U.S. Foreign Aid to the Palestinians
Jim Zanotti
Analyst in Middle Eastern Affairs
May 31, 2011
Congressional Research Service
7-5700
www.crs.gov
RS22967
CRS Report for Congress
P
repared for Members and Committees of Congress
U.S. Foreign Aid to the Palestinians
Summary
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 $4 billion in bilateral assistance to the
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. A May 2011 power-sharing agreement between Fatah and Hamas has raised
concerns among some Members of Congress about continuing U.S. budgetary and security
assistance to a PA government that could be subject to the approval of a U.S.-designated Foreign
Terrorist Organization (Hamas) that claims to reserve the right to violently oppose Israel’s
existence. Prospects for implementation of the power-sharing agreement remain unclear. Some
observers question the extent to which Palestinians in the West Bank and Gaza are likely to
integrate their political decisionmaking and security practices, and also question the credibility of
the one-year timeline put forward for PA presidential and legislative elections. Furthermore, some
U.S. lawmakers have raised the possibility that U.S. aid to the PA could be affected by Palestinian
efforts to seek international recognition of Palestinian statehood outside of negotiations with
Israel.
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.
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). 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.
The power-sharing or “unity” government expected in the wake of the May 2011 Fatah-Hamas
agreement will not be eligible for U.S. aid if Hamas is included in the government and does not
change its stance towards Israel—possibly subject to some limited exceptions. 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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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............................................................... 4
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.................................................................................................. 11
Overview ............................................................................................................................ 11
Issues for Congress ............................................................................................................. 12
Vetting of UNRWA Contributions ................................................................................. 13
Resettlement of Palestinian Refugees from Iraq............................................................. 15
Legislation .................................................................................................................... 16
Issues for Congress in Determining Future Aid.......................................................................... 16
Hamas and a “Unity Government”?..................................................................................... 16
Questions Regarding a Two-State Solution .......................................................................... 18
The Gaza Situation.............................................................................................................. 19
Strengthening the PA in the West Bank................................................................................ 19
Economic Development and International Donor Assistance ............................................... 20
Conclusion................................................................................................................................ 23
Figures
Figure 1. West Bank and Gaza Strip Gross Domestic Product (GDP) Per Capita: 1999-
2009 ...................................................................................................................................... 22
Tables
Table 1. U.S. Bilateral Assistance to the Palestinians, FY2005-FY2012 ....................................... 5
Table 2. Proposed Spending Plan for FY2012 Bilateral Assistance............................................... 6
Table 3. Historical U.S. Government Contributions to UNRWA ................................................ 11
Contacts
Author Contact Information ...................................................................................................... 23
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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
On May 4, 2011, in Cairo, Egypt, Mahmoud Abbas and Hamas political bureau chief Khaled
Meshaal signed a Fatah-Hamas PA power-sharing agreement brokered by Egypt intended to
bridge the Palestinian geographical and factional divide and to clear the way for PA presidential
and parliamentary elections in a year’s time. This could also present a unified Palestinian stance
in international negotiations and fora and may have a significant impact on Israeli-Palestinian
relations. Analysts are vigorously debating both what the Fatah-Hamas deal signifies about each
party’s motivations and leverage over the other, as well as what it signifies about greater regional
implications given the ongoing political change and unrest around Israel, the West Bank, and
Gaza—particularly in Egypt and Syria.
Reports indicate that Fatah and Hamas have agreed to allow a “technocratic” PA government—
presumably run by ministers without formal party affiliations—until such time as elections can be
held. The factions have also agreed to form a Higher Security Committee under Abbas’s
leadership, but almost no actual details about how West Bank and Gaza security forces might
coordinate have been publicly communicated.
Whether the possible benefits to Palestinians of fully implementing a power-sharing deal can
persuade Fatah and Hamas to overcome their deep differences and distrust of one another, along
with their reluctance to risk their respective power bases and claims to legitimacy, is unclear, as is
1 For more information on Hamas and these terrorist designations, see CRS Report R41514, Hamas: Background and
Issues for Congress, by Jim Zanotti.
