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Palestinian Foreign Aid: U.S. Foreign Aid

(FY 2012 - 2013)

Excerpted Report:

    - Summary
    - Conditions, Limitations, Restrictions
    - Types of Funding Programs
    - Direct Assistance to the PA
    - Security Assistance to the PA
    - US Contributions to UNRWA
    - Conclusion

Read Full Congressional Report - CLICK HERE


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— toward 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.

Some U.S. lawmakers have taken action since August 2011 to delay the obligation of some already-appropriated FY2011 U.S. aid to the Palestinians, largely due to Palestinian efforts— currently on hold—to seek greater international support of Palestinian statehood outside of negotiations with Israel. Palestine Liberation Organization (PLO).

Additionally, various agreements since May 2011 between Fatah and Hamas leaders have raised concerns among some Members of Congress about continuing U.S. budgetary and security assistance to a PA government whose composition 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 agreement remain unclear.

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 Hamascontrolled 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. 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.

Major Conditions, Limitations, Restrictions on Aid

Annual appropriations legislation routinely contains the following conditions, limitations, and restrictions on U.S. aid to Palestinians:

• 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, or that results from an agreement with Hamas and over which Hamas exercises “undue influence,” 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 Hamascontrolled) may under certain conditions receive aid pursuant to a presidential waiver for national security purposes.

It is unclear whether a power-sharing government of the type anticipated under the May 2011 or February 2012 Fatah-Hamas agreements would come under the legal definition of a “power-sharing PA government that includes Hamas as a member” or a government over which Hamas exercises “undue influence.” It is also unclear whether it would come under the legal definition of a “Hamascontrolled” PA government, and thus trigger the additional conditions on U.S. aid cited above. 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.16

• 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
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).

• Palestinian Membership in the United Nations or U.N. Specialized Agencies: No Economic Support Fund aid is permitted to the PA if the Palestinians obtain from this point forward (the restriction does not apply to Palestinian membership in UNESCO) “the same standing as member states or full membership as a state in the United Nations or any specialized agency thereof outside an agreement negotiated between Israel and the Palestinians.” The Secretary of State may waive this restriction for national security reasons by filing a waiver detailing how “the continuation of assistance would assist in furthering Middle East peace.”

• 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).

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 Department) to U.S. nongovernmental organizations (NGOs) operating in the West Bank and the Gaza Strip. Funds are allocated in this program for projects in sectors such as humanitarian assistance, economic development, democratic reform, improving water access and other infrastructure, health care, education, and vocational training.

U.S. Bilateral Assistance to the Palestinians, FY2006-FY2013
(regular and supplemental appropriations; current year $ in millions)

P.L. 480
(Food Aid)

Table 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/Refugee Assistance (MRA) or Emergency Refugee and Migration Assistance (ERMA) accounts, regardless of how the term is defined in legislation.
a. Amounts stated for FY2013 have been requested but not yet appropriated.
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.

Proposed Spending Plan for FY 2013 Bilateral Assistance



Economic Support Fund
($370 million total)
:                 $150 million   

$220 million   

   Direct Budgetary assistance to the Palestinian Authority in the West Bank

   Assistance for the West Bank and Gaza (through USAID)
            $22.5 million - governance, rule of law, civil society
            $88 million - health, education, social services
            $78.7 million - economic development
            $30.8 million - humanitarian assistance

International Narcotics Control and Law Enforcement ($70 million total):
                                                 $40.8 million  

$29.2 million  


   Training, non-lethal equipment, and garrisoning assistance to the PA security forces in the West Bank, supporting efforts by the US Security Coordinator

   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


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 toward peace with Israel in return. 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. Annual appropriations legislation also routinely places conditions on aid to any power-sharing PA government “of which Hamas is a member,” and the FY2012 bill extended these conditions to any PA government that result from an agreement with Hamas over which Hamas has “undue influence." 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.

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 $550 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.
• 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.
• 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).
• In August 2011, $50 million in budgetary assistance from the ESF account were provided via presidential waiver.

U.S. Security Assistance to the Palestinian Authority

As mentioned above, aid has been given to train, reform, advise, house, and provide non-lethal equipment for PA civil security forces 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 but increasing proportion of this training and infrastructure assistance has been provided to strengthen and reform the PA criminal justice sector (see Table 1 and Table 2 above). This assistance has come from the International Narcotics Control and Law Enforcement (INCLE) account—to which a total of $658.4 million has been appropriated or reprogrammed for use in the West Bank since 2007. The Obama Administration has requested an additional $70 million in FY2013 INCLE funding.

Since Hamas gained control of the Gaza Strip, the office of the U.S. Security Coordinator (USSC) for Israel and the Palestinian Authority (a three-star U.S. general, supported as of late 2011 by U.S. and allied staff and military officers from the United Kingdom, Canada, and seven other countries) 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 4,200 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 eight of which have already been trained or begun training). At a July 12, 2011, hearing before the House Foreign Affairs Subcommittee on the Middle East and South Asia, Lieutenant General Michael Moeller, the current USSC, outlined some changes in emphasis for the USSC/INL program for FY2012:

This year, we will transition the program into the next phase of our campaign plan: Building institutional capacity. This new phase is less resource intensive as we move away from primarily providing the Palestinian security forces with equipment and infrastructure toward an increasingly direct “advise and assist” role.

In this phase, we will help the PASF develop indigenous readiness, training, and logistics programs and the capability to maintain/sustain their force structure readiness and infrastructure. Additionally, the USSC will continue to support other US rule of law programs that assist the Palestinians to improve the performance of the Justice and Corrections Sectors.

The USSC/INL security 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.34 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.35 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 Bank36 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—sparked by failed negotiating efforts, a possible U.N. action on Palestinian statehood in September 2011, and periodic outbursts of violence.

How potential Fatah-Hamas consensus on a PA governing arrangement 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.

U.S. Contributions to UNRWA

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. 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 2011 was $568 million, funded mainly by Western governments, international organizations, and private donors.37 UNRWA also creates special emergency funds for pressing humanitarian needs. 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 $249.4 million for FY2011 ($145.6 million for the general fund, $103.8 million for emergency funds and special projects), and totaled $238 million for FY2010 ($125 million and $113 million, respectively). According to the Obama Administration’s request, approximately $232 million in total contributions are expected for FY2012.

Historical U.S. Government Contributions to UNRWA
(in $ millions)

Fiscal Year(s)
Fiscal Year(s)
Table 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. 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.


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 responds to PLO action internationally on Palestinian statehood and observes how various Fatah-Hamas agreements since May 2011 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. 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.

Read Full Congressional Report - CLICK HERE

Sources: Library of Congress