U.S. Foreign Aid to the Palestinians
Jim Zanotti
Analyst in Middle Eastern Affairs
May 1, 2009
Congressional Research Service
7-5700
www.crs.gov
RS22967
CRS Report for Congress
P
repared for Members and Committees of Congress

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U.S. Foreign Aid to the Palestinians

Summary
In March 2009, the Obama Administration pledged $900 million in U.S. assistance to the
Palestinians to address both post-conflict humanitarian needs in the Gaza Strip and reform,
security, and development priorities in the West Bank. Most of the pledged amount remains
subject to congressional appropriation. In April 2009, the Obama Administration issued an
FY2009 supplemental budget request that included $815 million in proposed appropriations—
$665 million in bilateral assistance and $150 million in contributions to international
organizations from the Migration and Refugee Assistance account—to benefit the Palestinians.
The request also proposed a provision that could apply different conditions than those applied by
previous FY2008 and FY2009 appropriations legislation to possible U.S. assistance to a
Palestinian power-sharing government that includes Hamas.
Since the signing of the Oslo Accord in 1993 and the establishment of limited Palestinian self-
rule in the West Bank and Gaza Strip in 1994, the U.S. government has committed more than $2
billion in bilateral economic assistance to the Palestinians. In the last half of the 1990s, U.S.
foreign aid to the Palestinians averaged approximately $75 million per year. That average has
increased during this decade, but the outbreak and continuation of the second Palestinian intifada
(or “uprising”) and Hamas’s heightened role in Palestinian politics have made it more difficult to
implement effective and lasting aid projects that also serve U.S. interests.
U.S. aid to the Palestinians has fluctuated considerably over the past three 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 non-
Hamas government in the West Bank—resulting in different models of governance for the two
Palestinian territories. Since then, the U.S. has dramatically boosted aid levels to bolster the PA in
the West Bank and President Mahmoud Abbas vis-à-vis Hamas.
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. For FY2009, $275 million in bilateral assistance—which
includes projects funded through the U.S. Agency for International Development; direct
budgetary assistance to the PA; and training, non-lethal equipment, and facilities for PA civil
security forces—have already been appropriated for the Palestinians, and the State Department
has already contributed $98.5 million to the U.N. Relief and Works Agency for Palestine
Refugees in the Near East (UNRWA). Some of these funds have gone toward emergency
humanitarian needs in Gaza created by the 2008-2009 Israel-Hamas conflict.
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.

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Contents
Introduction ................................................................................................................................ 1
Overview and Recent Developments ........................................................................................... 1
Types of U.S. Bilateral Aid to the Palestinians ............................................................................. 3
Project Assistance Through USAID....................................................................................... 3
Types of Funding Programs............................................................................................. 3
Vetting Requirements and Procedures.............................................................................. 4
Direct Assistance to the Palestinian Authority........................................................................ 5
U.S. Security Assistance to the Palestinian Authority............................................................. 6
U.S. Contributions to UNRWA.................................................................................................... 7
Overview .............................................................................................................................. 7
Issues for Congress – Vetting and Oversight .......................................................................... 8
The $900 Million U.S. Pledge and the International Donors’ Effort ........................................... 10
The U.S. Pledge and Proposed FY2009 Supplemental Appropriations ................................. 10
Overview ...................................................................................................................... 10
Hamas’s Role in a “Unity Government”—Different Approach to Aid Conditions?......... 12
Congressional Consideration of Proposed FY2009 Supplemental .................................. 13
International Pledges and the Gaza Reconstruction Effort.................................................... 15
Factors in Determining Future Aid ............................................................................................ 17
Effectiveness of U.S. Assistance in Strengthening the PA in the West Bank.......................... 17
Economic Development and International Donor Assistance ............................................... 18
Hamas and a “Unity Government”?..................................................................................... 18
Questions Regarding a Two-State Solution .......................................................................... 20

Tables
Table 1. U.S. Bilateral Assistance to the Palestinians, FY2004-FY2009 ....................................... 3
Table 2. Historical U.S. Government Contributions to UNRWA .................................................. 8
Table 3. Actual and Requested Appropriations Toward $900 Million U.S. Pledge to
Palestinians ............................................................................................................................ 10
Table 4. Spending Plan for $815 Million in Proposed FY2009 Supplemental Funding ............... 11
Table 5. Notable Pledges of Assistance from March 2 Conference in Egypt ............................... 16

Contacts
Author Contact Information ...................................................................................................... 20

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Introduction
In March 2009, the Obama Administration pledged $900 million in U.S. assistance to the
Palestinians to address both post-conflict humanitarian needs in Gaza and reform, security, and
development priorities in the West Bank. Most of the pledged amount remains subject to
congressional appropriation. In April 2009, the Obama Administration issued an FY2009
supplemental budget request that included $815 million in proposed appropriations toward the
amount pledged in March. The request also proposed a provision that could apply different
conditions than those applied by previous FY2008 and FY2009 appropriations legislation to
possible U.S. assistance to a Palestinian power-sharing government that includes Hamas. For a
fuller description of the pledge and budget request, see “The $900 Million U.S. Pledge and the
International Donors’ Effort” below.
Since the signing of the Oslo Accord in 1993 and the establishment of limited Palestinian self-
rule in the West Bank and Gaza Strip in 1994, the U.S. government has committed more than $2
billion in bilateral economic assistance to the Palestinians. The 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 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
During the 1990s, U.S. foreign aid to the Palestinians averaged approximately $75 million per
year. That average has increased during this decade, but the outbreak and continuation of the
second Palestinian intifada (or “uprising”) 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. 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 three 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


