Palestine and the Politics of Aid


As Hamas claimed 76 out of 132 seats in the recent Palestinian elections, an occupied state rang out a chorus for change. Tired of broken dreams and failed promises, they turned to an organization viewed as terrorist and freedom fighters in equal measure.

Yet the politicising of aid continues to drive the agenda. Threats to cut off funding made by the European Union (EU) and the United States is another chant, rallied around by the idea the Palestinians will have rights, when they prove that they deserve rights, as if human rights are something that can be granted or revoked.

Throughout the occupation, Hamas continued to make strides in its social welfare and charity programmes keeping the occupied territories alive –” barely, considering unemployment stands at 70 per cent. Prior to the elections, Hamas chief Mahmoud al-Zahar urged the international community to continue donations promising to use the money in the “proper way and in a purified manner”. The United States initially planned to provide $150 million to the Palestinians through the US Agency for International Development (USAID) and another $84 million through the UN Relief and Works Agency for Palestinian refugees.

Whether or not Hamas cracks down on the corruption hampering Fatah, the history of USAID in Iraq should prompt al-Zahar to consider how funding is being used. The funding arm of the US government awarded numerous “reconstruction” projects to various corporate backers in the Bush administration. They have pioneered the art of war profiteering where an exact form of re-colonisation is sure to be implemented in Palestine.

In fact, it has already begun. Prior to Ariel Sharon’s pullout in Gaza, USAID distributed to international contractors a tender document for projects aimed at the developing the agricultural and fishing sector in the Gaza Strip. Iraq is currently a testing ground for a $100 million agricultural reconstruction project undertaken by USAID –” where economic decisions have already been made, primarily to get the government out of food production.

“The idea is to make this completely a free market, says Doug Pool, agriculture, irrigation and environmental specialist with the USAID’s office of Iraq Reconstruction. The USAID goal –” mirroring World Trade Organization (WTO) policies –” is to help the new Iraqi government phase out farm subsidies.

“The Minister of Agriculture has been quite good in doing that,” says Pool. State enterprises such as the Mesopotamia Seed Co., “need to be spun off and privatised,” he said.

USAID now aims to privatise assets in the Gaza Strip, employing Palestinian “caretakers”. This is merely the same form of re-colonisation employed in Iraq, where the agency is essentially buying former occupied territories from Israel and going forward with so-called reconstruction projects for the Palestinians. In 2004, the Palestinian people became the largest per capita recipients of foreign aid in the world. Yet Palestine is not only unable to move forward in its development process towards statehood, but rather any achievements that have been made thus far are being unravelled while donor funds continue to flow unabated.

While Fatah is blamed for the deepening economic crisis, the very same argument is used against dictators around the world for being solely responsible for the desperation of their people. This only forms part of the picture. In areas of the West Bank and Gaza, under the jurisdiction of the Palestinian Authority (PA), remain dominated by Israeli economic policies and are subordinated to the prescriptions of international financial institutions (IFI) such as the World bank and the IMF which, according to Palestinian developmental economist Adel Samara, played a central role in designing the economic policies put forward by the PA.

Within days of Israel’s conquest of the West Bank and Gaza in June 1967, the Israeli military governor of the time began to issue orders that would reshape the lives of the territories residents. “No less than half of these orders involved economic matters,” writes Samara in “The Political Economy of the West Bank 1967-1987”.

The principal aim of the Israeli occupation was and continues to adjust the economy of the territories to fit in with the interests, needs and structure of its own economy. By absorbing the labor force, while at the same time pursuing a policy of rejecting Palestinian applications for licences to start productive projects, Israel was able to destroy the occupied territories’ economic infrastructure, thus facilitating the integration of the latter’s economy into that of Israel.

This process forced all Palestinian social classes to interact directly with the Israeli economy, thereby creating and reinforcing Palestinian economic dependency. This is visibly displayed by Israel’s halt to a $55 million tax payment due to the Palestinians because of the Hamas victory.

The departing minister of economy, Mazen Sinokrot said the 135,000 civil servants in need of the tax and customs receipts (Israel collects on behalf of Palestine), were the main breadwinners for 30 per cent of Palestinian families. “If these salaries do not come in, this is a message for violence,” he said.

It is also reflected through USAID’s corporate backed venture in Gaza, where according to the Palestine Report, the PA met with the agency and submitted a detailed complaint regarding the inclusion of Israel in the management of land and assets after its departure in the Gaza Strip, where implicit in the proposal is the idea Palestinian firms would work with Israeli firms to upgrade their agricultural practices. Furthermore, the project omits any Palestinian or international legal framework for the reclamation of occupied land.

