Order Code IB92052
CRS Issue Brief for Congress
Received through the CRS Web
Palestinians and Middle East Peace:
Issues for the United States
Updated April 26, 2005
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Current Negotiations Between Israel and the Palestinians
The Road Map
The United States and the Palestinians
U.S. Policy Toward the Palestinians
Refugees and Terrorists
U.S. Aid for the Palestinians
Wye Agreement Funding
Congress and the Palestinians
Unresolved Issues in the Palestine Problem
Israeli Settlements in the Occupied Territories
Compensation/Repatriation for Palestinian Refugees
The Palestinian Entity
Other Aspects of the Palestinians
Palestine Refugees and UNRWA
Palestinians and Middle East Peace: Issues for the United States
The United States began contacts with
the Palestine Liberation Organization (PLO)
in December 1988, after the PLO accepted
Israel’s right to exist, accepted U.N. Resolutions 242 and 338 that call for an exchange of
land for peace, and renounced terrorism. The
United States broke contact with the PLO in
1990 after a terrorist incident but reestablished contact before the 1991 Madrid
exchanges, economic cooperation, diplomatic
relations, or Jerusalem. On August 19, 1993,
Israeli and PLO representatives initialed an
agreement to guide future negotiations. On
September 10, the PLO and Israel exchanged
letters of mutual recognition, and on September 13, they signed the Declaration of Principles calling for Israeli withdrawal from Gaza
and Jericho, the election of a Palestinian
Council, and negotiations for future withdrawals and a permanent settlement in five years.
Following the 1993 Israeli-PLO agreement, Congress gave the President the authority to waive previously passed legislation
prohibiting U.S. contributions to the United
Nations from funding any PLO activities,
threatening to withdraw U.S. membership
from international organizations that recognize the PLO, prohibiting U.S. government
employees from negotiating with the PLO,
and labeling the PLO a terrorist organization.
The waiver authority was extended in P.L.
104-107 (February 12, 1996), but expired
August 12, 1997. Congress also ordered
closed PLO offices in Washington and New
York, although the New York office serving
the U.N. remains open under a U.S. court
A May 4, 1994, agreement provided for
the Israeli withdrawal from Gaza and Jericho.
The Interim Agreement signed on September
28, 1995 (also called Oslo II or the Taba
Agreement), provided for elections for the
88-seat Palestinian Assembly, the release of
Israeli-held prisoners, Israeli withdrawal from
six West Bank cities, and other issues. The
Israelis withdrew from the West Bank cities
by the end of 1995, and the Palestinian Assembly was elected on January 20, 1996.
Israel and the Palestinians agreed to an
Israeli withdrawal from Hebron in January
1997, and on October 23, 1998 signed the
Wye agreement to meet previous commitments. The peace talks stalled at Camp David
in July 2000, and remain suspended since the
Palestinian uprising began in September 2000.
The “Road Map” of April 2003, provides for
a three-phase, three-year, peace plan, but the
plan has been stalled by a series of attacks and
retaliations and by stated Israeli intentions to
impose unilateral actions. Also see CRS Issue
Brief IB91137, The Middle East Peace Talks.
In opening remarks to the Madrid conference on October 30, 1991, the Palestinian
delegation accepted confederation of a Palestinian state with Jordan, but clearly most
Palestinians want an independent Palestinian
state. The Israeli and Palestinian delegations
did not appear to be making any progress in
resolving any of the issues: elections,
statehood, borders, peacekeeping, demilitarized zones, water sharing, population
Congressional Research Service
The Library of Congress
MOST RECENT DEVELOPMENTS
On April 26, Palestine President Mahmud Abbas named Rashid Abu Shbak to head the
Preventative Security Services. Shbak is one of Fatah’s younger generation leaders who had
been in charge of Gaza police since 2003. Earlier in April, Abbas announced that 1,150
security officials were to be retired as part of the President’s police reform.
After his April 11 meeting with Israeli Prime Minister Sharon, President Bush said that
there should be no expansion of settlements in the occupied territories. President Bush
repeated his support for a two-state solution and his belief that Israel would retain some of
the West Bank settlement areas. Palestine President Mahmud Abbas is scheduled to visit
Washington to meet with the President in May.
BACKGROUND AND ANALYSIS
Current Negotiations Between Israel and the Palestinians
The Road Map. According to the “road map” for the “quartet” peace proposal
(Europe, Russia, U.N., U.S.A.), presented on April 30, 2003,1 the Israelis and Palestinians
must take steps to implement the plan, but it was not clear if the steps were to be sequential
(the Israeli view) or in parallel (the Palestinian view). During stage one of phase one, the
Israelis were to end attacks on Palestinian cities, house demolitions, and deportations; to
freeze settlement activity; and to dismantle settlements established since February 2001. The
Palestinians were to name a new cabinet (approved February 24, 2005) and Prime Minister
(sworn in April 30, 2003), end violence against Israelis, and consolidate the Palestinian
police forces. During stage two of phase one, Israelis were to withdraw to the September 28,
2000 lines and freeze all settlement activity. The Palestinians and the Israelis were to sign
a new security agreement. The Palestinians will hold elections for the Palestinian Legislative
Council in the summer of 2005.
