only increased. Over the course of the decade that has elapsed since the Oslo process began, the Palestinians have received international development assistance at one of the highest per capita rates in the world. Close to seven billion aid dollars have been committed. And half of this has been provided during the past three and a half years alone, since the current conflict commenced.

Today most of this aid takes the form of emergency humanitarian assistance. According to the World Bank, the ratio between development aid and emergency aid changed from 7:1 before the intifada to 1:5 in 2002. This means that the international community is now essentially devoting its support--about one billion dollars in 2002--to keeping this generation of Palestinians alive rather than to developing Palestine for future generations and sustaining the peace process.

If the international community were to withdraw its aid tomorrow, the world would look to Israel--still technically the occupying power--to provide sustenance for Palestinians. Israel would still be obliged to export foodstuffs to Palestine and provide for the Palestinian electricity, water, fuel and communications infrastructures, but neither the aid-givers nor the Palestinian Authority would be able to pay for them. As a result, Israel would be out of pocket by as much as $2 billion annually--unless it chose to allow Palestinians to starve while the world watched.

This would not stop the fighting. Without the international aid, the Palestinian economic situation would get worse, not better. Palestinians would not stop attacking Israelis, and Israel would not stop retaliating for the violence. If anything, the occupation--and the opposition it provokes--would become more intense. Once again the many Israeli security people and politicians who today consider the international aid community to be a hypercritical source of trouble for Israel, would quickly change their minds.

Now Israel's disengagement plans provide the aid community with a new and unique opportunity. If Israel does indeed abandon settlements in the Gaza Strip and perhaps in the West Bank, the aid givers have a unique opportunity to petition Israel to turn the homes, farms and infrastructure that it abandons over to them, e.g., to the United Nations and/or the World Bank. In cooperation with the Palestinian Authority, these international institutions can then redistribute these assets to Palestinians in an equitable manner. They can also ensure that Israel receives a "credit" of major proportions, looking to the day when, under a peace agreement, the value of these assets will be deducted from Israeli compensation payments to Palestinian 1948 refugees.

The international aid community should begin by appealing, now, publicly, to the government of Israel, to ensure that those assets are not destroyed or removed if and when the settlers leave--to guarantee that Prime Minister Ariel Sharon does not yield to the same impulse that led him to destroy the settlements in Sinai when Israel departed in 1982. -Published 22/3/2004©bitterlemons.org

Yossi Alpher is coeditor of bitterlemons.org and bitterlemons-international.org. He is former director of the Jaffee Center for Strategic Studies at Tel Aviv University, and a former senior adviser to PM Ehud Barak.

Not a prop for the peace process
by Ghassan Khatib

The Palestinian-Israeli conflict is influenced a great deal by foreign aid contributions for the simple reason that the two parties are heavily dependent on these contributions in all respects. Israel, which is relatively less dependent on foreign aid, receives direct and indirect economic support from the United States and European Union, in addition, of course, to material support in the form of military assistance.

One can speak of two reasons Israel receives this monetary backing: first is the commitment that Europe has made to the survival of Israel as a form of compensation/support after the suffering of the Jewish people in Europe during World War II, but second and more important is the political self-interest that drives both American and European support. Israel plays a political and strategic role in the region that the United States and European countries believe advances their interests. Thus, most of the foreign aid that Israel receives is based on a mutual understanding over common interests, which enhances the durability and long life of that aid.

Palestinians, as the weaker party, are more dependent on foreign aid. Their assistance comes in part from Arab oil-producing countries, Saudi Arabia in particular, but also from the European Union and the United States. It comes at times in the form of government support for the Palestinian Authority, and at other times is extended through international development agencies to the Palestinian Authority or to Palestinian civil society organizations.

An analysis of the foreign aid that comes to Palestinians is more complicated because it is more varied. This aid is not based on perceived mutual interests, but rather on humanitarian grounds or as an attempt to influence the politics of the Palestinian people, whether internally (by trying to direct the public debate in a certain direction) or by bluntly trying to bend the political positions taken by the Palestinian people and their leadership. This stands true for foreign aid coming from Arab and non-Arab donors alike.

