Democracy and Governance in West Bank & Gaza
The Development Challenge: USAID/West Bank and Gaza (USAID/WBG) continues to play an integral role in promoting the U.S. Government's strategic foreign policy priority of advancing the Middle East peace process and creating two independent, viable, democratic states living side by side in peace and security. An underlying objective of U.S. Government support is to improve the quality of life for Palestinians. The conflict with Israel has severely constrained development, especially since the Intifada began in September 2000. According to the World Bank, approximately 16% of the population, or 607,000 persons, live below the poverty line of $280 per month for a family of six and cannot afford the basics for survival. In 2003, per capita real Gross Disposable Income (GDI) in the West Bank and Gaza stood at $1,467 ($1,621 in the West Bank and $1,227 in Gaza), a level that is comparable with Egypt. This figure includes official donor assistance of $300 per capita, an extraordinary level of donor support. Without this assistance, Palestinian consumption and social indicators would all be appreciably lower, and Gaza's per capita GDI would be the second lowest in the region after Yemen. The January 2005 election of a new president lays the groundwork for the cessation of violence, the implementation of security, democratic and governance reforms, and a return to the Roadmap process. These developments create new opportunities for U.S. assistance to help the Palestinians return to economic growth and an improved quality of life for residents of the West Bank and Gaza.
Apart from the violence itself, the proximate causes of this decline in the well-being of Palestinians were the physical fragmentation of the West Bank and Gaza and the much higher transactional costs associated with Israeli closures and curfews (implemented in response to terror attacks) and other restrictions on Palestinian mobility of both goods and people. In addition, for two years beginning in December 2000, in response to the Intifada, Israel began withholding the customs, excise, and value added taxes that it had been collecting on behalf of the Palestinian Authority (PA) as part of the Customs Union arrangement under the Oslo Accords. Since Israeli revenue clearances constitute about two thirds of the PA's total revenues, this period of revenue transfer suspension had an immediate and crippling effect on both the PA and the Palestinian economy. This crisis elicited a major donor response, which now totals approximately $1 billion per annum.
A forceful and well-coordinated donor response during the past four years, and the resumption of Israeli revenue clearances in the past two years, has meant that an outright humanitarian disaster, especially in Gaza, has been averted. At the same time, high fertility and population growth rates persist, dependence on foreign aid has been further entrenched, and the economy now needs to be reoriented away from its former dependence on labor exports to Israel. Critical infrastructure needs, particularly in water, also need to be addressed. Along with the need to proceed rapidly with democratic governance, institution building, social service delivery, and other reforms, these represent the major development challenges.
The World Bank, in its December 2004 report on "Israeli Disengagement and Palestinian Prospects," suggested that if Israel works to remove its constraints on the movement of goods and people following its withdrawal from Gaza and four settlements in the Northern West Bank, and if the PA can demonstrate commitment and achieve progress in the areas of elections, security, and other key reforms, then the basis for economic regeneration and a return to the Roadmap process would be in place. In accordance with the Palestinian Basic Law, and following the election of President Abbas, plans for Legislative elections in May 2005 and for local municipal elections are similarly underway. In a further sign of progress on the reform front, President Fattouh has signed all pending Palestinian Legislative Council (PLC) laws. Israel, meanwhile, has been steadily advancing its unilateral Disengagement Plan that is expected to lead to a withdrawal from the Gaza Strip and the Northern West Bank by the end of 2005. These defining events are giving rise to renewed but cautious optimism among both Israelis and Palestinians.
It is important to note that the political uncertainty and accompanying instability increase the planning and implementation challenges of the Mission. Within this context, the Mission continues to develop innovative approaches to ensure that U.S. taxpayer dollars are serving the intended purposes and not being provided to terrorist organizations or their affiliates. Per a congressional mandate, the U.S. Inspector General supervises audits of all ongoing projects; all local organizations that receive USAID funds and their key officials are vetted for terrorist affiliations; and the Mission conducts regular project evaluations to ensure that critical development needs are addressed.
(Excerpted from the 2006 Congressional Budget Justification for West Bank & Gaza)
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