U.S. Foreign Aid to the Palestinians

U.S. Foreign Aid to the Palestinians Jim Zanotti Analyst in Middle Eastern Affairs August 12, 2010January 13, 2011 Congressional Research Service 7-5700 www.crs.gov RS22967 CRS Report for Congress Prepared for Members and Committees of Congress U.S. Foreign Aid to the Palestinians Summary Since the signing of the Oslo Accord in 1993 and the establishment of limited Palestinian selfruleself-rule in the West Bank and Gaza Strip in 1994the mid-1990s, the U.S. government has committed over $3.5 billion in bilateral assistance to the Palestinians. Since the death of Yasser Arafat in November 2004, U.S. assistance to the Palestinians has been averaging about $400 million a year. During the 1990s, U.S. foreign aid to the Palestinians averaged approximately $75 million per year. Despite more robust levels of assistance this decade, Israeli-Palestinian conflict and Hamas’s heightened role in Palestinian politics have made it more difficult to implement effective and lasting aid projects that serve U.S. interests. U.S. aid to the Palestinians has fluctuated considerably over the past five years, largely due to Hamas’s changing role within the Palestinian Authority (PA). After Hamas led the PA government for over a year, its forcible takeover of the Gaza Strip in June 2007 led to the creation of a nonHamas government in the West Bank—resulting in different models of governance for the two Palestinian territories. Since then, the United States has dramatically boosted aid levels to bolster the PA in the West Bank and President Mahmoud Abbas vis-à-vis Hamas. The United States has appropriated or reprogrammed nearly $2 billion since 2007 in support of PA Prime Minister Salam Fayyad’s security, governance, development, and reform programs, including $650 million for direct budgetary assistance to the PA and nearly $400 million (toward training, non-lethal equipment, facilities, strategic planning, and administration) for strengthening and reforming PA security forces and criminal justice systems in the West Bank. The remainder is for programs administered by the U.S. Agency for International Development and implemented by nongovernmental organizations in humanitarian assistance, economic development, democratic reform, improving water access and other infrastructure, health care, education, and vocational training. In December 2009, Congress approved $500 million in total FY2010 assistance pursuant to P.L. 111-117, the Consolidated Appropriations Act, 2010. In addition to its bilateral assistance to the Palestinians, the United States is the largest singlestate donor to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which provides food, shelter, medical care, and education for many of the original refugees from the 1948 Arab-Israeli war and their descendants—now comprising approximately 4.8 million Palestinians in Jordan, Syria, Lebanon, the West Bank, and Gaza. Since UNRWA’s inception in 1950, the United States has provided the agency with nearly $4 billion in contributions. U.S. contributions to UNRWA have steadily increased over the past decade, with nearly $228 million thus far for FY2010. Whether UNRWA’s role is beneficial overall, however, is a polarizing question, particularly with respect to UNRWA’s presence in Hamas-controlled Gaza. Because of congressional concerns that, among other things, U.S. funds might be diverted to Palestinian terrorist groups, much of this aid is subject to a host of vetting and oversight requirements and legislative restrictions. Experts advise that PA stability appears to hinge on improved security, economic development, Israeli cooperation, and the continuation of high levels of foreign assistance. The possibility of a consensus or unity government to address the problem of divided rule among Palestinians could lead to a full or partial U.S. aid cutoff if Hamas is included in the government and does not change its stance toward Israel. Even if the immediate objectives of U.S. assistance programs for the Palestinians are met, lack of progress toward a politically legitimate and peaceful two-state solution could undermine the utility of U.S. aid in helping the Palestinians become more cohesive, stable, and self-reliant over the long term. Congressional Research Service U.S. Foreign Aid to the Palestinians Contents Introduction ................................................................................................................................1 Overview and Recent Developments ...........................................................................................1 Types of U.S. Bilateral Aid to the Palestinians .............................................................................3 Project Assistance Through USAID.......................................................................................4 Types of Funding Programs.............................................................................................4 Vetting Requirements and Procedures..............................................................................5 Direct Assistance to the Palestinian Authority........................................................................6 U.S. Security Assistance to the Palestinian Authority.............................................................7 U.S. Contributions to UNRWA....................................................................................................8 Overview ..............................................................................................................................8 Issues for Congress ............................................................................................................. 10 Vetting of UNRWA Contributions ................................................................................. 10 Concerns Over Possible Resettlement of Palestinian Refugees ...................................... 12 Legislation .................................................................................................................... 13 Factors for Congress in Determining Future Aid........................................................................ 14 Effectiveness of U.S. Assistance in Strengthening the PA in the West Bank.......................... 14 Economic Development and International Donor Assistance ............................................... 14 Hamas and a “Unity Government”?..................................................................................... 16 Questions Regarding a Two-State Solution .......................................................................... 17 Tables Table 1. U.S. Bilateral Assistance to the Palestinians, FY2004-FY2011 .......................................3 Table 2. Proposed Spending Plan for FY2010 Bilateral Assistance...............................................4 Table 3. Historical U.S. Government Contributions to UNRWA ..................................................9 Contacts Author Contact Information ...................................................................................................... 18 Congressional Research Service U.S. Foreign Aid to the Palestinians Introduction Since the signing of the Oslo Accord in 1993 and the establishment of limited Palestinian selfrule in the West Bank and Gaza Strip in the mid-1990s, the U.S. government has committed over $3.5 billion in bilateral assistance to the Palestinians. This assistance, which includes $500 million appropriated in December 2009 pursuant to the Consolidated Appropriations Act, 2010 (P.L. 111-117), has focused on the further development of the Palestinian economic, social services, and civil society sectors; and on strengthening the processes, governance, and securityproviding capacities of Palestinian Authority (PA) institutions, through partnerships with U.S. and Palestinian organizations. Nevertheless, significant legislative conditions, limitations, and restrictions remain attached to certain aid given to Palestinians.1 Since the death of Yasser Arafat in November 2004, U.S. assistance to the Palestinians has been averaging close to $400 million a year, with funding levels spiking to more than double the average for FY2009 to address (1) humanitarian needs in Gaza during and after the December 2008-January 2009 Israel-Hamas Gaza conflict; and (2) reform, security, and development priorities in the West Bank. Since 2007, the United States has appropriated or reprogrammed nearly $2 billion in support of PA Prime Minister Salam Fayyad’s security, governance, development, and reform programs, including $650 million for direct budgetary assistance to the PA and nearly $400 million in security and criminal justice sector assistance for the PA in the West Bank. The remainder is for project assistance administered by the U.S. Agency for International Development (USAID). During the 1990s, U.S. foreign aid to the Palestinians averaged approximately $75 million per year. Despite more robust levels of assistance in the past decade, Israeli-Palestinian conflict and Hamas’s heightened role in Palestinian politics have made it more difficult to implement effective and lasting aid projects. Contributions from the United States to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) (which have been made since the time of UNRWA’s inception in 1950) have continued. Overview and Recent Developments The level of U.S. assistance to the Palestinians—among the largest per capita recipients of foreign aid worldwide2—has fluctuated considerably since it was initiated following the establishment of limited Palestinian self-rule in the mid-1990s. Fluctuations have been particularly significant over the past four years—due mainly to the on-again, off-again role of Hamas within the Palestinian Authority (PA). Hamas is designated as a Foreign Terrorist Organization (FTO) by the U.S. State Department. After the 2006 Hamas victory in Palestinian Legislative Council elections, U.S. assistance to the Palestinians was restructured and reduced. The United States halted direct foreign aid to the PA but continued providing humanitarian and project assistance to the Palestinian people through international and non-governmental organizations (NGOs). The ban on direct assistance continued during the brief tenure of a Hamas-led unity government (February to June 2007). During that time, the United States and the other members of the international 1 See P.L. 111-117, Secs. 7034-7040. These conditions include a restriction on aid to Hamas (including Hamas affiliates and any government of which Hamas is a member) or to a Palestinian state unless commitments toward peaceful coexistence with Israel are made and other requirements met by certain Palestinian parties. 2 See U.N. Development Programme 2007/08 Human Development Report 18: Flows of Aid, Private Capital and Debt at http://hdrstats.undp.org/indicators/171.html. Congressional Research Service 1 U.S. Foreign Aid to the Palestinians Quartet (the United Nations, the European Union, and Russia) unsuccessfully demanded that Hamas accept the “Quartet principles”—recognition of Israel’s right to exist, renunciation of violence, and acceptance of previous Israeli-Palestinian agreements. Subsequent events, however, altered the situation dramatically. In June 2007, Hamas forcibly took control of the Gaza Strip. PA President Mahmoud Abbas (head of the Fatah party), calling the move a “coup,” dissolved the unity government and tasked the politically independent technocrat Salam Fayyad to serve as prime minister and organize a new PA “caretaker” government in the West Bank. Within days, the United States lifted its economic and political embargo on the PA. The Bush Administration and Congress then boosted U.S. aid levels in hopes of fostering an economic and security climate conducive to Palestinian statehood. The revival of IsraeliPalestinian negotiations for a final-status agreement in conjunction with the Annapolis Conference of November 2007 provided further impetus for U.S. economic support of the institutional and societal building blocks deemed crucial for Palestinian self-governance. The Obama Administration has thus far advocated a similar approach. In March 2009, the Obama Administration pledged $900 million in U.S. assistance to the Palestinians to address both humanitarian needs in the wake of the Gaza conflict and reform and development priorities in the West Bank. The pledge was exceeded by appropriations made in the Omnibus Appropriation Act, 2009 (P.L. 111-8) and the Supplemental Appropriations Act, 2009 (P.L. 111-32). P.L. 111-117 provides $500 million in bilateral assistance to the Palestinians for FY2010. The Administration has requested $550 million for FY2011 (see Table 1 for details). The United States and others within the international community have publicized their efforts to facilitate post-conflict recovery in Gaza. However, Hamas’s control of Gaza presents a conundrum. No one, including Israel and the PA, has figured out how to assist Gaza’s population without bolstering Hamas, and thus aside from humanitarian assistance, the issue has been largely ignored, despite aspirational pledges otherwise.3 Many observers believe that either Hamas’s positions on the Quartet principles or its control over Gaza would have to change before the United States might consider dedicating substantial resources toward the reconstruction of buildings and infrastructure in Gaza, with the exception of U.N. facilities and other special cases such as international schools. In May 2010, Israeli special forces raided one of six ships trying to break the Israeli blockade of Gaza (the Turkish-flagged MV Mavi Marmara, on which 9 Turkish citizens, including a TurkishAmerican, were killed). Reports say that some of the ship’s passengers provoked or actively resisted the Israeli special forces troops who boarded the ship in international waters. The incident led to renewed international outcries seeking the lifting or significant loosening of the Israeli/Egyptian closure regime (Egypt controls Gaza’s southernmost border crossing at Rafah).4 The naval blockade and a general closure of land crossings have been enforced since 2007, ostensibly to prevent weapons, money, and dual use items from reaching Hamas, but possibly also to squeeze the Gazan people economically in hopes that they would turn against Hamas. 