By: Prof. Dr. Mohsen Mohammad Saleh.
If the Palestinian decision maker is guided by a genuine desire for liberation and independence, then he must carefully examine the problem of financial reliance on others in managing the Palestinian national program and building its institutions.
Because the action for Palestine takes place on Planet Earth and nowhere else, then it must have a land under its control, otherwise, it will come under pressure, blackmail, and obligations arising from “respecting the requirements of hospitality” of its hosts. Under occupation, Palestinian action will also be subject to the former’s measures and conditions, and if Palestinian action decides to swim against the regional and international current—as in the Gaza Strip (GS)—then siege, destruction, and war awaits it.
In any case, confronting the global Zionist project requires alliances, relations, and nurturing environments, while being wary of falling into the traps laid by those who frequently use political money to subdue, divert, distort, and/or disrupt Palestinian action. If those who don’t own their own food can’t control their decisions, then those who rely in their income or some of it on forces and parties that have an agenda contradictory to the national agenda are gravely risking their plans, projects, and dreams.
From its outset, the PA found itself in an environment that did not allow it to stand on its feet, whether because of the ongoing occupation, the nature of the peace agreements, and/or because the PA itself is relatively new. For this reason, foreign aid became a main source of funding.
However, these funds are political money associated to the agendas of funder countries, which are mostly Western countries with strong ties to Israel and are led by the United States (US). Hence, these try to impose their own version of the peace process and its obligations. Therefore, these funds have been used to pressure the PA to adhere to the peace process and the conditions of the Quartet, becoming one of the obstacles to Palestinian national unity, as an important percentage of the Palestinian people lost faith in the peace process and do not accept the Quartet conditions. Part of these funds were also used to meet the security commitments of the Palestinian side vis-a-vis Israel.
The Extent of the Phenomenon
A study prepared by Nasr Abdel Kareem and Basim Makhool, published by the Palestine Economic Policy Research Institute (MAS) in 2005, based on data from the Ministries of Planning and Finance, shows that the PA received grants and aid worth of $3.495 billion during 1994–2000, with an average annual rate of $499 million. However, PA revenues—other than foreign aid—did not exceed $226 million in 1995, $300 million in 1996, and $327 million in 1997. In other words, foreign aid was often larger than other PA revenues.
During the 2000–2013 period, the total amount of grants and aid to the PA, according to Palestinian Monetary Authority statistics, was $13.931 billion. If all revenues are tallied (local tax collection, clearance revenues and foreign revenues) from 2000 to 2013, their total would be $33.583 billion. Thus, grants and aid are 41.5% of total revenues, with $995 million as an annual average.
The proportion of clearance revenues—tax and customs collected by Israel on behalf of the PA—of total revenues is 37.6% with an annual rate of $903 million. In other words, up to 79% of the PA total revenues from 2000 to 2013 were dependent upon or linked to Israel or the donor countries.
Western Dominance
According to data collected by Nasr Abdel Kareem and Basim Makhool from reports published by the Ministries of Planning and Finance, the US, the European Union (EU), and European countries provided the bulk of aid and grants during the period from 1994–2003, with a total of $4.283 billion (65.4%), while the Arab countries provided $1.283 billion (18.4%), Japan provided $482 million (7.4%), and international institutions $435 million (6.6%). The US as an individual donor country topped the list, offering aid to the tune of $1.028 billion or 15.7% of the total.
Between 2007 and 2013, the EU, through the Palestinian-European mechanism, and the US, continued their crucial role in shoring up the PA budget. The Palestinian-European mechanism offered $2.702 billion, 33.3% of total international support (and almost equal to combined Arab aid), while the US supported the budget in the same period with $1.204 billion or 14.8% of total international support.
The US had cut its aid to the PA budget in 2011 and 2012 to $51.7 million and zero, respectively, in conjunction with the impasse in the peace process. Then, with the re-launch of the peace process in summer of 2013, US aid resumed to the tune of $349 million. The World Bank provided assistance worth of $1.374 billion, or 16.9% of international support.
This means that Western support and the support by international institutions dominated by the Western powers remained the key player in the PA’s external support.
Arab Support
Clearly, the contributions of Arab countries were minimal between 1994 and 2000, prior to al-Aqsa Intifadah, offering a total of $300 million in aid out of $3.495 billion donated to the PA, or as little as 8.6%. This underscores the marginal role of the Arab nations in establishing and sustaining the PA in its early years.