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whether any such deal might meet the conditions of the United States and other members of the
international Quartet (European Union, United Nations, Russia) regarding international dealings
with and aid to a Palestinian entity that includes Hamas in some manner.2 Decisions by
international donors, including resource-rich Gulf Arab states, could influence Israel’s willingness
to continue transferring tax and customs revenues it collects on behalf of the PA, as well as how
the PA chooses to configure its governing, security, and electoral arrangements. For information
on legal conditions on U.S. aid to a PA power-sharing government, see “Major Conditions,
Limitations, and Restrictions on Aid,” below.
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.
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 post-2007 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
U.S. policymakers routinely call for greater or more timely assistance from Arab governments in
line with their pledges.
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 approximately $4 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 more than $4 billion in bilateral assistance to the
Palestinians in the West Bank and Gaza,3 who are among the largest per capita recipients of
foreign aid worldwide.4 This assistance has focused on the further development of the Palestinian
2 Those conditions are that Hamas members of a Palestinian power-sharing government (1) recognize Israel’s right to
exist, (2) renounce violence, and (3) accept previous Israeli-Palestinian agreements.
3 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.
4 See U.N. Development Programme 2007/08 Human Development Report, Table 18: Flows of Aid, Private Capital
(continued...)
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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.5 PA President and Fatah head Mahmoud Abbas, calling the move a “coup,”
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 an Israeli-Palestinian negotiating process that yields a substantive and
lasting resolution of core issues in dispute by the parties (borders, security, refugees, the status of
Jerusalem, settlements, and water rights) have thus far proven unsuccessful.
Following the Fatah-Hamas power-sharing agreement, prospects for negotiations may be even
dimmer for the near term given heightened Israeli security concerns in the context of region-wide
political uncertainty and plans by the PA and Palestine Liberation Organization (PLO) to pursue
widespread international recognition of Palestinian statehood, including possibly through a
resolution at the United Nations General Assembly in September 2011.
(...continued)
and Debt, available at http://hdr.undp.org/en/media/HDR_20072008_EN_Complete.pdf.
5 For competing accounts of the events surrounding the Hamas takeover, see CRS Report R41514, Hamas: Background
and Issues for Congress, by Jim Zanotti.
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Major Conditions, Limitations, and Restrictions on
Aid
Annual appropriations legislation routinely contains the following conditions, limitations, and
restrictions on U.S. aid to Palestinians:6
• 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 as a member 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 (the
“Section 620K principles”). 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.
It is unclear whether a “technocratic” government of the type anticipated under
the May 2011 Fatah-Hamas power-sharing arrangement—whose ministers are
not formally aligned with Hamas—would come under the legal definition of a
“power-sharing PA government that includes Hamas as a member” or a “Hamas-
controlled” PA government and thus trigger these additional conditions on U.S.
aid. Under PATA, the Palestinian Legislative Council (PLC) is considered to be
part of the PA, but the legal consequences if the PLC were to reconvene with the
majority Hamas won in 2006 are still unclear.7
• 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
6 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 the Department of Defense
and Continuing Appropriations Act, 2011 (P.L. 112-10).
7 Although a Hamas-majority PLC could technically pass legislation controlling various functions of the PA
government, a document summarizing a May 16, 2011, 3D Security Initiative briefing for a congressional staff
audience stated that the PLC would not likely play an activist role—absent widespread consensus across factions—
given the interim nature of the power-sharing agreement as a placeholder anticipating PA presidential and legislative
elections.
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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
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).8
Types of U.S. Bilateral Aid to the Palestinians
Table 1. U.S. Bilateral Assistance to the Palestinians, FY2005-FY2012
(regular and supplemental appropriations; current year $ in millions)
Account
FY2005 FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012a
ESF 224.4
148.5
50.0
389.5
776.0
400.4
400.4
400.4
P.L. 480
6.0 4.4 19.488
-
20.715
-
-
-
Title II
(Food Aid)
INCLEb - -
-
25.0 184.0 100.0 150.0 113.0
Total 230.4
153.243
69.488
414.5
980.715
502.9
550.4
513.4
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 FY2012 have been requested but not yet appropriated.
8 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).
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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).
Table 2. Proposed Spending Plan for FY2012 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
• $20 million – governance, rule of law, civil society
• $79.7 million – health, education, social services
• $53.2 million – economic development
• $47.5 million – humanitarian assistance
International Narcotics Control
and Law Enforcement
($113 million total)
$77 million
Training, non-lethal equipment, and garrisoning assistance to PA security
forces in the West Bank, supporting efforts by the U.S. Security Coordinator
$36 million
Assistance for PA Ministry of Interior and for the justice sector (prosecutors
and criminal investigators) to improve performance, efficiency, and inter-
institutional cooperation
Rule-of-law infrastructure, including courthouses, police stations, and prisons
Source: U.S. State Department, FY2012 Congressional Budget Justification for Foreign Operations (Annex:
Regional Perspectives), available at http://www.state.gov/documents/organization/158268.pdf.