During phase two, the quartet was to establish a monitoring system to monitor
compliance with the agreement and was to hold an international conference on Palestinian
economic recovery. The quartet also will sponsor negotiations for a Palestinian state within
provisional borders. During phase three, scheduled to begin in 2004, Israel and the
Palestinians were to agree on a provisional Palestinian state and, by the beginning of 2005,
were to resume negotiations for permanent borders, Jerusalem, refugees, settlements, and
See “A Performance-Based Roadmap to a Permanent Two-State Solution to the Israeli-Palestinian
Conflict,” published by the U.S. Department of State, [http://www.state.gov/r/pa/prs/ps/2003/
Current Status. On October 6, 2004, Sharon aide Dov Weisglass told the press that
the disengagement plan for an Israeli withdrawal from Gaza would prevent the establishment
of a Palestinian state, which many assumed meant the end of the road map peace process.2
Some observers viewed Arafat’s November 11, 2004, death as a possible trigger for
renewed action in the peace process. The Bush Administration refused to deal with Arafat.
Mahmud Abbas was elected president on January 9, 2005, and the Palestinian legislative
Council approved a new cabinet under Prime Minister Ahmad Qurai on February 24. Abbas
disapproves of the intifada and violence, and the new cabinet is primarily technocrats rather
than Arafat loyalists.
The United States and the Palestinians
U.S. Policy Toward the Palestinians
Between World War II and the 1991 collapse of the Soviet Union, U.S. policy toward
the Middle East was based on several broad goals, the most noteworthy of which were (1)
stop Soviet expansion into the region; (2) keep open the Middle Eastern lines of
communication and trade; (3) maintain Western access to Middle Eastern oil; (4) foster
democracy and free market economies; and (5) protect Israel’s security.
There appear to be many reasons why U.S. citizens have favored Israel: Israel and the
United States espouse shared Judeo-Christian principles; both countries were “pioneering”
in their early years; both countries are democracies; the United States has empathy for
Israel’s position as an embattled “underdog”; Israel and the United States opposed Soviet
expansion during the cold war years; the United States has sympathy for the experience of
European Jews in World War II; Jewish-Americans have a very effective pro-Israel political
support organization; and the United States is more aware of Israel’s point of view. In short,
some say, Israelis “are like us.” Conversely, there is less empathy among Americans for
Arab viewpoints because, some say, Arabs are “not like us.” Eastern Arab culture (dress,
food, music, art, written and spoken language, religion) appears to have little in common
with Western American culture, and Arab-Americans in the past have tended to assimilate
more than some other ethnic groups and to avoid the public stage of advocacy for Arab
Refugees and Terrorists. The United States, until recently, treated the Palestinians
as one of the problems to be solved in ending the Arab-Israeli dispute rather than as
participants in the peace process. From 1948 until the 1967 war, the United States, like many
other countries, considered the Palestinian people in the context of the refugee problem and
not as an independent national movement. Beginning with a series of terrorist incidents
starting in 1968, most added “terrorist” to the “refugee” image of Palestinians. President
Carter shifted the terrorist-refugee perception on March 16, 1977, when he said the
Palestinians deserved a homeland, and on January 4, 1978, when he said that the Palestinians
had legitimate rights and should participate in any deliberations about their future. The
Camp David agreements of September 1978 mentioned “the legitimate rights of the
Shavit, Ari, “Top PM Aide: Gaza Plan Aims to Freeze the Peace Process,” Haaretz, Oct. 6, 2004.
Palestinian people.” Early in the Reagan Administration, officials returned to referring to
Palestinians as “refugees” and “terrorists” and did not mention Palestinian rights or
self-determination. But in his September 1, 1982, Middle East address, President Reagan
said that the Palestinian problem was more than refugees. On April 14, 2004, President Bush
said the refugees should not be returned to their former homes in what is now Israel.
Recognition. In 1975, one year after the Arab League stated that the Palestine
Liberation Organization (PLO) was the sole representative of the Palestinian people,
Secretary of State Henry Kissinger informed Israel that the United States would not
recognize or negotiate with the PLO unless and until the PLO recognized Israel and accepted
U.N. Resolutions 242 and 338. Congress codified the pledge into law (Section 535, P.L.
98-473, October 12, 1984), and added that the PLO also must renounce terrorism. Secretary
of State George Shultz stated on December 14, 1988, that the PLO had met the conditions
stipulated by the United States, and that the United States would open a dialogue with the
PLO in Tunis, Tunisia, on December 16, 1988.
President George H.W. Bush announced on March 6, 1991 (in the wake of the Gulf
war), that he would pursue Arab-Israeli peace negotiations; he dispatched Secretary of State
Baker to the Middle East where he met with Palestinian leaders from the occupied territories.
Baker’s 8 trips to the region and his contacts with the Palestinians, Jordanians, Israelis,
Syrians, Egyptians, and others led to peace talks in Madrid on October 30, 1991. But at
Madrid and the subsequent meetings, the United States (and Israel) treated the Palestinians
as part of the Jordanian delegation, not as a separate entity.
On September 10, 1993, following the Israeli-PLO mutual recognition, President
Clinton announced that the United States would resume the dialogue with the PLO. PLO
leader Arafat, representing the national aspirations of the Palestinian people, shared the
spotlight with Israeli Prime Minister Rabin and President Clinton at the signing of the
Declaration of Principles on the White House lawn on September 13, 1993. U.S. official
attitudes toward the Palestinians had evolved from seeing them only as refugees to according
them a form of recognition that approached, but did not reach, nationhood. Following a
pledge made at the Wye River conference, President Clinton visited Gaza to attend the
December 14, 1998 meeting of the PLO National Council, at which the Council voted by
show of hands to reaffirm that the PLO Covenant had been amended to remove anti-Israeli
Current Relations. The George W. Bush White House refused to meet with
Palestinian President Yasir Arafat because, in the Administration’s view, Arafat did not do
enough to stop terrorism. President Bush said, in his June 24, 2002 statement, that he
envisioned a two-state solution to the Israeli-Palestine problem, the first time a U.S.
