The international politics of aid in the occupied Palestinian territory
by Anne Le More, Oxford University November 2004

When international donors embarked on a substantial assistance programme to the West Bank and Gaza Strip following the signing of the Oslo peace agreement in 1993, they had three declared objectives. First, international funds were sought to support the implementation of the agreement and to sustain the Palestinian–Israeli peace process. Second, aid would contribute to Palestinian socio-economic development. At the time, an optimistic conception dominated the economic aspects of peace in the Middle East. According to this approach, aid would help to promote development and enhance regional cooperation, which in turn would consolidate peace through ‘spillover’ effects. In particular, aid would contribute to sustaining Palestinian domestic stability and the momentum of the peace process by creating tangible and rapid improvements in basic infrastructure and in Palestinian living conditions – the so-called ‘peace dividend’ which the population of the occupied Palestinian territory (OPT) was supposed to reap. Third, donors aimed to build Palestinian institutions. Although not explicitly stated at the time as pertaining to final status negotiations between the two parties, most within the international community envisaged institution-building as a first step towards establishing an independent Palestinian state.

From the outset, international assistance in the context of the Oslo process was thus an eminently political enterprise. Since then, the relationship between aid and politics has been complex and intricate. Not only has politics had a disproportionate impact on the strategic orientation and effectiveness of the assistance programme, but aid has also influenced the dynamics of the conflict. However, at no point, including the present, has the overall international response to the Palestinian–Israeli conflict been influenced by an integrated policy framework, in which aid and political actors pursue a mutually supportive peace strategy.

The aid coordination structure: a political framework for assistance

Nothing embodies more clearly the way aid and diplomacy have been inextricably linked than the coordination structure set up to manage donor funds. Several coordination bodies were established, including the Ad Hoc Liaison Committee (AHLC), the main capital-level body mandated to design the overall aid strategy; the Local Aid Coordination Committee (LACC), to provide regular coordination in the field; the Joint Liaison Committee (JLC), designed to address problems in tripartite relations between the donors, the Palestinian National Authority (PA) and the Israeli government; and the Task Force on Project Implementation (TFPI), tasked with resolving implementation problems, notably access issues. Since the beginning of the second intifada, new bodies have been created to deal specifically with the emergency situation, such as the Humanitarian and Emergency Policy Group (HEPG) and the Task Force on Palestinian Reform (TFPR).

One of the main features of this aid management structure is that it was initially conceived as a trilateral mechanism involving donors, the PA and the Israeli government. This reflected the fact that the Palestinian–Israeli peace process provided the political framework for international assistance to the West Bank and Gaza Strip. Moreover, although the Palestinian population had been granted a degree of autonomy in some of the areas established by the Oslo Agreement, Israel retained control of East Jerusalem, 60% of the West Bank and a large proportion of Gaza. The PA thus lacked sovereignty and such critical state attributes as control over its borders, its foreign policy, its currency, its fiscal and monetary policy and its natural resources. Accordingly, Israel also remained the aid community’s ‘host’ – international aid agency staff working in the OPT arrive at and depart from Tel Aviv airport, the Israeli Ministry of Foreign Affairs delivers work visas and most international organisations, including UN agencies and NGOs, operate in the Palestinian territories on the basis of an agreement concluded with the Israeli government.

That Israel had to be involved in every aspect of the aid process was inevitable given both the absence of Palestinian sovereignty and the political incentives for international assistance. Yet this also imposed critical limitations on donors, particularly as the relationship between the parties deteriorated after 1996 and the peace implementation process stalled. On the ground, the division of the West Bank and Gaza Strip into different areas and the restrictions imposed by Israel on the movement of Palestinian goods and people have impeded both the access of aid agency staff and the delivery of services, including humanitarian relief. Closure and movement restrictions have also resulted in donor projects being less effective in their implementation, more time-consuming and more costly. Furthermore, the division of the OPT has limited the geographical scope of donors’ projects. In accordance with the Oslo framework, donors have predominantly financed projects in the main cities of the West Bank and Gaza under full Palestinian control, to the detriment of projects in East Jerusalem and rural areas, which have been largely neglected. This inadvertently reinforced the process of Palestinian territorial fragmentation which took place during the 1990s as a result of Israeli closure policy and such measures as the expansion of Israeli settlements and by-pass roads in the occupied territory.

