Issue 37 - Article 1

Dilemmas for aid policy in Lebanon and the occupied Palestinian territories

April 13, 2007
David Shearer and Francine Pickup, OCHA

With the spotlight focused on the political causes and after-effects of the Hizbollah–Israel war and the upsurge in the Israeli–Palestinian conflict in 2006, little attention has been paid to the role played by donor assistance to the region. Aid in the Middle East has been motivated by donors’ political preferences, not humanitarian needs. That intensified markedly during 2006, a shift that also challenges the activities and agendas of aid agencies. This article examines the interconnections between aid and politics, and how they have played themselves out in Lebanon and the occupied Palestinian territories (oPt).

There are some obvious parallels between the Israeli–Palestinian and the Israeli–Hizbollah conflicts. In both instances, Israel, with superior firepower, was responding to the abduction of its soldiers by militants within its territory. In both instances, Israel was fighting militants whose organisations had also been democratically elected to their respective governments. Hizbollah draws the bulk of its support from the Shia population, while Hamas enjoys a broader spectrum of support from Palestinians. Both are political–military organisations, both are Islamic in orientation and both operate extensive welfare networks. Both also share similar origins. Hizbollah grew out of resistance to Israel’s occupation of southern Lebanon in the 1980s and 1990s, and Hamas drew on Israel’s occupation of Palestinian territory to increase its influence during the 1990s.

For Western governments, the growing dominance of Hizbollah and Hamas has been deeply problematic. The US and the European Union (EU) passed legislation in 1993 and 2003, respectively, declaring Hamas a terrorist organisation and severely limiting contacts with it. Hizbollah is classed as a terrorist group in the US, but the approach in Europe is more ambivalent. The prevailing policy towards Lebanon by Western and some Arab states has been to counter Hizbollah’s increasing influence and strengthen Prime Minister Faoud Siniora’s government. In the oPt, the strategy has been to isolate Hamas and actively promote its rivals. A key policy tool in both cases has been aid.


Western donors responded to the conflict in Lebanon by giving to an Emergency Flash Appeal, which enabled international relief programmes to be launched without delay. However, a number of donors exerted pressure on UN agencies and NGOs not to meet or provide assistance to Hizbollah. As a result, some international NGOs were accused of siding against Hizbollah by refusing to assist returnees in villages receiving Hizbollah funds. Avoiding Hizbollah was not a simple matter given its extensive network throughout southern Lebanon, however, and the bulk of the UN’s emergency assistance was delivered through elected municipalities, some of whom were headed by Hizbollah. In this way, the UN’s emergency response was not criticised as being politically linked to any one faction.

Hizbollah was also fully aware that aid was an important political tool. It understood that its popularity might be damaged when Shias returned to the south and confronted the reality of smashed homes and livelihoods. Hizbollah teams moved about the south making rapid damage assessments of property as soon as the fighting stopped. Cash handouts of up to $12,000 were given immediately to those hardest hit. This proved popular, and was an extremely effective means of rebuilding and getting the economy going again.

The Lebanese government responded to Hizbollah’s recovery activities by seeking to show the Lebanese public that it was at the forefront of recovery efforts. It asked the humanitarian programme to wind up early and launched a fund-raising conference in Stockholm to finance its own early recovery programme. The Stockholm meeting (on 31 August), and a more substantial gathering in Paris on 24 January 2007, raised $940 million and $7.6 billion respectively, much more than was anticipated and a graphic indication of donor support and concern. Strong backing came from Saudi Arabia, Kuwait, Qatar and the United Arab Emirates to fund projects in the Shia south. These states took on Siniora’s suggestion of ‘adopting’ heavily damaged villages, and each pledged assistance worth hundreds of millions of dollars.

The government faced an uphill battle in establishing its credibility in the south. Some government institutions, such as the state electricity authority, mobilised quickly into the south. These efforts did little to counter the persistent complaint of Shias living in Lebanon’s poorer south that they do not receive a fair share of state funds and are inadequately represented. In part, the confessional make-up of the government and its centralised nature is to blame. The allocation of key political positions and ministries is done according to a formula in which different political parties each receive a predetermined share. This system aims to keep the peace between Lebanon’s Sunni, Shia, Christian and Druze communities.

As a result of these factors, the south became an arena for competing regional influence among range of entities, including the Lebanese government, Lebanese regional bodies, Hizbollah-affiliated organisations, the Iranian embassy, Arab states and more traditional aid actors, including the UN and Western NGOs.

The occupied Palestinian territories

In the oPt, politics and aid have always been intimately connected. Since the Palestinian Authority (PA) was established in 1993, the rationale for aid has been to support the peace process and build the nascent institutions of a future Palestinian state. Israel, which as the Occupying Power, had until then been running the key welfare administrations in the West Bank and Gaza, stepped back from its responsibilities in favour of the donor-backed PA.