President advocated the formation of a Palestinian state on an equal basis to Israel. The
“Quartet” of the United States, the United Nations, the European Union, and Russia
presented the “road map” peace plan on April 30, the day Mahmud Abbas was sworn in as
Palestinian Prime Minister. Prime Minister Abbas met with President Bush at the White
House on July 25, 2003. In comments to the press after the meeting, Abbas said he raised
the issues of the Israeli wall under construction in the West Bank,3 Israeli withdrawal from
Palestinian cities, the expected Israeli release of Palestinian prisoners, and other issues, and
reaffirmed the Palestinian pledge to curtail terrorist attacks against Israel. President Bush
said the wall was a “problem” and that he expected both sides to meet their obligations for
peace, reaffirmed the United States support for a two-state solution, and reminded the
Palestinians of their promise to end terror attacks against Israel. On April 14, 2004, President
Bush endorsed the Israeli wall around Palestinian areas, approved Israel’s unilateral action
in Gaza and the West Bank, rejected the right of return for Palestinian refugees, and said
Israel’s occupied territory settlements should be recognized in final borders.
On February 21, 2005, in Brussels, President Bush said: “So Israel must freeze
settlement activity, help Palestinians build a thriving economy, and ensure that a new
Palestinian state is truly viable, with contiguous territory on the West Bank. A state of
scattered territories will not work.”
U.S. Aid for the Palestinians
(See Table 3, U.S. Assistance to the West Bank and Gaza, at the end of this report)
At an October 1, 1993, Washington meeting, 46 donor nations pledged $2.4 billion for
the Palestinian entity. The U.S. Administration offered $500 million ($125 million in loans
or loan guarantees and $375 million in grants) over five years for economic development of
the Palestinian entity. Of the $125 million available in loan guarantees, $3 million had been
drawn through April 2001. The United States provided $36 million funding for the
Palestinian Authority through the Holst Fund of the World Bank. The remaining $339
million was delivered through private voluntary organizations (PVOs), and through USAID
contracts. No U.S. aid went directly to the PLO.
Wye Agreement Funding. On November 30, 1998, President Clinton told the
donors conference in Washington that the United States would provide $400 million in
grants for the Palestinians. Congress did not include funding for the Wye Agreement in the
Foreign Operations Appropriations bills for FY2000 (H.R. 2606, S. 1234). The President
vetoed H.R. 2606 in part because it did not contain funding for the Wye Agreement. After
negotiations with the White House, the House of Representatives passed H.R. 3196 on
November 5, 1999, that included the Wye Agreement funding; $1.2 billion for Israel, $200
million for Jordan, $25 million for Egypt, and $400 million for the Palestinians. H.R. 3196
was set aside and replaced with H.R. 3422, which was included by reference in H.R. 3194,
the consolidated appropriations bill passed by the House on November 18, by the Senate on
November 19, and presented to the President on November 22, 1999. The $400 million Wye
supplemental was in addition to annual aid levels of about $75 million.
According to a State Department report presented to Congress in late October 1999, the
Wye funding for the Palestinians would be spent for infrastructure, education, community
development and “Rule of Law” projects.
Other Assistance. The supplemental appropriation for FY2002 (H.R. 4775, P.L.
107-206, signed on August 2, 2002) included $50 million in disaster relief assistance for the
See CRS Report RS21564, Israel’s Security Fences, Separating Israel from the Palestinians.
Palestinians, primarily in response to damages inflicted during the April-May 2002 Israeli
military operations in Palestinian areas, particularly the city of Jenin. The section specifically
stated that the funds for the West Bank and Gaza could not be used for the Palestinian
Authority. The funds were not allocated. The President requested $50 million for the
Palestinians in the FY2003 supplemental appropriations, but the funds were not earmarked
in the final bill (P.L. 108-11). The Department of State announced on April 21, 2003, that
$50 million was allocated from the supplemental for the Palestinians. The United States
announced on July 8, 2003, that it would provide $20 million of the $50 million in direct aid
to the Palestinian Authority. On July 10, the State Department waived congressional
restrictions against providing aid directly to the PA. The $20 million was used for water,
sewers, and other infrastructure, and to pay the electric bill owed to Israel.
The Administration requested $75 million for the Palestinians for FY2005. Palestinian
aid funds are not earmarked in Division D of H.R. 4818, the FY2005 appropriations act, but
are mentioned in the conference report, H.Rept. 108-792. On December 8, 2004, President
Bush notified Congress that $20 million of the $75 million in FY2005 foreign assistance
scheduled for the Palestinians will go directly to the Palestinian Authority. The $20 million
will be used to pay past-due utility bills owed to Israel, which, it was believed, would free
up other PA assets to fund the January 9, 2005 presidential election. Members of Congress
objected to a mid-November proposal to shift the $20 million to pay for the election because,
according to the press, Congress was not satisfied with PA efforts to stop terrorism or feared
that the funds would be diverted to support terrorism.
In his State of the Union message, President Bush said he would seek $350 million for
the Palestinians, $200 million in supplemental FY2005 funds, and $150 million in FY2006
aid funds. The $200 million in FY2005 supplemental would include $60 million for
revitalizing the economy (trade, agriculture, jobs, Gaza home construction), $90 million for
development (roads, water, courts, vocational education, health care, police programs to stop
terrorism), and $50 million for “building bridges” (transit points to move people and goods
between Israel and the Palestinian areas). The $200 million was included in H.R. 1268,
reported on March 11, 2005.
