In 2011, at the end of the statebuilding process, several international actors published reports which all stated that the PA, despite the tremendous difficulties it faced, had made steady advances in the rule of law and justice sector, including in drafting legislation and addressing the long-standing backlog of court cases (See, for example, UNSCO 2011, European Commission 2011). However, despite this progress, rule of law, together with human rights, are the two areas of Palestinian statebuilding that have been most negatively affected by the split between the Fatah and Hamas. In the West Bank and Gaza, two different sets of security forces and legal systems have been established and consolidated. Consequently, in reality, it is questionable to what extent, if any, Gaza now can be considered part of Fayyad’s statebuilding project. The PA’s former officials in Gaza, numbering several tens of thousands, have since they were ousted by Hamas in 2007 been receiving salaries month after month without being able to work. A UN Gaza official, Simon Boas, refers to this as the “sleeping ministries of the PA” (Boas, interview 2 July 2012).
All this, moreover, underscores the problems of factionalism in the Palestinian territories, where civil servants are affiliated with a faction rather than with the whole of society, which in turn enforces structures of patronage and clientelism. This further makes it dangerous for factions like Fatah or Hamas to lose elections and other power struggles. In the end, this is one of the reasons why both groups are hesitant to call for new elections because they both fear the consequences of losing. As a result, Fatah and Hamas have each entrenched themselves in, respectively, the West Bank and Gaza, and consolidated their own power base while mutually oppressing each other, to the dismay of the Palestinian population who strongly favor reconciliation between the groups (For polls about this, see Palestinian Center for Public Opinion 2011).
7.4 The economic dimension of Palestinian
economic role is by far the most prominent role of the EU in the conflict. At the same time, it must be recognized that the fundamental tasks with regard to economic assistance, namely supporting the PA, funding civil society, wider development and aid issues, are all deeply political processes with close relations to other political developments in the Palestinian territories.
Even if these and other economic matters regularly and sometimes unfairly are overshadowed by what is called the final status issues, there should be no doubt that building up functioning Palestinian institutions is of decisive importance for any future peace agreement.
According to Rouba Al-Fattal (2010:12), the reason why the EU acquired a mainly economic role was that all parties welcomed it; the Palestinians needed the money; the Israelis and the Americans needed someone who could pay the bills; and the EU needed a presence in the conflict. An economic role is also generally far less sensitive than a political role, which makes it suitable for the EU. By assuming an economic role, which had the consent of all parties, the EU could claim it was supporting the peace process and the Palestinian people while not being directly involved in sensitive political matters, a situation that Le More calls (2008:84) “aid instead of politics”. It was the hope and belief of the EU that its “low politics” would influence Israeli and American “high politics”, in other words, the final status issues of the conflict. As this has not happened, in large part because there was little “high politics” going on between the Americans and the two parties since the collapse at Camp David in 2000, Le More (2008:85) argues that “in the absence of movement on the diplomatic front, donor initiatives became the peace process.”
7.4.1 A substantial EC/EU economic commitment to the peace process
The EC began supporting the Palestinians economically as early as 1971, two decades before the peace process began. EC/EU assistance was first channeled through UNRWA and then, after the Oslo peace process began, partly through the Ad Hoc Liaison Committee (AHLC). After the election victory of Hamas in 2006 the route was through the Temporary International Mechanism (TIM). The latest mechanism, PEGASE, which replaced TIM, was launched by the EU in 2008 and channels economic support to the Palestinian people, either through the Palestinian Authority or via direct
payments to eligible companies and individuals. Although launched by the EU, PEGASE is also open to donors and organizations outside the Union.
Like its predecessor, PEGASE also has programmes that distribute allowances both to the PA’s civil servants and pensioners and to the most vulnerable Palestinian families (EU’s PEGASE Mechanism 2009:1).
The EU is the largest donor to the Palestinian people and since the inception of peace process following signature of the DOP in 1993, the EU and its member states have made a substantial economic commitment to it (PEGASE 2009). Exactly how much money the EU and its members have given is not clear, but the standard figure in the literature is that the EU provided approximately half of the total economic aid to the Palestinians within the framework of the peace process (Hollis 1997:22, Keukeleire &
MacNaughtan 2008:283). Most EU officials interviewed in this dissertation, even the most senior who have worked on the conflict for many years, say that they do not know how much money the EU has spent on it, but according to one mid-level EEAS official in Brussels, since the peace process began the EU, including the individual member states, has provided over €10 billion to the Palestinians (Anonymous EEAS official, interview 17 November 2011).