1 See the Omnibus Appropriations Act, 2009 (P.L. 111-8), Division H, Title VII, Secs. 7036-7040. 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.
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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, U.S. policymakers demanded unsuccessfully that Hamas
renounce, among other things, violence and its commitment to the destruction of the state of
Israel.
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 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 thus far advocated a similar approach.
Following the outbreak of the 2008-2009 Gaza conflict between Israel and Hamas, the United
States provided approximately $65 million in emergency U.S. humanitarian assistance for
Palestinians in the Gaza Strip. These funds were channeled through the U.S. Agency for
International Development (USAID) and through international organizations such as UNRWA
and the International Committee of the Red Cross. For a fuller description of these emergency
contributions, please see CRS Report R40101, Israel and Hamas: Conflict in Gaza (2008-2009),
coordinated by Jim Zanotti.
In March 2009, the Obama Administration pledged $900 million in U.S. assistance to the
Palestinians to address both post-conflict humanitarian needs in Gaza and reform and
development priorities in the West Bank. Most of the pledged amount remains subject to
congressional appropriation. In April 2009, the Obama Administration issued an FY2009
supplemental budget request that included $815 million in proposed appropriations toward the
amount pledged in March. The request also proposed a provision that could apply different
conditions than those applied by previous FY2008 and FY2009 appropriations legislation to
possible U.S. assistance to a Palestinian power-sharing government that includes Hamas. For a
fuller description of the pledge and budget request, see “The $900 Million U.S. Pledge and the
International Donors’ Effort” below.
International efforts to contribute to the post-conflict reconstruction of Gaza have begun (see
“International Pledges and the Gaza Reconstruction Effort” and Table 5 below), and U.S.
policymakers have expressed interest in participating. Questions remain, however, over how
reconstruction assistance given through the PA or other entities or mechanisms can be effective
given that Hamas still controls Gaza. Some recommend that the United States and other actors—
particularly Europeans and Gulf Arab states—coordinate their efforts informally, if not directly,
with Hamas. Others reject this recommendation as one that would possibly strengthen Hamas
through de facto recognition of it as having a legitimate governing role in Gaza.
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Types of U.S. Bilateral Aid to the Palestinians
Table 1. U.S. Bilateral Assistance to the Palestinians, FY2004-FY2009
(regular and supplemental appropriations; current year $ in millions)
Account
FY2004 FY2005 FY2006 FY2007 FY2008 FY2009a
ESF
74.5 224.4 148.5 50.0 389.5
225.0
P.L. 480 Title II (Food Aid)
-
6.0
4.4
19.488
-
-
INCLEb
- - - - 25.0
50.0
Transition
Aid - - 0.343
- - -
Total 74.5
230.4
153.243
69.488
414.5
275.0
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. Funding for FY2009 to date has come from the Supplemental Appropriations Act, 2008 (P.L. 110-252) and
the Omnibus Appropriations Act, 2009 (P.L. 111-8). Between the end of FY2008 and the enactment of P.L.
111-8 on March 11, 2009, The Consolidated Security, Disaster Assistance, and Continuing Appropriations
Act, 2009 (P.L. 110-329)—extended for an additional five days on March 6, 2009—appropriated funds for al
U.S. projects and activities, including aid to the Palestinians, at the rate and in the manner for which they
were provided in the Consolidated Appropriations Act, 2008 (P.L. 110-161).
b. Does not include $86.362 million reprogrammed into the INCLE account by President Bush in January 2007
(see “Direct Assistance to the Palestinian Authority” below).
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.3 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 dedicated to humanitarian assistance and economic recovery needs).


3 The FY2009 Supplemental Justification, Department of State and U.S. Agency for International Development, p. 46,
states that “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 USG-funded programs and activities, and the
ability to move essential materials and commodities into Gaza. We will work with the Palestinian Authority and our
implementing partners to follow established safeguards that will ensure that our funding is only used where, and for
whom, it is intended.”
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Vetting Requirements and Procedures
USAID’s West Bank and Gaza program is subject to a vetting process 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.4 This vetting process has become more rigorous in
recent years in response to reports 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.5
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.6
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.7


4 P.L. 111-8, Division H, Title VII, 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. 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 she has determined to be involved in or advocating terrorist activity.”
5 “Audit: Terrorists Got U.S. Aid; Agency's Screening Called Inadequate,” Chicago Tribune, November 16, 2007. In
February 2008, then USAID Administrator and Director of U.S. Foreign Assistance Henrietta Fore said, in testimony
before the House Appropriations Subcommittee on State, Foreign Operations, and Related Programs, that Congress’s
“strong support and vigilance” was encouraging the adoption of more rigorous vetting measures. 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.
6 Statement issued by USAID to CRS on February 5, 2009.
7 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. The statement issued by USAID to CRS on February 5, 2009
directly challenged a recent article’s allegation that USAID had not yet implemented its new “partner vetting system”
(PVS) in West Bank/Gaza. See Matthew Levitt, “How Not to Fund Hamas: Scrutinize Those Who Receive U.S. Aid,”
New York Daily News, February 4, 2009. The USAID statement asserted that the article’s author was probably
confusing the already rolled-out West Bank/Gaza pilot PVS with the PVS that was awaiting final approval to be rolled
out for USAID’s other worldwide programs.
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Direct Assistance to the Palestinian Authority
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.8 Current law also
places conditions on aid to any power-sharing PA government “of which Hamas is a member”
(for further discussion, see “Hamas’s Role in a “Unity Government”—Different Approach to Aid
Conditions?” and “Hamas and a “Unity Government”?” below).9 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 ” below).10 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.11 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.12
• 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.13
• 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.”14 Chairwoman Lowey again declared a hold,
requesting greater details about the funds’ allocation.15 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.16