Congress and the Palestinians
Congress stated its opposition to the U.N. special committee on Palestinian rights
(Section 614, P.L. 95-426, October 7, 1978), opposed U.S. participation in the International
Monetary Fund if the IMF granted membership to the PLO (Section 7, P.L. 96-389, October
7, 1980), and stated that U.S. funds contributed to the U.N. could not be used to support the
PLO (Section 154, P.L. 97-377, December 21, 1982). In 1984, Congress prohibited U.S.
government employees from negotiating with or recognizing the PLO unless and until the
PLO recognized Israel’s right to exist, accepted U.N. Resolutions 242 and 338, and
renounced terrorism (Section 535, P.L. 98- 473, October 12, 1984).
In 1987, Congress declared the PLO to be a terrorist organization and a threat to U.S.
interests, and ordered the PLO information office in Washington and the office of the PLO
U.N. mission in New York to be closed (Title X of P.L. 100-204, December 22, 1987). The
Department of State closed the Washington office, but the New York office remained open
after a judge ruled that the office was legal under the U.N. treaty signed by the United States.
The Washington office reopened in September 1993, after the PLO and Israel signed the
Declaration of Principles under waiver provisions in the Middle East Peace Facilitation Act.
The PLO office closed on August 12, 1997, when the Middle East Peace Facilitation Act
expired because the presidential waiver expired with the act. The PLO office reopened on
December 6, 1997, when the President exercised the waiver in Section 539(d) of P.L. 105118, the foreign operations appropriations law. The office remained open under subsequent
presidential waivers provided in the foreign operations appropriations bills.
In 1989, Congress added Title VIII, the PLO Commitments Compliance Act
(PLOCCA), to P.L. 101-246, signed into law on February 16, 1990, which repeated the
prohibition against negotiating with the PLO, stated the sense of Congress that the United
States should seek to prevent PLO involvement in terrorism, said the United States should
obtain an accounting from the PLO of several listed incursions into Israel, required the
Secretary of State to report to the Congress on the PLO explanation of the incursions, and
required the President to file quarterly reports on several listed PLO activities and positions.
The Secretary of State sent the first PLO Compliance Act report to Congress on January 11,
1994, stating that the PLO remained opposed to terrorism and that the United States would
continue the dialogue resumed on September 10, 1993.
Following the signing of the Declaration of Principles on September 13, 1993, Congress
passed the Middle East Peace Facilitation Act (MEPFA) granting the President the authority
to waive sections of existing law that forbid contacts with the PLO, that prohibit the PLO
from opening an office in the United States, or that constrict providing aid to the PLO
through the United Nations. (The Middle East Peace Facilitation Act of 1993, P.L. 103-125,
October 28, 1993; amended and renewed several times, most recently in P.L. 104-107,
February 12, 1996). The most recent MEPFA and the President’s waiver authority expired
on August 12, 1997. The most recent combined MEPFA-PLOCCA report to Congress
appeared on January 12, 1997, covered both the PLO Commitment Compliance Act and the
Middle East Peace Facilitation Act, and found that the PLO was complying with its
In May 1997, some Members of Congress threatened to cut U.S. aid to the Palestinians
because Palestinian leaders advocated applying a 1973 Jordanian law that called for the death
penalty for Palestinians who sold land to Israelis or Jews. On June 10, 1997, the House
passed by voice vote an amendment to H.R. 1757, the Foreign Relations Authorization bill,
that called upon Palestinian leaders to renounce the death penalty, and stated that the
President and Congress will consider Palestinian actions when considering renewal of the
Middle East Peace Facilitation Act that expired on August 12, 1997. Other Members of
Congress suggested cutting aid to the Palestinians because they believed that the PLO or the
Palestinian Authority incited recent terror attacks against Israel. News reports that an
internal PA audit released on May 25, 1997, disclosed corruption and waste prompted other
Members of Congress to question U.S. aid to the Palestinians. After allowing the Middle
East Peace Facilitation Act to expire on August 12, 1997, Congress added sections to the
Foreign Operations Appropriations bill, H.R. 2159, and to subsequent bills, that gave the
President waiver authority similar to the MEPFA waivers.
Section 584 of P.L. 105-277 of November 21, 1998, and similar sections in subsequent
foreign operations appropriations bills prohibit any aid funds for the Palestine Broadcasting
Corporation (PBC). The United States provided about $250,000 for training and equipment
for the PBC in 1995 but withdrew the aid when it was feared that Arafat would use the public
station for political purposes. The United States continues to help Palestinian journalists, but
does not provide direct support to the PBC.
The House of Representatives passed H.Con.Res. 426 by a vote of 365 to 30 on October
25, 2000; the resolution expressed solidarity with Israel and condemned Palestinian Arab
leaders for encouraging violence in the continuing confrontations that began following Likud
Party leader Sharon’s visit to the Haram al-Sharif/Temple Mount area of Jerusalem on
P.L. 107-115 (H.R. 2506), the foreign operations appropriations bill for FY2002 signed
into law on January 10, 2002, requires the President to report to Congress on PLO
compliance with past commitments. If not in compliance, the President may close the PLO
office in Washington, designate the PLO constituents as terrorist groups, and/or limit
humanitarian assistance to the Palestinians.
The House passed H.Res. 392 by a vote of 352-21 with 29 “present” on May 2, 2002.
The bill stated that the Palestinian leadership incited and supported terrorism against Israel.