The peace process collapsed with the onset of the second intifada in 2000. Donor assistance doubled, from $500 million to more than $1 billion per year, in the hope that this support would tide the PA over until the peace process could be rejuvenated. Most of the increase was in the form of humanitarian assistance through the UN appeal, and support to the PA amounted to about a quarter of its total budget.

Following Hamas’ victory in parliamentary elections in January 2006, aid has been allocated along more overtly political lines. Donors stopped funding to the PA and set three conditions for its resumption: the PA had to recognise Israel’s right to exist, renounce violence and respect earlier agreements. At the same time, Israel withheld the customs revenues it collects on Palestinian goods entering through Israeli ports, which it is obligated to hand over. These dues account for 50% of PA revenues.

Freezing funds to the PA produced entirely predictable results. Poverty rates soared, from 51% in 2005 to 67% in 2006. By the third quarter of 2006 GDP had declined by 15% compared with the same period the previous year. In response to this economic downturn, donors turned to alternative means to disburse funds that bypassed the PA institutions they had historically supported as the cornerstone of a future Palestinian state. One of these alternative channels was the UN’s emergency appeal. The appeal was revised upwards by 44% in May 2006, from $216 million to $384 million for the year. By the end of 2006, it was 73% funded – higher than any other year and higher than any appeal globally. The appeal for 2007 is for $450 million in emergency assistance.

A new funding method – the Temporary International Mechanism (TIM) – was also devised. The TIM, developed and led by the EU, funds cash allowances to PA employees, meets some welfare needs and finances some services provided by Israel, such as water, electricity and fuel. By the end of 2006, the TIM had distributed approximately $180 million. However, payments are directed via the Office of the President – an overtly political move given that the president, Mahmoud Abbas, is also the leader of the Fatah party, which lost its parliamentary majority to Hamas in the 2006 elections. TIM payments are issued without consulting the PA, making coordination and forward planning difficult, and accountability has suffered because civil servants are no longer being paid salaries by the PA for the services they deliver. Absenteeism among unpaid PA employees and restricted working hours have undermined a wide range of PA services, including health and education, on which Palestinians depend. PA employees were on strike between September 2006 and January 2007 in protest at the inability of the PA to pay salaries.

A further characteristic of the TIM is that it excludes the security services, which make up half of the public sector. With the PA unable to pay their salaries, security personnel – most of whom are Fatah loyalists – have rejected the authority of the Hamas Interior Minister, Saim Sayed. At the same time, Hamas has consolidated its armed forces in opposition to the Fatah groups. Rivalry between the two has led to unprecedented inter-factional violence. The death-toll from internal Palestinian violence for the first six weeks of 2007 was 86, including 11 children, and 486 injured. In comparison, 146 were killed in the whole of 2006, and 11 in 2005.

In 2006, the UN stated strongly that it had neither the mandate nor the ability to take on the core public sector responsibilities of the PA, such as health care and education. Nevertheless, the humanitarian response has been compelled to plug some gaps in the health sector to ensure that the PA could continue its work. Although this is perceived as a time-bound way of supporting the PA, there is a fine – sometimes indistinguishable – line between support and substitution.

The obvious answer to the dilemmas of aid in the oPt – international humanitarian law – remains missing. IHL states simply that the welfare of Palestinians is the obligation of the occupying state, which in this case is Israel. In practical terms, the formation of the PA relieved Israel of many of its responsibilities. As donors commit ever more of their taxpayers’ money to keeping basic services running, while at the same time undermining the enormous investments they have made over the years in state-building, they may well want to examine Israel’s obligations.


One unintended consequence of aid policy in the oPt may be to reinforce radical elements in the region, rather than weakening them. The Palestinian situation is regularly mentioned in Al-Qaeda broadcasts as a rallying point for sympathetic Muslims, and Islamic groups throughout the Middle East are closely watching Hamas’ experiences to see whether they too should embrace democratic politics. Meanwhile, many Palestinians believe that they have been punished for their choice of government.

It seems unlikely that the announcement of a Palestinian unity government on 8 February 2007 will end the boycott of Western aid to the PA. Some Western donors, notably the US and UK, have already voiced their opposition to a joint administration that includes Hamas. These donors may choose to continue funding the TIM, and the EU has even proposed expanding its remit. Saudi Arabia, on the other hand, has reportedly promised $1 billion to the new PA administration. Ironically, the Palestinian unity government, heavily dependent on Arab money, may come to look very like its Lebanese counterpart. Hizbollah’s decision on 10 November 2006 to withdraw from the Lebanese government shows the fragility of that model. Yet both Lebanon and the oPt will both depend on donor funding just to maintain minimum conditions of stability.

David Shearer is Head of UNOCHA in the oPt and was UN Humanitarian Coordinator in Lebanon in July–September 2006. His email address is: Francine Pickup heads the Research and Analysis Unit in UNOCHA oPt. She was Deputy Head of OCHA Lebanon between August and September 2006. Her email address is:


Comments are available for logged in members only.