8 See P.L. 111-8, Division H, Title VII, Sec. 7040 (“Limitation on Assistance for the Palestinian Authority”). This law
also expressly prohibits using funds transferred to the PA to pay salaries of PA employees in the Gaza Strip unless the
“Section 620K principles” (see “Hamas’s Role in a “Unity Government”—Different Approach to Aid Conditions?”)
are met.
9 Ibid.
10 See 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.”
11 See “Splits Between U.S. and Europe Over Aid for Palestinians,” International Herald Tribune, February 22, 2007.
12 CRS conversation with U.S. Department of State official, September 16, 2008.
13 See Presidential Determination No. 2007-20.
14 See Presidential Determination No. 2008-12.
15 “Appropriator Wants Palestinian Authority Aid on Hold Until Accountability in Place,” CQToday, March 4, 2008.
16 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.
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• Another $150 million in budgetary assistance from the ESF account was
provided to the PA in October 2008 via presidential waiver.17
U.S. Security Assistance to the Palestinian Authority
As mentioned above, aid has been given to train, reform, advise, house and provide non-lethal
equipment for PA civil security forces loyal to President Abbas in an effort both to counter
militants from organizations such as Hamas, Palestinian Islamic Jihad, and the Al Aqsa Martyrs’
Brigades, and to establish the rule of law for an expected Palestinian state. This assistance, which
was projected by the Bush Administration to last at least through 2011, has come from the INCLE
account—to which a total of $161.3 million has been appropriated or reprogrammed since 2007.
Since Hamas gained control of the Gaza Strip, Lt. Gen. Keith Dayton, the U.S. Security
Coordinator (USSC) for Israel and the Palestinian Authority, has helped with the “gendarmerie-
style” training of roughly 400 Presidential Guardsmen and 1,700 National Security Forces troops
at the International Police Training Center near Amman, Jordan.18 Most reports agree that law and
order have improved where these PA forces have been deployed, but uncertainty remains
(particularly among some Israeli officials) over the willingness and ability of the forces to
incapacitate militants.
Some Palestinians and outside observers 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 Bank and its recent military campaign in Gaza.19 Israel claims that its
continuing operations are necessary in order to reduce the threat of terrorism emanating from the
West Bank. 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.
The FY2009 supplemental appropriations request includes $109 million for the INCLE account to
continue security assistance to the PA in the West Bank (the USSC-assisted mission) as well as to
provide “law enforcement-related training and [non-lethal] equipment to enhance border integrity
along the Gaza border” (see Table 4).20 The amount that the Obama Administration might
propose to allocate separately among the USSC-assisted West Bank mission and Gaza border
security remains unknown. Hamas’s control over Gaza might prevent U.S.-funded border security
train-and-equip programs from being based there, and it is unclear whether such programs might
take place elsewhere and how they might be coordinated with border security assistance provided
to Egypt (see footnote 20).


17 See Presidential Determination No. 2009-02.
18 See Adam Entous, “Palestinian Forces Return from U.S.-Funded Training, Reuters, May 28, 2008; “500 Palestinian
Security Force Members Head to Jordan for U.S.-Funded Training,” Reuters, September 18, 2008.
19 See International Crisis Group, Ruling Palestine II: The West Bank Model? Middle East Report No. 79, July 17,
2008.
20 The supplemental request also seeks $50 million in Nonproliferation, Anti-Terrorism, Demining and Related
Programs (NADR) funding for Egypt to secure its border with the Gaza Strip from smuggling. Office of Management
and Budget, FY2009 Supplemental Appropriations Request, April 9, 2009, p. 88.
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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 1947-1949 Arab-Israeli
war and their families—now comprising approximately 4.6 million Palestinians in Jordan, Syria,
Lebanon, the West Bank, and Gaza.21 U.S. contributions to UNRWA—separate from U.S.
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 $3.5 billion
in contributions (see Table 2 below).
According to the State Department’s Bureau of Population, Refugees, and Migration (PRM), U.S.
contributions to UNRWA for FY2008 totaled approximately $184.7 million.22 Thus far in
FY2009, there have been two U.S. contributions to UNRWA: a December 30, 2008 MRA
contribution of $85 million toward UNRWA’s 2009 appeals, and a January 27, 2009 ERMA
contribution of $13.5 million to address post-conflict humanitarian needs in Gaza (part of a $20.3
million ERMA contribution to various international organizations).23 It is not clear whether the
tensions that arose between Israel and UNRWA during the 2008-2009 Gaza conflict over
casualties among UNRWA staff and Palestinian civilians and damage to U.N.-marked property
that resulted from Israeli military operations will have a significant and/or lasting effect on
UNRWA’s future operations in Gaza.24 Israeli officials explained the relevant incidents as
accidental or as occurring in response to fire from Palestinian militants at or adjacent to U.N.-
marked grounds.
The Obama Administration’s March 2 pledge of $900 million (see “The $900 Million U.S. Pledge
and the International Donors’ Effort” below) and its April supplemental budget request, which
have called for additional FY2009 appropriations to the accounts from which UNRWA
contributions are made, could meet with increased scrutiny if there is a perception that resources
from UNRWA or other international organizations are used (with or without organizational
complicity) to strengthen Hamas or to frustrate Israeli objectives.


21 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.
22 According to PRM, U.S. contributions in 2008 constituted approximately 17.8% of the UNRWA General Fund
budget and a major share (up to 25%) of other UNRWA funds benefitting Palestinian refugees in Lebanon, the West
Bank, and Gaza. Aggregate contributions from the European Commission and European states (including both EU
members and non-members) and regions constitute approximately 60% of all UNRWA contributions, according to
UNRWA’s 2006-2007 financial statement. See UNRWA Financial Report and Audited Financial Statements (for the
Biennium Ended 31 December 2007) and Report of the Board of Auditors, U.N. General Assembly Official Records
(63rd Session, Supplement No. 5C), 2008.
23 See Presidential Determination 2009-15, available at http://www.whitehouse.gov/blog_post/relief_for_gaza/.
24 For further information on U.S. humanitarian assistance in relation to the Gaza conflict and on Israel-UNRWA
tensions during the Gaza conflict, see CRS Report R40101, Israel and Hamas: Conflict in Gaza (2008-2009),
coordinated by Jim Zanotti.
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In February 2009, not long after the cessation of major hostilities in Gaza, Hamas confiscated
shipments of UNRWA humanitarian supplies at gunpoint on two separate occasions. UNRWA
responded by suspending the shipment of additional goods into Gaza until the supplies were
returned. Hamas eventually did return the supplies, and UNRWA resumed aid shipments.
Table 2. 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 2009a 98.5
1999 80.5 TOTAL 3,491.8
Source: U.S. Department of State
Notes: All amounts are approximate.
a. To date
Issues for Congress – Vetting and Oversight
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.25 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 an independent policing capability and other operational limitations, political pressures,
security concerns). 26