The Administration opposed the bill because it could have hampered U.S. efforts to mediate
an Israeli-Palestinian cease-fire. The bill vowed U.S. solidarity with Israel and justified
Israel’s use of force against the Palestinians. The Senate passed S.Amdt. 3389 to H.R. 3009,
the Andean Trade bill, the same day, also justifying Israel’s actions against the Palestinians.
Title VI of the Foreign Relations Authorization Act of 2002 (P.L. 107-228, H.R. 1646),
entitled the Middle East Peace Commitments Act of 2002, repeated many aspects of
PLOCCA, MEPFA, and the reporting requirements in the appropriations bills mentioned
above. Section 604© provided for a presidential waiver of the act’s sanctions applicable to
The FY2003 consolidated appropriations bill (H.J.Res. 2, P.L. 108-7, February 20,
2003) had several sections dealing with the Palestinians. Section 403 banned U.S. aid for the
Palestinian Broadcast Corporation. Section 548 prohibited the use of funds to create another
U.S. government office in Jerusalem. Section 552 banned funds for the Palestinian Authority
but provided a presidential waiver if such aid was in the United States’ national security
interests. Section 563 declared that no U.S. funds could be used to support Palestinian
statehood unless the Palestinians elected new leadership, agreed to co-exist with Israel,
countered terrorism, resumed security cooperation with Israel, ended belligerency against
Israel, and agreed to a just solution to the refugee problem. Section 563 also provided a
presidential waiver if such action were in the U.S. national security interests. Section 566
banned U.S. aid for the Palestinian Broadcasting Corporation (repeating Section 403, cited
above). Section 568 ensured that the U.S. Comptroller General has access to information to
audit expenditure of Economic Support Funds, that the Secretary of State takes measures to
ensure that U.S. funds are not used for terrorism, and that USAID conduct annual audits of
H.R. 2673, the omnibus appropriations bill for FY2004 (P.L. 108-199,118 Stat.3, 23
January 2004), denies funding for the Palestinian Broadcasting Corporation (Sec. 403 and
565), provides $1 million in ESF for West Bank/Gaza legal reforms, denies funds for the
PLO unless certified under MEPFA (Sec. 545), denies funds to the Palestinian Authority
unless waived by the President (Sec. 552), denies funds for a Palestinian state unless certified
by the Secretary of State or waived by the President (Sec. 562), and stipulates that the
Comptroller General should have access to financial records, that U.S. funds not be used to
finance terrorism, that there will be annual audits of Palestinian aid accounts, and that $1
million is available for a USAID audit (Sec. 566).
H.R. 4818, the foreign operations appropriations act for FY2005, does not have an
earmark for funds for the Palestinians but does repeat many of the restrictions on aid to the
PLO, the Palestinian Authority (with a presidential waiver), and Palestinian statehood that
are found in previous years’ bills.
H.R. 1268, the FY2005 supplemental appropriation, includes $200 million in aid for the
Palestinians and also includes in Section 2106 a requirement that the President report to the
Congress information on Palestinian security services, PA actions to dismantle terrorist
groups, PA actions to stop incitement, PA steps to ensure democracy, PA cooperation in
investigating Yasir Arafat’s finances, and a listing of aid to the Palestinians from other
donors. Section 2106 set aside $5 million for an independent audit of PA accounting
procedures. (It is not known if the PA would cooperate with a congressionally mandated
audit.) Section 2106 also stated that the waiver in Section 550 of P.L. 108-447, the FY2005
Foreign Operations Appropriation, will not apply to funds intended for the Palestinians in
the FY2005 supplemental. (The waiver permitted the President to provide funds to the PA.)
Palestinian Statehood. On November 15, 1988, the Palestine Liberation
Organization National Council declared a Palestinian state with its capital in Jerusalem.
Some 100 nations recognized the new state even though it did not have a government or any
territory under its sovereignty. Despite the 1988 declaration, in February 1998, Palestinian
leader Arafat said he would declare a state unilaterally on May 4, 1999, the date set in the
1994 Gaza-Jericho Agreement for completing the permanent status talks, but the declaration
of statehood was delayed several times and has not been completed. Israeli leaders oppose
the Palestinian declaration of statehood because they feel that the future status of the
Palestinian entity should be a subject in the talks.
Several U.S. Administrations have decried unilateral actions that could interrupt the
peace talks, and the Clinton Administration had cautioned Arafat not to declare a state
unilaterally. H.Con.Res. 24, passed by the House on March 16, 1999, and the Senate on
April 12, 1999, states that a unilateral declaration of Palestinian statehood would draw strong
congressional opposition and that the President should assert that a statehood declaration
would violate the Oslo accords. (Palestinian statehood is not mentioned in the Oslo
agreements.) The House voted 385 to 27 (with four present) on September 27, 2000, to pass
H.R. 5272, which would have cut off U.S. foreign assistance to the Palestinians if the
Palestinians declared a state without Israeli agreement. (In the April 14, 2004, White House
meeting, President Bush approved of Israel’s unilateral decision to withdraw from Gaza,
construct the security wall, and reject the right of return to Palestinian refugees.)
On September 24, 2002, President Bush said that a state of Palestine was part of the
vision for a future resolution of the Arab-Israel problem. U.N. Security Council Resolution
1397, passed by a vote of 14-0-1 (Syria) on March 12, 2002, included the phrase “two states,
Israel and Palestine,” the first Security Council resolution to mention a Palestinian state.
President Bush repeated U.S. support for an independent Palestinian state at Aqaba on June
Unresolved Issues in the Palestine Problem
Palestinians maintain that Israel must withdraw from east Jerusalem, seized by Israel
in the 1967 war along with the rest of the West Bank, and that east Jerusalem will become
the capital of the Palestinian state. Israel, which has claimed Jerusalem as its capital since
1948, annexed east Jerusalem in 1967, and claims that Jerusalem’s status is not negotiable.