3 See, e.g., Failing Gaza: No rebuilding, no recovery, no more excuses (A report one year after Operation Cast Lead), Amnesty International UK, et al., December 2009, available at http://www.amnesty.org.uk/uploads/documents/doc_20012.pdf. 4 See CRS Report R41275, Israel’s Blockade of Gaza, the Mavi Marmara Incident, and Its Aftermath, by Carol Migdalovitz. Congressional Research Service 2 U.S. Foreign Aid to the Palestinians Nevertheless, Israel and Egypt have not gone beyond limited and/or temporary measures to relax restrictions on the movement of people and goods in and out of Gaza (although Egypt has relaxed more restrictions than Israel). Shortly after the flotilla incident, on June 9, the Obama Administration announced that it was prepared to move forward with “up to $400 million in projects for the West Bank and Gaza that will help increase access to clean drinking water, create jobs, build schools, expand the availability of affordable housing, and address critical health and infrastructure needs.” Of this amount, only $160 million are slated for humanitarian and project assistance through USAID contractors and international and non-governmental organizations (all of which come from funds appropriated for FY2009 and FY2010), and only $40 million of this amount—new FY2010 contributions to UNRWA to “help improve educational and health services, increase job creation, and repair shelters in Gaza” and to address core humanitarian needs in the West Bank—represent assistance newly set aside for the Palestinians.5 Types of U.S. Bilateral Aid to the Palestinians Table 1. U.S. Bilateral Assistance to the Palestinians, FY2004-FY2011 (regular and supplemental appropriations; current year $ in millions) Account FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011a ESF 74.5 224.4 148.5 50.0 389.5 776.0 400.4 400.4 P.L. 480 Title II (Food Aid) - 6.0 4.4 19.488 - 20.715 - INCLEb - - - - 25.0 184.0 100.0 150.0 NADRc - - - - - - 2.5d - Transition Aid - - 0.343 - - - - - Total 74.5 230.4 153.243 69.488 414.5 980.715 502.9 550.4 Sources: U.S. Department of State, USAID. Notes: All amounts are approximate; for purposes of this table and this report, “bilateral assistance” does not include U.S. contributions to UNRWA or other international organizations from the Migration and Refugee Assistance (MRA) or Emergency Refugee and Migration Assistance (ERMA) accounts, regardless of how the term is defined in legislation. a. Amounts stated for FY2011 have been requested but not yet appropriated; see FY2011 Congressional Budget Justification for Foreign Operations, Department of State (Volume 2), pp. 78, 95, available at http://www.state.gov/documents/organization/137936.pdf. b. INCLE stands for International Narcotics Control and Law Enforcement. INCLE figures do not include $86.362 million reprogrammed into the INCLE account by President Bush in January 2007 (see “Direct Assistance to the Palestinian Authority” below). c. NADR stands for Nonproliferation, Anti-terrorism, Demining and Related Programs. 5 Information provided to Congressional staffers from the State Department, June 2010. The other $240 million are amounts to be invested by the Overseas Private Investment Corporation (OPIC) in an ongoing West Bank mortgage finance program intended to expand homeownership. Congressional Research Service 3 U.S. Foreign Aid to the Palestinians d. According to the State Department, the counterterrorism training program for which this funding was contemplated is no longer slated to take place during FY2010. Table 2. Proposed Spending Plan for FY2010 Bilateral Assistance Amount Purpose Economic Support Fund ($400.4 million total) $150 million Direct budgetary assistance to Palestinian Authority (PA) in West Bank (helping to discharge PA debt obligations, which are primarily incurred in order to pay the salaries of PA employees) $250.4 million Assistance for the West Bank and Gaza (through USAID)a • $38 million – governance, rule of law, civil society • $93.5 million – health, education, social services • $95 million – economic development • $23.9 million – humanitarian assistance International Narcotics Control and Law Enforcement ($100 million total) $96 million Training, non-lethal equipment, and garrisoning assistance to PA security forces in the West Bank, supporting efforts by the U.S. Security Coordinator $4 million Governance, rule of law, human rights, and institution-building assistance, including to strengthen PA ministries and the justice system and to encourage judicial independence Source: FY2010 Congressional Budget Justification for Foreign Operations, Department of State Notes: All amounts are approximate. a. See footnote 6. Project Assistance Through USAID Types of Funding Programs Most aid to the Palestinians is appropriated through the Economic Support Fund (ESF) account and provided by USAID to U.S.-based non-governmental organizations operating in the West Bank and the Gaza Strip.6 Funds are allocated in this program for projects in sectors such as humanitarian assistance, economic development, democratic reform, improving water access and 6 The FY2010 Congressional Budget Justification for Foreign Operations, Department of State (Book II), p. 459, available at http://www.state.gov/documents/organization/124072.pdf, stated that “All assistance programs for Gaza funded under this request will, consistent with legislative requirements, work through vetted non-governmental or international organizations to meet U.S. Government objectives in Gaza. Beyond immediate humanitarian relief, successful implementation of programs in Gaza is dependent on the establishment of a durable ceasefire, the creation of an operating environment in which Hamas does not interfere with U.S.-funded programs and activities and greater access for essential materials and commodities to Gaza. The U.S. Government will work with the PA and implementing partners to follow established safeguards that will ensure funding is only used where and by whom it is intended. It will similarly work with the Government of Israel to develop an effective crossings regime that enables the flow of humanitarian and commercial goods without compromising Israeli security concerns.” Congressional Research Service 4 U.S. Foreign Aid to the Palestinians other infrastructure, health care, education, and vocational training (currently most, if not all, funds for the Gaza Strip are dedicated to humanitarian assistance and economic recovery needs). See Table 2 above for the Obama Administration’s proposed spending plan for FY2010 ESF West Bank/Gaza assistance. Vetting Requirements and Procedures USAID’s West Bank and Gaza program is subject to a vetting process (for non-U.S. organizations) and to yearly audits intended to ensure that funds are not diverted to Hamas or other organizations classified as terrorist groups by the U.S. government.7 This vetting process has become more rigorous in recent years in response to allegations that U.S. economic assistance was indirectly supporting Palestinian terrorist groups, and following an internal audit in which USAID concluded it could not “reasonably ensure” that its money would not wind up in terrorist hands.8 Palestinians, who are among the world’s largest per capita recipients of international foreign aid. Successive Administrations have requested aid for the Palestinians to support at least three major U.S. policy priorities of interest to Congress. • Combating, neutralizing, and preventing terrorism against Israel from the Islamist group Hamas and other militant organizations. • Creating a virtuous cycle of stability and prosperity in the West Bank that inclines Palestinians—including those in the Hamas-controlled Gaza Strip— towards peaceful coexistence with Israel and prepares them for self-governance. • Meeting humanitarian needs and preventing further destabilization, particularly in the Gaza Strip. Since June 2007, these U.S. policy priorities have crystallized around the factional and geographical split between the Fatah-led Palestinian Authority (PA) in the West Bank and Hamas in the Gaza Strip. From FY2008 to the present, annual U.S. bilateral assistance to the West Bank and Gaza Strip has averaged over $600 million, including annual averages of over $200 million in direct budgetary assistance and over $100 million in non-lethal security assistance for the PA in the West Bank. Much of this assistance is in direct support of PA Prime Minister Salam Fayyad’s security, governance, development, and reform programs aimed at building Palestinian institutions in advance of statehood. Additionally, the United States is the largest single-state donor to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), which provides food, shelter, medical care, and education for many of the original refugees from the 1948 Arab-Israeli war and their descendants—now comprising approximately 4.8 million Palestinians in Jordan, Syria, Lebanon, the West Bank, and Gaza. Since UNRWA’s inception in 1950, the United States has provided the agency with nearly $3.9 billion in contributions. However, whether UNRWA’s role is beneficial remains a polarizing question, particularly with respect to its presence in Hamas-controlled Gaza. Because of congressional concerns that, among other things, funds might be diverted to Palestinian terrorist groups, U.S. aid is subject to a host of vetting and oversight requirements and legislative restrictions. U.S. assistance to the Palestinians is given alongside assistance from other international donors, and U.S. policymakers routinely call for greater or more timely assistance from Arab governments in line with their pledges. Prospects for stability in the West Bank appear to hinge on improved security, political and economic development, Israeli cooperation, and continuation of high levels of foreign assistance. A power-sharing or unity government meant to address the problem of divided rule among Palestinians would not be eligible for U.S. aid if Hamas is included in the government and does not change its stance towards Israel. Even if the immediate objectives of U.S. assistance programs for the Palestinians are met, lack of progress towards a politically legitimate and peaceful twostate solution could undermine the utility of U.S. aid in helping the Palestinians become more cohesive, stable, and self-reliant over the long term. Congressional Research Service U.S. Foreign Aid to the Palestinians Contents Introduction: Issues for Congress ................................................................................................1 Historical Background and Recent Developments .......................................................................2 Major Conditions, Limitations, and Restrictions on Aid...............................................................3 Types of U.S. Bilateral Aid to the Palestinians .............................................................................5 Economic Support Fund Project Assistance ...........................................................................6 Types of Funding Programs.............................................................................................6 Vetting Requirements and Procedures..............................................................................7 Direct Assistance to the Palestinian Authority........................................................................8 U.S. Security Assistance to the Palestinian Authority.............................................................9 U.S. Contributions to UNRWA.................................................................................................. 10 Overview ............................................................................................................................ 10 Issues for Congress ............................................................................................................. 12 Vetting of UNRWA Contributions ................................................................................. 12 Resettlement of Palestinian Refugees from Iraq............................................................. 14 Legislation .................................................................................................................... 15 Issues for Congress in Determining Future Aid.......................................................................... 16 Questions Regarding a Two-State Solution .......................................................................... 16 The Gaza Situation.............................................................................................................. 16 Strengthening the PA in the West Bank................................................................................ 17 Economic Development and International Donor Assistance ............................................... 18 Hamas and a “Unity Government”?..................................................................................... 20 Conclusion................................................................................................................................ 21 Figures Figure 1. West Bank and Gaza Strip Gross Domestic Product (GDP) Per Capita: 19992009 ...................................................................................................................................... 19 Tables Table 1. U.S. Bilateral Assistance to the Palestinians, FY2004-FY2011 .......................................5 Table 2. Proposed Spending Plan for Requested FY2011 Bilateral Assistance..............................6 Table 3. Historical U.S. Government Contributions to UNRWA ................................................ 11 Contacts Author Contact Information ...................................................................................................... 22 Congressional Research Service U.S. Foreign Aid to the Palestinians Introduction: Issues for Congress U.S. aid to the Palestinians is intended to forward at least three major U.S. policy priorities of interest to Congress: • Combating, neutralizing, and preventing terrorism against Israel from the Islamist group Hamas and other militant organizations. • Creating a virtuous cycle of stability and prosperity in the West Bank that inclines Palestinians—including those in the Hamas-controlled Gaza Strip— towards peaceful coexistence with Israel and prepares them for self-governance. • Meeting humanitarian needs and preventing further destabilization, particularly in the Gaza Strip. Since June 2007, these U.S. policy priorities have crystallized around the geographical and factional split between (1) West Bank/Fatah: the U.S.