25 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. 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.
26 A direct written rebuttal by Israeli academic Maya Rosenfeld to the former UNRWA general counsel’s critiques is
carried by UNRWA’s website at http://www.un.org/unrwa/allegations/Rejoinder2Lindsay_jan09.pdf. UNRWA also
maintains a “Setting the Record Straight” section on its website to address common critiques leveled at the agency,
available at http://www.un.org/unrwa/allegations/index.html. See also Summary of remarks by James G. Lindsay and
Andrew Whitley, UNRWA Nears Sixty: Part of the Solution or Part of the Problem? Washington Institute for Near East
Policy PolicyWatch #1471, February 6, 2009.
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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.27
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. 87-
195), 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
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.” A November 2003 report from the
General Accounting Office described UNRWA's efforts in implementing the Section 301(c)
requirement and the State Department's actions in attempting to facilitate and strengthen these
efforts.28 To date, no arm of the U.S. government has found UNRWA to be in noncompliance with
Section 301(c).
Nevertheless, 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. 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 80 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 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 25 co-
sponsors.29 Both H.R. 557 and H.Con.Res. 29 were referred to the House Committee on Foreign
Affairs in January 2009.


27 Transcript of House Appropriations Subcommittee on State, Foreign Operations and Related Programs hearing:
“Supplemental Request,” April 23, 2009.
28 See U.S. General Accounting Office, Department of State and United Nations Relief and Works Agency Actions to
Implement Section 301(c) of the Foreign Assistance Act of 1961, November 6, 2003, available at
http://www.gao.gov/new.items/d04276r.pdf.
29 See also the following article by five Members of Congress: Ileana Ros-Lehtinen, John A. Boehner, Eric Cantor,
Mike Pence, and Thaddeus McCotter, “Ros-Lehtinen et al.: Cut Off Relief Agency,” Washington Times, March 26,
2009.
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The $900 Million U.S. Pledge and the International
Donors’ Effort
The U.S. Pledge and Proposed FY2009 Supplemental
Appropriations
Overview
An international donors’ conference intended to gather support for the Palestinians in the
aftermath of the Gaza conflict took place in Sharm al-Sheikh, Egypt on March 2, 2009. At the
conference, Secretary of State Hillary Rodham Clinton pledged $900 million in U.S. assistance to
the Palestinians—$300 million for post-conflict humanitarian purposes in Gaza and $600 million
to forward PA security, institutional reform, and economic development goals in the West Bank.30
Most of the pledged amount remains subject to congressional appropriation (see Table 3 below).
The FY2009 supplemental budget request proposes $815 million in appropriations toward the
March 2 pledge—$665 million in bilateral assistance (from the ESF and INCLE accounts) and
$150 million in contributions to international organizations (mostly to UNRWA) from the MRA
account.31 A spending plan for proposed FY2009 supplemental funding appears below as Table 4.
Table 3. Actual and Requested Appropriations Toward
$900 Million U.S. Pledge to Palestinians
(in $ millions)
Legislative Authority
ESF
MRA/ERMA
INCLE
Total
Pre-111th Congress Legislation
-
20.3a -
20.3
FY2009 Omnibus (P.L. 111-8)
75.0
35.0
-
110.0
Administration Request for FY2009
556.0 150.0 109.0 815.0
Supplemental (Pending Appropriation)
Total
631.0 205.3 109.0 945.3
Sources: U.S. Department of State, Office of Management and Budget
Notes: All amounts are approximate; the amounts listed do not necessarily reflect all amounts appropriated for
aid to the Palestinians under the respective legislative appropriating authorities—they are limited to the amounts
specifically connected to the $900 million pledge.


30 See U.S. Department of State Press Release: “United States Assistance to the Palestinians,” March 2, 2009, available
at http://www.state.gov/r/pa/prs/ps/2009/03/119925.htm.
31 FY2009 Supplemental Appropriations Request, op. cit., pp. 81-83, available at
http://www.whitehouse.gov/omb/assets/budget_amendments/supplemental_04_09_09.pdf. The supplemental request
also seeks $50 million in Nonproliferation, Anti-Terrorism, Demining and Related Programs (NADR) funding for
Egypt to secure its border with the Gaza Strip from smuggling, as mentioned in footnote 20 (this $50 million is added
to the other $665 million in bilateral assistance for the Palestinians as part of the State Department’s $715 million
figure in its FY2009 Supplemental Budget Justification), along with $5 million for “U.S. direct hires, program
oversight, and related security and other support costs for increased assistance programs in the West Bank and Gaza.”
FY2009 Supplemental Appropriations Request, op. cit., p. 92.
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a. See “U.S. Contributions to UNRWA” above. See also Presidential Determination 2009-15, available at
http://www.whitehouse.gov/blog_post/relief_for_gaza/.
Table 4. Spending Plan for $815 Million in Proposed FY2009 Supplemental Funding
Amount Purpose
Economic Support Fund

