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West Bank and Gaza
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Private Sector Development | 294-001 |
13,950 |
7,649 |
23,000 |
| Water Resources Development | 294-002 |
22,808 |
31,943 |
51,000 |
| Democracy and Governance | 294-003 |
13,350 |
23,255 |
20,000 |
| Higher Education and Training | 294-005 |
2,250 |
700 |
14,000 |
| Family Health | 294-007 |
6,200 |
4,823 |
16,000 |
| Community Services Program | 294-008 |
16,000 |
1,430 |
19,000 |
| Program Support Objective | 294-009 |
|
4,600 |
7,000 |
|
Total (in thousands of dollars) |
74,558 |
74,400 |
150,000 |
|
The Development Challenge: USAID/West Bank and Gaza (USAID/WBG) continues to play an integral role in promoting the U.S. Government's strategic foreign policy priority of advancing the Middle East peace process and creating two independent, viable, democratic states living side by side in peace and security. An underlying objective of U.S. Government support is to improve the quality of life for Palestinians. The conflict with Israel has severely constrained development, especially since the Intifada began in September 2000. According to the World Bank, approximately 16% of the population, or 607,000 persons, live below the poverty line of $280 per month for a family of six and cannot afford the basics for survival. In 2003, per capita real Gross Disposable Income (GDI) in the West Bank and Gaza stood at $1,467 ($1,621 in the West Bank and $1,227 in Gaza), a level that is comparable with Egypt. This figure includes official donor assistance of $300 per capita, an extraordinary level of donor support. Without this assistance, Palestinian consumption and social indicators would all be appreciably lower, and Gaza's per capita GDI would be the second lowest in the region after Yemen. The January 2005 election of a new president lays the groundwork for the cessation of violence, the implementation of security, democratic and governance reforms, and a return to the Roadmap process. These developments create new opportunities for U.S. assistance to help the Palestinians return to economic growth and an improved quality of life for residents of the West Bank and Gaza.
Apart from the violence itself, the proximate causes of this decline in the well-being of Palestinians were the physical fragmentation of the West Bank and Gaza and the much higher transactional costs associated with Israeli closures and curfews (implemented in response to terror attacks) and other restrictions on Palestinian mobility of both goods and people. In addition, for two years beginning in December 2000, in response to the Intifada, Israel began withholding the customs, excise, and value added taxes that it had been collecting on behalf of the Palestinian Authority (PA) as part of the Customs Union arrangement under the Oslo Accords. Since Israeli revenue clearances constitute about two thirds of the PA's total revenues, this period of revenue transfer suspension had an immediate and crippling effect on both the PA and the Palestinian economy. This crisis elicited a major donor response, which now totals approximately $1 billion per annum.
A forceful and well-coordinated donor response during the past four years, and the resumption of Israeli revenue clearances in the past two years, has meant that an outright humanitarian disaster, especially in Gaza, has been averted. At the same time, high fertility and population growth rates persist, dependence on foreign aid has been further entrenched, and the economy now needs to be reoriented away from its former dependence on labor exports to Israel. Critical infrastructure needs, particularly in water, also need to be addressed. Along with the need to proceed rapidly with democratic governance, institution building, social service delivery, and other reforms, these represent the major development challenges.
The World Bank, in its December 2004 report on "Israeli Disengagement and Palestinian Prospects," suggested that if Israel works to remove its constraints on the movement of goods and people following its withdrawal from Gaza and four settlements in the Northern West Bank, and if the PA can demonstrate commitment and achieve progress in the areas of elections, security, and other key reforms, then the basis for economic regeneration and a return to the Roadmap process would be in place. In accordance with the Palestinian Basic Law, and following the election of President Abbas, plans for Legislative elections in May 2005 and for local municipal elections are similarly underway. In a further sign of progress on the reform front, President Fattouh has signed all pending Palestinian Legislative Council (PLC) laws. Israel, meanwhile, has been steadily advancing its unilateral Disengagement Plan that is expected to lead to a withdrawal from the Gaza Strip and the Northern West Bank by the end of 2005. These defining events are giving rise to renewed but cautious optimism among both Israelis and Palestinians.
