Some Members of Congress have increased their scrutiny of the Palestinian practice of providing payments to some Palestinians (and/or their families) who have been imprisoned for or accused of terrorism by Israel. Critics have asserted that because money is fungible, any aid that directly benefits the Palestinian Authority (PA) could indirectly support such payments. Congress may consider legislation—most of the bills are known as the Taylor Force Act—that could supersede existing provisions on the subject in annual appropriations legislation. The impact that the legislation could have on overarching U.S. priorities on Israeli-Palestinian matters is unclear.
Palestinian Payments for "Martyrs" and Prisoners
According to a 2016 article, the Palestinian practice of compensating families who lost a member (combatant or civilian) in connection with Israeli-Palestinian violence dates back to the 1960s. Palestinian payments on behalf of prisoners or decedents in their current form apparently "became standardized during the second intifada [uprising] of 2000 to 2005." Various PA laws and decrees since 2004 have established parameters for payments. Some lawmakers and the Trump Administration have condemned the practice, focusing particular criticism on an apparent tiered structure that provides higher levels of compensation for prisoners who receive longer sentences.
Since FY2015, annual appropriations legislation has provided for "dollar-for-dollar" reduction of Economic Support Fund (ESF) aid for the PA in relation to terrorism-related payments. Section 7041(l)(3) of the Consolidated Appropriations Act, 2017 (P.L. 115-31), reduces ESF for the PA by the amount the Palestinians provide as "payments for acts of terrorism by individuals who are imprisoned after being fairly tried and convicted for acts of terrorism and by individuals who died committing acts of terrorism during the previous calendar year."
In practice, ESF aid for the West Bank and Gaza includes the following:
To date, executive branch reporting to Congress regarding reductions made to ESF aid for the PA in relation to these payments has been classified. In July 2017, former U.S. Ambassador to Israel Daniel Shapiro testified at a congressional hearing that, beginning in FY2015, the Obama Administration reduced "the overall [annual] assistance program from about $400 million to about $260 million."
Congressional scrutiny of Palestinian terrorism-related payments increased in the wake of the March 2016 death of Taylor Force, a U.S. citizen and war veteran who, while studying abroad as a private civilian, was fatally stabbed by a Palestinian attacker. The incident was part of a larger wave of Israeli-Palestinian violence that periodically resurfaces. Two bills are known as the Taylor Force Act (H.R. 1164 and S. 1697). Another contains similar provisions (S. 474). The Senate Foreign Relations Committee (SFRC) reported S. 1697 in modified form (the "SFRC version") on September 6, 2017. As congressional deliberations have proceeded, Trump Administration officials have called upon Palestinian leaders to cease payments on behalf of Palestinians who have committed terrorist acts. Earlier versions of the Taylor Force Act were introduced in the 114th Congress.
In contrast to the "dollar-for-dollar" reduction to ESF in existing legislation, the different versions of the bill would either fully or partially suspend ESF unless and until the PA meets certain conditions. In their original versions, H.R. 1164 and S. 474 would condition all ESF aid for the West Bank and Gaza—both USAID-administered project assistance and PA budget support—on an end to specified terrorism-related payments. The SFRC version of S. 1697, per Section 4, would suspend means of assistance that "directly benefit" the PA unless and until the Secretary of State certifies to Congress that the PA, among other things
These conditions would apparently apply to all budget support to PA creditors (except for the East Jerusalem Hospital Network). It is unclear to what extent some project assistance funds might also be construed to "directly benefit" the PA.
Additionally, under Section 5 of the SFRC version, all ESF for the West Bank and Gaza (whether or not construed to "directly benefit" the PA) would be subject to a continuous certification (every 180 days) that the PA is "taking credible and verifiable steps" to end violence perpetrated by those under its jurisdiction against U.S. and Israeli citizens.
The SFRC version also includes an amendment (Section 6) that would keep any withheld ESF funding for the West Bank and Gaza in a Palestinian Authority Accountability Fund (PAAF) for up to a year in order to allow the Palestinians time to conform their practices to the bill's requirements. If this does not happen, funds held in the PAAF would be reallocated away from the West Bank and Gaza.
As reported, S. 1697 would not permit the executive branch to waive its provisions on national security grounds, despite some discussion of a possible waiver during a July 2017 committee hearing. It would also (per Section 7) apparently require the executive branch to switch from classified to unclassified annual reporting (though a classified annex would be permitted) on payments made by the PA—including estimated amounts and related legal developments.
On September 7, the Senate Appropriations Committee reported a version of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018 (S. 1780) that included most of the SFRC version of S. 1697, but with a substantive change that appears to have gained the bill additional support. Per the change, the continuous certification requirement from Section 5 of the SFRC version [imported to S. 1780 as Section 7041(k)(3)(B)] would only apply to types of ESF deemed to "directly benefit" the PA.
On December 5, the House passed a revised version of H.R. 1164 (the "House version") as stand-alone legislation that is similar to the corresponding provisions in the Senate FY2018 appropriations bill (S. 1780). The House version would apply from FY2018 to FY2023, and specifically exempts the following additional types of aid from limitation: (1) assistance for wastewater projects and (2) activities providing vaccinations to children. Also, under the House version of H.R. 1164, funds withheld would remain available for up to two years (versus one under S. 1780) to allow the Palestinians time to conform their practices to the bill's requirements, before being reallocated elsewhere.
The modifications reflected in the SFRC version of S. 1697 (and later incorporated into S. 1780) appear to have garnered general acquiescence from some key Israeli security officials and analysts who were reportedly concerned that more stringent conditions on project assistance could endanger West Bank stability.
Facing domestic political challenges, Palestinian leaders have publicly denounced S. 1697, and it is unclear whether passage of the bill would enhance the PA's willingness to suspend payments or otherwise change how they are made in order to maintain U.S. budget support. According to PA financial statements from calendar years 2013 to 2016, U.S. budget support has averaged around 13% of the PA's annual external support and 3.5% of annual PA spending (calculated on a commitment basis) over that time. Clearance revenues (tax and customs amounts due to the PA that Israel collects on its behalf and transfers to it per a 1994 agreement) over the same period averaged around 50% of annual PA spending.