- and Western-supported Palestinian Authority (PA) in the West Bank led by President Mahmoud Abbas (who also leads the secular nationalist Fatah faction) and Prime Minister Salam Fayyad (a political independent and former international technocrat); and (2) Gaza Strip/Hamas: the regime led by Hamas in Gaza, which receives support from Iran and Syria along with substantial non-state support and has been designated a Foreign Terrorist Organization (FTO), a Specially Designated Terrorist (SDT), and a Specially Designated Global Terrorist (SDGT) by the U.S. government.1 From FY2008 to the present, annual U.S. bilateral assistance to the West Bank and Gaza Strip has averaged over $600 million (and spiked to nearly $1 billion in FY2009 following the 2008-2009 Gaza conflict between Hamas and Israel, also known as “Operation Cast Lead”), including annual averages of over $200 million in direct budgetary assistance and over $100 million in non-lethal security assistance for the PA in the West Bank. The remainder—approximately $300 million on average per year—is dedicated to project assistance for the West Bank and Gaza through U.S. government grants to non-governmental organizations (NGOs). Much of this assistance is in direct support of PA Prime Minister Salam Fayyad’s security, governance, development, and reform programs aimed at building Palestinian institutions in advance of statehood. The post2007 annual average of U.S. bilateral assistance is substantially greater than the approximate annual average of $170 million from 2000-2007 and $70 million from 1994-1999. Despite more robust levels of assistance, the absence of Israeli-Palestinian peace and Hamas’s heightened role in Palestinian politics could make effective implementation of lasting aid projects difficult. Because of congressional concerns that, among other things, U.S. funds might be diverted to Palestinian terrorist groups, this aid is subject to a host of vetting and oversight requirements and legislative restrictions (see “Major Conditions, Limitations, and Restrictions on Aid” below). U.S. assistance to the Palestinians is given alongside assistance from other international donors, and 1 For more information on Hamas and these terrorist designations, see CRS Report R41514, Hamas: Background and Issues for Congress, by Jim Zanotti. Congressional Research Service 1 U.S. Foreign Aid to the Palestinians U.S. policymakers routinely call for greater or more timely assistance from Arab governments in line with their pledges. Under the Continuing Appropriations and Surface Transportation Extensions Act, 2011 (P.L. 111322), an amendment to the Continuing Appropriations Act, 2011 (P.L. 111-242), assistance for FY2011 will continue at the same levels and under the same conditions, limitations, and restrictions set forth in the Consolidated Appropriations Act, 2010 (P.L. 111-117) until the earlier of (1) March 4, 2011, and (2) enactment of superseding legislation. Additional U.S. humanitarian assistance for Palestinian refugees in Gaza and elsewhere continues through contributions to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). U.S. contributions to UNRWA, which have totaled nearly $3.9 billion since UNRWA’s inception in 1950, have averaged over $200 million annually since 2007. Historical Background and Recent Developments Since the establishment of limited Palestinian self-rule in the West Bank and Gaza Strip in the mid-1990s, the U.S. government has committed over $3.5 billion in bilateral assistance to the Palestinians in the West Bank and Gaza,2 who are among the largest per capita recipients of foreign aid worldwide. 3 This assistance has focused on the further development of the Palestinian economic, social services, and civil society sectors; and on strengthening the processes, governance, and security-providing capacities of Palestinian Authority (PA) institutions, through partnerships with U.S. and Palestinian organizations. Following the death of Yasser Arafat in 2004 and his succession by Mahmoud Abbas as PA President in 2005, Congress and the Bush Administration increased U.S. assistance to the Palestinians. However, when the 2006 Hamas victory in Palestinian Legislative Council elections reversed the renewed sense of U.S. optimism in elected Palestinian leadership, U.S. assistance was restructured and reduced. The United States halted direct foreign aid to the PA but continued providing humanitarian and project assistance to the Palestinian people through international and non-governmental organizations (NGOs). The ban on direct assistance continued during the brief tenure of a Hamas-led power-sharing government (February to June 2007). During that time, the United States and the other members of the international Quartet (the United Nations, the European Union, and Russia) unsuccessfully demanded that Hamas accept the Quartet principles—recognition of Israel’s right to exist, renunciation of violence, and acceptance of previous Israeli-Palestinian agreements. Subsequent events altered the situation dramatically. In June 2007, Hamas forcibly took control of the Gaza Strip.4 PA President and Fatah head Mahmoud Abbas, calling the move a “coup,” 2 Prior to the establishment of limited Palestinian self-rule in the West Bank and Gaza, approximately $170 million in U.S. developmental and humanitarian assistance (not including contributions to UNRWA) were obligated for Palestinians in the West Bank and Gaza from 1975-1993, mainly through non-governmental organizations. CRS Report 93-689 F, West Bank/Gaza Strip: U.S. Foreign Assistance, by Clyde R. Mark, July 27, 1993, available on request to Jim Zanotti. 3 See U.N. Development Programme 2007/08 Human Development Report, Table 18: Flows of Aid, Private Capital and Debt, available at http://hdr.undp.org/en/media/HDR_20072008_EN_Complete.pdf. 4 For competing accounts of the events surrounding the Hamas takeover, see CRS Report R41514, Hamas: Background and Issues for Congress, by Jim Zanotti. Congressional Research Service 2 U.S. Foreign Aid to the Palestinians dissolved the power-sharing government and tasked the politically independent technocrat Salam Fayyad to serve as prime minister and organize a new PA “caretaker” government in the West Bank. Within days, the United States lifted its economic and political embargo on the PA. The Bush Administration and Congress then boosted U.S. aid levels in hopes of fostering an economic and security climate conducive to peaceful coexistence between Israel and a future Palestinian state. The revival of Israeli-Palestinian negotiations for a final-status agreement in conjunction with the Annapolis Conference of November 2007 provided further impetus for U.S. economic support of the institutional and societal building blocks deemed crucial for Palestinian self-governance. The Obama Administration has advocated a similar approach. Attempts by both Administrations to broker the relaunch of Israeli-Palestinian negotiations have thus far proven unsuccessful. Major Conditions, Limitations, and Restrictions on Aid Annual appropriations legislation routinely contains the following conditions, limitations, and restrictions on U.S. aid to Palestinians:5 • Hamas: No aid is permitted for Hamas or Hamas-controlled entities. • Power-Sharing PA Government: No aid is permitted for a power-sharing PA government that includes Hamas unless the President certifies that the PA government, including all ministers, has accepted the following two principles embodied in Section 620K of the Palestinian Anti-Terrorism Act of 2006 (PATA), P.L. 109-446: (1) recognition of “the Jewish state of Israel’s right to exist” and (2) acceptance of previous Israeli-Palestinian agreements. If the PA government is “Hamas-controlled,” PATA applies additional conditions, limitations, and restrictions on aid. Under PATA, in the event Hamas participation in a PA government precludes ministries from receiving aid, the PA President and judiciary (if not Hamas-controlled) may under certain conditions receive aid pursuant to a presidential waiver for national security purposes. • PLO and Palestinian Broadcasting Corporation (PBC): No aid is permitted for the PLO or for the PBC. • Palestinian State: No aid is permitted for a future Palestinian state unless the Secretary of State certifies that the governing entity of the state 1. has demonstrated a firm commitment to peaceful coexistence with the State of Israel; 2. is taking appropriate measures to counter terrorism and terrorist financing in the West Bank and Gaza in cooperation with Israel and others; and 3. is working with other countries in the region to vigorously pursue efforts to establish a just, lasting, and comprehensive peace in the Middle East that will 5 Conditions, limitations, and restrictions for FY2011 are contained in the Consolidated Appropriations Act, 2010, P.L. 111-117, Secs. 7034-7040, as these provisions’ application has been extended pursuant to P.L. 111-242, as amended. Congressional Research Service 3 U.S. Foreign Aid to the Palestinians enable Israel and an independent Palestinian state to exist within the context of full and normal relationships. This restriction does not apply to aid meant to reform the Palestinian governing entity so that it might meet the three conditions outlined above. Additionally, the President is permitted to waive this restriction for national security purposes. • PA Personnel in Gaza: No aid is permitted for PA personnel located in Gaza. Although the PA does pay salaries to individuals located in Gaza, USAID says that U.S. direct budgetary assistance to the PA goes toward paying off the PA’s commercial debts (see “Direct Assistance to the Palestinian Authority” below). • Vetting, Monitoring, and Evaluation: As discussed throughout this report, for U.S. aid programs for the Palestinians, annual appropriations legislation routinely requires executive branch reports and certifications, as well as internal and Government Accountability Office (GAO) audits. These requirements are aimed at preventing U.S. aid from benefitting Palestinian terrorists or abetting corruption, ensuring the amenability of Palestinian society and institutions to aid programs, assessing the programs’ effectiveness, and monitoring intervening variables (such as aid from international actors).6 6 P.L. 111-117, Secs. 7039-7040, 7042(f). GAO audits are available on the following U.S. aid programs to the Palestinians: (1) Economic Support Fund, including direct assistance to the PA and project assistance (audit for FY2008-FY2009 accessible at http://www.gao.gov/new.items/d10623r.pdf), (2) security assistance to the PA through the International Narcotics Control and Law Enforcement account (http://www.gao.gov/new.items/d10505.pdf), and (3) contributions to UNRWA through the Migration and Refugee Assistance and Emergency Refugee and Migration Assistance accounts (http://www.gao.gov/new.items/d09622.pdf). Congressional Research Service 4 U.S. Foreign Aid to the Palestinians Types of U.S. Bilateral Aid to the Palestinians Table 1. U.S. Bilateral Assistance to the Palestinians, FY2004-FY2011 (regular and supplemental appropriations; current year $ in millions) Account FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011a ESF 74.5 224.4 148.5 50.0 389.5 776.0 400.4 400.4 P.L. 480 Title II (Food Aid) - 6.0 4.4 19.488 - 20.715 - INCLEb - - - - 25.0 184.0 100.0 150.0 - NADRc - - - - - - 2.5d Transition Aid - - 0.343 - - - - - Total 74.5 230.4 153.243 69.488 414.5 980.715 502.9 550.4 Sources: U.S. State Department, USAID. Notes: All amounts are approximate; for purposes of this table and this report, “bilateral assistance” does not include U.S. contributions to UNRWA or other international organizations from the Migration and Refugee Assistance (MRA) or Emergency Refugee and Migration Assistance (ERMA) accounts, regardless of how the term is defined in legislation. a. Amounts stated for FY2011 have been requested but not yet appropriated; see U.S. State Department, FY2011 Congressional Budget Justification for Foreign Operations (Volume 2), pp. 78, 95, available at http://www.state.gov/documents/organization/137936.pdf. b. INCLE stands for International Narcotics Control and Law Enforcement. INCLE figures do not include $86.362 million of FY2006 ESF funds reprogrammed into the INCLE account by President Bush in January 2007 (see “Direct Assistance to the Palestinian Authority” below). c. NADR stands for Nonproliferation, Anti-terrorism, Demining and Related Programs. d. According to the State Department, the counterterrorism training program for which this funding was contemplated did not take place. Congressional Research Service 5 U.S. Foreign Aid to the Palestinians Table 2. Proposed Spending Plan for Requested FY2011 Bilateral Assistance Amount Purpose Economic Support Fund ($400.4 million total) $200 million Direct budgetary assistance to Palestinian Authority (PA) in West Bank $200.4 million Assistance for the West Bank and Gaza (through USAID)a • $31 million – governance, rule of law, civil society • $72.5 million – health, education, social services • $81.4 million – economic development • $15.5 million – humanitarian assistance International Narcotics Control and Law Enforcement ($150 million total) $139.5 million Training, non-lethal equipment, and garrisoning assistance to PA security forces in the West Bank, supporting efforts by the U.S. Security Coordinator $10.5 million Assistance for PA Ministry of Interior’s Strategic Planning Department and for the justice sector (prosecutors and criminal investigators) to improve performance, efficiency, and inter-institutional cooperation Source: U.S. State Department, FY2011 Congressional Budget Justification for Foreign Operations (Annex: Regional Perspectives), available at http://www.state.gov/documents/organization/137937.pdf. Notes: All amounts are approximate. Current FY2011 levels of funding, pursuant to P.L. 111-117 and to P.L. 111-242, as amended, are $400.4 million in ESF and $100 million in INCLE, with direct budgetary assistance to the PA capped at $150 million. a. See footnote 8. Economic Support Fund Project Assistance Types of Funding Programs Most aid to the Palestinians is appropriated through the Economic Support Fund (ESF) account and provided by USAID (and, to a far lesser degree, the State Department7) to U.S. nongovernmental organizations (NGOs) operating in the West Bank and the Gaza Strip.8 Funds are allocated in this program for projects in sectors such as humanitarian assistance, economic development, democratic reform, improving water access and other infrastructure, health care, education, and vocational training (currently most, if not all, funds for the Gaza Strip are 7 For example, see the State Department’s Middle East Partnership Initiative (MEPI) West Bank/Gaza website at http://mepi.state.gov/med-region/west-bank-and-gaza.html. 8 The State Department’s FY2011 Congressional Budget Justification for Foreign Operations (Annex: Regional Perspectives), p. 521, available at http://www.state.gov/documents/organization/137937.pdf, stated that “All assistance programs for Gaza funded under this request, consistent with legislative requirements, will work through vetted local non-governmental, U.S. non-governmental or international organizations to meet U.S. objectives in Gaza. The U.S. Government will work with the PA and implementing partners to follow established safeguards that will ensure funding is only used where and by whom it is intended. It will similarly work with the Government of Israel to try to develop an effective crossings regime that enables the flow of humanitarian, recovery, and commercial goods without compromising Israeli security.” Congressional Research Service 6 U.S. Foreign Aid to the Palestinians dedicated to humanitarian assistance and economic recovery needs). 