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To oversimplify by talking of extremists or moderates does not take into account the highly complex political realities. It also risks alienating large sections of the Palestinian people. Indeed, it is all too possible that the Israeli, US and our own approach of openly favouring Fatah with support and money could well assist in provoking the implosion of the Occupied Territories, especially Gaza. Unless, God forbid, that is the intention, if the quartet finds itself unable to work with Hamas it should at least strive to avoid exacerbating the division between Hamas and Fatah.
Meanwhile, the destabilising humanitarian plight of the Palestinians remains grave, as the noble Earl has illustrated. As I argued in our debate last month, the suspension of international aid to the Palestinian authorities—$350 million of direct budgetary support in 2005—coupled with the cancellation of technical support and humanitarian schemes and the withholding of tax revenues by Israel of $814 million in 2005 and an estimated $700 million in 2006 have led to a dramatic increase in poverty. The World Bank reported last November that public service workers received only 40 per cent of their normal salaries, and in the same month UNRWA reported that 1 million Palestinians were living on less than half a dollar a day. Indeed, on 12 December, Reuters reported Filippo Grandi, the deputy head of UNRWA, as having said that aid policy was perceived as politically motivated impoverishment. According to the UN Office for the Coordination of Humanitarian Affairs, the Palestinian Authority has only 34 per cent of the income it had in 2005.
Despite the 27 per cent additional aid given by the European Union since 2005, the temporary international mechanism, known as TIM and extended by the quartet for three months in December, has nowhere near adequately met the situation. While it is true that 70,000 public service workers receive partial payments under TIM and 73,000 social welfare payments are made by the mechanism, some 90,000 government workers, mostly security personnel, are excluded from the scheme. Many key workers, including those in the public health sector, are left without regular salaries.
The normal annual Ministry of Health budget for medical supplies is $43 million, but only $8 million in donations has been received. It is winter, and stocks of drugs are severely depleted. In some areas, hospitals have closed or moved to providing only emergency treatment. Some doctors report receiving no funding at all from TIM. The Union of Health Work Committees, an NGO that runs a hospital and four health centres in Gaza, fears it will collapse for lack of funds. The union is owed half a million dollars by the Ministry of Health for its sub-contracted services, including vaccination campaigns and surgery. In fact, it is on the verge of bankruptcy. While it receives 300 litres of fuel daily through TIM,
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An Oxfam assessment team has found that many water and sewage projects have been suspended because of a lack of funds. Before disengagement, 95 per cent of household water bills were paid, but it is now only 25 per cent. The Coastal Municipal Water Utility, a public/private partnership, depends on those bills to pay its workers, most of whom have now lost their salary. In addition, municipalities and their staff, who act as joint implementing partners, also lost their incomes because of the embargo on the Palestinian Authority.
It is significant that TIM provides its funding through the Fatah office of the president, thereby creating parallel funding structures and institutions. The UN Office for the Coordination of Humanitarian Affairs, the World Bank and others have expressed concern that this could undermine existing ministries. Surely it is an urgent priority to resume payments to the Palestinian Authority. Earlier today, we were debating the White Paper on good governance. I fail to see how deliberately creating parallel systems of administration in such a situation can help good governance.
It is clear that the situation I have been describing has given a powerful twist to the spiralling violence between Palestinian factions. According to the OCHA, that violence has increased by 800 per cent since 2005. With security and police excluded from the temporary international mechanism, different security units are allied to Hamas or Fatah. Negotiations by our own Prime Minister and European Union officials aimed at paying 70,000 security workers seem, unfortunately, to have come to nothing. Those workers support hundreds of thousands of family members. David Shearer, the head of the OCHA in Jerusalem, recently said in evidence to a Commons committee that current aid policy was creating a “failed state”.
If we are to maintain support for what will inevitably be long peace negotiations, the suffering and dislocation I have described must urgently and effectively be addressed. Failure by the international community to do so will undermine its credibility when it has a vital political role to play. That political role must involve nurturing regional goodwill and support. We must therefore really try to see statements such as those by our Prime Minister and Javier Solana in favour of President Abbas through the eyes of the region and the Palestinians themselves. Through many of those eyes, such statements are, perhaps inevitably, seen as an attempt to assist in what many would regard as, in effect, a coup against Hamas. Of course Hamas must come to recognise Israel and its right to exist. That is essential. But every day, all the time, we have to keep asking ourselves whether what we are doing or not doing, and what we are saying or not saying, makes that more or less likely.
