Donors Assess Socio-Economic Damage In Palestine

VOL. XLV

No 15

15 April 2002

PALESTINE

Donors Assess Socio-Economic Damage In Palestine

As the international donor community in Palestine continues to condemn Israel’s military incursion into the West Bank, concern is growing not only about the exact nature of the immediate humanitarian crisis but also the destruction of the Palestinian institutional capacity that will be needed to manage it. The World Bank and UNSCO (UN Special Coordinator) jointly called on the Israeli Defense Forces (IDF) on 4 April, following a press conference held in Jerusalem, to “desist from the destruction of water pumps, electricity generators and sub-stations, roads, schools, hospitals and business premises,” noting that damage to infrastructure and property comes on top of the serious recession that the Palestinian economy has experienced over the past 18 months, with the result that over half the Palestinian population is now estimated to live below the poverty line (or on less than $2 per day – MEES, 8 April). “We urge the Government of Israel to ensure that full respect is given to humanitarian principles and that relief workers, who are risking their lives to assist the injured, the sick and the needy, are given unimpeded freedom of mobility.”

The Humanitarian And Economic Crisis

Since Israel invaded the towns of Ramallah, Nablus, Hebron, Jenin, Qalqilya and Dora in the past two weeks, and despite the severe restrictions on media coverage of IDF activities, it is now clear that a humanitarian crisis is in the making. As the New York-based Center for Economic and Social Rights (CESR) notes in a letter dated 7 April to Kofi Annan, the Secretary-General of the UN, a full assessment of the situation is difficult: “An accurate accounting is not yet possible because Israeli forces are expelling non-Palestinians from the scene, including members of the media and humanitarian and medical agencies, as well as peace activists who have traveled to the occupied territories seeking through their presence to deter further abuses.” However, the CESR reiterates other reports of “bulldozers demolishing rows of houses…[and]…Israeli soldiers are rampaging through people’s homes, committing extrajudicial executions, and conducting mass arrests.” Water and electricity have been cut off to many parts of the West Bank, including hospitals. The President of the European Commission, Romano Prodi, said on 9 April that “it is beyond any doubt that aid is now urgently needed and that the situation in the West Bank is rapidly turning into a major humanitarian crisis.” Commissioner Poul Nielson said that “the intentional attacks on medical teams which are prevented from treating the sick and wounded have reached an unprecedented level.”

Equally disturbing, say donors, is the fact that civilian infrastructure is being targeted, damaged, looted and in some cases destroyed, fueling fears that Palestinian administrative institutional capacity will be destroyed and along with it the ability to provide the most basic public services. Several reports have confirmed that the Palestinian Ministry of Education has been hit and raided. The Palestinian Ministry of Civil Affairs, the Ramallah Arab Care hospital and Red Crescent Maternity hospital have been attacked and badly damaged. Entire shops in Ramallah have been burned down and raided and local sources confirm that IDF soldiers have looted buildings. The offices of the national telecom provider Paltel in Nablus were attacked and computers were stolen by the Israeli forces. Several reports speak of house-to-house raids where the inhabitants are held at gun point while Israeli soldiers remove objects of value including gold and mobile phones (gold is used as an informal savings mechanism by many families and is sold in times of crisis to provide immediate cash flow). Several reports describe Ramallah as “unrecognizable”. While, the United Nations Relief Works Agency (UNRWA) is trying to mobilize ambulances and food trucks, it says it cannot do so without Israeli assurances that they will not come under fire.

In a report issued by UNRWA on 11 April, the commissioner general Peter Hansen said that the situation in the Jenin refugee camp, which has seen some of the worst violence, is “fast turning into a catastrophe.” He said “we are getting reports of pure horror – that helicopters are strafing civilian residential areas, that systematic shelling by tanks has created hundreds of wounded, that bulldozers are razing refugee houses to the ground and that goods and medicine will soon run out.” Indeed the level of destruction is so great that even Israeli soldiers are concerned about how it will later be viewed. On 9 April, Ha’aretz quoted an anonymous Israeli solider saying he had confirmed that the army is using bulldozers to plough their way through the camp and that he was worried that the truth about the level of destruction in Jenin would do Israel’s reputation “great damage.” The soldier said “however many wanted men we kill in the refugee camp…there is still no justification for causing such great destruction.”

