Contents

• 2.1 The Arab World
• 2.2 Europe
• 2.3 Japan
• 2.4 North America
• 2.5 Other Countries
• 2.6 Loans Pledged

• 3.1 The Arab World
• 3.2 Europe
• 3.3 Japan
• 3.4 North America
• 3.5 Other Donor Countries

• 4.1 General Profile
• 4.2 Sectoral Profile
• 4.2.1 Agriculture
• 4.2.2 Education
• 4.2.3 Employment Creation
• 4.2.4 Environment
• 4.2.5 Health
• 4.2.6 Infrastructure
• 4.2.7 Housing
• 4.2.8 Institution-Building
• 4.2.9 Legal Affairs
• 4.2.10 Police
• 4.2.11 Private sector
• 4.2.12 Public Finance
• 4.2.13 Tourism

• Annex I: Tripartite Action Plan on Revenues, Expenditures and Donor Funding for the Palestinian Authority

Annex II: Matrices & Charts

This report represents the conclusion of the first phase of a three-phase research project focusing on the donor initiative in the West Bank, including East Jerusalem, and the Gaza Strip. The two main objectives of this project are a) to shed light on the current debate, acrimonious and otherwise, between the donor community and the Palestinians on whether or not donors are fulfilling their commitments; and b) to examine whether the funds being given by the donor community are being used in a constructive way which will help ensure sustainable development, or whether they are helping to create structural dependency instead.

Thus, the aim of the first phase of the project is to provide information on the current status of the development initiative, how much money is being donated and by whom, and to what sectors it is being allocated.

The aim of the second phase is to present analysis, stimulate debate, and highlight differences of opinion about two main aspects of the donor initiative: the qualitative contributions of the donor community; and the way in which this money is being used by the Palestinians. Of particular interest is the development policies [if any] and various agendas, whether Palestinian or foreign, in place.

The aim of the project's third and final phase is the formulation and presentation of various policy recommendations by development and economic experts and other specialists, whether academics, government officials or NGO representatives.

The report presented here is the first of three, and represents the results of the first information-gathering phase. It concentrates primarily on providing as much information as possible on the scope of the development effort in the West Bank and Gaza Strip, including funds pledged, committed and disbursed; the share of funds according to donor countries and multilateral; and the sectoral allocation of funds. It should be noted that while this report was intended to be as comprehensive as possible, we did encounter some discrepancies and inconsistencies between various donor sources and bertain difficulties in obtaining information from Palestinian Authority sources at times.

 Ghassan Khatib, Director

The two parties view the economic domain as one of the cornerstones in their mutual relations with a view to enhance their interest in the achievement of a just, lasting and comprehensive peace. Both parties sha# cooperate in this field in order to establish a sound economic base for these relations, which will be governed in various economic spheres by principles of mutual respect of each other's economic interests, reciprocity, equity, and fairness.

Preamble of the Protocol on Economic Relations between the Government of Israel and the PLO, representing the Palestinian people.

WITH THE SIGNING of the Declaration of Principles on Interim SelfGovernment by Israel and the PLO, redeployment from the major Palestinian towns, and the ongoing peace negotiations, the Palestinian people are emerging from years of Israeli military occupation to face a dubious political and economic future whose potential remains deeply scarred by that occupation. High hopes and expectations have been placed on the current peace process and the economic development and growth envisioned. Yet there are huge obstacles to be overcome.

The international donor community has recognized that improved living conditions, rebuilding the infrastructure of the West Bank and Gaza Strip, and the building of necessary institutions are all elements vital to the success of the new era of peace envisaged by the DOP. Therefore, the international community met in Washington on October 1, 1993 at the US-hosted Conference to Support Middle East Peace. This conference concluded with pledges to the Palestinians from the donor community amounting to the amount of US$2,996.32 million', to be disbursed over the five-year period 1994-98.

The development process in the West Bank and Gaza Strip has traditionally been linked to the political situation, and the current political uncertainty is reflected in the current economic/donor situation. The West Ban and Gaza Strip remain in need of assistance. That assistance has b linked to perceived progress in the peace negotiations, to demands f for transparency and accountability in the structures of the Palestinia (PA), and to the various priorities being set by individual governments an multilateral organizations (e.g., World Bank, International Monetary Fund, Unite Nations).

In sum, there is lack of consistency on all sides as to the current a actual state of the PA's finances, actual levels of foreign assistance - pledg and disbursed - and how and to what projects these funds have be disbursed. There is an urgent need to gain a greater understanding of situation, as transitory structures become more permanent, and as a Palesti development strategy materializes on the ground. Furthermore, it is vital the population at large feel confident that this development strategy is one that will not contrive structural mechanisms which will prevent people from equal access to higher education, better jobs, and the basic human right to support themselves and their families at a level above subsistence.

Within this context, the Jerusalem Media and Communication Centr (JMCC) has established this project entitled 'Foreign Aid and Development i Palestine', which is supported by NOVIB. The overall aim of the project is to help in establishing an acceptable level of accountability vis-ci-vis the funding of Palestinian development. Further, it is hoped that the provision of this information will serve as the first step in establishing a forum and stimulating discussion concerning economic development and the role of the donor community in the Palestinian arena. The first part of this project is not meant to be analytical in nature, but essentially is a compilation of various materials pertaining to the donor community and the Palestinian economy Donor activitypledges, commitments, disbursements - as well as sectoral concentrations for the period 1994-96 are discussed in some length. Furthermore, an appendix of relevant source materials has been added to help shed some light on the current economic development situation in the West Bank and Gaza Strip.

In the second phase of this project, using the data gathered and the input of experts and policy-makers in the field, we will try to identify and prioritize the key issues relevant to the responsible use of funds received, through interviews, workshops, and other fora. Additionally, it is hoped that the discussion and analysis of this second phase will help to determine the respective roles of the PA, NGOS, and international donors and agencies within the development process in Palestine, and encourage communication between all parties on how to strike a balance between short-term needs and long-term sustainability. It is the goal of the JMCC that by the third and final phase of the project, a forum will have been firmly established in which relevant issues and strategies can be discussed in depth. Based on this premise, various components of the development process will be prioritized and policy guidelines and recommendations will be formulated and published.

It should be noted that in the course of gathering data for this report, there were frequent discrepancies between sources, and information was not always easy to obtain. These difficulties were exacerbated by differences in categorizations, definitions and standards. We are hopeful that this report will clarify such ambiguities, although the accuracy of secondary sourcing cannot always be guaranteed.