4.40 pm
Lord Sheikh: My Lords, almost four decades of protracted occupation and conflict have left the Palestinian territories with what might be best described as a “war economy”, with all the implications that has for social, economic and political development.
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The Palestinian economy relies heavily on donor aid, including the temporary international mechanism devised by the European Union and the World Bank, which bypasses the Hamas-led Government and provides aid direct to Palestinian people. Although I support this mechanism and the work of the diplomatic quartet established by the United Nations, the United States, Russia and the European Union, I have concerns over the cutting of funding. For example, one effect of the freeze in aid is that salaries of some 160,000 government workers have gone largely unpaid. That cannot but further undermine the Palestinian economy and civil society.
A significant share of donors’ assistance in the last four years has been for relief efforts aimed at poverty alleviation. Poverty will undoubtedly continue to be a serious problem as long as current political conditions persist. Certainly, the grotesque levels of poverty in some Palestinian territories, especially in the Gaza Strip, remain a recruiting sergeant for disaffected and alienated youth. It is right therefore that poverty alleviation should have a high priority in Palestinian development strategy.
Micro-financing has helped to develop economies around the world and I believe there is no reason why it cannot be part of the solution in Palestine. I have seen for myself the success of micro-financing in some parts of the globe, including in the Indian subcontinent, where micro-financing of very small scale enterprises has proved a significant stimulus to economic growth and the creation of new breeds of entrepreneur. It has also provided women with the opportunity to gain empowerment, through gaining success with funding and resources, and start small home businesses. That is especially important at the current juncture. In effect, they can help themselves and their local communities through such small entrepreneurial schemes, which will help to circulate finance within local villages and communities.
Yesterday I was with the High Commissioner of Bangladesh, discussing at length the micro-credit and financing arrangements in Bangladesh and the success of the operations. Some of what they do can perhaps be replicated in the Palestinian territories. I have recently been asked to become involved with a group carrying out micro-financing operations in the Palestinian territories. I believe that micro-financing could provide some Palestinians with the key to improving their own living standards and aiding economic development. Could the Minister kindly tell the House what steps, if any, have been taken to support micro-financing schemes in the Palestinian territories?
Unfortunately, I feel that providing relief and development is only a short-term solution. It is important to recognise the adverse effect of economic dependence of the Palestinian territories on Israel, formed over the past decades. On that point, may I ask what measures Her Majesty’s Government are taking for a new policy framework to move from providing relief and development only to one which helps the Palestinian people to become more economically empowered?
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Without such empowerment all forms of peace proposals and dialogue, although valuable, threaten to remain ineffective. As poverty aids violence, so wealth creation will aid stability, for both the Palestinian territories and Israel.
Experience in the Holy Land has shown that hopelessness leads to violence, but the prospect for empowerment leads to peaceful co-existence.
4.46 pm
Viscount Waverley: My Lords, there is an issue that unites the interests of western Governments with Hamas: corruption, the bane of governmental and commercial worlds alike.
A divisive issue to the formation of a Unity Government has arisen, exacerbated by a US/Israeli demand that the post of Finance Minister be given to Salam Fayyad—a past Finance Minister about whom there are grave reservations.
Participants argue that the West has not been following the detail closely enough to make informed judgment. US diplomats have been stating that if Abu Mazen is left with no choice but to choose Fayyad, albeit through coercion, this would unlock the $800 million Palestinian customs-taxes held back by the Israelis. That is tantamount to blackmail in my book.
I call on the British Government to not proffer similar unreasonable opinions, to allow the Palestinians in this regard to administer their affairs and to not interfere. Senior Treasury officials, supported by Ed Balls MP on behalf of our Chancellor of the Exchequer, have travelled to Palestine twice recently. I understand that they were advocating the US line.