($556 million total)
$200 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)
$156 million
Assistance for Gaza (through USAID)a
• $61 million – immediate humanitarian and food relief (through well-
established international organizations)
• $54 million – restore essential services and create jobs
• $20 million – household-level economic recovery (i.e., agriculture and
livestock) and microenterprise
• $15 million – replenish funds expended on humanitarian assistance
during war in Gaza
• $6 million – small-scale community improvement and rebuilding projects
(working with non-Hamas municipalities and communities)
$195 million
Assistance for the West Bank (through USAID)
• $93 million – institutional capacity building, education, and social services
• $60 million – promote economic growth
• $30 million – support governance and rule of law
• $12 million – humanitarian assistance
$5 million
Security and administrative costs
Migration & Refugee Assistance

($150 million total)
$125 million
Emergency humanitarian assistance for West Bank and Gaza (mostly to
UNRWA)
$25 million
Assistance to Palestinian refugees in Lebanon (mostly to UNRWA)
International Narcotics Control Training and non-lethal equipment assistance to PA security forces in the
and Law Enforcement
West Bank, supporting efforts by the U.S. Security Coordinator/Deputy
($109 million)
Envoy for Security, Lt. Gen. Keith Dayton; and training and non-lethal
equipment assistance to enhance the integrity of the Gaza border
Source: FY2009 Supplemental Appropriations Request, Office of Management and Budget; FY2009
Supplemental Justification, U.S. Department of State and U.S. Agency for International Development
Notes: All amounts are approximate.
a. See footnote 3.
The Israeli daily Ha’aretz reported that Secretary Clinton warned PA President Mahmoud Abbas
during their March 4 meeting in Ramallah that U.S. pledges would likely be withdrawn if a PA
consensus or unity government including Hamas did not meet the conditions that the international
Quartet (the United States, the United Nations, the European Union, and Russia) has prescribed
for cooperation with a PA government—recognition of Israel’s right to exist, renunciation of
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violence, and acceptance of previous Israeli-Palestinian agreements (the “Quartet principles”).32
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.
Hamas’s Role in a “Unity Government”—Different Approach to Aid
Conditions?
The FY2009 supplemental appropriations request includes a provision that would allow aid to be
provided to a power-sharing PA government of which Hamas is a member (see “Hamas and a
“Unity Government”?” below) if the President certifies that such a government has accepted and
is complying with the principles found in Sections 620K(b)(1)(A) and (B) of the Foreign
Assistance Act of 1961, as amended by the Palestinian Anti-Terrorism Act of 2006 (P.L. 109-
446). These “Section 620K principles”—related to the Quartet principles—refer to (1) a public
acknowledgment of the Jewish state of Israel’s right to exist and (2) commitment and adherence
to previous international agreements (including the Performance-Based Roadmap to a Permanent
Two-State Solution to the Israeli-Palestinian Conflict, commonly known simply as the
“Roadmap”).33
Each of the provisions regarding a potential power-sharing PA government under FY2008
appropriations legislation (P.L. 110-161 and P.L. 110-252) and the Omnibus Appropriations Act,
2009 (P.L. 111-8) has only remained effective during the particular cycle to which it has
pertained, and only with respect to the funds appropriated. In the form in which it has been
drafted, the proposed provision for the supplemental appears to follow this pattern. Thus, if
included in the same form in enacted legislation, it would not appear to change any underlying,
permanent legislation that pertains to funding authorization, but may only affect appropriations
for the cycle to which it pertains. This is in keeping with the general legislative proposition that
conditions explicitly attached to yearly appropriations generally do not last beyond the relevant
appropriations cycles, unlike stand-alone legislation that does.
The proposed provision does, however, appear to differ in at least one respect from the analogous
provisions regarding power sharing from the FY2008 appropriations cycle and in the FY2009
omnibus (P.L. 111-8). According to P.L. 111-8, Section 7040(f)(1), a presidential certification
permitting aid to a power-sharing government would appear to require Hamas as an organization,
not simply the power-sharing government itself, to accept the Section 620K principles.34
Language within the FY2009 supplemental request explaining the proposed provision to
designate a PA power-sharing government (instead of Hamas) as the Palestinian party subject to
the presidential certification clause states, “It is expected that such a power-sharing government
would speak authoritatively for the entire Palestinian Authority government, including its


32 Barak Ravid, “Clinton: U.S. Gaza Aid Tied to Recognition of Israel,” Ha’aretz, March 12, 2009.
33 FY2009 Supplemental Appropriations Request, op. cit., p. 96; Palestinian Anti-Terrorism Act of 2006 (P.L. 109-
446), Section 2(b)(2). The text of the provision proposed for the supplemental reads, “None of the funds made available
in this Act may be made available for ... any power-sharing government of which Hamas is a member: Provided, That
assistance may be provided to a power-sharing government if the President certifies in writing and reports to the
Committees on Appropriations that such government has accepted and is complying with the principles contained in
section 620K(b)(1)(A) and (B) of the Foreign Assistance Act of 1961, as amended”.
34 See also P.L. 110-161, Division J, Title III, “Economic Support Fund”; P.L. 110-252, Section 1417.
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ministries, agencies and instrumentalities.”35 For discussion of testimony in congressional
hearings regarding which parties within a potential PA unity government might need to commit to
the Quartet principles for the government to be eligible for U.S. funding, see “Congressional
Consideration of Proposed FY2009 Supplemental” below.
Some analysts might say that the provision proposed for the supplemental could make the
conditions under which a power-sharing PA government might receive U.S. assistance less
stringent than the conditions attached to the FY2008 legislation and the FY2009 omnibus that
focused on Hamas’s behavior. Some might maintain, though, that by placing the legislative focus
on the behavior of the PA government, the proposed supplemental provision might bring the
conditions on aid to the PA more in line with the focus found in the Palestinian Anti-Terrorism
Act of 2006 (P.L. 109-446) and in executive branch policy (under both the Bush and Obama
Administrations) that has existed since Hamas’s entry into government in 2006. National Security
Council spokesman Benjamin Chang has said that the proposed provision “is consistent with our
policy. It would prohibit assistance to a government that does not accept the Quartet principles
but would preserve the president’s flexibility to provide such assistance if that government were
to accept and comply with the Quartet principles.”36 The exact correspondence of the proposed
provision (if enacted), when taken in concert with P.L. 109-446 and other existing legislation,
with the Quartet principles could be subject to interpretation.37 Such an interpretation could hang
on the definition of such terms as “power-sharing government of which Hamas is a member” and
“Hamas-controlled Palestinian Authority.”
If the President does not certify that a power-sharing PA government including Hamas has
accepted and is complying with the Section 620K principles, the proposed FY2009 supplemental
provision would appear to permit the President to provide aid to either the PA president or
judiciary—by means of a Section 620K(e) waiver on national security grounds—if they are not
members of or controlled by Hamas or another foreign terrorist organization.38 A similar waiver
authority allowed the Bush Administration to provide aid to PA President Mahmoud Abbas and
his own security forces during the time of the Hamas-controlled government in 2006-2007.
Congressional Consideration of Proposed FY2009 Supplemental
It is not known whether prospects for congressional approval of the proposed $815 million
FY2009 supplemental aid package for the Palestinians might be affected by the stated opposition
of some Members to the $900 million pledge and the apparent desire of some Members to attach


