Statement by

Deputy Assistant Secretary of State for Near Eastern Affairs

Robert M. Danin

 

Connecting the Money to the Mission: 

The Past, Present, and Future of U.S. Assistance to the Palestinians

 

House Foreign Affairs Middle East and South Asia SubCommittee

 

December 12, 2007

 

Chairman Ackerman, Representative Pence, Members of this distinguished subcommittee, thank you for providing me the opportunity to speak with you today.  I will focus my remarks on the Administration’s ongoing efforts to support the Israelis and Palestinians as they move forward in their own discussions, and how our diplomatic and financial assistance will work to support our overarching objective of establishing an independent, democratic and viable Palestinian state living in peace with a safe and secure Israel.

 

I am pleased to report on what we feel was a very successful conference in Annapolis on November 27 that energized and galvanized international support for Israeli-Palestinian and Israeli-Arab peace.  The event itself was an unprecedented gathering in the United States of foreign ministers and other senior officials from throughout the world who came with the shared purpose of supporting the resolution of the Israeli-Palestinian conflict.  The joint agreement reached by the Israelis and Palestinians and announced by President Bush as the conference opened, was a significant achievement.  It creates a framework for ongoing, vigorous negotiations between the parties.  Both Prime Minister Ehud Olmert and President Mahmoud Abbas have demonstrated courageous leadership and resolve in their desire to tackle the most sensitive and challenging issues that have prevented a settlement of this conflict.  The participation of nearly fifty delegations from the Middle East, Europe, the Muslim world and beyond came to support Israeli-Palestinian peace.  The large number of countries from the Arab world that sent delegations was unprecedented, and sent an important message that they are intent on assisting the Palestinians in building a future state and realizing the Arab Peace Initiative, whose goals include peace and normalizing relations with Israel.

 

The next important milestone before us in our international peace efforts is the Donors’ Conference for the Palestinian Authority that the Government of France will host in Paris on December 17.  Over ninety countries, international organizations, and financial institutions are expected to attend.  Secretary Rice will lead the U.S. delegation.  Former Prime Minister and Quartet Representative Tony Blair will join France, Norway and the European Commission in co-chairing the event, during which Prime Minister Salam Fayyad will present the Palestinian Reform and Development Plan, or PRDP.  The PRDP is more than a budget request.  It provides a comprehensive approach to the economic and developmental needs and challenges facing the Palestinian people, and outlines the Palestinian Authority’s anticipated budgetary needs over a three year period, including its plans for development, capacity, and institution building; proposed reform measures; and security requirements.  The plan was developed in consultation with the United States and other international donors, and has the endorsement of the international financial community, including the World Bank and the International Monetary Fund.

 

This plan is ambitious, but realistic and necessary in order to lay the groundwork for a sustainable, democratic and prosperous Palestinian state.  Its implementation will create momentum and build the confidence of the Palestinian people in their government, a government that is viewed by both the U.S. and Israel as a true partner for peace.

 

After Hamas won the January 2006 Palestinian Legislative Council Elections, the U.S. Government made significant adjustments to our assistance programs, both for policy and security reasons, as well as to ensure that we were in strict compliance with all legal requirements.  Leading the international community, we established a united front that put the onus for the new government’s international isolation squarely on Hamas.  Hence, the international community clearly stated with one voice that it would have nothing to do with any Palestinian government that failed to accept three basic principles laid out by the Quartet: namely, the renunciation of violence and terror; second,  recognition of Israel, and third, acceptance and compliance with all previous Israeli-Palestinian agreements, including the Roadmap. 

 

Working with the Office of President Abbas, independent Palestinian agencies and certain NGOs, we scaled back and, in some cases, froze any project that could have benefited Hamas.  At the same time, we significantly ramped up assistance to meet the basic needs of Palestinians and support civil society and private sector initiatives.   In the face of this new reality, the Hamas government was a failure.  It lacked the courage to make the changes necessary to transform itself from a terrorist organization into a responsible law-abiding government.   Moreover, the Hamas government failed to deliver the basic services they promised to provide to the Palestinian people.