No other country recognizes Israel’s annexation of east Jerusalem. Despite the Israeli claim,
Israel signed the 1993 Declaration of Principles, which calls for negotiations on the future
The July 25, 1994 Jordan-Israel non-belligerency agreement states that Israel “respects
... the special role” played by Jordan in Muslim religious shrines in Jerusalem. Arafat had
stated in the past that the Palestinian entity would be responsible for non-Jewish religious
shrines in the holy city. The Jordan-Israel agreement appears to set the stage for a future
contest or cooperation between Jordan and Palestine over the religious sites.
The United States has maintained a policy since 1967 that the future of the city must be
negotiated and cannot be decided unilaterally, and that the city should not be divided as it
was between 1948 and 1967. In 1990, Congress opposed the Administration position and
passed resolutions acknowledging that Jerusalem was the capital of Israel and should not be
a divided city (H.Con.Res. 290, passed on April 24, 1990, and S.Con.Res. 106, passed on
March 22, 1990). In 1995, Congress passed S. 1322 (P.L. 104-45, November 8, 1995) that
stated that the U.S. embassy should be moved from Tel Aviv to Jerusalem. The law provides
a presidential waiver if maintaining the embassy in Tel Aviv is in the U.S. national interest
(Out-of-print CRS Report 94-755, Jerusalem, dated February 21, 1995; available by
contacting Clyde Mark, 7-7681). On July 27, 2000, President Clinton told an Israeli
interviewer that he favored moving the embassy to Jerusalem, but signed waivers to keep the
embassy in Tel Aviv. During the 2000 campaign, George Bush said he favored moving the
embassy to Jerusalem, but since becoming President has signed waivers delaying the move.
Section 214 of P.L. 107-228, the Foreign Relations Authorization Act for FY2003,
states that Congress maintains its commitment to moving the U.S. embassy from Tel Aviv
to Jerusalem, bans funds appropriated in the act from being used to support the Jerusalem
consulate unless the U.S. ambassador to Israel has authority over the consulate, declares that
publications financed under the act must list Jerusalem as the capital of Israel, and states that
any U.S. citizen born in Jerusalem may request that their birthplace be listed as Israel.
President Bush issued a statement on September 30, 2002, that he considered the section to
be advisory, not binding , and that the section interfered with his constitutional authority to
conduct the nation’s foreign relations. The statement also said that U.S. policy toward
Jerusalem remained unchanged, which implied that the United States holds that the future
of Jerusalem must be negotiated and not be decided unilaterally, as the Israelis have done.
The Palestinians would prefer a return to the boundaries recommended by the United
Nations in Resolution 181 of 1947, but since 1974, have accepted the 1948-1967 boundaries
between the West Bank/Gaza and Israel. The Shamir government (1988- 1992) claimed all
of the West Bank as part of Israel and would have made the boundary the Jordan River. It
is not clear what other Israeli governments would have offered or accepted. Some Israelis and
most Palestinians believe that the Israeli wall/fence under construction since June 2003 to
separate Israel from the Palestinians will become a permanent boundary, despite the Sharon
government’s claims that it will not.
The Palestinian-Israeli Interim Agreement, September 1995, partitioned the 2,200
square mile West Bank into a patchwork quilt composed of three different jurisdictions: Area
A, under full Palestinian control, about 1% of the total, was comprised of the seven largest
cities (excluding Jerusalem), primarily populated by Palestinian Arabs; Area B, under shared
Palestinian and Israeli control, about 27% of the West Bank, was comprised of Arab villages
around the cities; and Area C, under full Israeli control, about 72% of the total, was
comprised of Israeli settlements, so-called “state land,” highways, public areas, and Israeli
Israel withdrew from the Area A cities in December 1995-January 1996 (and Hebron
February 1997) and a few of the Area B villages, leaving the Palestinian Authority in full
control of about 3% of the West Bank. Israel also withdrew from 70% of the Gaza Strip, but
retained four areas where there are Jewish settlements. The Netanyahu government ceded
another 7% of the West Bank in November 1998, in keeping with the Wye agreement, but
postponed further withdrawals until after the May 1999 election. The government of Ehud
Barak, sworn in July 1999, agreed in September 1999 to further withdrawals in September
and November 1999, and March 2000, that left about 18% of the West Bank in Palestinian
hands, 22% under shared Israeli-Palestinian control, and 60% under full Israeli control.
According to press reports in early May 2000, Israel offered to withdraw from a total
of 80% of the West Bank, withdrawing from 66% then and the remaining 14% after a couple
of years. Israel would annex the remaining 20%. The Palestinians rejected the offer. The
press reported on May 20 that Israel raised the offer to 90% of the West Bank, and an
unconfirmed rumor circulating in August 2000 said that the United States proposed that
Israel retain only 5% of the West Bank. Reports from the July 2000 Camp David talks said
the figures under discussion ranged from 90% to 97%. The Palestinians rejected the Israeli
Camp David offer because Israel retained sovereignty over all of Jerusalem — the
Palestinians sought sovereignty over Arab east Jerusalem — and because the Israeli proposal
divided the West Bank into three non-contiguous zones that would have impaired Palestinian
nationalism and stymied economic growth.
Palestinians consider the Golan Heights part of Syria, not Palestine, but the
Syrian-Israeli negotiations over the Golan may affect Palestinian-Israeli negotiations over the
West Bank and Gaza. Persistent rumors from Israel and unconfirmed reports from Syria
claim that the Rabin-Peres government agreed to withdraw from most of the Golan Heights.