Notes: All amounts are approximate.
a. See footnote 10.
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 Department9) to U.S. non-
governmental organizations (NGOs) operating in the West Bank and the Gaza Strip.10 Funds are
9 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.
10 The State Department’s FY2012 Congressional Budget Justification for Foreign Operations (Annex: Regional
Perspectives), p. 571, available at http://www.state.gov/documents/organization/158268.pdf, stated that “The United
States will continue to respond to humanitarian needs in Gaza as they arise, through emergency assistance to the most
vulnerable populations through nongovernmental organizations not controlled by Hamas or other foreign terrorist
organizations. All assistance programs for Gaza, consistent with legislative requirements, will work through vetted
local, U.S., or international nongovernmental organizations to meet U.S. objectives and follow established safeguards
that will ensure funding is only used where, how, and by whom it is intended. The United States will similarly continue
to work with the Government of Israel to try to develop an effective crossings protocol that improves the flow of
(continued...)
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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).11 See Table 2 above for the
Obama Administration’s proposed spending plan for FY2012 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.12 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.13
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.14
(...continued)
humanitarian, recovery, and commercial goods into and out of Gaza without compromising Israel’s security.”
11 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.
12 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.”
13 “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.
14 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 GAO, Measures to Prevent Inadvertent Payments to Terrorists Under Palestinian
(continued...)
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A May 2009 Government Accountability Office (GAO) report found that USAID had
strengthened its antiterrorism policies and procedures in response to recommendations GAO had
made in a 2006 report.15
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.16 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.17 Annual appropriations legislation also routinely caps direct U.S.
budgetary assistance to the PA (the cap for FY2011 is $200 million under P.L. 112-10, the
Department of Defense and Continuing Appropriations Act, 2011) 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.18
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 $500 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.19
(...continued)
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.
15 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.
16 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 anti-
Semitic 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.
17 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.”
18 Congressional briefing with State Department and USAID officials, July 9, 2009.
19 Presidential Determination No. 2009-23.
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• 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.20
• 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).21
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.22
U.S. Security Assistance to the Palestinian Authority23
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 International Narcotics Control and Law Enforcement (INCLE) account—to
which a total of $545.4 million has been appropriated or reprogrammed for use in the West Bank
since 2007. The Obama Administration has requested an additional $113 million in FY2012
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 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 1,000 PA Presidential Guard and 3,700 PA National Security Forces (NSF)
troops at the International Police Training Center near Amman, Jordan. The USSC and INL
reportedly plan to help organize and train a total of approximately 6,000 troops, including 10 500-
man NSF battalions (approximately 7 of which have already been trained or begun training).
20 Presidential Memorandum 2010-06, available at http://www.whitehouse.gov/the-press-office/presidential-
determination-waiver-restriction-providing-funds-palestinian-authority.
21 Presidential Determination 2011-1, available at http://www.whitehouse.gov/the-press-office/2010/10/07/presidential-
memorandum-providing-funds-palestinian-authority.
22 USAID, FY2011 Congressional Notification #1, October 7, 2010.
23 For further information on this subject, see CRS Report R40664, U.S. Security Assistance to the Palestinian
Authority, by Jim Zanotti.
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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.24 By most accounts, the
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.25
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 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. It is unclear how concerns about the effectiveness of the PA security might evolve if
anti-Israel protests in the West Bank increase in frequency and intensity amid the region-wide
political unrest and heightened Israeli-Palestinian tension.
How the May 2011 Fatah-Hamas power-sharing agreement may affect the activities of PA
security forces in the West Bank is unclear, although it is possible that these activities will remain
largely unchanged until either PA presidential and legislative elections can be held or Fatah and
Hamas can agree on security coordination for both the West Bank and Gaza. The likelihood of
either contingency occurring is seriously questioned by many observers.
24 See, e.g., Ian Cobain, “CIA working with Palestinian security agents,” guardian.co.uk, December 17, 2009; Yezid
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.