35 FY2009 Supplemental Appropriations Request, op. cit., p. 96.
36 Adam Graham-Silverman, “Bid to Ease Conditions on Aid to Palestinians Faces Tough Scrutiny,” CQToday, April
17, 2009.
37 See, e.g., FY2009 Supplemental Appropriations Request, op. cit., p. 96; P.L. 109-446. For example, the proposed
supplemental provision does not expressly refer to Section 620K(b)(2) of the Foreign Assistance Act of 1961, as
amended by P.L. 109-446 (pertaining to progress on issues including but not limited to counter-terrorism and
institutional reform). Rep. Ileana Ros-Lehtinen has stated that the proposed provision appears “to ignore requirements
for the dismantling of the Islamist militant infrastructure and the halting of incitement before the P.A.—before a P.A.
effectively controlled by Hamas could be eligible for U.S. funds.” See Transcript of House Committee on Foreign
Affairs hearing: “New Beginnings: Foreign Policy Priorities in the Obama Administration,” April 22, 2009.
37 Adam Graham-Silverman, “Bid to Ease Conditions on Aid to Palestinians Faces Tough Scrutiny,” CQToday, April
17, 2009.
38 See FY2009 Supplemental Appropriations Request, op. cit., p. 96; P.L. 109-446, Section 2(b)(2).
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conditions to aid or to increase the scrutiny of such aid during consideration of the Omnibus
Appropriations Act, 2009 (P.L. 111-8).39 Debate over the supplemental could intensify if the
proposed provision regarding power sharing (see “Hamas’s Role in a “Unity Government”—
Different Approach to Aid Conditions?” above) is perceived to represent or foreshadow a
significant change in U.S. policy with respect to Hamas and the concept of Palestinian unity (see
“Hamas and a “Unity Government”?” below).
House committee hearings held in April that featured Secretary of State Clinton as a witness
afforded some Members the opportunity to comment on the proposed provision regarding
conditions on aid to a potential power-sharing government that includes Hamas. At the April 23
hearing before the House Appropriations Subcommittee on State, Foreign Operations and Related
Programs, Chairwoman Nita Lowey said, “I believe it's not enough for Abu Mazen [Mahmoud
Abbas’s nickname] or Salam Fayyad to accept the [Quartet] principles. It must be all the
ministers, including any minister appointed by Hamas, that comply with these principles.”
Representative Adam Schiff stated, “It seems to me unworkable to have Hamas organizing
terrorist attacks against Israel at the same time it has the power to appoint ministers to a coalition
government.” Representative Mark Kirk told Secretary Clinton, “I would just urge that you’re
picking up some pretty strong bipartisan concern here, which means that an amendment is
coming. So I—I would urge you to beat a strategic retreat on this point and then use the Congress
as the bad guy.”40
Secretary Clinton defended the Administration’s proposed provision as follows:
this is a critically important time in the Middle East, and we don't know what will come from
these ongoing [Palestinian unity] talks in Cairo. But if what emerges from these talks is a
unity government that abides by the Quartet principles, we do want to have the authority to
deal with that government in the peace process or negotiations that might possibly develop.
Before providing any such waiver, the administration will consider all the relevant facts,
including who these people were, what their role in the government was, to make sure this
meets our standards and our national interest.41
One week later, at an April 30 Senate Appropriations Committee hearing on the FY2009
supplemental request, Secretary Clinton appeared to use greater specificity in defining the
Administration’s view regarding which parties within a potential PA unity government might
need to commit to the Quartet principles for the government to be eligible for U.S. funding. This