The latest Israeli attacks come against the backdrop of a Palestinian economy that had deteriorated significantly over the 15 months since Ariel Sharon’s controversial decision to visit the Haram al-Sharif/Temple Mount on 28 September 2000 ignited the current intifada (MEES, 9 October 2000). According to the latest report issued by the World Bank and UNSCO on 12 March, entitled Fifteen Months – Intifada, Closures and Palestinian Economic Crisis, Palestinian per capita income declined by 12% in 2000 as a whole and a further 19% in 2001 despite the injection of donor funds worth $195 per person since 1994, or “one of the highest levels of per capita official development assistance anywhere in the world.” In addition to the human losses of life and injury, which “defy economic estimation,” the report says that some $305mn worth of physical damage had been incurred by the end of December 2001. More importantly, “Gross National Income losses…amounted to at least $2.4bn in real terms by the end of 2001,” and average per capita income was 30% lower than when the Gaza-Jericho Agreement was signed in 1994. According to the report, under the best case scenario Palestine will need some $1.5bn in its current fiscal year just to maintain the status quo, with $1.7bn needed should the closure tighten funding (see Table below). However, the three scenarios projected by the report were drawn up without factoring in the latest escalation of violence, suggesting that in reality the worst case scenario would require significantly more.

Emergency Donor Support To The Palestinian Authority For 2002

($Mn)

Scenario	Status Quo				Lifting Of Closure (Optimistic)						Tightened Closure (Pessimistic)
	Need	Available		Gap		Need	Available			Gap		Need	Available		Gap
1. Budget Support	816	768	48			300-360		768	-			876	768	108
2. Service Delivery (PA)	96	36	60			60		36	-			96	36	60
Sub-total PA budget support	912	804	108			360-420		804	-			972	804	168
Service Delivery (Municipal)	60	22	38			40		22	18			70	22	48
3. Private Sector Support	75	-	75			140		-	140			75	-	75
(Crisis Fund, VAT)
4. Unemployment & Welfare	200	80	120			150		80	70			250	80	170
5. Physical Reconstruction	125	50	75			200		50	150			125	50	75
6. Student Scholarships	20	-	20			20		-	20			30	-	30
7. UNRWA	142	-	142			142		-	142			200	-	200

TOTAL	1,534	956	578			1,052-1,112		956	96-156 540*			1,722	956	766

___________

Source: Fifteen Months – Intifada, Closures and Palestinian Economic Crisis. World Bank and UNSCO, 18 March.

Note: * Were all PA central budget commitments fungible, the gap would range between $96 and 156mn. If none of the PA central budget commitments could be switched into investments, the gap would become $540mn (unfunded programs No.2-7).

Assessing The Damage

MEES understands that the donor community met on 9 April to discuss how to assess the current level of damage, how to mobilize available funds and how to work to develop a coordinated response in cooperation with the Palestinian Authority (PA) at three levels – humanitarian, infrastructural and institutional. Donor sources confirm that there is still donor appetite from both Arab and non-Arab sources. The EU Humanitarian Aid Office (ECHO – which provides relief to victims of natural disasters) on 2 April approved €5mn for both Palestine and Lebanon and is now preparing a new emergency decision for around €1.7mn to fund further emergency activities in the West Bank and Gaza. Saudi Arabia announced on 9 April that it had transferred $15.4mn to the PA, and Kuwait said it had given $7.5mn the same day. However, the same sources say that this appetite may be irrelevant if there is no institutional capacity to mobilize it. “The damage to cars, roads and buildings is one thing,” said one donor source, “but ransacking buildings and taking hard disks and data, examination records, cause a problem in terms of data gaps. How do you cost and replace the institutional capacity that was built up over the past few years?”