9 See Table 2 above for the Obama Administration’s proposed spending plan for FY2011 ESF West Bank/Gaza assistance. Vetting Requirements and Procedures USAID subjects its programs worldwide to vetting requirements to ensure the proper use of funds appropriated through its accounts. USAID’s West Bank and Gaza program is subject to a specialized vetting process (for non-U.S. organizations) and to yearly audits intended to ensure that funds are not diverted to Hamas or other organizations classified as terrorist groups by the U.S. government.10 This vetting process has become more rigorous in recent years in response to allegations that U.S. economic assistance was indirectly supporting Palestinian terrorist groups, and following an internal audit in which USAID concluded it could not “reasonably ensure” that its money would not wind up in terrorist hands.11 A February 2009 statement from USAID described its revamped vetting procedures as follows: All NGOs applying for grants from USAID are required to certify, before award of the grant will be made, that they do not provide material support to terrorists.... Before making an award of either a contract or a grant to a local NGO, the USAID West Bank/Gaza Mission checks the organization and its principal officers, directors and other key personnel against lists maintained by the Office of Foreign Assets Control (OFAC) within the U.S. Department of Treasury. The Mission also checks these organizations and individuals through law enforcement and intelligence community systems accessed by USAID’s Office of Security. At present, the Mission collects additional information up front in addition to the individual’s full [four-part] name, such as a government issued photo-ID number and the individual’s date and place of birth.... [USAID’s] West Bank/Gaza program possess[es] the most comprehensive partner vetting system for foreign assistance throughout the U.S. Government.9 Other sources corroborate the assertion made in USAID’s statement that its West Bank and Gaza program is one of the most, if not the most, rigorously vetted USAID programs worldwide. 10 A 712 9 For further detail on the types of projects funded, see GAO, Foreign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal Years 2008 and 2009, May 14, 2010, available at http://www.gao.gov/new.items/d10623r.pdf. 10 P.L. 111-117, Sec. 7039(b) sets forth the legal requirements for vetting: “Prior to the obligation of funds appropriated by this Act under the heading ‘Economic Support Fund’ for assistance for the West Bank and Gaza, the Secretary of State shall take all appropriate steps to ensure that such assistance is not provided to or through any individual, private or government entity, or educational institution that the Secretary knows or has reason to believe advocates, plans, sponsors, engages in, or has engaged in, terrorist activity nor, with respect to private entities or educational institutions, those that have as a principal officer of the entity’s governing board or governing board of trustees any individual that has been determined to be involved in, or advocating terrorist activity or determined to be a member of a designated foreign terrorist organization: Provided, That the Secretary of State shall, as appropriate, establish procedures specifying the steps to be taken in carrying out this subsection and shall terminate assistance to any individual, entity, or educational institution which the Secretary has determined to be involved in or advocating terrorist activity.” 811 “Audit: Terrorists Got U.S. Aid; Agency’s Screening Called Inadequate,” Chicago Tribune, November 16, 2007; Testimony of Henrietta Fore, USAID Administrator and Director of U.S. Foreign Assistance, House Appropriations Subcommittee on State, Foreign Operations, and Related Programs Holds Hearing on the Fiscal 2009 Budget for the U.S. Agency for International Development, February 27, 2008. 912 Statement issued by USAID to CRS on February 5, 2009. USAID does not subject U.S. organizations to vetting due to U.S. privacy law concerns. See U.S. Government Accountability Office (GAO)GAO, Measures to Prevent Inadvertent Payments to Terrorists Under Palestinian Aid Programs Have Been Strengthened, but Some Weaknesses Remain, GAO Foreign Assistance Report 09-622, May 2009, available at http://www.gao.gov/new.items/d09622.pdf. 10 See Walter Pincus, “Plan for Terror Screening of Aid Groups Cut Drastically,” Washington Post, August 30, 2007; Federal Register, vol. 2, no. 36, pp. 39042-39044. Congressional Research Service 57 U.S. Foreign Aid to the Palestinians A May 2009 Government Accountability Office (GAO) report found that USAID had strengthened strengthened its antiterrorism politics and procedures in response to recommendations GAO had made in a 2006 report.1113 Direct Assistance to the Palestinian Authority Budgetary assistance is a major part of the U.S. strategy to support the PA in the West Bank, although some Members of Congress expect better governance and more vigilant action from the PA towards peace with Israel in return. 14 According to annual foreign operations appropriations laws, congressionally approved funds for the West Bank and Gaza Strip cannot be given directly to the PA unless the President submits a waiver to Congress stating that doing so is in the interest of national security, and the Secretary of State certifies that there is a single PA treasury account, civil service roster, and payroll.12 Current law also15 Annual appropriations legislation also routinely caps direct U.S. budgetary assistance to the PA (the current annual cap remains at $150 million under the continuing resolution at FY2010 levels) and places conditions on aid to any power-sharing PA government “of which Hamas is a member” (for further discussion, see “Hamas and a “Unity Government”?” below). Even after money is transferred to the PA’s treasury account, the United States retains prior approval of any transactions from that account, along with a three-year power of audit over those funds.13 Recent instances in which the United States has provided direct assistance to or for the benefit of the PA as a result of special presidential action include the following: • In January 2007, President Bush reprogrammed $86.362 million in prior-year funding into the International Narcotics Control and Law Enforcement (INCLE) account to support PA civil security forces loyal to President Abbas (see “U.S. Security Assistance to the Palestinian Authority” below).14 Chairwoman Nita M. Lowey of the House Appropriations Subcommittee for State, Foreign Operations, and Related Programs put a hold on the funds in February 2007, reportedly seeking assurances that they would only be used for non-lethal assistance.15 Obligation of the funds for non-lethal purposes eventually began in June 2007, the month that the Hamas-led unity government was dissolved and the new Fayyad PA government was formed. 16 • In June 2007, President Bush issued a waiver to provide an additional $18 million in direct assistance to the PA to be used for a variety of purposes, including democracy assistance and security assistance. 17 11 See GAO, op. cit. A schematic detailing USAID’s vetting process is found on page 42 of the report. GAO did recommend in the report that USAID take steps to ensure that it and its primary contractors use the same rigor at the subcontractor level that they employed in requiring antiterrorism clauses and certifications during their contracting process. 1216 During the final year of President George W. Bush’s Administration, President Bush issued waivers providing $300 million in direct budgetary assistance to the PA. President Barack Obama has followed the precedent Bush established by authorizing a total of $400 million in direct budgetary assistance during his first two years in office, as follows: • In July 2009, $200 million in ESF money were transferred to the PA in the wake of a presidential waiver issued by President Obama.17 • In November 2009, $75 million in budgetary assistance were provided to the PA under the July presidential waiver as an advance on FY2010 ESF funds, pursuant to a continuing resolution (later appropriated pursuant to P.L. 111-117). 13 See GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit. A schematic detailing USAID’s vetting process is found on page 42 of the report. GAO did recommend in the report that USAID take steps to ensure that it and its primary contractors use the same rigor at the subcontractor level that they employed in requiring antiterrorism clauses and certifications during their contracting process. 14 Ileana Ros-Lehtinen, Chairwoman of the House Foreign Affairs Committee, voiced significant concern over the Administration’s provision of direct budgetary assistance to the PA when serving as Ranking Member in November 2010: “It is deeply disturbing that the Administration is continuing to bail out the Palestinian leadership when they continue to fail to meet their commitments, under international agreements and requirements outlined in U.S. law, including dismantling the Palestinian terrorist infrastructure, combating corruption, stopping anti-Israel and antiSemitic incitement, and recognizing Israel’s right to exist as a Jewish state.” House Foreign Affairs Committee website: “Ros-Lehtinen Opposes Latest U.S. ‘Bailout’ Installment for Palestinian Authority,” November 11, 2010, available at http://republicans.foreignaffairs.house.gov/press_display.asp?id=1630. 15 See P.L. 111-117, Sec. 7040 (“Limitation on Assistance for the Palestinian Authority”). In the event of a presidential waiver, Sec. 7040 requires the President to submit a report to the Committees on Appropriations “detailing the justification for the waiver, the purposes for which the funds will be spent, and the accounting procedures in place to ensure that the funds are properly disbursed. The report shall also detail the steps the Palestinian Authority has taken to arrest terrorists, confiscate weapons and dismantle the terrorist infrastructure.” 1316 Congressional briefing with State Department and USAID officials, July 9, 2009. 14 Presidential Determination No. 2007-11. Under Chapter 8 of Part I (Section 481) of the 1961 Foreign Assistance Act (as amended): “Notwithstanding any other provision of law, the President is authorized to furnish assistance to any country or international organization, on such terms and conditions as he may determine, for the control of narcotic and psychotropic drugs and other controlled substances, or for other anticrime purposes.” 15 See “Splits Between U.S. and Europe Over Aid for Palestinians,” International Herald Tribune, February 22, 2007. 16 CRS conversation with U.S. Department of State official, September 16, 2008. 17 Presidential Determination No. 2007-20. Congressional Research Service 6 U.S. Foreign Aid to the Palestinians • In February 2008, President Bush issued a waiver to provide $150 million in budgetary assistance to the PA from the ESF account to “avert a serious and immediate financial crisis.”18 Chairwoman Lowey again declared a hold, requesting greater details about the funds’ allocation.19 The funds were disbursed to the PA after the State Department delivered a certification (dated March 14, 2008) directly to Chairwoman Lowey stating that the PA had established a single treasury account and a single civil service payroll roster.20 • In October 2008, another $150 million in budgetary assistance from the ESF account were provided to the PA via presidential waiver.21 • In July 2009, $200 million in ESF money were transferred to the PA in the wake of a waiver issued by President Obama.22 • In November 2009, $75 million in budgetary assistance were provided to the PA under the July presidential waiver as an advance on FY2010 ESF funds, pursuant to a continuing resolution (later appropriated pursuant to P.L. 111-117). • In April 2010, another $75 million in budgetary assistance from the ESF account were provided to the PA via presidential waiver.23 U.S. Security Assistance to the Palestinian Authority2417 Presidential Determination No. 2009-23. Congressional Research Service 8 U.S. Foreign Aid to the Palestinians • In April 2010, another $75 million in budgetary assistance from the ESF account were provided to the PA via presidential waiver.18 • In November 2010, $150 million in budgetary assistance were provided to the PA via presidential waiver as an advance on FY2011 ESF funds, pursuant to the Continuing Appropriations Act, 2011 (P.L. 111-242).19 Direct U.S. budgetary assistance to the PA goes toward paying off its commercial debt, as the following USAID congressional notification language says: Cash transfer funds will be used in the same manner as previous transfers - to service debt to commercial suppliers and commercial banks. Debt to commercial banks will be debt originally incurred for purchases from commercial suppliers. Each of the payees will be vetted in accordance with USAID West Bank and Gaza existing procedures, as applicable, as a precondition to the transfer of funds by the PA for such payments. Funds may also be used to pay for upcoming purchases from commercial suppliers or reimbursements of recent purchases from the same.20 U.S. Security Assistance to the Palestinian Authority21 As mentioned above, aid has been given to train, reform, advise, house, and provide non-lethal equipment for PA civil security forces in the West Bank loyal to President Abbas in an effort both to counter militants from organizations such as Hamas and Palestinian Islamic Jihad, and to establish the rule of law for an expected Palestinian state. A small amount of training assistance also has been provided to strengthen and reform the PA criminal justice sector. This assistance has come from the INCLE account—to International Narcotics Control and Law Enforcement (INCLE) account—to which a total of $395.4 million (including $100 million in FY2010 funding—see Table 2 above for a description) has been appropriated or reprogrammed for use in the West Bank since 2007. The Obama Administration has requested an additional $150 million in FY2011 INCLE funding (see Table 2 above). Since Hamas gained control of the Gaza Strip, the U.S. Security Coordinator (USSC) for Israel and the Palestinian Authority (a three-star U.S. general, supported by staff and by U.S. and allied staff and military officers from the United Kingdom, Canada, and Turkey) has worked in coordination with the State Department’s Bureau of International Narcotics and Law Enforcement Affairs (INL) to help train roughly 400 Presidential Guardsmen and 2,700 National Security Forces (NSF) troops at the International Police Training Center near Amman, Jordan. The USSC reportedly plans to help 18 Presidential Determination No. 2008-12. “Appropriator Wants Palestinian Authority Aid on Hold Until Accountability in Place,” CQToday, March 4, 2008. 20 The certification was required by the 2008 foreign operations appropriations bill. See Consolidated Appropriations Act, 2008 (P.L. 110-161), Division J, Title III, Economic Support Fund. 19 21 Presidential Determination No. 2009-02. 22 Presidential Determination No. 2009-23. 23 See Presidential Memorandum 2010-06, available at http://www.whitehouse.gov/the-press-office/presidentialdetermination-waiver-restriction-providing-funds-palestinian-authority. 24 help organize and train five additional 500-man NSF battalions. This U.S. assistance program exists alongside other assistance and training programs reportedly provided to Palestinian security forces and intelligence organizations by the European Union and various countries, including probable covert U.S. assistance programs.22 By most accounts, the 18 Presidential Memorandum 2010-06, available at http://www.whitehouse.gov/the-press-office/presidentialdetermination-waiver-restriction-providing-funds-palestinian-authority. 