25 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.
26 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. 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.
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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 1948 Arab-Israeli war and
their descendants—now comprising approximately 4.8 million Palestinians in Jordan, Syria,
Lebanon, the West Bank, and Gaza. 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 approximately $4
billion in contributions (see Table 3 below). Other refugees worldwide fall under the mandate of
the U.N. High Commissioner for Refugees (UNHCR).
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.27 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))
totaled $238 million for FY2010 ($125 million for the general fund, $113 for emergency 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
27 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.
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Fiscal Year(s)
Amount
Fiscal Year(s)
Amount
1999 80.5 2010 237.8
TOTAL 3,899.1
Source: U.S. State Department
Notes: All amounts are approximate.
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 argue that its activities should be
discontinued or scaled back. This is in addition to critics who question UNRWA’s existence
because they believe it perpetuates Palestinian dependency and resentment against Israel.28
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
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.30 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).31
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:
28 See, e.g., Michael S. Bernstam, “The Palestinian Proletariat,” Commentary, December 2010.
29 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 self-
sufficiency. UNRWA plays a stabilizing role in the Middle East through its assistance programs, serving as an
important counterweight to extremist elements.”
30 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.
31 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://rete-
eco.it/attachments/5172_Rejoinder%20to%20Lindsay_jan09.pdf.
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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.32
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. 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 May 2009 GAO report said that, since a previous GAO report in 2003, UNRWA and the State
Department had strengthened their policies and procedures to conform with Section 301(c) legal
requirements, but that “weaknesses remain.”33 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.”34 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.35 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). State signed a similar document with UNRWA for 2011.36
32 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.
33 GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit.
34 Ibid.
35 Ibid.
36 “Framework for Cooperation Between UNRWA and the Government of the United States of America for 2011,”
available at http://www.state.gov/documents/organization/154856.pdf. The 15 enumerated criteria are found in Annex
4 of the framework document.
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• 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 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.37
• 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
contractors.38 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),
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.40
• 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.41
37 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/en/documents/category/35-
publications?download=135%3Asurvey04-05.
38 GAO, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit.
39 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, Measures to Prevent Inadvertent Payments to Terrorists…, op. cit.
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• 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
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 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 Iraqi-
Syrian border and in the International Zone in Baghdad. The USRAP will process more
Palestinians for resettlement if they are referred by UNHCR.43
The State Department says that it has not contributed to the resettlement costs of Palestinian
refugees from Iraq.44 According to the website of the U.S. Citizenship and Immigration Services
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.”45
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.46
The State Department 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
42 Ibid.
43 CRS correspondence with State Department, August 2010.
44 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.
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to ensure that families are not receiving the same assistance from both agencies.”47 The special
project contributions provide the refugees with basic services such as food, education, and
emergency shelter.48
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
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 P.L. 111-117 (incorporated by reference in the relevant particulars for FY2011 by P.L.
112-10) contains the same reporting requirement, without an accompanying cap on contributions.
Issues for Congress in Determining Future Aid
Hamas and a “Unity Government”?
Although Fatah and Hamas reached an Egyptian-facilitated power-sharing agreement in May
2011, questions over how the agreement might actually be implemented persist. These questions
include how PA and Hamas security operations might be integrated, when and how Palestinian
presidential and legislative elections might be conducted, and who might occupy PA government
positions. Proposed resolutions were introduced in May 2011 in both the House (H.Res. 268) and
Senate (S.Res. 185) questioning the continuation of U.S. aid to a PA government that includes
Hamas, although the resolutions do not expressly address whether they contemplate that Hamas’s
underlying approval of a PA government that includes formally non-aligned “technocrats” instead
of Hamas members would be sufficient to connote its involvement in the government.50
47 CRS correspondence with State Department, August 2010.
48 Ibid.
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, 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
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.
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 25
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 Both proposed resolutions’ ninth “resolved” clauses support “the position taken by Secretary of State Hillary Clinton
on April 22, 2009, that the United States ‘will not deal with or in any way fund a Palestinian government that includes
(continued...)
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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)
accepting previous Israeli-Palestinian agreements.
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.”51
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.52
(...continued)
Hamas unless and until Hamas has renounced violence, recognized Israel and agreed to follow the previous obligations
of the Palestinian Authority’”.
51 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.
52 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.
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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 towards 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.