Hamas will argue corruption and will veto any attempt at nomination, others would say Fayyad is at best guilty of extreme ineptitude. An isolated Hamas Government will not tolerate western pressure over this appointment, which is of critical importance for the institutional building of transparent governance and the laying down of the foundations for a future vibrant, progressive Palestinian economy.
Numerous examples abound of mismanagement, including increasing government expenditure by 50 per cent to the extent that there was not enough money to pay public sector salaries; underselling investments and giving away unsecured loans worth millions; and, equally worrying for the donor community, mortgaging funds specifically donated for health and education projects; and not having any programme to attract inward investment but also not even fulfilling agreements with existing investors.
In addition, the Economist Intelligence Unit reported this time last year that during Fayyad’s time as Finance Minister, some $700 million were secured through PIF funds by the Finance Ministry, against all the rules.
Out of a population of 8 million worldwide, other worthy moderate proven finance-ministerial candidates exist. I could identify for example Shukry Bishara, a past senior vice-president of the Arab Bank and today’s
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In conclusion, as a thought on how not to win friends, no leader likes being dictated to. This is self-defeating, particularly when coming from the US, from whom any coercion is interpreted with deep suspicion, a death-knell for advancing causes.
4.50 pm
Lord Anderson of Swansea: My Lords, I congratulate the noble Viscount on his timely speech and apologise to him and to your Lordships; I had a hospital appointment which went on far longer than expected.
My link with the Anglo-Israel Association is duly registered. I shall make but four brief comments. First, the starting point is clear: without doubt, there is real poverty in the West Bank and Gaza. Christian Aid quoted in the Foreign Affairs Committee report on terrorism published last June figures from July 2005 showing that more than 2 million people on the West Bank survive on less than £1.05 per day, and the situation is much worse in Gaza, where on average citizens live on less than 85p per day, well below the official UN poverty line. According to ILO statistics, unemployment stands at 23 per cent to 24 per cent; in the south of Gaza it stands at 50 per cent, with youth unemployment there at 70 per cent.
The noble Earl has asked what assistance Her Majesty’s Government are providing for relief and development. This is my second point. The fact is that the European Union is the principal provider of financial and technical assistance to the PA and the United Kingdom is a major bilateral donor. These figures are easily obtainable from the website. Between 1994 and 2001, the European Union and its member states contributed €3.47 billion to the Palestinians, far in excess of the pledges made at the post-Oslo donor conference in Washington. Since the intifada and the economic collapse there, the EU has contributed more than €1 billion. In 2005, the EC’s financial assistance to the Palestinians was €192 million for direct support, infrastructure, institution building and social services. Direct financial assistance was obviously put on hold when the newly elected Hamas Government refused to accept the international community principles of recognising Israel, renouncing violence and accepting the international agreements. Yet direct aid to the Palestinian people accelerated so that within the first two months of last year almost half the normal annual budget was committed and, as we have heard, on 1 September all elements of the temporary international mechanism—the TIM—were declared to be operational. By that time, €330 million had already been made available by the EU.
Given those facts, it is surely difficult to argue that the economic and social problems are due to any neglect by the European Union. The Palestinian Authority has perhaps more aid per head of population than any other territory. Yet it is still not
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That said—this is my third point—there is perhaps a danger that the outside world will view the Palestinians largely as victims who are in no way responsible for their condition. The evidence to the Foreign Affairs Committee report last June quotes Transparency International, which states:
The question has to be asked: where has all that money gone? In September 2003 the IMF stated that it had identified $900 million in public assets that had been diverted into the private accounts of the Palestine leadership. In January 2005, shortly after the death of Chairman Arafat, Al Jazeera estimated his private fortune at between $4.2 billion and $6.5 billion. Corruption was clearly part of the reason for the electoral defeat of Fatah, and it makes the task of President Abbas more difficult. The EU should have insisted on greater transparency to reduce the misuse of its funds, and it should in future institute more effective procedures when aid is resumed, with a far more vigilant OLAF.
