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Palestinian Foreign Aid: Congressional Restrictions on U.S. Aid

In November 2005, the U.S. Congress passed the 2006 Foreign Operations Appropriations Act that included a stipulation prohibiting foreign aid to the Palestinian Authority unless it stops supporting terrorism, demonstrates a commitment to peaceful coexistence with Israel, raises democratic elections, takes measures to counter terrorism and terrorism financing and establishes security entities that cooperate with Israeli counterparts. Each successive Appropriations bill has included this restrictions.

A loophole was also worked into the bill allowing the President to issue a waiver to bypass the aid restrictions if he believes it to be in the national security interests of the United States. Since 2006, Presidents Bush and Obama have isued the waiver every year.

After Hamas took power on March 30, 2006, Secretary of State Rice said, “We are not going to fund a Hamas-led government. But we are going to look at what we can do to increase humanitarian assistance to the Palestinian people....” The Administration requested that the PA return $50 million in direct aid provided in 2005; as of April 7, $30 million had been returned. On April 7, the Administration announced that it would provide $245 million for basic human needs and democracy building through various U.N. and nongovernmental agencies, suspend or cancel $239 million for programs related to the PA ($105 million of which will be redirected to human needs), and review $165 million in other projects. It redirected about $100 million for humanitarian needs and $42 million for civil society groups.59

On May 9, the Quartet endorsed a Temporary International Mechanism (TIM) to be developed by the EU to ensure direct delivery of aid to the Palestinian people. In June, the EU presented a three-prong plan open to all donors to bypass the PA government. It calls for the expanding a World Bank emergency support program for essential health and social services programs and employees, for contributions to ensure uninterrupted supply of essential utilities (fuel for electricity from Israel), and for a needs-based social safety net based on for the poorest Palestinians. The first two programs already exist; the third has yet to be worked out in detail. The Quartet endorsed the TIM on June 17, and money was expected to flow in August. On September 20, the Quartet extended the TIM for three months and expanded it to security sector reform, reconstruction of infrastructure, and economic development.

P.L. 109-234, June 15, 2006, the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006, prohibits obligation of ESF appropriated in P.L. 109-102 for the West Bank and Gaza (above) until the Secretary of State submits a revised plan for such assistance and ensures that it is not provided to or through entities associated with terrorist activity. Section 550 prohibits assistance to the PA unless the Secretary of State determines that it has complied with the Quartet’s January 30 conditions. The President may waive the prohibition with respect to the administrative and personal security costs of the Office of the President of the PA and for his activities to promote democracy and peaceful resolution of the Israeli-Palestinian conflict if it is in the U.S. national security interest, if the President of the PA is not associated with Hamas or any other foreign terrorist group, and if aid will not be transferred to Hamas.

H.R. 5522, the Foreign Operations Appropriations bill for 2007, passed on June 9, prohibits the provision of economic aid to the PA unless the President certifies that it is important to U.S. national security interests. When the President exercises the waiver authority, he must report to Congress on the steps that the PA has taken to arrest terrorists, confiscate weapons, and dismantle the terrorist infrastructure. It also prohibits assistance to support a Palestinian state unless the Secretary of State certifies that its leadership has been democratically elected, has demonstrated a commitment to peaceful coexistence with the State of Israel, is taking measures to counter terrorism and terrorist financing, is establishing a new security entity that is cooperative with Israel, and the PA is working for a comprehensive peace. Again it grants the President waiver authority.

Other legislation reacting to the Hamas victory in the January 2006 Palestinian parliamentary elections includes S.Con.Res. 79, passed in both houses in February, which expressed the sense of Congress that no assistance should be provided directly to the PA if a party calling for the destruction of Israel holds a majority of its parliamentary seats. Also, H.R. 4681, passed in the House on May 23, would limit assistance to the PA until it meets a number of specific conditions, to nongovernmental organizations operating in the West Bank and Gaza, and to specified U.N. agencies and programs that “fail to ensure balance” in the U.N. approach to Israeli-Palestinian issues, proportionate to U.N. aid to the PA; deny visas to PA officials; restrict the travel of PA and PLO officials stationed at the U.N.; and prohibit PA and PLO representation in the United States, among other measures. The White House said that H.R. 4681 “unnecessarily constrains the executive’s ability to use sanctions, if appropriate, as tools to address rapidly changing circumstances.” The Senate version of the bill, S. 2370, passed on June 23, is less restrictive regarding nongovernmental organizations and adds a call for the establishment of a $20 million Israeli-Palestinian Peace, Reconciliation, and Democracy Fund.

The Trump administration announced on August 24, 2018, that it would not spend more than $200 million set aside for Palestinian refugee aid. In September, the administration said it was also cutting $25 million originally planned for the East Jerusalem Hospital Network and $10 million from a program for people-to-people exchanges between Palestinians and Israelis. In October, the State Department cancelled a $165 million transfer of aid to the Palestinian Authority over its failure to adhere to the Taylor Force Act.

Sources: Carol Migdalovitz, "Israeli-Arab Negotiations: Background, Conflicts, and U.S. Policy," DC: Congressional Research Service, (November 14, 2006);
New York Times, (August 24, 2018);
Reuters, (September 20, 2018);
New York Times, (September 14, 2018);
Jerusalem Post, (October 11, 2018).