However, the Arab aid doubled after the escalation of al-Aqsa Intifadah, in order to support the PA and the steadfastness of the Palestinian people. Arab aid rose to $903 million between 2001 and 2003, with 29.5% of total aid.
Data shows that Arab countries supported the PA to the tune of $2.529 billion between 2007 and 2013, with an average annual rate of $361 million, 31.1% of total aid. Other countries and donors contributed during the same period $5.593 billion or $799 million annually, 68.9% of total support.
Saudi Arabia topped the list of Arab contributors to the PA between 2007 and 2013, with a total of $1.293 billion or 51.1% of total Arab support and 15.9% of total international support. The UAE came second with a total of $637 million or 25.2%of total Arab support, and Algeria third with 10.8% of total Arab support, followed by Qatar with 6.3%.
In other words, four Arab countries covered around 93.4% of total Arab aid to the PA, while Iraq, Kuwait, Egypt, and Oman covered the remaining 6.6%. It is worth noting that Saudi Arabia and the UAE alone covered more than three-quarters of this aid, highlighting the role of the Arab “Moderate Front” in supporting the PA and the peace process.
Political Money
Hamas’s victory in the elections in 2006 was a clear example of the problem of political money that donors grant to the PA. Suddenly, direct financial support to the Palestinian government stopped, and Israel stopped transferring the taxes collected on behalf of the Palestinians. The Palestinian government, although it won a vote of confidence in the Palestinian Legislative Council (PLC), was the target of attempts to thwart and disrupt its work and the target of an explicit siege, for not consenting to the conditions of the Western powers and Israel on the peace process.
To circumscribe the government of Ismail Haniyeh, the EU in 2006 sought to find an alternative mechanism to deliver grants and aid directly, without going through the channels of the Hamas-led Palestinian government, creating the so-called Palestinian-European Mechanism for the Management of Socio-Economic Aid (PEGASE).
Because Western powers, specifically the US, controls the global financial system, and because most influential Western countries decided to embargo the government of Isma‘il Haniyyah, other financial transfers were diverted to the Palestinian presidency, or using channels that do not defy or circumvent the U.S.-led Western financial embargo.
After Fatah took control of the Palestinian Authority (PA) in the West Bank (WB) and Hamas took over GS in mid-2007, the pro-peace process forces supported the Fatah-appointed government in WB, while also supporting the continuation of the embargo on the caretaker government led by Hamas in GS.
Following the Annapolis conference, which was held on 27/11/2007 to push peace process forward, another conference was held in Paris, International Donors’ Conference for the Palestinian State, on 17/12/2007 with the participation of 87 countries and international bodies. The participating countries and donor agencies pledged assistance to the government of Salam Fayyad in Ramallah, worth $7.4 billion over three years.
The Donors’ Conference was another clear example of the role of political capital in supporting one Palestinian side against another, one Palestinian policy against another, and the legitimacy of the Palestinian presidency over the legitimacy of the PLC. Thus, enabling the presidency and government appointed by the president while disrupting the role of the PLC and government produced by it.
This political money reared its head strongly again following the formation of the national consensus government in early June 2014, which refused to pay the salaries of Gaza civil servants appointed by the caretaker government led by Isma‘il Haniyyah. Those had bore the brunt of running and protecting GS for seven years, and were denied their rights either under the pretext that the Ramallah government had not appointed them or under the pretext that the donors and Israel would object.
At the same time, this government continued to pay the salaries of tens of thousands of civil servants who stopped showing up for work since the summer of 2007, and who remained loyal to the PA in Ramallah.
Non-innocent political money also found its way to Palestinian civil society organizations. It contributes to corrupting intellectuals and rearranging their priorities and concerns in accordance to the agenda of the donors, through large amounts of money that gave the recipients a higher living standard. It works also on deflating the revolutionary sentiment and marginalizing its advocates, while promoting advocates of “well-being under occupation” or the peace settlement.
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Palestinian decision-makers would be mistaken to believe that they can achieve national unity, build comprehensive representation and effective institutions, liberate the land and holy sites, and build a productive economy, while at the same time enjoying the political money of Israel’s alliances and close friends.
Accordingly, independence of the Palestinian decision-making depends mainly on relinquishing this aid, and on searching for alternative ways to support steadfastness, enhance strength, and increase social and political immunity. Consequently, a healthy atmosphere of the Palestinian struggle would be available, without having to pay prices at the expense of Palestinian rights, dignity, pride, liberation and independence.
The Arabic version of this article appeared on Al Jazeera.net on 21/12/2014. 
Al-Zaytouna Centre for Studies and Consultations, 31/12/2014
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