39 During the consideration of the Omnibus Appropriations Act, 2009 (P.L. 111-8), Senator John Kyl proposed two
amendments to the bill relating to aid for Palestinians: S.Amdt. 629 (“To provide that no funds may be used to resettle
Palestinians from Gaza into the United States”) and S.Amdt. 631 (“To require the Secretary of State to certify that
funds made available for reconstruction efforts in Gaza will not be diverted to Hamas or entities controlled by
Hamas”). Kyl 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, and S.Amdt. 631 failed by a vote of 39-56. Additionally,
Rep. Ileana Ros-Lehtinen said, “I am deeply concerned about the administration’s plan to take $900 million from U.S.
taxpayers to fund Gaza reconstruction and a bailout of the Palestinian Authority at a time when our nation is grappling
with serious economic challenges.” Adam Graham-Silverman, “Palestinian Aid Expected to Be Approved in
Supplemental, Despite Concerns,” CQToday, March 4, 2009.
40 Transcript of House Appropriations Subcommittee on State, Foreign Operations and Related Programs hearing:
“Supplemental Request,” April 23, 2009. See also Transcript of House Committee on Foreign Affairs hearing: “New
Beginnings: Foreign Policy Priorities in the Obama Administration,” April 22, 2009.
41 Transcript of House Appropriations Subcommittee on State, Foreign Operations and Related Programs hearing:
“Supplemental Request,” April 23, 2009.
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view appeared to be largely in line with Chairwoman Lowey’s stated preference from the April 23
hearing. Clinton’s statement was as follows:
What we have said is that if there were to be, which at this moment seems highly unlikely, a
unity government that consisted of the Palestinian Authority members from Fatah and any
members from Hamas, the government itself, plus every member of the government, would
have to commit to the [Q]uartet principles. Namely, they must renounce violence, they must
recognize Israel, and they must agree to abide by the former PLO and Palestinian Authority
agreements.42
It is unclear to what extent this statement reflects the Obama Administration’s legal interpretation
of the potential meaning of the proposed provision on power sharing, and to what extent it
reflects the Administration’s policy view regarding the circumstances that might justify a
presidential waiver and/or certification to authorize direct assistance to a potential unity
government.
To defend the hypothetical notion of tolerating the possibility of Hamas members serving in a PA
government that would accept the Quartet conditions and/or the Section 620K conditions, Clinton
pointed out at the April 23 hearing 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.”43 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).
International Pledges and the Gaza Reconstruction Effort
According to the State Department, total pledges of over $4.6 billion (including the U.S. pledge
of $900 million) were made at the March 2 conference in Egypt. Notable pledges are set forth
below in Table 5.


42 Transcript of Senate Appropriations Committee hearing: “FY2009 Supplemental,” April 30, 2009.
43 Ibid.
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Table 5. Notable Pledges of Assistance from March 2 Conference in Egypt
(in $ millions)
Donor Amount Donor Amount
United States
900.0
Org. of Islamic Conf.
100.0
European Commission
554.4
Arab Monetary Fund
10.0
24 EU Member States
854.7
OPEC Fund for Int’l Dev.
5.5
Saudi Arabia
1,000.0
World Bank
55.0
Qatar
250.0 Japan 200.0
Kuwait 200.0 South
Korea 15.0
United Arab Emirates
174.0
Australia
12.9
Bahrain 23.0 Brazil 10.0
Algeria 200.0 China
2.2
Morocco 15.0 Singapore 1.0
Tunisia
1.3 India 1.0
Lebanon 1.0 Malaysia 0.1
Turkey 93.0 TOTAL 4,679.1
Source: U.S. Department of State
Notes: All amounts are approximate.
Questions abound regarding the pledges. To what extent will they be fulfilled—and when, where,
to whom, and how? To what extent might donor assistance be used for actual bricks-and-mortar
reconstruction in Gaza? Gulf Arab states have reportedly discussed using international
organizations or a Gulf Cooperation Council/Islamic Development Bank mechanism as an
alternative to routing Gaza reconstruction assistance through the Palestinian Authority.44 Even if
the funding question is addressed, a remaining obstacle to reconstruction is the Israeli
government’s refusal to allow more than a minimal amount of construction materials to pass
through the Gaza border crossings it controls.


44 In February, Qatar announced a donation of $30 million and, in March, Saudi Arabia announced a donation of $20.5
million to various U.N. agencies to address post-conflict humanitarian needs, but little, if any, of those amounts
appeared to be slated for reconstruction assistance. See “Qatar Gives $40 Million, Mostly Targeted at Gaza, to Boost
UN Humanitarian Relief,” UN News Centre, February 23, 2009; “Riyadh Pledges $20.5 Million in Relief Funds to
Palestinians,” The Daily Star Online (Beirut), March 24, 2009, Open Source Document GMP20090324966010. It is
unclear whether this approach to post-conflict recovery in Gaza will be the rule or the exception in how the Gulf states
fulfill the larger balance of their pledges. In March, Qatar Charity announced a $10 million donation to the Norwegian
Refugee Council for a two-year Gaza reconstruction plan—focused on both the public sector (i.e., health, education,
infrastructure) and the private sector (up to 300 homes)—without specifying how construction would proceed despite
the embargo on construction materials. See Magnus Wright Jacobsen, “Joint Project for Reconstruction,” Norwegian
Refugee Council, March 5, 2009, available at http://www.nrc.no/?did=9386821.
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The PA’s goal is to raise $2.8 billion, including $1.3 billion in Gaza reconstruction assistance.45
Given its lack of control over Gaza, the PA has proposed using banks in Gaza and NGOs such as
CHF International (Cooperative Housing Foundation) to implement reconstruction, but its main
accomplishment to date has been to distribute $20 million through the United Nations
Development Programme (UNDP) in emergency cash assistance to families whose homes were
destroyed or damaged.46 To the extent that the PA is unable to meet its reconstruction goals, there
are concerns that Hamas and Iran might try to fill the void of reconstruction assistance (despite
the Israeli embargo on construction materials) and strengthen their support base among the Gazan
population. Hamas has reportedly handed out as much as $60 million to families who lost homes,
businesses, or family members during the conflict,47 and, according to a Bloomberg report, Iran
has established a “Gaza Reconstruction Headquarters” in Tehran that it claims will build 1,000
homes, 10 schools, five mosques and 500 shops.48 Time will likely tell whether the proposed
reconstruction plans of the PA, Hamas, Iran, and Gulf Arab states might actually materialize or
merely result in a domestic and regional competition for patronage through cash handouts and
public relations.49
Factors 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 two 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 This
debate has intensified and has become more complicated in the wake of the 2008-2009 Gaza


