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“Challenges
Facing the Donor Community” with Larry
Garber January 29, 2002 On
January 29, 2002, the Center for Middle East Peace and Economic
Cooperation was pleased to host Larry Garber, USAID Mission Director for
the West Bank and Gaza, who discussed the challenges facing the
international donor community and USAID’s efforts in the West Bank and
Gaza Strip. He also
provided a detailed account of the current economic distress facing the
Palestinians and examined the effects of the current violence on
USAID’s mission. Below is a summary of his comments. Before
the Outbreak of the Current Intifada
Since
the start of Oslo in 1993, USAID has distributed an average of $75
million annually to development and humanitarian programs run by
non-governmental organizations and private companies in the West Bank
and Gaza. An additional
$400 million was promised under the 1998 Wye River Agreement, which must
be obligated by this year. Much
of the Wye supplemental funding has not been spent yet.
If the additional aid is factored in, the West Bank and Gaza is
among the top five recipients of U.S. assistance in the world and is
probably the largest recipient of per capita aid other than Israel.
Congressional legislation prevents the USAID (and the United
States) from providing any funding directly to the Palestinian
Authority; it only provides grants to NGOs and commercial businesses,
whose programs are overseen and audited by USAID. Before
September 2000, there was steady economic growth of about 7% a year in
the West Bank and Gaza, and unemployment was below 9%.
The Palestinian Authority’s budget was basically balanced, and
the fiscal situation and the environment for foreign investment were
quite sound. The Peres
Center for Peace was working with USAID on developing an information
technology park in Tulkarm, and USAID was in the third phase of
developing its wastewater treatment program.
USAID’s efforts in the West Bank and Gaza have focused on
funding NGO and commercial endeavors in six program areas: economic
growth (employment generation programs, micro-credit projects, etc.),
basic healthcare, water resource development, democracy and governance
projects, education and training opportunities, and community
development. The
Current Situation
The
intifada has had a major impact on Palestinian economic life, with
unemployment reaching 35% and GNP declining by 19%.
Estimated income lost during the 16 months of violence is $2.4
billion, and physical damages are estimated at $300 million.
A majority of Palestinians live on less than $2 a day.
The Israeli closures have resulted in the loss of 75,000 jobs for
Palestinians who used to work in Israel.
Not only has foreign investment dropped, domestic investment has
dried up. So why has the Palestinian economy not suffered a total collapse? There are a few reasons, in USAID’s assessment of the situation. First and foremost is the financial support for the Palestinians received from the Arab League and the European Union - about $600 million in the past year - which has ensured the PA’s ability to pay its civil service employees. Also approximately 50,000 Palestinians have managed to find work in the settlements or inside Green Line Israel. The international donor community has also shifted its priorities from traditional programs to emergency efforts, such as food distribution. The Palestinians themselves have reduced consumption and relied on savings. USAID’s
Shift in Strategy
In response to the deteriorating situation, USAID has reviewed its strategy and produced various planning scenarios, developing contingency plans to deal with continued violence in the region or the possibility of a real cease-fire and an improvement in conditions. As part of its reassessment, it has reallocated funding to emergency response activities, basic health services and employment generation programs. Border industrial zone and local government projects have been suspended, but rule of law and civil society programs continue, as do some infrastructure projects, such as a desalination plant and water carrier in Gaza and a wastewater treatment facility in Hebron.
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S. Daniel Abraham, Chairman |
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633
Pennsylvania Ave, NW |
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