It is important to note that the political uncertainty and accompanying instability increase the planning and implementation challenges of the Mission. Within this context, the Mission continues to develop innovative approaches to ensure that U.S. taxpayer dollars are serving the intended purposes and not being provided to terrorist organizations or their affiliates. Per a congressional mandate, the U.S. Inspector General supervises audits of all ongoing projects; all local organizations that receive USAID funds and their key officials are vetted for terrorist affiliations; and the Mission conducts regular project evaluations to ensure that critical development needs are addressed.
The USAID Program: Prior to the Intifada, the Mission operated under a five-year strategic plan (1996-2000), which focused on the development of the private sector, water resources and democratic institutions. During the course of the Intifada, the Mission's program (beginning in the spring of 2001) was guided by a more flexible Transition Plan which sought to promote stability by addressing four main themes: a) responding to emergency needs; b) promoting reform; c) revitalizing the private sector; and d) maintaining infrastructure and human capital development. These efforts were funded by an operating year budget of $75 million, $400 million which became available in 2000 as part of the Wye Supplemental, and $50 million which was allocated to the Mission as part of the Iraq Supplemental in 2003, primarily for emergency needs. The additional funding enabled the Mission to disburse more than $170 million in fiscal year 2003 and more than $150 million in fiscal year 2004.
The Mission is preparing a new interim strategy to respond to the opportunity -- presented by Gaza disengagement and political reform by the Palestinians -- to support the President's vision of a sovereign, independent, viable, democratic and territorially contiguous Palestinian state, living side by side in peace and security with Israel. This new strategy retains all of the flexibility and innovative program management used over the past four years. Although the details and overall funding levels of this plan are still being formulated, this reflects a doubling of the Operating Year Budget from $75 to $150 million in FY 2006. With this increased funding, the Mission's broad operational goals will be to: 1) achieve political stability; 2) achieve economic stability; 3) achieve social stability; and 4) provide needed infrastructure.
USAID will respond to the opportunities created by the January 2005 Presidential by providing tangible support to Palestinian leadership committed to reform. We plan to use existing program vehicles to demonstrate the tangible benefits of transition through projects that can deliver immediate impact and results including in the areas of reconstruction, job-creation, and respect for the rule of law, and support for the secular moderate mainstream. In addition, the Mission has already developed a specific plan that will enable rapid response to increased funding. These interventions are in addition to the December 2004 $20 million cash transfer to the Palestinian Authority.
Other Program Elements: During FY 2004, all activities were funded by the West Bank and Gaza Mission. The Mission did not implement programs funded by pillar bureaus, or regional missions or bureaus. In FY 2005, the Mission expects to implement awards of up to $750,000 made by USAID's Bureau for Democracy, Conflict, and Humanitarian Assistance for conflict mitigation. USAID was a major participant in the preliminary field review process.
Other Donors: During the past four years, and particularly since 2002, the United States, the European Union (EU), the Arab League countries, the World Bank, and other donors have all played a critical role in preventing a humanitarian crisis and in maintaining a minimum level of economic, social, and political stability. The United States was the largest donor to the West Bank and Gaza in 2003, expending funding to more than $253 million: $172 million from USAID, and $81 million from the State Department through the United Nations Relief and Works Agency (UNRWA). The latter amount does not include assistance delivered by UNRWA to Palestinians in Lebanon, Syria, and Jordan. Total U.S. contribution in 2003 represented more than a quarter of the $927 million disbursed by all official donors as budget support, humanitarian, and development assistance. In 2003, the EU was the second largest donor, contributing $235 million, and Saudi Arabia was the third largest donor, contributing $77 million.
Following the start of the Intifada, the EU, the Arab League Countries, the World Bank, and other donors shifted the bulk of their assistance to direct budget support for the PA, 90% of which went for salaries and transfer payments. The United States responded to critical and humanitarian needs but maintains its medium-term focus on infrastructure and institutional development. As a result, the United States is now the leader in delivery of both tangible goods and services to Palestinians and to the PA. An international donor pledging conference may be convened in the first half of 2005, where a request to donors will be made for assistance over and above the current existing level of just under $1 billion annually.
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