International aid has been provided to Palestinians since at least the 1948 Arab–Israeli War. The Palestinians view the aid as keeping the Israeli–Palestinian peace process going, while Israelis and other foreign policy authorities have raised concerns that it is used to fund terrorismKeating (2005), 2 and removes the imperative for Palestinians to negotiate a settlement of the Israeli–Palestinian conflict. As a provision of the Oslo Accords, international aid was to be provided to the Palestinians to ensure economic solvency for the Palestinian National Authority (PA). In 2004, it was reported that the PA, within the West Bank and Gaza Strip, receives one of the highest levels of aid in the world.Palestine Human Development Report (2004), 113. In 2006, economic sanctions and other measures were taken by several countries against the PA, including suspension of international aid following Hamas' victory at the Palestinian Legislative Council election. Aid to the PA resumed in 2008 following the Annapolis Conference, where Hamas was not invited. Aid has been provided to the Palestinian Authority, Palestinian non-governmental organizations (PNGOs) as well as Palestinian political factions by various foreign governments, international organizations, international non-governmental organizations (INGOs), and charities, besides other sources.
The Ad Hoc Liaison Committee coordinates the delivery of most aid to Palestinians. The entities that provide such aid are categorized into seven groups: the Arab nations, the European Union, the United States, Japan, international institutions (including agencies of the UN system), European countries, and other nations.Palestine Human Development Report (2004), 116 The United States has been a major donor, providing more than $5.2 billion through USAID since 1994.
The international community has sent billions of dollars in aid to the Gaza Strip to provide relief to the more than 2 million Palestinians living there. From 2014 to 2020, U.N. agencies spent nearly $4.5 billion in Gaza, including $600 million in 2020 alone. According to the Organization for Economic Cooperation and Development, aid to Palestinians totaled over $40 billion between 1994 and 2020.
Unlike the Palestine Liberation Organization (PLO) in the West Bank, Hamas is designated as a terrorist entity, so the United States and the EU do not provide any assistance to Hamas. Israel has allowed Qatar to give hundreds of millions of dollars in aid through Hamas, and Hamas has collected revenue for years by taxing imports. Iran provides around $100 million annually to Hamas and other Palestinian groups.
History Before Oslo Accords Before the signing of the Oslo Accords, international aid for the West Bank and Gaza came mainly from Western and Arab states, mostly through UN agencies such as UNRWA. Most programs were started or developed during the 1970s, and expanded during the 1980s. Most of the aid was channeled through PNGOs or INGOs.Since 1970 the role of the INGOs (and in particular of the Northern NGOs) in the delivery of aid was strengthened. (Hanafi-Tabar , 35–36). Although the stance of the donors during the pre-Oslo period is regarded by some analysts, such as Rex Brynen, as controversial and linked with phenomena such as corruption, nationalism and factional rivalries,For instance, Jordan's disengagement from its administrative role in the West Bank just after 1990, and the discontent of some Arab states-donors for the Palestine Liberation Organization's stance during the First Gulf War resulted in the Organization's almost complete breakdown (Brynen , 47–48). International aid effectively financed a series of programs in the sectors of agriculture, infrastructure, housing and education.Brynen (2000), 44–48
Oslo Accords The Oslo Accords, officially signedBefore the signing ceremony, President Bill Clinton and Secretary of State Warren Christopher spoke in very clear terms about America's commitment to provide economic support to the Palestinians. Israeli foreign minister Shimon Peres told Palestinian officials that he had already secured commitments from European countries to give them aid (Lasensky , 93 and , 219). on September 13, 1993, contained substantial provisions on economic matters and international aid: Annex IV of the Declaration of Principles (DoP) discusses regional cooperation and implicitly calls for major international aid efforts to help the Palestinians, Jordan, Israel and the entire region.Annex IV (paragraph 1) of the Declaration of Principles on Interim Self-Government Arrangements : "The two sides will cooperate in the context of the multilateral peace efforts in promoting a Development Program for the region, including the West Bank and the Gaza Strip, to be initiated by the G7. The parties will request the G7 to seek the participation in this program of other interested states, such as members of the Organisation for Economic Cooperation and Development, regional Arab states and institutions, as well as members of the private sector."