The Netanyahu government elected in May 1996, appeared less inclined to withdraw from
Golan and not inclined to meet a commitment made by its predecessor government.
Prior to April 14, 2004, the United States stated that boundaries should be negotiated
and mutually recognized, “should not reflect the weight of conquest,” and that adjustments
in the pre-1967 boundaries should be “insubstantial.” The United States acknowledged
Israel’s need for defensible borders (erase some of the anomalies along the 1948-1967
armistice lines) and also acknowledged that the Palestinians desired a territorial entity
separate from Israeli rule. But President Bush said, on April 14, that boundaries should
reflect the realities of Israeli settlements, suggesting that Israel would establish sovereignty
over Israeli settlements on the West Bank. In the same statement, the President approved
Israeli unilateral action.
Israeli Settlements in the Occupied Territories
The Arab nations maintain that Israeli settlements in the occupied territories are illegal
under international law, specifically paragraph 6 of Article 49 of the Fourth Geneva
Convention on the Protection of Civilian Persons in Time of War, which states: “The
occupying power shall not deport or transfer parts of its own civilian population into
territories it occupies.” Israel maintains that Jordan’s 1950 annexation of the West Bank was
not recognized by the international community, and therefore is illegal. Egypt never claimed
the Gaza Strip. Israel maintains that the two regions are not “occupied territories,” and are
not subject to the Geneva Convention. Many nations, as reflected in the votes on several
U.N. General Assembly and Security Council resolutions, believe that Israel is the occupying
power, that the Geneva Convention applies, and that the Israeli settlements are illegal.
United States’ spokesmen, such as Ambassador George H. W. Bush on September 25, 1971,
Ambassador William Scranton on May 26, 1976, and Secretary of State Cyrus Vance on
March 21, 1980, have stated that the settlements are illegal. During a December 16, 1996
news conference, President Bill Clinton agreed with the statement that the settlements were
obstacles to peace. President George W. Bush said on April 4, 2002, that Israeli settlement
activity in the occupied territories must stop. On April 14, 2004, President Bush said that
negotiated borders should reflect realities on the ground, meaning the Israeli settlements.
The Israeli Attorney General recommended to the Prime Minister that Israel adopt the
Geneva Convention, which would be an admission by Israel that Israeli settlements in the
occupied territories were against international practice.4 The recommendation was included
in a report submitted in August 2004, on the implications of the World Court decision that
the wall was illegal.
Compensation/Repatriation for Palestinian Refugees
Palestinians argue that paragraph 11 of U.N.G.A. Resolution 194 of December 11,
1948, states that the Arab refugees have a choice between returning to the homes now in
Israel that they left during the 1947-1948 war (the “right of return”), or receiving
compensation for the lost property . Israel argues that the Arabs abandoned their property
voluntarily, and that the international community should provide funding for resettling the
Palestinian refugees in Arab countries. Arabs claim the Jews drove them from their homes
in 1948-1949. Some Israelis counter with a claim for compensation for property abandoned
by Jews who left or were driven from Arab countries in the aftermath of the 1948-1949 war.
Palestinians counter that Jews who fled Arab countries should take their claims to those
countries, not to the Palestinians.
King, Laura Israel Urged to Adopt Geneva Convention, Los Angeles Times, Aug. 25, 2004.
Israel claims that allowing Palestinian refugees to return to homes left in 1948-1949 or
1967 will destroy the Jewish nature of Israel. Palestinians claim the right of return is a matter
of justice encased in international law. The argument probably was a matter of perception
rather than physically moving a number of Palestinians into Israel: by accepting the right of
return, Israel would accept blame for forcing the refugees out of their homes in the first
place, and the Palestinians might have been more interested in such a confession of guilt than
in the actual return to abandoned properties. On April 14, 2004, President Bush said that the
Palestinian refugees should be settled in a Palestinian state and not in Israel, thus dismissing
the right of return. (See CRS Report RS20616, Middle East Peace: The Refugee Issue.)
The Palestinian Entity
On May 24, 1994, Arafat canceled all Israeli laws and reinstated pre-1967 laws in Gaza
and Jericho in an attempt to erase the Israeli occupation presence. Under terms of the
September 13, 1993 Declaration of Principles, the Palestinian cabinet assumed responsibility
for health, education and culture, social welfare, direct taxation, and tourism. The 88-seat
Palestinian Authority (also called the Palestinian Legislative Council, PLC), elected on
January 20, 1996, and sworn in on March 7, 1996, and the 26-person cabinet named by
President Yasir Arafat on May 9, 1996, assumed responsibility over other functions of
government except for security and foreign relations, which Israel controlled through the
five-year interim and into the final negotiating period. Arafat named a new 34-person cabinet
on August 5, 1998, to avoid a vote of confidence in the Palestinian Legislative Council, and
on June 13, 2002, reduced the cabinet to 21 members as part of his reform program. The
cabinet resigned on September 19, 2002. Arafat named Mahmud Abbas to be Prime Minister
on March 6, 2003. Abbas and his 24-person cabinet won a vote of confidence on April 29,
2003, and were sworn in the next day. Abbas and Arafat disagreed over control and reform
of the police, and Abbas resigned on September 6. Arafat appointed PLC Speaker Ahmad
Qurai as the new prime minister on September 10, 2003, but Qurai and Arafat had the same
disagreement as Arafat and Abbas — who should control the police.