Second, and more fundamentally, Israel’s involvement has resulted in the aid process being over-politicised. In effect, the international aid agenda for the OPT has been determined less by Palestinian development needs than by the competing political agendas of the main donors – in particular the United States and the European Union – as they relate to the perceived requirements of the Middle East peace process. This has also meant that the aid process has been heavily dominated by donors (and in particular the ‘friends of the LACC’ comprising the US, EU, UN, Norway and the World Bank) contrary to best practice guidelines, which have long emphasised the importance of recipient countries ‘owning’ their development process.

Is aid perpetuating a harmful political status quo?

As a result of the intifada and the further deterioration of the Israeli–Palestinian relationship, Israel has withdrawn from aid management at the local level and the coordination set-up has become more bilateral. Nevertheless, donors have continued to interact with both parties through separate channels – as seen most recently in the upsurge of donor activity in the context of the talks between the international community and the two parties surrounding Israeli disengagement plans. It is also becoming increasingly difficult for donors to obscure the reality of the occupation and the related obligations of Israel under international humanitarian law (IHL). As long as the peace process seemed on track and aid was mainly developmental, donors preferred to downplay the occupation rather than antagonise Israel. However, the worsening of the humanitarian crisis, the intensification of Israeli military activity, the reoccupation of most West Bank and Gaza cities and the construction of the separation wall in the West Bank have forced IHL back onto the international agenda.

Lively discussions around the question of ‘should the international community continue to finance Israeli occupation and the destruction of Palestinian livelihood’ have been recurrent features of donor and UN meetings in Jerusalem over the last couple of years. Yet while those debates have served as a useful channel to ventilate the high level of frustration and loss of hope of the aid community on the ground, they have remained to date both sterile and without policy repercussions. The lack of unity among the aid and diplomatic community, the desire not to embarrass Israel for some, and the belief held by most that, were the international community to withdraw its assistance, it is unlikely that Israel would step in to supply adequate relief explain why there has been no substantive reassessment of the international aid response to the West Bank and Gaza Strip.

In effect, for the last four years, most donors have pursued a mixed and ad hoc strategy, trying to maintain a development perspective while injecting a huge amount of emergency assistance in response to the crisis. Relief aid has included budget support for the PA and the municipalities, food aid, job creation programmes and cash assistance. Within the ‘development’ category, European donors have tended to re-channel their aid towards institution-building. This is partly because the widespread destruction of the infrastructure that the donor community had financed in the period up to 2000 has made donors reluctant to reinvest in this sector. For instance, the European Commission has estimated the financial loss incurred by European projects at more than €39 million between 2002 and 2004. Moreover, a focus on institutions, notably the PA, has been attractive for political reasons. It has been assumed that supporting the PA – while simultaneously ‘reforming’ it to make it more transparent and accountable – is the best way to ensure the maintenance of a Palestinian negotiating partner, as well as some kind of proto-state institutions upon which to build a future Palestine. The PA was thus buttressed by a high level of budgetary assistance. In 2002, the World Bank estimated that, out of more than $1,000m disbursed to the West Bank and Gaza Strip, 50% ($519m) went on budget support to the PA.