The social problems are exacerbated by the high fertility rates in the Palestinian territory. The Palestinian Central Bureau of Statistics publication, Palestinian Children—Issues and Statistics, Annual Report 2006, published last April, quotes a 2004 survey indicating that the total fertility rate in the Palestinian territory is 4.6 children. It is 4.1 in the West Bank, which doubles the population there in 31 years, and 5.8 in Gaza, which doubles the population there every 25 years. In other Arab countries, the total fertility rate is lower. In Syria and Jordan, for example, it is 3.7, and the fertility rate of Israeli Arabs is less than four. With such a booming population, it is clearly much more difficult to provide jobs, housing, education and infrastructure.
Finally, at the heart of the social and economic problems is the fact of instability. Which private investors are likely to be attracted in the current conditions? All roads lead to politics: the intifada, the struggle for top dog between Fatah and Hamas, and the gloomy prospect for a political solution. Hamas appears to have gained some confidence in the past few months and seems ready to ignore the political and economic boycott. Money is smuggled to it through the Rafah crossing. The two-state solution appears to be losing ground. I note yesterday’s declaration by the Hamas political leader in exile, Khalid Meshal, stating,
- “in reality there will be an entity or state called Israel on the rest of Palestinian land. This is a reality, but I won’t deal with it in terms of recognising or admitting it”.
This may be a marginal softening of words, but it is still light years from the Arab League Beirut formula of 2002. After its unilateral withdrawal from Lebanon in 2000, and from Gaza in August 2005, Israel clearly sees little hope in further unilateral moves. Obviously, there is fault not only on one side. For example, progress on easing closures has been slow, there have
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The only final sign of hope is that there is likely, as a result of the initiative by the German chancellor leading the EU presidency, to be a reinvigoration of the peace process. Equally, as a result, Condoleezza Rice will be in the area tomorrow. Chances of progress are dwindling, but the quartet, including the EU presidency’s and our Prime Minister’s efforts, surely should begin a new drive for a settlement.
4.59 pm
Lord Wright of Richmond: My Lords, we should all be grateful to my noble friend Lord Sandwich for initiating this debate on the vital and urgent need for relief and development assistance in the Palestinian territories.
The Palestinians, whether in Gaza, on the West Bank, or in Jerusalem, need more than development assistance; they need hope—hope that the world will pay more attention to their longing for a state of their own, a state with contiguous boundaries, living at peace with its Israeli neighbour; a state whose viability is not being daily undermined by the continuing expansion of illegal Israeli settlements, and a state whose Palestinian inhabitants and those who wish to help them can move freely from one end of their territory to another, without checkpoints, harassment or the so-called security wall. For all these reasons, they need hope that the quartet will be reactivated after months of apparent inactivity to pursue the aims of the road map, to which the vast majority of Palestinians and a significant number of Israelis are deeply committed.
What hope can any of us, Palestinians or Israelis have in the current situation? I note that the Prime Minister, in reply to a question in the other place yesterday, spoke of his hope that the quartet would meet again before long. I hope that the Minister in reply can give us more assurances on that. I welcome also the Prime Minister's repeated acknowledgment that a solution to the Palestinian problem lies at the core of resolving the crises in the Middle East, including Iraq. But where is there any reference to the Palestinian problem in the statement made yesterday by President Bush on his strategy for Iraq? On the contrary, the president appears to have ignored the advice of the Baker-Hamilton commission, and presumably that of his friend the Prime Minister, by refusing to accept any link between the crisis in Iraq and the Israeli-Palestinian conflict.
Israeli settlement expansion on the West Bank, in the Jordan valley and around the crucial settlement area of Ma’aleh Adumim near Jerusalem, continues in spite of rather half-hearted criticism by the State Department two weeks ago that plans to build new settlements—and this is the first totally new settlement to be planned for a decade in the West Bank—would violate Israeli obligations under the road map. I hope that the Minister can tell us what
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The constraints on Palestinian movement also grow harsher by the day. Israeli military orders are now coming into force which would ban foreigners using Israeli-registered cars from having Palestinian passengers and require all foreigners entering the West Bank to have prior permission from the Israeli military authorities—requirements that will certainly have very damaging implications for the aid agencies and other NGOs.
To add to the list of Palestinian hardship, which the noble Earl and other speakers have described all too graphically, more than 9,000 Palestinians are being held by the Israelis, of whom 782 are held without trial in administrative detention. Many prisoners are being held inside Israel itself, another breach of the Fourth Geneva Convention.
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