Economic assistance to the PA and the Palestinian people constitutes the EU’s highest per capita foreign aid program. The latest seven-year budget, which will end in 2013, also funds UN projects, such as UNWRA and UNDP (Maan 2010b). Through UNWRA, the EU is the largest multilateral provider of international assistance to the Palestinian refugees (EU-PA Political and economic relations). Over the period 2000 to 2009 the EU gave more than €1 billion in support to UNRWA, exclusive of contributions by the individual member states. In 2009, the EU and its member states jointly provided 62 per cent of UNWRA’s General Fund (Maan 2010c).
In 2003, a decade after the peace process begun, the World Bank reported that the aid to the Palestinians “is thought to be the highest sustained rate of per capita disbursement to any aid recipient anywhere since the Second World War.” (The World Bank 2003:8) As the largest donor and financer of the peace process, the EU played a key role in all this, and in 2009, the European Commission Technical Assistance Office for the West Bank and Gaza Strip (ECTAO) reported that the EU, exclusive of bilateral funding by member states, provided €3.3 billion in assistance to the Palestinian people between 2000 and 2009 (PEGASE 2009). In 2012, the
Commission wrote on its webpage that from 1994 to the end of 2011, the EU, exclusive of the member states, committed approximately €5 billion in assistance to the Palestinians through its various geographical and thematic instruments (EC, Development and Cooperation, Occupied Palestinian Territory). The Palestinian newspaper Maan reported in 2011, citing a senior official at the Palestinian Ministry of Planning, that the PA has received about US$20 billion in donor funds since the peace process began (Maan 2011d). It is unclear exactly what that figure includes/excludes, but the EEAS official’s estimate that the EU, including individual contributions by its members, has given €10 billion to the Palestinians since the peace process began sounds reasonable in the light of this.
The PA’s budget for 2011 was US$3.7 billion, of which about a quarter was foreign aid. Reliance on donor money was twice as high, about half of the budget, in 2008 (Associated Press 2011). According to the Palestinian Ministry of Planning, of all the donor assistance to the Palestinians in 2011, about 43 percent came from the EU and its member countries; about 25 percent from the USA and its agencies; about 25 percent from Arab countries and their agencies; and about 7 percent from other donors, such as Australia, Japan, Canada and Norway (Maan 2011d). The decreasing reliance on donor money is considered to be one of Prime Minister Fayyad’s greatest achievements.
Depending on what sources one uses, the PA employs somewhere between 150,000 to 170,000 people in the West Bank and Gaza (Maan 2011e, Reuters 2011, The World Bank 2012:13). Of these, around 65,000 are in Gaza (The World Bank 2012:13). The PA’s Gaza employees continue to receive half-pay even though the Hamas government has replaced them with its own civil servants. A large part of the Palestinian population depends on the wages of these public employees. The World Bank estimates that the dependency rate is about 6-8 for each public employee, meaning that around one million Palestinians, 25 per cent of the total Palestinian population, rely on this income from public sources (The World Bank 2009a). This dependency on the PA is, of course, a major source of leverage and legitimacy for the PA. A large public sector has also traditionally been considered a force for stability in the Palestinian territories.
As has been noted by David Shearer and Anuschka Meyer (2005:165), the large volume of sustained aid to the Palestinians is very unusual in international peacebuilding, especially over such a long period of time. The EU’s four decades of involvement in this conflict therefore testifies to the
great significance that the EU and other Western states attach to it. It is also important to note that the EU sends aid to the PA and other relevant bodies in euros, which means that the value of the aid when converted into Israeli shekels, which is the currency also used in the Palestinian territories, has declined significantly over recent years (Maan 2010d). In April 2008, before the financial crisis broke out, the exchange rate between the euro (€) and the Israeli shekel (NIS) was 1€=5.74NIS (Sheva 2008). In mid-June 2012, the exchange rate was 1€=4.92NIS, a 14 percent loss for the euro against the shekel since the start of the financial crisis (XE currency rates 26 June 2012).
7.4.2 Liberalization and marketization in the Palestinian territories Because of the large involvement in the statebuilding process of international third parties, including the two leading financial institutions, the World Bank and the IMF, it is not surprising that critical voices, mainly from the left, have accused the PA and its international backers of pursuing neo-liberal policies. The fact that Prime Minister Fayyad himself, with his free market approach to economic policies, has worked for both the World Bank and the IMF, makes him an easy target for such criticism (Bröning 2011:117).
