Bbc News
December 18, 2007 - 12:25pm

As donors meet in Paris to pledge aid to the Palestinian Authority, BBC Middle East analyst Roger Hardy explains the steps being taken to make sure the money will reach those who need it most.

The idea is simple - to use a massive injection of outside aid to consolidate the fledgling peace process launched in Annapolis in November.

But how will the aid get to those who need it? And how will it be spent?

The Palestinian Prime Minister, Salam Fayyad, is seeking $5.6bn (£2.78bn) to fund a three-year plan to reform and rebuild Palestinian institutions - including the security forces.

Part of the money is to go towards the development projects which are being promoted by Tony Blair, the former British prime minister and now the special envoy of the so-called Quartet - the United Nations, European Union, United States and Russia.

He has announced plans for a sewage treatment plant in Gaza and a number of projects in the West Bank, including an industrial park in Jericho and an industrial zone in Hebron.

Sustainable mechanism

But Mr Fayyad has urgent short-term needs.

To pay the salaries of government employees, he has been relying on tax revenues which the Israelis collect on the Palestinian Authority's (PA) behalf.

But these backdated payments will soon dry up.

So the EU - already the biggest donor to the PA - is aiming to step in to prevent financial collapse.

At the moment it is still providing support for essential services through the Temporary International Mechanism (Tim).

The Tim, set up in June 2006, channels direct financial assistance to needy families and to help hospitals and schools cover their running costs.

It was set up to stop money going to the Islamist movement Hamas, after it won Palestinian elections at the beginning of last year.

The EU, like the US and Israel, regards Hamas as a terrorist movement and has no relations with it.

The EU intends to replace the Tim, which will end in March, with a new and more sustainable mechanism.

Beleaguered technocrat

Mr Fayyad has won Western plaudits through his efforts to put Palestinian finances on a new footing - and root out corruption.

But while he is regarded as a well-intentioned technocrat, he is operating under immensely difficult circumstances.

The consensus view is that, if the Palestinian economy is to recover, Israel must remove - or at least ease - restrictions on the movement of people and goods.

Another big complication is that Mr Fayyad operates in the West Bank, where the PA is based, while Hamas remains in charge of Gaza.

Conditions are far from ideal in the West Bank, but they are even worse in the impoverished and overcrowded Gaza Strip.

One of the messages being delivered at the donors' conference in Paris is the urgent need for burden-sharing.

The EU feels it is already doing its fair share, and wants the Saudis and other Gulf Arabs to do more.

With oil prices currently at record highs, they are under pressure to make generous pledges of aid.

The trouble, as ever, is that political progress is proving painfully slow.

And without that, donors are afraid they will be left providing a drip-feed of humanitarian aid for years to come.


American Task Force on Palestine - 1634 Eye St. NW, Suite 725, Washington DC 20006 - Telephone: 202-262-0017