19 Presidential Determination 2011-1, available at http://www.whitehouse.gov/the-press-office/2010/10/07/presidentialmemorandum-providing-funds-palestinian-authority. 20 USAID, FY2011 Congressional Notification #1, October 7, 2010. 21 For further information on this subject, see CRS Report R40664, U.S. Security Assistance to the Palestinian Authority, by Jim Zanotti. 22 See, e.g., Ian Cobain, “CIA working with Palestinian security agents,” guardian.co.uk, December 17, 2009; Yezid (continued...) Congressional Research Service 7 U.S. Foreign Aid to the Palestinians organize and train five additional 500-man NSF battalions. Most reports agree that law and order have improved where these PA forces have been deployed. Yet, uncertainty remains over the durability of these improvements and their connection with broader Palestinian economic and civil society development and with progress on Israeli-Palestinian negotiations, as well as over the willingness and ability of the forces to incapacitate militants. The USSC/INL program exists alongside a European Union police and justice sector train-and-equip program (known as EUPOL COPPS—the EU Police Co-ordinating Office for Palestinian Police Support), and alongside other assistance and training programs reportedly provided to Palestinian security forces and intelligence organizations by various countries, including probable covert U.S. assistance programs. 25 The aspiration to coordinate international security assistance efforts and to consolidate the various PA security forces under unified civilian control that is accountable to rule of law and to human rights norms remains largely unfulfilled. Some Palestinians and outside observers 9 U.S. Foreign Aid to the Palestinians PA forces receiving training have shown increased professionalism and have helped substantially improve law and order and lower the profile of terrorist organizations in West Bank cities. However, the aspiration to coordinate international security assistance efforts and to consolidate the various PA security forces under unified civilian control that is accountable to rule of law and to human rights norms remains largely unfulfilled. PA forces have come under criticism for the political targeting of Hamas—in collaboration with Israel and the United States—through massive shutdowns and forced leadership changes to West Bank charities with alleged ties to Hamas members and through reportedly arbitrary detentions of Hamas members and supporters.23 Some Palestinians and outside observers also assert that the effectiveness and credibility of PA operations are undermined by Israeli restrictions—including curfews, checkpoints, no-go zones, and limitations on international arms and equipment transfers—as well as by Israel’s own security operations in the West Bank26 and its closure regime/blockade vis-à-vis Gaza. Israel claims that Bank24 and the blockade and closure of crossings around Gaza. Israel claims that its continuing operations in the West Bank are necessary in order to reduce the threat of terrorism. These operations underscore the fact that the Israeli-Palestinian agreements that authorized the creation of Palestinian security forces in the 1990s in areas of limited Palestinian self-rule contained clauses that preserved Israel’s prerogative to conduct operations in those areas for purposes of its own security. of terrorism. U.S. Contributions to UNRWA Overview The United States is the largest single-state donor to UNRWA, which provides food, shelter, medical care, and education for many of the original refugees from the 1948 Arab-Israeli war and their descendants—now comprising approximately 4.8 million Palestinians in Jordan, Syria, Lebanon, the West Bank, and Gaza.27 U.S. contributions to UNRWA—separate from U.S. bilateral bilateral aid to the West Bank and Gaza—come from the Migration and Refugee Assistance (MRA) account and the Emergency Refugee and Migration Assistance (ERMA) account. Since UNRWA’s inception in 1950, the United States has provided the agency with nearly $4 billion in contributions (see Table 3 below). 25 See, e.g., Ian Cobain, “CIA working with Palestinian security agents,” guardian.co.uk, December 17, 2009; Yezid Other refugees worldwide fall under the mandate of the U.N. High Commissioner for Refugees (UNHCR). (...continued) Sayigh, “‘Fixing Broken Windows’: Security Sector Reform in Palestine, Lebanon and Yemen,” Carnegie Endowment for International Peace, October 2009, available at http://www.carnegieendowment.org/files/security_sector_reform.pdf. 26 See International Crisis Group, Ruling Palestine II: The West Bank Model? Middle East Report No. 79, July 17, 23 See, e.g., Nathan Thrall, “Our Man in Palestine,” New York Review of Books, October 14, 2010, available at http://www.nybooks.com/articles/archives/2010/oct/14/our-man-palestine/. For further discussion of human rights concerns surrounding PA security forces in the West Bank and Hamas in Gaza, see CRS Report R40664, U.S. Security Assistance to the Palestinian Authority, by Jim Zanotti; Human Rights Watch, Internal Fight: Palestinian Abuses in Gaza and the West Bank, July 29, 2008, available at http://www.hrw.org/en/reports/2008/07/29/internal-fight-0. 24 See International Crisis Group, Squaring the Circle: Palestinian Security Reform Under Occupation, Middle East Report No. 98, September 7, 2010, available at http://www.crisisgroup.org/~/media/Files/Middle%20East%20North%20Africa/Israel%20Palestine/98%20Squaring%2 0the%20Circle%20--%20Palestinian%20Security%20Reform%20under%20Occupation.ashx; International Crisis Group, Ruling Palestine II: The West Bank Model? Middle East Report No. 79, July 17, 2008, available at http://www.crisisgroup.org/library/documents/middle_east___north_africa/arab_israeli_conflict/79_ruling_palestine_ii ___the_west_bank_model.pdf. 27 For further information on UNRWA, see CRS Report RS21668, United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), by Rhoda Margesson. Congressional Research Service 8 These operations underscore the fact that the Israeli-Palestinian agreements that authorized the creation of Palestinian security forces in the 1990s in areas of limited Palestinian self-rule contained clauses that preserved Israel’s prerogative to conduct operations in those areas for purposes of its own security. Congressional Research Service 10 U.S. Foreign Aid to the Palestinians The budget for UNRWA’s core activities (general fund) in 2009 was $545.6 million, funded mainly by Western governments, international organizations, and private donors.2825 UNRWA also creates special emergency funds for pressing humanitarian needs, such as in the wake of the 2008-2009 Gaza conflict. U.S. contributions (which are made from the Migration and Refugee Assistance (MRA) and Emergency Refugee and Migration Assistance (ERMA) accounts managed by the State Department’s Bureau of Population, Refugees, and Migration (PRM)) have totaled $228238 million thus far for FY2010 ($120125 million for the general fund, $108113 for emergency funds funds and special projects), and totaled $268 million for FY2009 ($116 and $152 million, respectively) and $185 million for FY2008 ($100 and $85 million, respectively). Table 3. Historical U.S. Government Contributions to UNRWA (in $ millions) Fiscal Year(s) Amount Fiscal Year(s) Amount 1950-1989 1,473.3 2000 89.0 1990 57.0 2001 123.0 1991 75.6 2002 119.3 1992 69.0 2003 134.0 1993 73.8 2004 127.4 1994 78.2 2005 108.0 1995 74.8 2006 137.0 1996 77.0 2007 154.2 1997 79.2 2008 184.7 1998 78.3 2009 268.0 1999 80.5 2010 227.8a237.8 TOTAL 3,889899.1 Source: U.S. Department of StateState Department Notes: All amounts are approximate. a. Thus far Until the 1990s, Arab governments refrained from contributing to UNRWA’s budget in an effort to keep the Palestinian refugee issue on the international agenda and to press Israel to accept responsibility for their plight. Since then, most Arab states have made relatively small annual contributions. In Gaza, most observers acknowledge that the role of UNRWA in providing basic services (i.e., food, health care, education) takes much of the governing burden off Hamas. As a result, some complain that this amounts to UNRWA’s enabling of Hamas and is an argument militating for its argue that its activities to be should be discontinued or scaled back. However, many others, U.S. and Israeli officials 28This is in addition to critics who question UNRWA’s existence 25 According to UNRWA’s website (http://www.unrwa.org/userfiles/file/financial_updates/2009/Total_Contributions_to_UNRWA_2009_All_Donors.pdf), U.S. contributions in 2009 constituted approximately 20% of the UNRWA General Fund budget and 27% of the total budget. Aggregate contributions from the European Commission and European states (including both EU members and non-members) and regions constituted approximately 52% of the total budget. Congressional Research Service 911 U.S. Foreign Aid to the Palestinians because they believe it perpetuates Palestinian dependency and resentment against Israel.26 However, many others, U.S. and Israeli officials included, believe that UNRWA plays a valuable role by providing stability and serving as the eyes and ears of the international community in Gaza. They generally prefer UNRWA to the uncertain alternative that might emerge if UNRWA were removed from the picture.29 27 Issues for Congress Some observers, including a former general counsel for UNRWA, have criticized UNRWA for, among other things, insufficient or flawed vetting procedures and engaging in political advocacy.3028 UNRWA and its supporters, however, maintain that UNRWA officials are fulfilling their mandated roles as well as can be expected under challenging circumstances (i.e., UNRWA’s lack of a robust policing capability and other operational limitations, political pressures, security concerns). 3129 In testimony before the House Appropriations Subcommittee on State, Foreign Operations and Related Programs on April 23, 2009, Secretary of State Hillary Rodham Clinton spoke for the Obama Administration regarding U.S. oversight of contributions to UNRWA: We have made it clear to UNRWA, the United Nations Relief And Works Agency, that we intend to carefully track any aid that they receive. They have taken additional steps, partly at our urging, to make their process more transparent, consistent with both United Nations commitments and U.S. legislation. They conduct background checks on employees. They share staff lists with us and with Israel. They prohibit staff participation in political activities. They launch investigations upon receiving information from Israel, us, or anyone else about any staff member engaging in inappropriate or illicit activities. They are actually investigating staff members right now who were elected in internal elections within Gaza. And we have pressed them very hard because they have to earn our confidence in this.3230 Vetting of UNRWA Contributions The primary concern raised by some Members of Congress is that U.S. contributions to UNRWA might be used to support terrorists. Section 301(c) of the 1961 Foreign Assistance Act (P.L. 87195), as amended, says that “No contributions by the United States shall be made to [UNRWA] except on the condition that [UNRWA] take[s] all possible measures to assure that no part of the United States contribution shall be used to furnish assistance to any refugee who is receiving 29 26 See, e.g., Michael S. Bernstam, “The Palestinian Proletariat,” Commentary, December 2010. See FY2011 Congressional Budget Justification for Foreign Operations, Department of State (Volume 2), p. 86, available at http://www.state.gov/documents/organization/137936.pdf: “U.S. government support for UNRWA directly contributes to the U.S. strategic interest of meeting the humanitarian needs of Palestinians, while promoting their selfsufficiency. UNRWA plays a stabilizing role in the Middle East through its assistance programs, serving as an important counterweight to extremist elements.” 3028 See James G. Lindsay, Fixing UNRWA: Repairing the UN’s Troubled System of Aid to Palestinian Refugees, Washington Institute of Near East Policy Policy Focus #91, January 2009, available at http://www.thewashingtoninstitute.org/pubPDFs/PolicyFocus91.pdf. See also James Phillips, “The Gaza Aid Package: Time to Rethink U.S. Foreign Assistance to the Palestinians,” The Heritage Foundation WebMemo No. 2333, March 9, 2009, available at http://www.heritage.org/Research/MiddleEast/wm2333.cfm. 3129 A direct written rebuttal by Israeli academic Maya Rosenfeld to the former UNRWA general counsel’s critiques was carried by UNRWA’s website and is available at http://reteeco.it/attachments/5172_Rejoinder%20to%20Lindsay_jan09.pdf. 3230 Transcript of remarks by Secretary of State Hillary Rodham Clinton, House Appropriations Subcommittee on State, Foreign Operations and Related Programs hearing: “Supplemental Request,” April 23, 2009. 27 Congressional Research Service 1012 U.S. Foreign Aid to the Palestinians except on the condition that [UNRWA] take[s] all possible measures to assure that no part of the United States contribution shall be used to furnish assistance to any refugee who is receiving military training as a member of the so-called Palestine Liberation Army or any other guerrilla type organization or who has engaged in any act of terrorism.” TheA May 2009 GAO report said that, since a previous GAO report in 2003, UNRWA and the State State Department had strengthened their policies and procedures to conform with Section 301(c) legal legal requirements, but that “weaknesses remain.”3331 Neither report found UNRWA to be in noncompliance with Section 301(c), and to date, no arm of the U.S. government has made such a finding. The following are some points from the 2009 report and subsequent developments related to it: • In the 2009 GAO report, State officials said compliance is evaluated based on State’s “internal level of confidence that UNRWA has taken all possible measures to ensure that terrorists are not receiving assistance, such as having procedures in place and taking measures to respond to issues that arise.”3432 State has not defined the term “all possible measures,” nor has it defined what would constitute noncompliance with Section 301(c). • The report said that State had not established written criteria to use in evaluating UNRWA’s compliance with Section 301(c), and recommended that State consider doing so.3533 In November 2009, State and UNRWA signed a non-binding “Framework for Cooperation” for 2010. The document agreed that, along with the compliance reports UNRWA submits to State biannually, State would use 15 enumerated criteria “as a way to evaluate” UNRWA’s compliance with Section 301(c).3634 State expects to sign a similar document with UNRWA for 2011.35 • UNRWA said that it screens its staff and contractors every six months and that it screened all 4.6 million Palestinian refugees and microfinance clients in December 2008 (and intends to make this a routine procedure) for terrorist ties to Al-Qaida Qaeda and the Taliban, pursuant to a list established pursuant to U.N. Security Council Resolution 1267. UNRWA said that it is unable to screen those of its beneficiaries who are displaced persons from the 1967 war because it does not collect information on those persons.3736 • UNRWA’s UN 1267 terrorist screening list does not include Hamas, Hezbollah, or most other militant groups that operate in UNRWA’s surroundings. UNRWA is unwilling to screen its contractors and funding recipients against a list supplied by only one U.N. member state. Nevertheless, UNRWA officials did say that if notified by U.S. officials of potential matches, they would “use the information as a trigger to conduct their own investigation,” which led to the report’s recommendation that the State Department consider screening UNRWA 33 GAO, op. cit. Ibid. 35 Ibid. 34 36 31 GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit. Ibid. 33 Ibid. 32 34 “Framework for Cooperation Between UNRWA and the Government of the United States of America for 2010,” available at http://www.state.gov/documents/organization/133753.pdf. The 15 enumerated criteria are found in Annex 4 of the framework document. 