This characteristic, as well as Palestinian aid's diverse disbursement, makes it less sustainable, more occasional and consequently less valuable and less influential. One can think of two periods that clearly illustrate the role of foreign aid in the conflict. When the Palestinian resistance was at its height in the 1970s and early 80s, Arab oil-producing countries wished to neutralize the growing political weight of Palestinians in pan-Arab politics, for example, and manipulated their monetary support accordingly. Later, from 1996 to 2000, the international donor community dangled foreign aid as a carrot and stick before the Palestinian Authority to influence its negotiating positions.

After the signing of the Oslo accords, attempts to tie foreign aid to improving the relations between Palestinians and Israelis (dubbed "people-to-people" programs) proved to be artificial. Foreign aid to Palestinians has played a crucial role in humanitarian support and development. However, the best outcomes for this aid have been restricted by the ongoing political conflict and the constraints placed on the Palestinian economy by the Israeli occupation and reoccupation. The naive aims of politically motivated support also devalued the foreign aid effort as a whole.

In the final analysis, attempts to use foreign aid as a means of consolidating the peace process have not been successful by any measure. The reason, of course, is not that making peace doesn’t require foreign aid, but that without accompanying political effort, foreign aid cannot compensate for defects and deficiencies in the structure of the political process between Palestinians and Israelis. -Published 22/3/2004©bitterlemons.org

Ghassan Khatib is coeditor of bitterlemons.org and bitterlemons-international.org. He is minister of labor in the Palestinian government and for many years prior was featured in the press as a political analyst.

You can't turn back the clock
an interview with Dov Sedaka

bitterlemons: Can humanitarian aid bring peace or maintain the peace process?

Sedaka: Aid alone cannot maintain the process. But it can and does grease the wheels of peace.

bitterlemons: Some in Israel and the international community argue that the provision of international humanitarian aid to the Palestinian population actually prolongs the conflict.

Sedaka: Aid does not prolong this conflict. It is the right thing to do. International aid began with the occupation back in the 1960s, and it was justified then as now. The aid organizations did good work in the field. They recruited local resources in the areas of education and development and played an important role in the well being of the population.

bitterlemons: How does Israel's Civil Administration fit into this scheme?

Sedaka: It assists the dozens of international organizations, the United Nations, Red Cross and many [non-governmental organizations] that are present in the field. The Civil Administration is very familiar with these groups. This stems from the fact that the state of Israel cannot fill the organizations' function. Since the aid is necessary, it is best filled by the international groups and not, say, Hamas. Better to create a real humanitarian infrastructure and not that of Hamas' terrorist summer camps. The Civil Administration has trained its own "international organization officers." The Israel Defense Forces [IDF] has now integrated humanitarian aid into its combat doctrine.

bitterlemons: Yet the international organizations complain of friction with the IDF.

Sedaka: It is not always simple to balance combat with humanitarian aid. There are issues of time and space: first the battle has to end. Moreover, over the years fears and suspicions develop. [We have learned that] not every ambulance and aid shipment is "clean"; so suspicions arise. With good communications we can solve these problems. This insight has now penetrated deep into the IDF combat echelon; the soldier at the roadblock better understands the need for aid.

bitterlemons: Yet over the past year or so, the aid organizations have talked about pulling out.

Sedaka: They won't depart. There was a disguised threat to leave, but largely to pressure Israel to let them get the job done. If they were to pull out, this would not end the conflict; on the contrary, the resultant poverty would worsen the situation. The vacuum would not be filled entirely by Israel but by Hamas.

bitterlemons: Why? Why can't Israel provide the aid if need be? Or the Palestinian Authority?

Sedaka: You can't turn back the clock to status quo ante. If the aid ends [even under conditions of peace], the Palestinian Authority is still not capable of filling the gap. But [neither can we, because the Palestinian Authority] aspires to independence and has learned not to work with us. In any case Israel never provided 100 percent.

bitterlemons: There are allegations that Palestinian inefficiency and corruption complicate the aid picture.

Sedaka: Inefficiency contributes to lack of development. This touches not on the question whether there's enough food, but rather on infrastructure development, for example the Palestinian water economy. Of course, the conflict makes things worse, but (even without it) Palestinian government offices are not organized as they should be. [Minister of Finance Salam] Fayyad has still not succeeded in breaking the monopolies on energy supply, cement and agricultural exports.

The aid organizations come to us with these complaints, but there is little we can do. We try to provide security, mobility, and the necessary statutory permits--areas where the Palestinians are weak.

bitterlemons: Does the international aid improve or hinder Israel's relations with the aid-giving countries and organizations?