Whilst all this is on paper consistent with the two-state solution outlined in the Roadmap, it is arguably less so given the territorial, socio-economic and political reality of the OPT. Over the last decade, Israel has pursued a policy of expansion into the occupied territory through settlement growth, road and infrastructure construction and the building of the separation barrier in the West Bank. These measures have resulted in a multi-faceted process of fragmentation, whereby the West Bank, East Jerusalem and the Gaza Strip have become a collection of isolated regions and enclaves. This is in sharp contradiction to the sine qua non of territorial contiguity as the basis for an economically and politically viable Palestinian state. Closure and fragmentation have also been regarded as the proximate cause for the socio-economic and humanitarian crisis in the West Bank and Gaza Strip. Meanwhile, loss of security control, factional disputes and internecine struggles within Fatah, the dominant Palestinian political faction, has come to characterise an increasingly chaotic internal political scene in which the PA has lost much of its legitimacy and Islamist movements have gained substantial popular support. This reality, however, is not integrated into donors’ strategic thinking and policy making. An understanding of the multifaceted impact of ten years of international assistance on the Palestinian domestic scene, on Israeli policy and, more generally, on the dynamics of the conflict is also critically missing.

Towards a more integrated peace-building approach

Clearly, aid did not succeed in its key priority, sustaining the peace process, but, as in most post-conflict/in-conflict situations, development and relief assistance can only help to buttress and enhance a political process: they cannot be a substitute for it. What is less clear, however, is how aid has influenced the dynamics of the conflict by creating incentives and disincentives for peace or violence in both Israel and the OPT. In particular, the interface between aid, politics and security remains under-researched. Equally, the full implications of unilateral Israeli actions and its policy of territorial expansion for the possibilities for peace, security and development, and for the emergence of an independent Palestinian state, remain to be assessed. There have been some recent initiatives, such as a colloquium organised by the Royal Institute of International Affairs in June 2004 on the disconnects between aid, diplomacy and ‘facts on the ground’. Mary B. Anderson has also undertaken a short study, applying her ‘do no harm’ approach to the conflict and looking at the impact of aid on both Israeli/Palestinian relations and on relations among Palestinian groups and within Palestinian society. However, these initiatives have yet to result in further in-depth research, nor have they been translated into an articulated international strategy.

The paradox of the last decade is that, although the explicit aim of donor assistance has been to support the Palestinian–Israeli peace process, donors have nonetheless acted as if the development effort in the West Bank and Gaza Strip could proceed independently of the evolution of the bilateral political process and developments in Israel and the OPT. Israel has been included in the aid process, but only in so far as it has related to donors’ work in the Palestinian areas, not as one out of the two parties to which the process of peace implementation applied and at which the international intervention could have been targeted. There has thus been a fundamental contradiction between the aid enterprise’s ambitious political raison d’être and a minimalist technical interpretation of the role and mandate of the donor community – Palestinian socio-economic development and institution-building. In other words, there has been no integrated and coherent international peace strategy, where aid and political actors pursue a mutually supportive common policy aimed at consolidating peace, development and human security. Ten years on, and at a time when the two-state solution seems increasingly less likely given Palestinian territorial fragmentation and socio-economic and political disintegration, it is time to start thinking about resolving this contradiction.


Anne Le More is a doctoral student in international relations at Nuffield College, Oxford University. Her research focuses on international assistance to the Palestinian population. She has also worked for the Office of the UN Special Coordinator for the Middle East Peace Process (UNSCO) based in Gaza and Jerusalem. She can be reached at anne.lemore@nuf.ox.ac.uk.


References and further reading

Rick Hooper, ‘The International Politics of Donor Assistance to the Palestinians in the West Bank and Gaza Strip, 1993–1997’, Research in Middle East Economics (3), 1999.

Anne Le More, ‘Foreign Aid Strategy’, in Numan Kanafani and David Cobham (eds), The Economics of Palestine: Economic Policy and Institutional Reform for a Viable Palestinian State (London: Routledge, 2004).

Mary B. Anderson, ‘Do No Harm’ – Reflections on the Impacts of International Assistance Provided to the Occupied Palestinian Territories, report of a visit, 9–17 May 2004, available at www.miftah.org under the ‘Reports’ heading.