37 GAO35 CRS correspondence with State Department, December 2010. 36 GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit. In 2006, an organization that advocates for Palestinian refugees estimated the total number of 1967 displaced persons to be between 800,000 and 850,000. See BADIL Resource Center for Palestinian Residency & Refugee Rights, Survey of Palestinian Refugees and Internally Displaced Persons 2004-2005, May 2006, available at http://www.badil.org/Publications/Books/Survey2004-2005.pdfen/documents/category/35publications?download=135%3Asurvey04-05. Congressional Research Service 11 U.S. Foreign Aid to the Palestinians contractors.3813 U.S. Foreign Aid to the Palestinians by only one U.N. member state. Nevertheless, UNRWA officials did say that if notified by U.S. officials of potential matches, they would “use the information as a trigger to conduct their own investigation,” which led to the report’s recommendation that the State Department consider screening UNRWA contractors.37 In response, State says that it now screens quarterly, against the Excluded Parties Lists System (EPLS, which is a list of parties excluded throughout the U.S. government from receiving federal contracts39)contracts38), the names of vendors of contracts equal to or exceeding $100,000, as provided by UNRWA. Each of UNRWA’s 83 contract awardees of over $100,000 for the 2nd Quarter (April-June 2010) was screened twice by separate PRM staff. The analysis resulted in no matches against the EPLS.4039 • UNRWA has established procedures to investigate inappropriate staff behavior. UNRWA [said] that it seeks information from authorities whenever staff are detained, convicted, or refused a permit or targeted by Israeli military forces. UNRWA officials said they share the names of all UNRWA staff annually with the governments of Egypt, Israel, Jordan, Lebanon, Syria, and the Palestinian Authority but have received no information on staff members from these governments.”4140 • UNRWA officials said that UNRWA provides assistance “in the context of its humanitarian mandate, meaning that agency policy is generally not to deny education or primary healthcare benefits.” The officials said that if a refugee was denied benefits because of suspected militant or terrorist activities or ties, his or her child “would not be disqualified from attending an UNRWA school.”42 Concerns Over Possible Resettlement of Palestinian Refugees During the consideration of the Omnibus Appropriations Act, 2009 (P.L. 111-8), concerns surfaced over rumors being spread via the Internet that part of the Obama Administration’s $20.3 million contribution to UNRWA, the International Committee of the Red Cross, and the U.N. Office for the Coordination of Humanitarian Affairs made on January 27, 2009, from the Emergency Refugee and Migration Assistance (ERMA) account in the wake of the Gaza conflict might go toward resettlement of Gazan refugees in the United States. Senator John Kyl proposed S.Amdt. 629 (“To provide that no funds may be used to resettle Palestinians from Gaza into the United States”). Kyl, however, withdrew S.Amdt. 629 after receiving a letter from the State Department assuring him that U.S. funds were not being used to resettle Gazans in the United States. It is unclear whether the parties fueling the rumors were aware that ERMA contributions have been routinely made to UNRWA during past presidential administrations and that aid provided to UNRWA generally goes toward basic living needs and services (i.e., food, health care, education) for the Palestinian refugees over which its mandate exists in the places the refugees are already located (the West Bank and the Gaza Strip, Jordan, Syria, Lebanon). Notwithstanding the State Department’s assurances that ERMA funds are not being used to resettle Gazans in the United States, some have persisted in voicing their concerns on this issue. According to the State Department, some Palestinian refugees from Iraq are being resettled in the United States: 38 GAO, op. cit. U.S. General Services Administration website at https://www.acquisition.gov/faqs_whatis.asp. 40 CRS correspondence with State Department, August 9, 2010. 41 GAO, op. cit. 42 Ibid. 39 Congressional Research Service 12 U.S. Foreign Aid to the Palestinians 41 Resettlement of Palestinian Refugees from Iraq According to the State Department as of August 2010, the only Palestinian refugees being resettled in the United States were from Iraq: Since 2008, 679 Palestinians from Iraq have arrived for resettlement in nearly all 50 states across the U.S. through the U.S. Refugee Admissions Program (USRAP). PRM expects additional arrivals over the next two months, thus this number will increase by the end of this fiscal year. [The U.N.United Nations High Commissioner for Refugees (UNHCR)] referred 1,350 Palestinians to the USRAP for resettlement in [the United States] since FY2008. Processing of this group has taken place in two locations: at the Al Waleed camp located on the IraqiSyrian border and in the International Zone in Baghdad. The USRAP will process more Palestinians for resettlement if they are referred by UNHCR.4342 The State Department says that it has not contributed to the resettlement costs of Palestinian refugees from Iraq.4443 According to the website of the U.S. Citizenship and Immigration Services 37 GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit. U.S. General Services Administration website at https://www.acquisition.gov/faqs_whatis.asp. 39 CRS correspondence with State Department, August 9, 2010. 40 GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit. 41 Ibid. 42 CRS correspondence with State Department, August 2010. 43 Ibid. 38 Congressional Research Service 14 U.S. Foreign Aid to the Palestinians bureau of the Department of Homeland Security, refugees relocating to the United States generally receive loans from the International Organization for Migration for their transportation expenses. They are “expected to repay the cost of their transportation once they are established in the United States.”4544 The State Department has said that Palestinian refugees from Iraq who are potentially relocating to the United States are screened for potential security risks. Palestinians from Iraq undergo screening as if they were Iraqi citizens, including the enhanced security checks undergone by all Iraqi refugee applicants. These procedures consist of name and biometric checks against various additional U.S. Government databases to ensure that the applicants pose no known security risks.4645 The State Department has made $4.7 million in FY2009 and FY2010 “special project” contributions (from the MRA account) to UNRWA specifically dedicated to assisting Palestinian refugees from Iraq who have relocated to Syria. According to State, “While Palestinians from Iraq fall under UNHCR’s mandate, UNHCR and UNRWA closely coordinate assistance to this population to allow Palestinians from Iraq to access services from either agency as many families live on the outskirts of Palestinian refugee camps and do not feel safe traveling to UNHCR’s office. In 2009 UNHCR and UNRWA established a joint registration process for Palestinians from Iraq in order to ensure that families are not receiving the same assistance from both agencies.”4746 The special project contributions provide the refugees with basic services such as food, education, and emergency shelter.4847 Legislation Critiques of UNRWA’s operations are routinely raised, and some Members of Congress have supported legislation or resolutions aimed at increasing oversight of the agency, strengthening its vetting procedures, and/or capping U.S. contributions. H.Rept. 111-151 contained a provision from the joint explanatory statement capping contributions to UNRWA at $119 million for its 43 44 CRS correspondence with State Department, August 2010. Ibid. 45 U.S. Citizenship and Immigration Services bureau website at http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=e4eabcf527f93210 VgnVCM100000b92ca60aRCRD&vgnextchannel=385d3e4d77d73210VgnVCM100000082ca60aRCRD. 46 CRS correspondence with State Department, July 2009. 47 CRS correspondence with State Department, August 2010. 48 Ibid. Congressional Research Service 13 U.S. Foreign Aid to the Palestinians operations in the West Bank and Gaza from FY2009 funds appropriated pursuant to P.L. 111-32. This provision also required a report from the Secretary of State to the Committees on Appropriations no later than 45 days following the enactment of P.L. 111-32 on various UNRWA self-policing and transparency-promoting activities, including measures UNRWA takes to comply with Section 301(c) of the 1961 Foreign Assistance Act relating to preventing assistance to terrorists.49 The48 P.L. 111-117 contains the same reporting requirement, without an accompanying cap on contributions, applies under P.L. 111-117 for FY2010. Factors for Congress in Determining Future Aid Effectiveness of U.S. Assistance in Strengthening the PA in the West Bank Instability in the Palestinian territories is, paradoxically, both a major reason for the increases in U.S. assistance over the past three years and a factor that could lead some to oppose maintaining or boosting current aid levels. After Hamas’s takeover of the Gaza Strip and dismissal from the PA in June 2007, the United States made assisting the PA with economic development and civil security—aimed at bolstering the standing of President Abbas and the Fayyad government—a higher priority. Yet, if the PA in Ramallah is unable, at a minimum, to achieve and maintain popular legitimacy and competent control in the West Bank, U.S. reluctance to provide resources and training might increase, given concerns that aid could be used against Israel or Palestinian civilians, either by falling into the hands of Hamas or otherwise. Some observers argue that U.S. assistance does not enhance the legitimacy of Abbas and the PA, but rather detracts from it by leading some Palestinians to conclude that the PA is too beholden to the United States.50 Economic Development and International Donor Assistance The appointment in June 2007 of Salam Fayyad, a former World Bank and International Monetary Fund official, as PA prime minister raised hopes for Palestinian reform and economic growth that have been realized in part. Fayyad produced a Palestinian Reform and Development Plan for 2008-2010 (PRDP) that helped garner major international donor assistance pledges and promises of investment. International pledges of support, however, have routinely proven 49 See H.Rept. 111-151, Joint Explanatory Statement of the Committee of Conference, Title XI, “Migration and Refugee Assistance.” Also during the 111th Congress, Representative Ileana Ros-Lehtinen, the Ranking Minority Member on the House Committee for Foreign Affairs, has sponsored H.R. 557 (United Nations Transparency, Accountability, and Reform Act of 2009), which includes a section entitled “Withholding of United States Contributions to UNRWA,” with over 100 co-sponsors; and Representative Steven Rothman has sponsored H.Con.Res. 29 (“Expressing the sense of Congress that the United Nations should take immediate steps to improve the transparency on contributions. 44 U.S. Citizenship and Immigration Services bureau website at http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=e4eabcf527f93210 VgnVCM100000b92ca60aRCRD&vgnextchannel=385d3e4d77d73210VgnVCM100000082ca60aRCRD. 45 CRS correspondence with State Department, July 2009. 46 CRS correspondence with State Department, August 2010. 47 Ibid. 48 See H.Rept. 111-151, Joint Explanatory Statement of the Committee of Conference, Title XI, “Migration and Refugee Assistance.” Also during the 111th Congress, Representative Ileana Ros-Lehtinen, the Ranking Minority Member on the House Committee for Foreign Affairs, sponsored H.R. 557 (United Nations Transparency, Accountability, and Reform Act of 2009), which included a section entitled “Withholding of United States Contributions to UNRWA,” with over 100 co-sponsors; and Representative Steven Rothman sponsored H.Con.Res. 29 (“Expressing the sense of Congress that the United Nations should take immediate steps to improve the transparency (continued...) Congressional Research Service 15 U.S. Foreign Aid to the Palestinians Issues for Congress in Determining Future Aid Questions Regarding a Two-State Solution Even assuming that the immediate objectives of U.S. assistance to the Palestinians—relieving humanitarian needs in Gaza and improving security and facilitating development in the West Bank—are met, a failure to achieve progress towards a politically legitimate and peaceful twostate solution could undermine the utility of U.S. aid in helping the Palestinians become more cohesive, stable, and self-reliant over the long term. Many factors may complicate prospects for a negotiated two-state solution: • Discord within and among Palestinian factions—reflected geographically by divided rule in the West Bank and Gaza and ideologically by Hamas’s refusal to join the PLO in forswearing violent resistance against Israel. • Conditions that the Israeli government in power since April 2009 under Prime Minister Binyamin Netanyahu has attached to any consideration on its part of the concept of an independent Palestinian state, such as demilitarization and recognition of Israel as the “nation state of the Jewish people.”49 • Physical entrenchment of Israeli settlers in the West Bank and of obstacles to Palestinian movement within the West Bank and in and out of both the West Bank and Gaza, together with its political and socioeconomic consequences. • Possibility of course-changing events—such as a major terrorist attack, a surprise election outcome, an outbreak of war, or pursuit by Palestinians of a political pathway to statehood as an alternative to negotiations with Israel.50 The Gaza Situation Hamas’s control of Gaza presents a conundrum for many. Most parties, including Israel and the PA, are concerned that assisting Gaza’s population and rebuilding infrastructure damaged during Operation Cast Lead (the 2008-2009 Israel-Hamas conflict) could bolster Hamas. Thus, while controlled levels of humanitarian assistance have been permitted to enter Gaza, reconstruction projects have been very limited. 