On October 1, 1993, the international donor community (nations and institutions22 donor states, major international financial institutions, and states neighboring the West Bank and Gaza (Frisch-Hoffnung , 1243).) met in Washington to mobilize support for the peace process, and pledged to provide approximately $2.4 billion to the Palestinians over the course of the next five years.Aid Effectiveness (1999), 11; An Evaluation of Bank Assistance (2002), 2 ; Palestine Human Development Report (2004), 115 The international community's action was based on the premise that it was imperative to garner all financial resources needed to make the agreement successful, and with a full understanding that in order for the Accords to stand in the face of daily challenges on the ground, ordinary Palestinians needed to perceive positive change in their lives.Palestine Human Development Report (2004), 113 Therefore, the donors had two major goals: to fuel Palestinian economic growth and to build public support for negotiations with Israel.Lasensky-Grace (2006) . According to Yezid Sayigh (2007), 9, "starting with the first international donor conference in October 1993, foreign aidwas intended to demonstrate tangible peace dividends to the Palestinians as well as provide economic reconstruction and development to build public support for continued diplomacy. According to Scott Lasensky, "throughout the follow-up talks to the DoP that produced the Gaza-Jericho Agreement (May 1994), the Early Empowerment Agreement (August 1994), the Interim Agreement (September 1995), and the Hebron Accord (January 1997), [...] economic aid hovered over the process and remained the single most critical external component buttressing the PNA."Lasensky (2002), 94 and (2004), 221
1993–2000 Between 1993 and 1997 the PNA faced serious economic and financial problems.Poor economic performance in these years was the product of many factors, such as the low public investment and the contraction of the regional economy, and they were aggravated by the effects of Israeli closures, permits policies, and other complex restrictions on the movement of people and goods (Aid Effectiveness , 15 ; Brynen , 64; Le More , 984). International aid prevented the collapse of the local economy, and contributed to the establishment of the Palestinian administration.An Evaluation of Bank Assistance (2002), 24 ; Rocard (1999), 28; Roy (1995), 74–75 Donors' pledges continued to increase regularly (their value had risen to approximately $3,420 million as of the end of October 1997) as a result of the faltering peace process, along with the increase in needs and the consequent increase in the assistance necessary for Palestinians to survive.Palestine Human Development Report (2004), 115 Reality led, however, to a revision of the donors' priorities:As USAID director Chris Crowley stated, "the political situation often drove the aid disbursement process (Lasensky , 96–97 )." Out of concern that the deteriorating economic conditions could result in a derailment of the peace process, donor support was redirected to finance continued budgetary shortfalls, housing programs and emergency employment creation.An Evaluation of Bank Assistance (2002), 25 ; Brynen-Awartani-Woodcraft (2000), 254 According to a more critical approach, international aid in the mid-1990s supported PNA's bureaucracyAccording to Brynen (2005), 228, "closure [...] exacerbated the tendency of the PNA to use public sector employment as a tool of both political patronage and local job creation. The public sector payroll thus continued to expand at a rapid rate, growing from 9% of GDP in 1995 to 14% by 1997 [...] This sapped public funds needed for investment purposes and threatened to outstrip fiscal revenues." and belatedly promoted the centralization of political power, but in a way that did not enhance government capacity and harmed the PNGOs.Frisch-Hoffnung (1997), 1247–1250 In 1994–1995 problems of underfunding, inefficiency and poor aid coordination marked donors' activity, and led to tensions among the different aid bodies, and between the international community and the PNA.The Palestinians construed the shortage of aid funding as a form of punishment and as attempt of the donors to impose their own agenda, while US officials blamed "intra-PLO politics, the Palestinian leadership's resistance to donors' standards of accountability, and inexperienced [middle] management (Ball-Friedman-Rossiter , 256; Brynen , 114; Brynen-Awartani-Woodcraft , 222; Lasensky , 223; Roy , 74–75)." In 1996, the link between development assistance and the success of the peace process was made explicit by the President of the World Bank, James Wolfensohn, who stated: "The sense of urgency is clear. Peace will only be assured in that area if you can get jobs for those people."Ball-Friedman-Rossiter (1997), 257
After 1997, there was a reduction in the use of closure policy by Israel, which led to an employment growth and an expansion of the West Bank and Gaza economy.GDP grew by an estimated 3.8% in 1998 and 4.0% in 1999, and unemployment fell to 12.4 percent in 1999, almost half its 1996 peak (Aid Effectiveness , 14). After the signing of the Wye River Memorandum, a new donors' conference was convened, and over $2 billion was pledged to the PNA for 1999–2003.Lasensky (2002), 98 ; Lasensky (2004), 225; Rocard(1998), 28 Nevertheless, overall donor disbursements fell in 1998–2000, and the 1998 disbursements=to-commitments ratio was the lowest since 1994.Donor Disbursements and Public Investment , UNSCO As for international institutions, they began to play a bigger role in the international funding process, in spite of the decline in the absolute value of these institutions' total commitments.Palestine Human Development Report (2004), 117 After 1997, the need for donor support for the current budget and employment generation programs receded due to the PA's improved fiscal performance, and attention was focused instead on infrastructures to the detriment of institution building. Donors' activity was also characterized by a decline in support for PNGOs, and by a preference to concessionary loans (instead of grants) with generous grace periods, long repayment periods and low interest ratesAid Effectiveness (1999), 18–20; Brynen (2000), 74; UNCTAD (2006), 18
2000–2006 The second Intifada led to one of the deepest recessions the Palestinian economy experienced in modern history.Disengagement (2004), 1 In those two years, Palestinian real GDP per capita shrunk by almost 40 percent.Overview (2004), 6 The precipitator of this economic crisis was again a multi-faceted system of restrictions on the movement of goods and people designed to protect Israelis in Israel itself and in the settlements.