The PLC passed a Basic Law in 1997, but Arafat did not sign the law until May 30,
2002. The Basic Law serves as a constitution, outlining the function of the PLC, the
President, the cabinet, and the electoral process. One of the reforms sought by President
George W. Bush is a new Palestinian constitution.
Arafat died on November 11, 2004. Mahmud Abbas defeated six other candidates in the
election held on January 9, 2005, to replace Arafat. On February 23, 2005, the Palestinian
Legislative Council approved a new 24-person cabinet. Seventeen members of the new
cabinet members were selected for their expertise rather than their loyalty to Arafat or Fatah,
as had been the case in the past.
Police. According to negotiations following the May 4, 1994 agreement, the
Palestinian enclaves were to be protected by a Palestinian police force. The Palestinian police
began arriving in Gaza on May 11 and in Jericho on May 12, 1994, replacing the Israeli
Defense Forces and Israeli border police. Other nations have provided training (Egypt,
Jordan, Great Britain, Iraq), vehicles (the United States donated 200 light and heavy trucks,
Russia donated armored vehicles, Greece donated 58 trucks), uniforms (Norway),
communications equipment (Spain), anti-riot gear (Great Britain), housing and offices (Japan
and Germany), and cash (the United States $5 million, European Union).
The Palestinian police are supposed to cooperate with the Israeli police in patrolling the
borders and the villages, manning crossing points, and maintaining order. Paragraph 3 of
Article IV of Annex I of the Interim Agreement of September 28, 1995, states that the
Palestinian police force shall number 12,000 in the West Bank and 18,000 in the Gaza Strip.
Israel claimed that there were between 36,000, and 40,000 Palestinian police in uniform prior
to the second intifada that started in September 2000. Israel destroyed most of the Palestinian
police infrastructure during the Israeli invasions of West Bank cities in April-May 2002.
Arafat wants control of the police to rest in the president’s office, but his two prime
ministers, Abbas and Qurai, preferred that police control rest in the cabinet.
Israel’s closure of the occupied territories has forced the near collapse of the Palestinian
economy. Israel has closed Palestinian borders with Egypt, Israel, and Jordan, and has
cordoned off Palestinian towns and villages to prevent traffic between Palestinian areas.
About 100,000 Palestinian workers cannot cross into Israel to jobs; the unemployment is at
50%, and gross domestic product has fallen by 50%. In its search for terrorist infrastructure,
the IDF has destroyed much of the water, electrical, telephone, and transportation systems
in Ramallah, Nablus, Jenin, and other West Bank cities. The Palestinian Authority relies
upon grants from the Arab states and the European Union to meet its payroll.
Other Aspects of the Palestinians
Individual Palestinians and Palestinian military groups, both PLO and non-PLO, have
launched terror attacks against Israeli people and facilities. Palestinian terrorists also have
attacked people or institutions that, in the Palestinians’ view, support Israel, including U.S.
citizens, property, and installations. One of the conditions set by Congress in 1984 for
beginning a U.S. dialogue with the PLO was that the PLO renounce terrorism, which it did
in November and December 1988. But when the PLO refused to renounce the May 30, 1990,
attempted military landing near Tel Aviv, the United States broke off the dialogue. Israel
maintained that the PLO is a terrorist group. Until January 1993, any contact between an
Israeli or anyone under Israeli occupation and the PLO was a crime in Israel. Many
Palestinians view the attacks against Israel and its supporters as part of the legitimate
Palestinian armed struggle to secure Palestinian rights, and view Israeli attacks against Arab
civilians as terrorism.
Palestine Refugees and UNRWA5
One-half of the world’s almost 9 million Palestinians live in Israel or under Israeli
occupation. About 1 million Palestinian Arabs live in Israel and are Israeli citizens, who may
vote and are eligible to serve in the Knesset (11 Arabs were elected to the Knesset in May
1996). The 3 million Palestinians in the occupied territories are not Israeli citizens and do
not vote in Israeli elections. Jordan granted citizenship to the Palestinians living in Jordan
but other Arab states have not offered blanket citizenship.
Of the 9 million Palestinians, 4 million are registered with the United Nations Relief
and Works Agency (UNRWA) as refugees from the 1947-1948 war. There is disagreement
over why the Palestinians became refugees: Israeli sources claim the Palestinians left their
homes voluntarily or because the Arab governments told them to leave; Arab sources claim
the Israelis forced the Palestinians to leave. UNRWA provides shelter, food, medical and
dental care, and education benefits for the 4 million Palestinian registered refugees. Not all
the registered refugees receive all the benefits; some 1.3 million live in 59 refugee camps
scattered across Lebanon, Syria, Jordan, the West Bank, and the Gaza Strip.
The United States contributes to UNRWA through the refugee and migration account,
authorized in the State Department authorization bill and appropriated through the foreign
operations appropriations bill. U.S. contributions to UNRWA have not been earmarked in
past appropriations bills.
Table 1. Palestine Arab Refugees Registered with UNRWA
Source: Report of the Commissioner-General for UNRWA, Supplement 13 (A/55/13) 2002.
Note: West Bank included in Jordan in 1950. UNRWA stopped operating in Israel in 1952, when Israel
resettled its Arab refugees.
See CRS Report RS21668, United Nations Relief and Works Agency for the Palestine Refugees in
the Near East (UNRWA).
Table 2. U.S. Contributions to UNRWA, 1950-2005
(millions of dollars)
Source: Department of State.
* Regular contribution only. Before an anticipated emergency funding
Table 3. U.S.AID Assistance to West Bank & Gaza, FY1975-FY2004
($ in thousands)
Source: U.S. Department of State, Agency for International Development, [http://www.usaid.gov/wbg/].