While Fayyad in his plan for a state talks about a firm commitment to a free market economy (PNA 2009:12), the Palestinian territories cannot be said to represent a typical case of a conflict or post-conflict society where neo-liberal policies have led to destabilization and violence. Too many things are abnormal in the Palestinian territories for this to be true. First, they are one of the most donor dependent societies in the world, with a majority of the population receiving some kind of assistance (Development Initiatives 2011:23, European Commission 2009:8). Secondly, the Palestinian territories have a big public sector. Thirdly, the Palestinian economy faces major constraints when it comes to imports/exports, freedom of movement for persons and goods, fragmentation of the territory and lack of control over natural resources (The World Bank 2009b:4). As all these and other similar factors go against the logic of liberalization and marketization, it is incorrect to characterize the economy in the Palestinian territories as neo-liberal.
However, critics like Rafeef Ziadah (2011) certainly have a point in that the big West Bank security apparatus means less public welfare. Against
that, all experts agree that the improvement in the security sector is a major reason why the Palestinian economy has flourished in recent years (The World Bank 2009b:4, European Commission 2010c:8). The purpose of the 1997 EU-PA Interim Association Agreement was to establish the conditions for increased liberalization of trade between the EU and the PA, but with the outbreak of the second intifada three years later in 2000, not much has come out of it (ENP Country Report PA 2004:3). With €99 million in EU-PA trade in 2011, the Palestinian territories remain the EU’s smallest trading partner in the Euro-Mediterranean region and almost so worldwide (EU-OPT Trade Statistics, Maan 2011f). In recent years, the EU has on several occasions tried to bolster its trade relations with the Palestinian territories (See, for example, Maan 2011f) but, so far, little has materialized from these efforts.
EU-PA trade even decreased 20 per cent between 2010 and 2011 (EU-OPT Trade Statistics).
The PA’s economy, excluding Gaza, is extremely dependent on Israel.
The World Bank estimates that 85-90 per cent of the West Bank’s trade flows are with Israel (The World Bank 2008:i). In Gaza, the economy is largely controlled by Hamas and dependent on smuggling with Egypt, even if Israel’s blockade of Gaza has progressively been lifted since 2010. Both halves of the Palestinian territory experienced significant growth during the statebuilding period of 2009-2011, sometimes almost double-digit figures, but this growth stemmed from a low base during the second intifada, was primarily donor-driven and also mainly confined to the non-tradable sector (The World Bank 2011a:5). As a powerful illustration of the limits of Fayyad’s technocratic approach vis-à-vis the hard political realities, all the leading international organizations were in 2011 in clear agreement that progress and economic growth could not be sustained without lifting the various restrictions that accompany the Israeli occupation (The World Bank 2011a:5, UNSCO 2011, IMF 2011b, Ashton 2011b).
7.4.3 EU funding of NGOs
Besides the funding and support of the PA, the EU and its members are also major funders of the myriad of different NGOs that are active in the Israeli-Palestinian conflict, particularly in the Israeli-Palestinian territories. According to Christian Berger, the former head of ECTAO, “the Palestinian civil society
sector has always played a vital role in the Palestinian society and its aspiration for a free and sovereign Palestine.” (quoted in Maan 2010e)
As might be expected in an ongoing conflict, the NGO environment is polarized and politicized both in Israel and in the Palestinian territories.
Particularly since the outbreak of the second intifada, EU funding of NGOs during the conflict has become a major issue in some, primarily right-wing, circles in Israel, where the EU and some of its members have repeatedly come under fire for allegedly funding NGOs that promote conflict, false claims against Israel and oppose the stated goals of the EU in the peace process (NGO Monitor 2008:16). Even if some of the critics have obvious political agendas, it is clear that the EU’s funding of NGOs in the Israeli-Palestinian conflict is a controversial issue at present.8
The situation for NGOs in the Palestinian territories is equally precarious, but for completely different reasons. Historically, the PA, with its authoritarian tendencies, has always been suspicious of domestic NGOs and tried to use them as a tool against Israel. Over the period 2006-2011, as the level of Israeli-Palestinian violence in the West Bank declined after the second intifada, Palestinian NGOs began to turn their attention inwards, away from the Israeli occupation and more and more to scrutinizing the PA.