45 Alaa Shahine and Alastair Sharp, “Factbox: Pledges Made Ahead of Gaza Conference in Egypt,” Reuters, March 2,
2009.
46 International Crisis Group, Gaza’s Unfinished Business, Middle East Report No. 85, April 23, 2009.
47 Ibid.
48 See "Middle East: Gaza Ceasefire Faces Poor Prospects," Oxford Analytica, February 6, 2009; David Rosenberg and
Saud Abu Ramadan, “Gaza Rebuild Splits Palestinians as Iran, U.S. Clash,” Bloomberg, March 2, 2009.
49 The International Crisis Group has quoted a European diplomat as saying, “The way it looks now, the most likely
outcome is that, as in previous crises, recovery simply won’t occur.” International Crisis Group, Gaza’s Unfinished
Business, Middle East Report No. 85, April 23, 2009, footnote 272.
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.
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conflict, as questions have been raised about how to undertake the task of post-conflict
reconstruction with a Hamas “government” in control of Gaza.
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, respectively, at conferences in Paris (December 2007) and in Bethlehem
and Nablus (May and November 2008) that Quartet envoy and former British prime minister
Tony Blair helped organize. International pledges of support, however, have proven insufficient to
cover the PA’s monthly budgetary expenses, occasionally requiring last-minute efforts by Fayyad
and Blair to obtain outside assistance.51 Concerns over meeting expenses appear likely to
continue unless the March 2009 pledges in Egypt result in substantially heightened contributions
to the PA treasury. The ultimate success of Fayyad’s PRDP appears to hinge on two factors:
keeping the public sector solvent enough to sustain long-term 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
Hamas and a “Unity Government”?
If efforts at unifying Palestinians in the West Bank and Gaza under President Abbas’s
leadership—either through elections or political achievements that increase his legitimacy—
appear unlikely to succeed, cohesion might be promoted through a consensus or unity PA
government that is acceptable to both Abbas’s Fatah faction and Hamas. Egyptian-facilitated
efforts to reach agreement on such a government—which remain ongoing—have been
unsuccessful since the collapse of the last one following Hamas’s takeover of Gaza in June 2007.
Reportedly, the unity 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 (which, under current Palestinian
law, are scheduled to take place no later than January 2010), and whom to appoint to government


51 See Adam Entous and Mohammed Assadi, “Palestinian PM Gets Phone Firm Help to Pay Wages,” Reuters, August
8, 2008. See also The World Bank, Implementing the Palestinian Reform and Development Agenda: Economic
Monitoring Report to the Ad Hoc Liaison Committee, May 2, 2008. Only a small fraction of the $7.7 billion pledged in
Paris ($1.1 billion) was pledged for budgetary support, about $535 million short of the PA’s targeted needs for 2008. A
July 2008 Washington Post article stated that many Arab governments had fulfilled only a small percentage of their
pledges to the PA since 2002, and, as a group, had conspicuously decreased donations since Fayyad’s government was
installed in June 2007 (although some had since made additional donations). See Glenn Kessler, “Arab Aid to
Palestinians Often Doesn’t Fulfill Pledges,” Washington Post, July 27, 2008.
52 See The World Bank, op. cit.; International Crisis Group, Ruling Palestine II: The West Bank Model? Middle East
Report no. 79, July 17, 2008. 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 following the
Hamas takeover in June 2007 has led to a near economic standstill there. 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.
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positions.53 A consensus or unity government may or may not significantly depart from the
capacity-building 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 Hamas’s acceptance of the Section 620K principles (recognition of “the Jewish state of
Israel’s right to exist” and acceptance of previous Israeli-Palestinian agreements), current law
would apparently require the United States to cease direct aid to the PA (see “Hamas’s Role in a
“Unity Government”—Different Approach to Aid Conditions?” above),54 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
should be answerable for accepting and complying with the Section 620K conditions, 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. For discussion of a proposal
from the FY2009 supplemental appropriations request possibly pertaining to these issues, see
“Hamas’s Role in a “Unity Government”—Different Approach to Aid Conditions?” above.
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.55


53 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. Also at issue is whether PA Prime Minister Salam Fayyad—whose involvement is seen as
central to Palestinian reform and development efforts by many U.S. and European officials—might continue as prime
minister, unity government or no unity government. Fayyad submitted his resignation to PA President Mahmoud Abbas
on March 7, 2009, and analysts have disagreed over whether his resignation is final or a political device aimed at
gauging domestic and international feeling regarding his importance. Many believe that Fayyad will eventually
withdraw his resignation and form a new government at Abbas’s request.
54 See P.L. 111-8, Sec. 7040(f)(1): None of the funds appropriated ... may be obligated or expended for assistance to ...
any power-sharing government of which Hamas is a member unless the President certifies in writing and reports to the
Committees on Appropriations that Hamas has accepted and is complying with the principles contained in section
620K(b)(1)(A) and (B) of the Foreign Assistance Act of 1961, as amended. See also Palestinian Anti-Terrorism Act of
2006 (P.L. 109-446).
55 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 the
Europeans might be less willing to follow the U.S. lead in the event that another PA government including Hamas is
formed. The United Kingdom newspaper The Independent reported in February 2009 that since the end of 2008,
legislators from the United Kingdom, France, the Netherlands, Sweden, and three other Western European nations had
consulted with Hamas representatives, despite the official Quartet policy against such contacts. The article quotes a
senior European diplomat as saying, "Far more people are talking to Hamas than anyone might think. It is the
beginning of something new—although we are not negotiating." 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.
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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 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. The Obama Administration has emphasized
the United States’s continued commitment to a two-state solution, and has appointed former
Senator George Mitchell as its Special Envoy for Middle East Peace.
Nevertheless, 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 April 2009 accession of a right-wing
Israeli government under Prime Minister Benjamin Netanyahu that has thus far refused to endorse
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 unpredictable 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.56

Author Contact Information

Jim Zanotti

Analyst in Middle Eastern Affairs
jzanotti@crs.loc.gov, 7-1441






56 For further discussion of this issue, see CRS Report R40092, Israel and the Palestinians: Prospects for a Two-State
Solution, by Jim Zanotti.
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