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Palestinians Struggle With Donations

July 12, 2002 GMT

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RAMALLAH, West Bank (AP) _ Echoes bounce through Mohammad Shtayyeh’s cavernous office compound, empty except for himself, a man making mint tea and an accountant who grimaces as he hands Shtayyeh the latest unemployment figures.

As director of the Palestinian Economic Council for Development and Reconstruction, the main agency in charge of drumming up aid for Palestinian projects such as hospitals, schools and roads, Shtayyeh has seen the Palestinian economy crumble and promises for international aid broken.

Now, with almost a million Palestinians under Israeli curfew and aid workers unable to get to their jobs, comes another frustration: U.S. hints that future aid will be made conditional on far-reaching political and economic reforms.

``Without international aid everything _ including the Palestinian Authority _ will collapse,″ said Shtayyeh, standing next to a cork bulletin board featuring a cartoon of Palestinian leader Yasser Arafat nailed to a cross and two pie charts of poverty levels. ``Palestinians are being collectively punished.″

Since the Palestinian Authority was created in 1994, it has been dangerously dependent on handouts. Until 2000, the Palestinian government and various non-governmental organizations received some $500 million a year in foreign aid _ which then amounted to perhaps an eighth of their entire economy and a third of their state budget.

That dependance increased during the 21 months of violence: The economy has shrunk dramatically, while aid from the United States, Europe and Arab nations in 2001 went up to about $900 million.

But recent statements by U.S. officials have raised fears here that future aid might be made conditional on far-reaching reforms.

In his policy speech last month, President Bush said that the United States and other donors ``are willing to oversee reforms in Palestinian finances, encouraging transparency and independent auditing″ and, if this works, ``will increase our humanitarian assistance to relieve Palestinian suffering.″

Such reforms seem far off, while on the ground there is a sense of urgency as a result of the Israeli offensive in the West Bank, which has greatly hobbled the Palestinian and foreign institutions that administer the aid.

Since attacks killed 31 Israelis on June 18-20, Israeli troops have occupied most West Bank towns and cities, imposing tough curfews and making it difficult for Palestinians to move around. Israel says its presence is open-ended and is necessary to prevent suicide attacks.

Palestinians, Shtayyeh says, are being made into the scapegoats not only for the attacks, but also for Arafat’s falling-out with the United States.

All U.S. aid to Palestinians is funneled through non-governmental organizations, which this year were to receive $400 million from the U.S. Agency for International Development. The United States pledged $720 million in economic assistance to far richer Israel, and more than $2 billion in security assistance.

Meanwhile, other donors have been late on their pledges.

Of the $330 million promised by Arab nations in the first six months of this year, the Palestinian Authority received less than $200 million. Out of more than $300 million promised from the EU and World Bank, less than $100 million has been received, said Palestinian Cabinet minister Nabil Shaath.

To pay 130,000 people employed by the Palestinian Authority, $60 million per month is needed. The aid has made it possible to meet those salaries this year, but development projects are on hold.

In the past donor nations had preferred monies be used for long-term projects and not operating expenses such as salaries, but with the Palestinian economy _ and tax collection _ in tatters, such concerns appear to have diminished.

Some speculate that if anything, donor nations don’t want to funnel money to constructing things that could be damaged in clashes between Palestinians and Israeli forces. Others say donors are waiting to see if money would better directed toward costs associated with the hoped-for reforms.

Reforms are ``probably going to be a hot topic when it comes to aid and it’s an interesting area particularly for the Americans,″ said Deirdre Connolly, a technical adviser and program manager for the U.N. Development Program.

The UNDP’s work in the West Bank focuses on job creation and construction. But programs have been hobbled by the latest occupation, which keeps Palestinian aid workers from traveling between different West Bank towns and cities.

Shtayyeh knows he has a difficult and at times unpopular job. He spends much of his time traveling the world, making his pitch to prospective donors.

``We are looking at poverty levels where 65 percent of our people are living on less than $2 a day and in parts, there is 75 percent unemployment,″ said Shtayyeh. ``When people see what’s happening, the picture is clear and my job becomes easier.″