This caused anxiety in the PA. One of President Abbas’ advisers told the International Crisis Group “that NGOs can be easily used against the PA, rather than against Israel. They talk a lot about human rights in the PA, less about occupation.” (quoted in International Crisis Group 2012a:21)
In addition to the precarious situation that NGOs face in the conflict, the more general effectiveness of the EU’s massive funding of them has also been scrutinized and questioned by a number of observers, including by the EU itself. Reflecting a clear gap between rhetoric and reality, the Evaluation Team for the Partnership for Peace programme concluded in 2005 “that there has been no identifiable impact on the macro Middle East Peace Process that can be traced directly to this Programme.” (Evaluation of the PfP programme 2005:53).
8 In the first years of the second intifada, the EU was also accused by some pro-Israeli observers of financing Palestinian terrorism against Israel (See, for example, Carmi &
Carmi 2003:86). These accusations remain unproven.
In this context it should be mentioned that problems related to NGO-funding are peculiar neither to the EU, nor to this conflict. However, there are some interesting problems in this particular context. Critics like the NGO Monitor typically accuse the EU of funding questionable NGOs, while the EU claims it is funding specific projects, rather than a whole organization, thereby allowing an NGO to have other projects going on simultaneously, which are not supported by the EU. In practice, this means that an NGO like Adalah can get funds from the EU for a specific project, while at the same time running other projects with aims contrary to those of the EU. In the Adalah case, this particular NGO has promoted a “Democratic Constitution”, an idea that resembles a one-state solution, in stark contrast to the EU’s position of promoting a two-state solution.9 When Adalah’s “Democratic Constitution” was published in 2007, the Haaretz correspondent, Yoav Stern (2007), wrote that “Adalah’s version of the constitution essentially abolishes the Jewish elements of Israel.”
Asked about the appropriateness of this particular case, an EU official who requested not to be named said that the NGOs funded by the EU are not obliged to agree entirely with the EU’s views as long as they do not promote violence or hamper its work. On the contrary, the official said, the EU saw a democratic value in allowing a pluralistic and lively debate among NGOs and within civil society in general (Unnamed EU official, interview). The Adalah case poses a real dilemma for the EU and raises an important question of principle about how far an NGO’s agenda can differ from the EU’s without hampering the Union’s work in the conflict. The two-state solution is at the heart of EU’s formula for a just peace in this conflict, and the EU has spent two decades and billions of euros trying to realize it. It must therefore be considered an obstacle to the EU’s work when an organ that is funded by the EU works against this pivotal objective. On the other hand, when no negotiations are taking place and there is no movement towards a two-state solution, NGOs will naturally and rightfully explore different paths to peace.
Another interesting and even more problematic case is the Bader Youth Network, which is a joint initiative by the International Peace and
9 Adalah’s Democratic Constitution can be found on its website; URL= http://www.old-adalah.org/eng/democr atic_constitution-e.pdf, accessed 28 June 2012.
Cooperation Center (IPCC) in Jerusalem and the Konrad Adenauer Stiftung (KAS) in Ramallah. While the Bader Youth Network does not receive funds from the EU, both the IPCC and the KAS do so, albeit not for this particular project, but rather for other projects within the EU’s PfP programme and through EIDHR. According to the KAS website the
[a]im of the Project [Bader Youth Network] is to strengthen the role of youth in Palestinian society and in the political arena, to support future leaders as well as to cut back gender barrier. In this way, KAS and its partner [IPCC]
support the build-up of a pluralistic, democratic and viable civil society in the Palestinian Autonomous Territories. (Konrad Adenauer Stiftung 2008) While these are praiseworthy objectives, the Bader Youth Network distributes posters featuring a map of Israel, the West Bank and Gaza painted in the colors of the Palestinian flag (Black, red, white and green). This is widely seen as an expression of denying Israel its right to exist, and it was also a common practice by militant Palestinian groups, like Hamas, during the second intifada to feature the same map in the background of so-called
“martyrdom posters”. Again, this is a question of appropriateness: whether the EU should finance organizations (or projects belonging to organizations), which in turn finance other organizations/projects whose actions clearly run contrary to the efforts by the Union. Even if it is routine for both sides in the conflict to depict the whole Israeli-Palestinian territory in their own respective flags, this is not a practice that the EU should engage in, even indirectly.