51 In June and December 2010, Israel announced plans to ease the (...continued) and accountability of the United Nations Relief and Works Agency for Palestinian Refugees (UNRWA) in the Near East to ensure that it is not providing funding, employment, or other support to terrorists”) with over 30 co-sponsors.49 Both H.R. 557 and H.Con.Res. 29 were referred to the House Committee on Foreign Affairs in January 2009. Ranking Member Ros-Lehtinen subsequently introduced H.R. 5065 (UNRWA Humanitarian Accountability Act) with over 2025 co-sponsors. H.R. 5065 is nearly identical to the section pertaining to UNRWA found in H.R. 557, and was referred to the House Committee on Foreign Affairs in April 2010. 50 See Sherifa Zuhur, Ali Abunimah, Haim Malka, Shibley Telhami, “Symposium: Hamas and the Two-State Solution: Villain, Victim or Missing Ingredient?” Middle East Policy, vol. 15, issue 2, July 1, 2008; Transcript of National Public Radio interview (“All Things Considered”) with Robert Malley, June 16, 2007. Congressional Research Service 14 U.S. Foreign Aid to the Palestinians insufficient to cover the PA’s budgetary expenses, occasionally requiring efforts by Fayyad to obtain last-minute assistance and/or private financing. As of August 2010, the State Department is projecting a $338 million budget shortfall for the PA for 2010.51 The ultimate success of Fayyad’s PRDP appears to hinge on two factors: keeping the public sector solvent enough to sustain longterm private sector development, and getting Israeli restrictions loosened or lifted on the movement of goods and people both within and out of the West Bank and Gaza.52 Several high-profile projects—housing developments, industrial parks, superstores, entertainment complexes—have been completed or are in various stages of proposal or construction in and around Ramallah, Bethlehem, Jericho and the northern West Bank in an effort to jumpstart private sector development.53 The International Monetary Fund and Palestinian Central Bureau of Statistics estimate that real GDP in the West Bank and Gaza grew 6.8% (8.5% in the West Bank) in 2009 and that unemployment declined.54 Yet, most analysts advise against drawing the conclusion that the overall West Bank economy (let alone that of Gaza) has turned a corner.55 Congress has indicated an interest in staying abreast of the economic assistance Arab states provide to the West Bank and the PA. The joint explanatory statement to the conference report attached to P.L. 111-117 reads: The conferees direct the Secretary of State to provide a report to the Committees on Appropriations not later than 180 days after enactment of this Act on international participation, including by Arab states, in the economic development of the West Bank and support for the Palestinian Authority, similar to that proposed by the House. This report may be submitted in classified form, if necessary.56 Arab states (especially Gulf states) provided large amounts of aid to the Hamas-led PA government in 2006-2007 after the United States and European Union withdrew their aid, but following the reinstitution of U.S. and EU aid in mid-2007, most of them reduced contributions. 57 51 Figure provided to CRS by State Department, August 10, 2010. For additional information on economic development prospects in the Palestinian territories, see CRS Report RL34074, The Palestinians: Background and U.S. Relations, by Jim Zanotti. Israeli restrictions on movement have been a key factor in the Palestinian economic downturn since the second Palestinian intifada (which began in late 2000), and the closure of Gaza crossings and ports following the Hamas takeover in June 2007 has led to a near economic standstill there. The International Crisis Group has referred to a UNDP official’s estimate that it would take five years for Gaza to be restored simply to the unenviable state in which it was immediately before the recent conflict began in December 2008. International Crisis Group, Gaza’s Unfinished Business, Middle East Report No. 85, April 23, 2009. 53 Some of these ventures have been supported by U.S. organizations—including the Overseas Private Investment Corporation (OPIC), the Aspen Institute, the Center for American Progress, and CHF International—affiliated or involved with a public-private partnership known as the Middle East Investment Initiative. See http://meiinitiative.org. 54 The World Bank, Towards a Palestinian State: Reforms for Fiscal Strengthening—Economic Monitoring Report to the Ad Hoc Liaison Committee, April 13, 2010, available at http://siteresources.worldbank.org/INTWESTBANKGAZA/Resources/WorldBankReportAHLCApril2010Final.pdf. 55 Many Israelis and Western analysts emphasize the West Bank’s recent economic growth and the loosening of some Israel Defense Forces obstacles to Palestinian movement. Nonetheless, many Palestinians and international analysts assert that actual and prospective economic development should not be overstated because the Palestinian economy continues to be propped up by external aid and continues to recover from historic economic lows precipitated from the conflicts of the past decade. Furthermore, uncertainty remains regarding movement and access and regarding progress in negotiations with Israel. See The World Bank, op. cit.; Zahi Khouri, “The West Bank’s Deceptive Growth,” New York Times, September 8, 2009. 56 H.Rept. 111-366. 57 See Glenn Kessler, “Arab Aid to Palestinians Often Doesn’t Fulfill Pledges,” Washington Post, July 27, 2008; (continued...) 52 Congressional Research Service 15 U.S. Foreign Aid to the Palestinians Routinely, they make generous pledges (including over $1.8 billion dollars in the wake of the 2008-2009 Gaza conflict) of aid to the Palestinians, but often49 See Transcript of translated remarks (from Hebrew) by Prime Minister Binyamin Netanyahu, Tel Aviv, Israel, June 14, 2009, available at http://www.pmo.gov.il/PMOEng/Communication/PMSpeaks/speechbarilan140609.htm. 50 For further discussion of this issue, see CRS Report R40092, Israel and the Palestinians: Prospects for a Two-State Solution, by Jim Zanotti. 51 A December 2010 Washington Post article described the situation in Gaza with respect to issues such as (1) the limited operation of conveyor belts and passage of supply trucks at crossings, (2) concerns about sewage contamination (continued...) Congressional Research Service 16 U.S. Foreign Aid to the Palestinians closure regime it has enforced at its crossings with Gaza (Egypt controls the southernmost crossing at Rafah). More goods have come into Gaza as a result, but it is not clear if, when, and under what conditions a full resumption of agricultural and industrial trade and movement of persons between Gaza and the outside world might be expected. Many observers believe that either Hamas’s positions on the Quartet principles or its control over Gaza would have to change before substantial U.S. funds might be used in the reconstruction of buildings and infrastructure in Gaza, with the exception of U.N. facilities and other special cases such as international schools.52 In the meantime, occasional skirmishes between Palestinian militants (including Hamas) and Israel along Gaza’s borders and continuing low-level rocket and mortar fire from Gaza at targets in Israel could spiral into renewed conflict. Members of Congress are routinely wary that bilateral assistance for Gaza or contributions to UNRWA could be misused and diverted to benefit Hamas or other terrorist groups. Yet, some Members of Congress advocate expanding the level and type of humanitarian and development assistance to Gaza—often at the same time they advocate easing, ending, or even challenging the Israeli-Egyptian closure regime—because Gazans are seen as needing more support to improve their economic, physical, and psychological situations. In January 2010, 54 Representatives from the 111th Congress signed a letter to President Obama that requested a substantive lifting of the closure regime. 53 Strengthening the PA in the West Bank Instability in the West Bank and the Gaza Strip is, paradoxically, both a major reason for the increases in U.S. assistance over the past three years and a factor that could lead some to oppose maintaining or boosting current aid levels. After Hamas’s takeover of the Gaza Strip and dismissal from the PA in June 2007, the United States made assisting the PA with economic development and civil security—aimed at bolstering the standing of President Abbas and the Fayyad government—a higher priority. Yet, if the PA in Ramallah proves unable, at a minimum, to achieve and maintain popular legitimacy and competent control in the West Bank, U.S. reluctance to provide resources and training might increase, given concerns that aid could be used against Israel or Palestinian civilians, either by falling into the hands of Hamas or otherwise. Some observers argue that U.S. assistance does not enhance the legitimacy of Abbas and the PA, but rather detracts from it by leading some Palestinians to conclude that the PA is too beholden to the United States.54 Others have warned that U.S. dependence on individual leaders such as Abbas (...continued) and drinking water shortages, and (3) comparisons between construction materials available through the crossings for internationally-supervised projects and those smuggled into Gaza through tunnels from Egypt for Hamas-led construction projects. Janine Zacharia, “Aid groups decry Israel’s Gaza constraints,” Washington Post, December 21, 2010. See, also, e.g., Amnesty International UK, et al., "Dashed Hopes: Continuation of the Gaza Blockade," November 30, 2010, available at http://www.oxfam.org/sites/www.oxfam.org/files/dashed-hopes-continuation-gazablockade-301110-en.pdf; Sarah A. Topol, "'Gaza Is Not Darfur!'", Slate.com, August 5, 2010. 52 See footnote 8. The December 2010 Washington Post article said that UNRWA has built 151 housing units out of the 10,000 it hopes to build, and has only received Israeli approval to build six out of the 100 schools UNRWA says are needed to accommodate 40,000 children, while Hamas claims that it has renovated 1,000 houses and built a school with materials smuggled into Gaza through the help of Islamic charities from the Gulf region. Zacharia, op. cit. 53 Text of Letter to the President, January 20, 2010, available at http://docs.google.com/viewer?url=http%3A%2F%2Fellison.house.gov%2Fimages%2Fstories%2FDocuments%2F201 0%2FGaza_letter_to_Obama.pdf. 54 See Sherifa Zuhur, Ali Abunimah, Haim Malka, Shibley Telhami, “Symposium: Hamas and the Two-State Solution: (continued...) Congressional Research Service 17 U.S. Foreign Aid to the Palestinians and Fayyad works against long-term stability by undermining mechanisms of democratic governance and enabling growing authoritarianism. 55 Economic Development and International Donor Assistance The appointment in June 2007 of Salam Fayyad, a former World Bank and International Monetary Fund official, as PA prime minister raised hopes for Palestinian reform and economic growth that have been realized in part. Fayyad has produced reform proposals aimed at establishing a “de facto Palestinian state”56 that have helped garner major international donor assistance pledges and promises of investment. International pledges of support, however, have routinely proven insufficient to cover the PA’s budgetary expenses, occasionally requiring efforts by Fayyad to obtain last-minute assistance and/or private financing. The success of Fayyad’s reform plans appears to hinge on the following factors: • Keeping the public sector solvent enough to sustain long-term private sector development; • Getting Israeli restrictions loosened or lifted on the movement of goods and people both within and out of the West Bank and Gaza57 and on Palestinian development projects in so-called “Area C”;58 and • Overall political progress to overcome Palestinian factional/geographical division and towards Palestinian statehood. 59 (...continued) Villain, Victim or Missing Ingredient?” Middle East Policy, vol. 15, issue 2, July 1, 2008; Transcript of National Public Radio interview (“All Things Considered”) with Robert Malley, June 16, 2007, available at http://www.npr.org/templates/story/story.php?storyId=11135538. 55 See Nathan J. Brown, “Fayyad Is Not the Problem, but Fayyadism Is Not the Solution to Palestine’s Political Crisis,” Carnegie Endowment for International Peace, September 2010, http://www.carnegieendowment.org/files/fayyad_not_problem_2.pdf. 56 See, e.g., Palestinian National Authority, Palestine: Ending the Occupation, Establishing the State, Program of the Thirteenth Government, August 2009, available at http://www.mideastweb.org/palestine_state_program.htm. A key passage from the document reads: “Out of respect for our citizens, and in recognition of their desire to live free and peaceful lives under national independence, we must answer their demand to see the fruits of the state-building project. Against this background, the Palestinian government is struggling determinedly against a hostile occupation regime, employing all of its energies and available resources, most especially the capacities of our people, to complete the process of building institutions of the independent State of Palestine in order to establish a de facto state apparatus within the next two years. It is time now for the illegal occupation to end and for the Palestinian people to enjoy security, safety, freedom and independence.” 