Many factors may complicate prospects for a negotiated two-state solution:
• Discord within and among Palestinian factions—reflected geographically by
(unless and until the May 2011 power-sharing agreement is implemented)
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.”53
• 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.54 This
possibility could be exacerbated by the region-wide unrest and political change
that has been ongoing since early 2011.
The proposed resolutions discussed above (with regard to a possible power-sharing PA
government) that were introduced in May 2011 in both the House (H.Res. 268) and
Senate (S.Res. 185) indicate that some Members of Congress might consider curtailing
aid to the Palestinian Authority and possibly other aid to the Palestinians in the event the
PLO/PA seeks to circumvent negotiations with Israel through appeals to the United
Nations, other international bodies or fora, and/or foreign governments for recognition of
statehood or similar diplomatic support.55
53 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.
54 For further discussion of this issue, see CRS Report R40092, Israel and the Palestinians: Prospects for a Two-State
Solution, by Jim Zanotti.
55 The eighth “resolved” clause in H.Res. 268 “affirms that Palestinian efforts to circumvent direct negotiations and
pursue recognition of statehood prior to agreement with Israel will harm United States-Palestinian relations and will
have serious implications for the United States assistance programs for the Palestinians and the Palestinians [sic]
Authority”. The eighth “resolved” clause in S.Res. 185 reads that the Senate would “consider restrictions on aid to the
Palestinian Authority should it persist in efforts to circumvent direct negotiations by turning to the United Nations or
other international bodies”.
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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.56 In June and December 2010, Israel announced plans to ease the
closure regime it has enforced at its crossings with Gaza. 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.
In late May 2011, Egypt permanently opened its crossing with Gaza at Rafah to passenger traffic,
but because this will not extend to the passage of goods, it might not have a material effect on
trade and smuggling patterns. 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.57 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.58
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
56 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
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-gaza-
blockade-301110-en.pdf; Sarah A. Topol, "'Gaza Is Not Darfur!'", Slate.com, August 5, 2010.
57 See footnote 10. 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.
58 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.
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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.59 Others have warned that U.S. dependence on individual leaders such as Abbas
and Fayyad works against long-term stability by undermining mechanisms of democratic
governance and enabling growing authoritarianism.60 The May 2011 Fatah-Hamas power-sharing
agreement might also raise concerns that PA leaders may be insufficiently strong or motivated to
prevent Hamas from gaining greater influence in the West Bank.
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”61 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 Gaza62 and on Palestinian
development projects in so-called “Area C”;63 and
59 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, available at
http://www.npr.org/templates/story/story.php?storyId=11135538.
60 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.
61 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.”
62 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
(continued...)
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• Overall political progress to overcome Palestinian factional/geographical division
and towards Palestinian statehood.64
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.65 The World Bank reported real GDP growth of 9.3% for the West
Bank and Gaza in 2010.66 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.67
Fayyad’s future status within the PA government, and possibly the continuing prospects of
Western support for the reform and economic development programs described above, have been
thrown into limbo pending formation of the new government under the May 2011 Fatah-Hamas
power-sharing agreement.
(...continued)
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.
63 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+ISRAELI-
PALESTINIAN+INTERIM+AGREEMENT.htm.
64 See Nathan J. Brown, “Are Palestinians Building a State?”, Carnegie Endowment for International Peace, June 2010,
available at http://www.carnegieendowment.org/files/palestinian_state1.pdf.
65 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.
66 The World Bank, Statement at the Ad Hoc Liaison Committee Meeting, Brussels, Belgium, April 13, 2011, available
at http://siteresources.worldbank.org/WESTBANKGAZAEXTN/Resources/AHLCApril2011WorldBankStatement.pdf.
67 See The World Bank, op. cit.; Zahi Khouri, “The West Bank’s Deceptive Growth,” New York Times, September 8,
2009.
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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.68 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.69
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.
68 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
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.”
69 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/wp-
dyn/content/graphic/2008/07/27/GR2008072700095.html?sid=ST2008072700226.
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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—particularly as
Congress observes how the May 2011 Fatah-Hamas power-sharing agreement might be
implemented. 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.
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.
Given that evaluation, Congress will assess future aid in the context of U.S. policy priorities (see
“Issues for Congress in Determining Future Aid” and “Introduction: Issues for Congress”). Such
evaluation and assessment 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
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