Writing on 8 April, following the lifting of the curfew in Ramallah, Palestinian doctor and academic Rita Giacaman reported that over and above the fear of “plunder, stealing and breaking” a worse realization was confirmed – the destruction of the institutional and cultural infrastructure of Palestinian life. “For many, much of their laborious work in institution building has been ruined” said Ms Giacaman, noting the damage done to Palestinian media, including TV and radio stations, and how the Union of Palestinian Medical Relief Committee’s Optometry Center had been stormed with all the internal walls destroyed and equipment broken. “The Israeli army also took with them the main records computer,” said Ms Giacaman, confirming that now “there is nothing there that is operational.”

The removal of documentation and records is most worrying since it destroys years of historical information, critical to building Palestinian public service capacity in all fields. When the Ministry of Education was attacked by the IDF on 3 April, the damage was much more than physical. According to Ms Giacaman, who has been collating information from colleagues working in the relevant institutions, “the Ministry’s computer net servers were stolen, along with many floppy disks, CD’s, files, dossiers, and other documents…The general examination central office doors were all detonated and destroyed…many of which contain very important educational documents. All records were taken or destroyed, even records of official transcripts that have been laboriously developed over years, and making it impossible now to issue or certify student documents and transcripts.” A report issued by the Palestinian branch of the international NGO Defense for Children International on 9 April said that officials in the Nablus area estimate that “it will take 15-20 years to return Nablus to its pre-siege state.” Rebuilding this capacity is now overshadowed by the donor focus on how to assess the level of damage and offer emergency humanitarian aid.

Mobilizing The Repair

Europeans are making all the right noises. The EU President, Spain, said on 8 April that it might convene an urgent meeting to discuss trade sanctions on Israel if it continued its military offensive in the West Bank. The Council for the Advancement of Arab British Understanding (CAABU) in the UK noted on 10 April that there are numerous measures open to the EU that fall short of sanctions, including the suspension of the EU-Israeli trade agreement. CAABU notes that “European states are still allowing illegal Israeli settlement products to be imported at preferential rates.” In his speech delivered at the Plenary Session of the European Parliament on 9 April, European Commissioner for External Affairs Chris Patten said that “the only way to bring a definitive end to the wave of suicide bombings is to tackle the source of the problem and find a just and lasting peace.” He went on to note that “the current Israeli response of blockading an entire population, withholding tax revenues, extra judicial killings, destruction of infrastructure and arable land is not the answer. This kind of behavior seems not only to be aimed at the elimination of terror but the elimination of the Palestinian Authority and any achievements of the Oslo accords.”

However, a consensus in the EU has yet to emerge as Mr Josep Pique, the Spanish Foreign Minister, made clear on 8 April. “It is a possible scenario” he said “some countries are in favor of introducing sanctions very, very soon; others are more reluctant. So we have to discuss it.” A senior foreign aid official based in Jerusalem confirmed that humanitarian groups “can’t do anything without somebody in Europe taking action.” He said: “We can raise say $5mn in humanitarian assistance immediately but we can’t use it. The only people we can give assistance to are those in Jerusalem, because that’s the only place we can go.”

Given the damage inflicted on Palestinian institutions by Israel’s latest attacks, even if donors could freely access the West Bank and Gaza, the extent to which the internal mechanisms would be in place to manage any assistance programs, emergency or otherwise, is questionable. Already, as the World Bank and UNSCO point out in their report, capacity built to date is extremely vulnerable: “The value of this enormous collective effort [of total disbursed donor funds of $4.4bn], is threatened by the breakdown of the peace process.” Even under the Oslo agreements, which sporadically increased Palestinian jurisdiction over economic issues, in the absence of a sovereign country and macro-economic tools of management (a national currency and control over trade borders to name but two), donors’ funds, without political backing, could only ever have gone part of the way to solving Palestine’s development problems.