 

In June of this year, Hamas violently took control of the Gaza Strip.  President Abbas, exercising his legitimate right as President, declared a national emergency, dismissed Hamas, and appointed a new government, comprised entirely of non-Hamas, non-Fatah, independent Ministers under the leadership of Prime Minister Salam Fayyad.  Following those changes, the new PA government officially endorsed the Quartet principles.  The Palestinian Authority’s compliance with Quartet requirements allowed the U.S. Government to lift many of the restrictions that had been put in place with respect to our assistance programs.   We have been working since that time to quickly ramp up our assistance efforts to support this new Quartet-compliant PA government.  The United States, along with Israel and the international community, sees this new government of President Abbas and Prime Minister Fayyad as a true partner for peacemaking, a sentiment expressed publicly by President Bush on July 16, and a commitment that was reaffirmed at Annapolis. 

 

It is on this basis that the United States is working intensively along three parallel tracks.  The first is the diplomatic track, as evidenced by the Annapolis Conference and Secretary Rice’s frequent trips to the region.  Here, we have worked hard to help bring the parties to the point where they can launch negotiations on the establishment of a Palestinian state and the realization of Israeli-Palestinian peace.  They will do so on December 12.  This political track remains a U.S. foreign policy priority, and we will remain actively engaged with the parties as their bilateral negotiations get underway.  The second track is one of implementation.  We are working with both parties to address their commitments under Phase One of the Roadmap in order to improve the situation on the ground, establish a sense of security for both sides, build trust between the parties, and create conditions that will allow for the implementation of a peace agreement. Finally, along a third track, we are supporting and continue to work closely with Quartet Representative Tony Blair, Palestinian Prime Minister Salam Fayyad, and other international donors to build the economic and institutional capacity that will serve as the foundation for a stable and prosperous Palestinian state.  The December 17 Paris Donors’ Conference is the next major step in this effort and generous donor contributions are critical.  Intensive efforts following Paris will also be required. 

 

Hamas mismanagement during its period of control of the Palestinian government exacerbated the PA’s serious financial straits.  Over the past few months, Israel has returned customs and tax payments to the PA that were withheld while Hamas was in office.  These funds have helped to keep the PA afloat, but will only last until the end of this year.  The current PA government inherited more than $1 billion in arrears.  Starting in January 2008, it will experience a monthly cash shortfall of $100 million for its monthly budget of $200 million.

 

It is critical for the United States and the international community to support the Fayyad government and President Abbas as they seek peaceful reconciliation with Israel while staving off the violent alternative represented by Hamas.  This government must be able to deliver to the Palestinian people and we intend to support them in that effort.  The government of Prime Minister Fayyad has committed itself to reforming the PA, extending the rule of law, and building democratic institutions--all critical for the establishment of a Palestinian state that will live peacefully with a strong and secure Israel as a neighbor.  To date, the PA government has restored the components of its public finance system, including most importantly, the Single Treasury Account.  The PA permanently stopped paying salaries to more than 20,000 members of the security services who had been added to the payrolls under the Hamas Government.  Since Salam Fayyad’s appointment as Prime Minister, the PA has been able to make full payments to its employees, something that Hamas could not achieve.  The role of the judiciary has been strengthened through the PA appointment and training of new staff.  This government has adopted money laundering legislation and has closed down or reorganized charities and religious committees that were in violation of PA laws, and may have been providing funding and political support to Hamas.  Finally, the government has banned armed militias, confiscated over 700 weapons thus far, taken important steps to end incitement in places of worship, and is working with U.S. Security Coordinator General Keith Dayton to restore law and order throughout the West Bank, beginning with a successful mission in Nablus, a major Palestinian economic and population center that had been a source of lawlessness and extremism in Palestinian society.

 

The Palestinian Authority needs considerable help if it is to succeed in reestablishing its authority throughout the entire West Bank while working with Israel to negotiate a peaceful resolution to this conflict.   Our Fiscal Year 2008 request was sent to Congress prior to the change in the PA government.  Due to the new circumstances on the ground that have created an unprecedented opportunity for peace, we are seeking an additional $410 million in emergency supplemental funding for the Palestinians.  First in Annapolis, and now in Paris, we will be showing the world that the United States is fully engaged and committed to providing the necessary support – both financial and political – to assist the parties in resolving the Israeli-Palestinian conflict.  A significant U.S. contribution will send a signal to other donors that the time to assist the PA is now and a PA government with the full and public support of the international community will help to build a constituency for peace within Palestinian society.