Throughout the troubled history of the region, numerous donor offerings of “development” ultimately reveal the inner workings of an entire donor industry built around the catastrophic predicament of the Palestinian people –” an industry sustained by the so-called “peace process”. During the post-Oslo period, a flurry of donor pledges and commitments were made and continue to be made by the international community who took it upon themselves to intervene on behalf of Palestinian development. A bipartisan group of US House of Representatives members introduced legislation on Thursday to halt U.S. aid to the Palestinian Authority as Hamas is expected to form a new Palestinian government. Threats to cease funding now replace lectures on “good governance”. Fatah was constantly warned to build “democratic” principles in its ruling framework, and now Hamas is blackmailed into coerced “democracy”, which is primarily a condition of aid, where good governance is interpreted as an attempt to embed American neo-liberalist agenda into Palestinian politics. Nothing therefore must impede the vision of the US Millenium Challenge Account, which uses aid to implement the neocons’ vision of US national interests in the region.

Fatah’s incompetence establishes a framework, which makes multinationals feel like they are back in the good old days of colonialism where all you have to do is pay the ‘native chief’ a pittance.

While the EU also threatens to cut off aid, the past 10 years indicates the EU’s global strategy of intervention failed to develop Palestine. In “The Myth of Palestinian Development: Political Aid and Sustainable Deceit”[1], author Dr Khalil Nakhleh asks, “Is it for example, the type of ‘survival’ the EC (European Commission) aid offers that hooks entire PA institutions to a ‘life-sustaining machine’, which manages to inject intravenously small yet steady doses of cash, to keep the entire public sector afloat?”

With a deficit of $69 million for January alone, the expected budget deficit for 2006 is stands at $600 million to $700 million. To ease the budget cash crunch, the World Bank proposed a multidonor trust fund, where the EC, Japan, Norway and Britain stand as the largest contributors. The World Bank attributes Palestine’s functional bankruptcy to a “significant increase in public-sector salaries and public hiring”, primarily unemployed young men who walk the streets bored senseless. This stood as a broken promise to the World Bank, which instructs donor recipients to crack down on public sector spending, where forced procurement liberalisation is imposed, limiting the freedom of governments to use their national budgets in a manner favouring local business and in this case, job creation.

Superficial headlines concerning the occupation primarily centre on funding efforts aimed at strengthening the PA and creating tangible benefits for Palestinians in the West Bank and Gaza, thereby generating support for the peace process. According to Rex Brynen, professor of Political Science at the University of Calgary, “individual donors ultimately retain control of their own individual programs…virtually all donors are driven by a desire to become involved on projects that maximize their political visibility and credit.”

A large portion of funding by IFI’s are in the form of loans, which in principle, must be repaid. However the PA’s only source of income to gradually pay off loans come from taxes, now stopped. Considering the vast majority of donor funding spent irresponsibly, the PA debt cannot be financed without incurring more debt, threatening to spiral out of control, resulting in yet another textbook case of a third world country under the strain of market subservience.

While the world tries to save the “peace process”, international consultants are sent to patronise the Palestinians with empty promises. They are found in every aspect of Palestinian life –” politics, security, economy, education, etc –” all holding VIP cards, freely passing through Israeli military checkpoints with 4×4 vehicles in one of the most deprived and unfree places in the world. They gather for summits and conferences, where Arab poet Mudhaffar al-Nawab describes them as goats inspecting each other’s urine.

These foreign consultants line high on cost-plus expense accounts and thousand-dollar-a-day salaries, while locals are shut out of much needed jobs, training and decision-making. The tragedy here is the Palestinians alone are being held responsible for their statehood building misgivings, when in reality, aid money, and donor-picked consultants are really in the developmental driving seat.

For a real partnership, the concept of “aid” should be replaced by a common obligation to put people before profit. In January 2005, US Secretary of State Condoleeza Rice described the Asian tsunami as “a wonderful opportunity” that “has paid great dividends for us”.[2] Many were horrified at the idea of treating a massive human tragedy as a profitable venture. But if anything, Rice was understating the case.

In Palestine, the politics of aid is being played out exposing the real objective of funding, not aimed at economic development, but at the pockets of corporate clients, while polices labelled “reform” are consistently imposed.

Why should money transfers like this be counted as aid? This kind of “aid” continues to undermine development, deepen poverty and further promote repression and violence. Under these conditions, no viable Palestinian state can possibly emerge, as the PA and Hamas are reduced to merely the political managers of a dispossessed labour reserve set to be re-occupied by foreign interests.





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