57 The current system of Israeli restrictions on movement within the West Bank can be traced to the time of the second Palestinian intifada (which began in late 2000), and the closure of Gaza crossings and ports following the Hamas takeover in June 2007 has led to a near economic standstill there. The International Crisis Group has referred to a UNDP official’s estimate that it would take five years for Gaza to be restored simply to the unenviable state in which it was immediately before the recent conflict began in December 2008. International Crisis Group, Gaza’s Unfinished Business, Middle East Report No. 85, April 23, 2009, available at http://www.crisisgroup.org/~/media/Files/Middle%20East%20North%20Africa/Israel%20Palestine/85%20Gazas%20U nfinished%20Business.ashx. 58 Zones denoted as “Area C” in the West Bank pursuant to the Israel-PLO Interim Agreement on the West Bank and the Gaza Strip, dated September 28, 1995, fall under Israeli administrative and security control. The agreement is available at http://www.mfa.gov.il/MFA/Peace+Process/Guide+to+the+Peace+Process/THE+ISRAELIPALESTINIAN+INTERIM+AGREEMENT.htm. 59 See Nathan J. Brown, “Are Palestinians Building a State?”, Carnegie Endowment for International Peace, June 2010, (continued...) Congressional Research Service 18 U.S. Foreign Aid to the Palestinians Several high-profile projects—housing developments, industrial parks, superstores, entertainment complexes—have been completed or are in various stages of proposal or construction in and around Ramallah, Bethlehem, Jericho and the northern West Bank in an effort to jumpstart private sector development.60 The International Monetary Fund projected real GDP growth of 8% for the West Bank and Gaza in 2010.61 Yet, most analysts assert that actual and prospective economic development should not be overstated because the West Bank economy continues to be propped up by external aid and continues to recover from historic economic lows precipitated by the conflicts of the past decade (see Figure 1 below). Furthermore, uncertainty remains regarding movement and access and regarding progress in negotiations with Israel.62 Figure 1. West Bank and Gaza Strip Gross Domestic Product (GDP) Per Capita: 1999-2009 Source: World Bank; Palestinian Central Bureau of Statistics Congress has indicated its interest in staying abreast of the economic assistance Arab states provide to the West Bank and the PA, sometimes requiring reports from the Administration on the subject.63 Arab states (especially Gulf states) provided large amounts of aid to the Hamas-led PA (...continued) available at http://www.carnegieendowment.org/files/palestinian_state1.pdf. 60 Some of these ventures have been supported by U.S. organizations—including the Overseas Private Investment Corporation (OPIC), the Aspen Institute, the Center for American Progress, and CHF International—affiliated or involved with a public-private partnership known as the Middle East Investment Initiative. See http://meiinitiative.org. 61 The World Bank, The Underpinnings of the Future Palestinian State: Sustainable Growth and Institutions— Economic Monitoring Report to the Ad Hoc Liaison Committee, September 21, 2010, available at http://siteresources.worldbank.org/INTWESTBANKGAZA/Resources/WorldBankReportAHLCApril2010Final.pdf. 62 See The World Bank, op. cit.; Zahi Khouri, “The West Bank’s Deceptive Growth,” New York Times, September 8, 2009. 63 See, e.g., H.Rept. 111-366: “The conferees direct the Secretary of State to provide a report to the Committees on Appropriations not later than 180 days after enactment of this Act on international participation, including by Arab (continued...) Congressional Research Service 19 U.S. Foreign Aid to the Palestinians government in 2006-2007 after the United States and European Union withdrew their aid, but following the reinstitution of U.S. and EU aid in mid-2007, most of them reduced contributions. 64 Routinely, they make generous pledges (including over $1.8 billion dollars in the wake of the 2008-2009 Gaza conflict) of aid to the Palestinians, but at times fulfill them only in part and after significant delay. Their reluctance to fulfill pledges may stem from misgivings over “picking sides” in Palestinian factional disputes and from concerns that without imminent prospects either for domestic political unity or for progress on the peace process, any money contributed could be a waste. On the part of the Gulf states in particular, reluctance may also stem from a feeling that they are less responsible historically for the Palestinians’ current situation than Israel, the United States, and Europe. Hamas and a “Unity Government”? If efforts at unifying Palestinians in the West Bank and Gaza under the leadership of President Abbas or those who might succeed him in the Fatah movement and the PLO—either through elections or political achievements that increase Fatah’s legitimacy— appear unlikely to succeed, cohesion might be promoted through a consensus or unitypower-sharing or “unity” PA government that is acceptable to both Fatah and Hamas. Egyptian-facilitated efforts to reach agreement on such a government government have been unsuccessful since the collapse of the last one (which was brokered by Saudi Arabia in February 2007) following Hamas’s takeover of Gaza in June 2007. Reportedly, the unity the power-sharing negotiations have been complicated by differing factional views on various questions. These questions include how to integrate PA and Hamas security operations, when and how to conduct Palestinian presidential and legislative elections, and whom to appoint to to government positions.58 A consensus65 A power-sharing or unity government may significantly depart from the development and reform objectives set by the Fayyad government that are used as a major justification for current U.S. aid levels. The continuation of U.S.-sponsored PA security reform efforts (see “U.S. Security Assistance to the Palestinian Authority” above), which are aimed at consolidating all Palestinian forces under a single, civilian-led chain of command, could be particularly difficult for Hamas and its militia to accept. Regardless of the objectives of a consensus or unity PA government, were it to include Hamas without the acceptance of the “Section 620K principles” (recognition of “the Jewish state of Israel’s right to exist” and acceptance of previous Israeli-Palestinian agreements—named after the section in the Palestinian Anti-Terrorism Act of 2006 (P.L. 109-446) that sets them forth) by all of the government’s ministers, current law would require the United States to cease direct aid to the PA,59 and there could be calls for cessation or for limits on other economic assistance to the West Bank and Gaza. Future debates might focus on whether to relax or to tighten these restrictions, on which Palestinian party/ies should be answerable for accepting and complying with the Section 620K principles, and on whether the President might be granted discretion to waive aid restrictions relating to a unity government under certain conditions and/or for specific purposes. To defend the hypothetical notion of tolerating the possibility of Hamas members serving in a PA government that would accept the Quartet principles and/or the Section 620K conditions, Secretary of State Hillary Rodham Clinton pointed out at an April 2009 hearing that “we are (...continued)As mentioned above (see “Major Conditions, Limitations, and Restrictions on Aid”), current appropriations legislation prohibits the United States from providing financial assistance to Hamas under any conditions. This law also prohibits U.S. assistance to a PA government with Hamas ministers (subject to possible exceptions for a non-Hamas PA president and judiciary) unless all the government’s ministers accept the “Section 620K principles”: (1) recognition of “the Jewish state of Israel’s right to exist” and (2) acceptance of previous Israeli-Palestinian agreements—named after the section in PATA (P.L. 109-446) that sets them forth. These principles have some similarity to the principles the so-called international Quartet (United States, European Union, United Nations, and Russia) has required Hamas to meet before accepting dealings with it: (1) recognizing Israel’s right to exist, (2) renouncing violence, and (3) (...continued) states, in the economic development of the West Bank and support for the Palestinian Authority, similar to that proposed by the House. This report may be submitted in classified form, if necessary.” 64 See Glenn Kessler, “Arab Aid to Palestinians Often Doesn’t Fulfill Pledges,” Washington Post, July 27, 2008; “Falling Short,” Washington Post, July 27, 2008, available at http://www.washingtonpost.com/wpdyn/content/graphic/2008/07/27/GR2008072700095.html?sid=ST2008072700226. 5865 Various proposals regarding government composition include a government composed fully of independent “technocrats,” one with formally non-aligned technocrats who have various factional leanings, and one with actual Fatah and Hamas members. 59 See P.L. 111-32, Sec. 1107. See also Palestinian Anti-Terrorism Act of 2006 (P.L. 109-446). Congressional Research Service 16 U.S. Foreign Aid to the Palestinians Congressional Research Service 20 U.S. Foreign Aid to the Palestinians accepting previous Israeli-Palestinian agreements. Hamas has alleged that the United States has used its leverage with Abbas to “veto” any serious attempt to broker a power-sharing compromise (by threatening an aid cutoff if Hamas rejoins the PA without accepting the Section 620K principles and/or Quartet principles), and some analysts understand the situation similarly.66 Future debates might focus on the following issues: • Whether to relax or tighten U.S. restrictions on which Palestinian party/ies should be answerable for accepting and complying with the Section 620K principles. • Whether to grant the U.S. President discretion—under certain conditions and/or for specific purposes—to waive aid restrictions relating to a power-sharing government that includes Hamas and does not meet the Section 620K principles. Secretary of State Hillary Rodham Clinton gave testimony at an April 2009 congressional hearing regarding the possibility of Hamas members serving in a PA government that would accept the Quartet principles and/or the Section 620K principles. At the time, she stated that “we are currently funding the Lebanese government, which has Hezbollah in it” because of a U.S. interest in supporting a government working to prevent the “further incursion of extremism.”60 She also drew comparisons between the Israeli-Palestinian peace process and the peace process in Northern Ireland during the 1990s (with which she was acquainted as First Lady).67 Assuming that the United States chooses not to engage with and/or contribute to a PA government that includes Hamas, future debates might take place over the degree to which the United States should actively dissuade others in the international community—particularly European and Arab actors—from engagement and contributions. 61 Questions Regarding a Two-State Solution Even assuming that the immediate objectives of U.S. assistance to the Palestinians—relieving humanitarian needs in Gaza and improving security and facilitating development in the West Bank—are met, a failure to achieve progress toward a politically legitimate and peaceful twostate solution could undermine the utility of U.S. aid in helping the Palestinians become more cohesive, stable, and self-reliant over the long term. Many factors may complicate prospects for a negotiated two-state solution in the near term. One is discord within and among Palestinian factions—reflected geographically by divided rule in the West Bank and Gaza. Another is the right-wing Israeli government in power since April 2009 under Prime Minister Benjamin Netanyahu that has attached provisos—such as demilitarization—to any consideration on its part of the concept of an independent Palestinian state. Yet another is the physical entrenchment of Israeli settlers in the West Bank and of obstacles to Palestinian movement within the West Bank and in and out of both the West Bank and Gaza, together with its political and socioeconomic consequences. A fourth is the possibility of coursechanging events—such as a major terrorist attack, a surprise election outcome, or an outbreak of war—occurring in the Palestinian territories, Israel, or elsewhere in the region.62 60 Transcript of House Appropriations Subcommittee on State, Foreign Operations and Related Programs hearing: “Supplemental Request,” April 23, 2009. 6168 Conclusion Implementing U.S. bilateral assistance programs for the West Bank and Gaza and making UNRWA contributions presents significant challenges due both to regional political uncertainty and to concerns that aid might be diverted to Palestinian terrorist groups. Prospects for stability in the West Bank appear to hinge on improved security, political and economic development, Israeli cooperation, and continuation of high levels of foreign assistance. 66 See Michele Dunne, “A Two-State Solution Requires Palestinian Politics,” Carnegie Endowment for International Peace, June 2010, available at http://www.carnegieendowment.org/files/palestine_politics.pdf. 67 Transcript of House Appropriations Subcommittee on State, Foreign Operations and Related Programs hearing: “Supplemental Request,” April 23, 2009. In the four years since the 2006 war between Israel and Hezbollah, the United States has provided robust levels of both economic and security assistance to Lebanon to (1) help with post-conflict reconstruction and to win “hearts and minds” of Lebanese citizens and (2) strengthen the Lebanese military to adequately patrol Lebanon’s porous borders with Syria and prevent Hezbollah’s rearmament. See CRS Report R40054, Lebanon: Background and U.S. Relations, by Casey L. Addis. 68 On the previous occasions in which Hamas participated in the PA government from 2006-2007, the European Union joined the United States in refusing to provide direct assistance to the PA. There are indications, however, that Europeans might be less willing to follow the U.S. lead in the event that another PA government including Hamas is formed. See Muriel Asseburg and Paul Salem, “No Euro-Mediterranean Community without peace,” EU Institute for Security Studies and European Institute of the Mediterranean, September 2009, available at http://www.iss.europa.eu/uploads/media/10Papers-01.pdf; Andrew Rettman, “EU Countries Practice ‘Secret’ Diplomacy, Hamas Says,” euobserver.com, September 14, 2009; “British Official Calls on Hamas to Reject Violence,” Agence France Presse, April 1, 2009; Anne Penketh, “Europe Opens Covert Talks with ‘Blacklisted’ Hamas,” The Independent (UK), February 19, 2009. For further discussion of possible policy responses to a PA government that includes Hamas, see the section entitled “The Role of Hamas” in CRS Report R40092, Israel and the Palestinians: Prospects for a Two-State Solution, by Jim Zanotti. 62 For further discussion of this issue, see CRS Report R40092, Israel and the Palestinians: Prospects for a Two-State Solution, by Jim Zanotti. Congressional Research Service 17 U.S. Foreign Aid to the Palestinians. Congressional Research Service 21 U.S. Foreign Aid to the Palestinians In assessing whether U.S. aid to the Palestinians since the June 2007 West Bank/Fatah-Gaza Strip/Hamas split has advanced U.S. interests, Congress could evaluate how successful aid has been in • reducing the threat of terrorism; • inclining Palestinians towards peace with Israel; • preparing Palestinians for self-reliance in security, political, and economic matters; • promoting regional stability; and • meeting humanitarian needs. Congress’s assessment of the issues (see “Issues for Congress in Determining Future Aid”) and factors above in the context of the U.S. policy priorities listed at the beginning of this report (see “Introduction: Issues for Congress”) might influence its deliberations over • which aid programs to start, continue, expand, scale back, change, or end; and • which oversight, vetting, monitoring, and evaluation requirements to apply to various aid programs. Author Contact Information Jim Zanotti Analyst in Middle Eastern Affairs jzanotti@crs.loc.gov, 7-1441 Congressional Research Service 1822