Sedaka: Improve, unequivocally. In the eyes of the aid-givers as well, the joint projects and working relationships contribute to relations.

bitterlemons: Israel and the Palestinian Authority developed a complex economic relationship after 1993. In retrospect, was this beneficial?

Sedaka: The present situation of intifada is not natural and does not bear faithful testimony to the relationship. In view of the huge disparity between the economies, the Oslo and Paris agreements were the right ones in their day. The Palestinian economy was supposed to grow, to stand on its own two feet. They were to have their own air and sea ports and economic independence. The process can still be renewed with joint industrial zones and the return of Palestinian labor to Israel.

The trade balance at its peak was about $2.6 billion per annum in Palestinian imports from Israel and $800 million in Palestinian exports to Israel. This was Israel's biggest trading relationship after the United States. This has declined radically since the intifada began. -Published 22/3/2004©bitterlemons.org

Brigadier General (ret.) Dov F. Sedaka was the head of the Civil Administration in the West Bank until 2003.

Underpinning a peace process
an interview with Salem Ajluni

bitterlemons: How has foreign aid influenced the Palestinian-Israeli conflict, particularly in recent years?

Ajluni: Donors have said very specifically for a decade now that foreign aid is designed to underpin a peace process. They say very bluntly and openly that aid to the Palestinian Authority is seen as peace implementation or peace facilitation. Whether or not it has played that role is another question.

I think that foreign aid has played an important role to some extent in reducing the distortion in the occupied Palestinian territories that existed particularly in the period prior to the last ten years. Palestinian incomes were rising while their public services, infrastructure and public spaces were degrading for close to 30 years [after Israel's 1967 occupation].

For the last decade, though, personal incomes have been on the decline due to Israeli measures blocking Palestinian access to the Israeli labor and commodity markets. The aid has to some extent served to mitigate the distortion of this occupied economy. In the last three years, much of the aid has been budgetary support for the Palestinian Authority to allow it to be able to meet salary payments.

bitterlemons: How then has the aid influenced the course of the conflict?

Ajluni: Some donor countries have said openly, and others have said not so openly, that for the last two years at least, they have been financing the fallout of Israel's measures rather than allowing Israel to bear the full weight of its actions and pay for the damage and destruction that it has caused. Seen from that donor perspective, some might say that they have fueled the conflict--if the aid had stopped, then the Israelis would bear a much bigger burden and not engage in the behavior that they have.

bitterlemons: Is the international community considering pulling back for this reason?

Ajluni: I think that the donors are engaged in that rethinking. It is a good question.

bitterlemons: Both Israel and the Palestinian Authority draw a large portion of their budget from foreign aid. How might each, in a perfect world, make the transition to a self-sufficient economy?

Ajluni: Were it not for the movement restrictions and the difficulties imposed on the Palestinian population as a result of Israeli measures, there would be no need for budgetary support. In 1999, [the Palestinian Authority] had a balanced operating budget. The Palestinian Authority, relative to what it has received, however, would have only minimally been able to cover the development budget that creates medical facilities, public infrastructure, public space, technical assistance, etc.

Let's keep in mind that we are talking about a population that has a large component of refugees and that has been under occupation since 1967. The degradation of public infrastructure has been great and ongoing for nearly four decades.

Israel, on the other hand, is the largest recipient of external funding in the world, bar none. On a per capita basis, that equals three times what the Palestinians receive, and somewhere over $1,000 per person per year. Could the Israelis do without that? Most of this assistance is official and comes from the United States. Roughly half of that is military assistance. If Israel wants to maintain the fourth largest army in the world at the current level of readiness, then it will probably have to continue to receive that amount.

bitterlemons: Given the experience of the Oslo accords where donors gave a large amount of money and then the process collapsed, if there were to be a comprehensive settlement would there also be a willingness to give?

Ajluni: My sense is that if there were to be a comprehensive settlement bringing real peace and justice, the donors would give more. In the past three years, most of the assistance has come from Arab countries for budget support [of the Palestinian Authority]. In that case, the Arab states would play a greater role if a comprehensive solution were to be found. The other main donors of the Palestinians--the European Union, Japan, and the United States--would probably also be forthcoming. -Published 22/3/2004©bitterlemons.org

Salem Ajluni is an economist and consultant focusing on the Palestinian occupied territories.

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