 

In preparation for the Paris Donors’ Conference, our USAID West Bank/Gaza Mission and Consulate General in Jerusalem have worked closely with Prime Minister Fayyad and his team in order to coordinate our efforts with the PRDP.  The $410 million request includes $200 million in projects that we will continue to coordinate with the PA.  This emergency funding will go directly towards the most urgently needed projects to improve the lives of Palestinians and build the institutions necessary to create a future Palestinian state.  Our focus will be on rapid job creation, essential public infrastructure and improved government services through a number of programs.  These projects will be tightly coordinated with the PA, and credit will accrue to Dr. Fayyad, President Abbas and the Palestinian Authority, building further support for their moderate and peaceful approach, in stark contrast to that of Hamas.

 

The Palestinian Authority government will only earn the trust of its people if it remains corruption-free, provides the services its people need, and maintains law and order on the streets.  We will be providing funding specifically to address capacity building and transparency in government.  Our aid will go toward helping the PA provide services that Palestinians care about most and expect from their government.  For example, we will work with the PA Ministry of Health to improve its ability to deliver quality health care services to the Palestinian people.  All these improvements will further bolster the Fayyad government.

 

We are seeking $150 million to provide direct budgetary support to the Palestinian Authority.  We normally do not seek this form of assistance for the Palestinians; however, the extraordinary fiscal circumstances the PA is currently facing and the urgent need to build democratic institutions in anticipation of a peaceful Palestinian state, warrant such direct support.  As noted earlier, the PA’s financial situation requires immediate budgetary support.  We must help President Abbas and Prime Minister Fayyad meet this challenge.  Also important is the fact that our assistance will be used to encourage other countries to provide immediate assistance to the PA, including budgetary support.  We have instructed our embassies worldwide to meet with the highest levels of governments that are invited to the Paris Conference to urge them to send their foreign ministers to Paris and be prepared to announce major assistance pledges that go beyond past contributions to the Palestinian people. 

 

We are seeking $25 million for security sector reforms.  USSC General Dayton and the U.S. Security Coordinator Mission have been working with Prime Minister Fayyad and PA Interior Minister Yahya to rebuild the PA’s capacity to fight terrorism and extend law and order to the West Bank.  These funds would be used to sustain and strengthen a comprehensive security sector reform program that the State Department’s Bureau of International Narcotics and Law Enforcement (INL) is already implementing using funds appropriated in FY 2006.  In order to continue this important work, emergency supplemental funding would be used immediately for additional training and equipping of the Palestinian Presidential Guard and National Security Forces.  Deputy Assistant Secretary of State Snyder will speak further to this point.  In short, we are still early in this process but our efforts are working to successfully build up the PA’s security capacity and we are seeing important results.  We are working to provide instructor development, refresher, and basic training to a total of over 1,000 personnel in the Presidential Guard and National Security Forces.  We are supplying them with non-lethal equipment such as vehicles, communications and reconnaissance gear, to help them do their jobs.  And we are working with the Ministry of Interior to create a Strategic Planning Directorate responsible for developing and coordinating strategies and logistics.  

 

Finally, we have requested $35 million to support the emergency needs of Palestinian refugees in Gaza and the West Bank and camp rehabilitation in Lebanon.  Palestinian refugees are a population that is a prime target for extremist recruitment.  Support for the UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) is critical to achieving the President’s goal to secure peace in the Middle East and assist the most vulnerable Palestinians.    

 

Allow me to close my remarks by noting that all U.S. assistance to the Palestinian territories has been, and will continue to be, governed by strict accountability and oversight mechanisms to ensure that taxpayer funds do not fall into the wrong hands.

 

We look forward to working closely with the Congress to further our goals in the Middle East at this critical juncture.  Thank you for your interest and your continued support.  I look forward to answering any questions you may have.