Assessing Donor-driven Reforms in the Palestinian Authority: Building the State or Sustaining Status Quo?

Abstract

Official development assistance for statebuilding provided to the Palestinian Authority (PA) has increasingly been focused on technocratic governance reforms that fail to address the root causes of conflict between Israel and Palestinians. A prime example is an emphasis on preparing medium-term development plans despite the fact that the ongoing occupation prevents their effective implementation. The donor community is bound by the Fragile States Principles to strengthen state capacity to help prevent recurrence of conflict. Drawing on publicly available data and government documents, as well as interviews with stakeholders in PA development policy, this article identifies shortfalls in statebuilding strategy benchmarked against the Fragile States Principles. In order to fulfil their peacebuilding mandate, it is crucial for the donor community to address the role of the Government of Israel in governance failures in the occupied Palestinian territory and engage civil society more effectively.

Keywords::

• aid effectiveness
• conflict
• development
• donors
• fragile states principles
• governance reform
• Israel
• Palestine
• peacebuilding
• statebuilding

Introduction

Official development assistance for Palestine since the 1993 Oslo Accords has failed to yield favourable macroeconomic outcomes in terms of poverty reduction or increased employment rates. Further, despite statebuilding efforts on the part of the international community, there is little indication of improved accountability between the Palestinian Authority (PA) and Palestinian citizens. The Fragile States Principles make it incumbent on donors to assess the impacts of their interventions on the causes of conflict in countries with weak states. However, the recurrence of conflict in Gaza, Jerusalem and the West Bank indicates that the institutions providing official development assistance (ODA) to the PA are failing their peacebuilding mandate.

This article assesses ODA-driven governance reform in the PA, taking the medium-term development planning process and plans as a lens for doing so. The article breaks with existing ODA approaches to governance reform that focus solely on activities within the domain of the PA. Instead, it argues that the Government of Israel is deeply involved in the day-to-day governance of the occupied Palestinian territories (oPt) such that reform efforts focused solely on the PA are unlikely to yield results. In addition, the decision of donor country capitals to sideline Hamas, the party in charge of governance in Gaza, has further undermined statebuilding efforts. In the wake of the 2014 war in Gaza and the rise in violent deaths in Jerusalem and the oPt, it is more urgent than ever for ODA actors to rethink their strategies in terms of the Fragile States Principles.

Over the past 20 years, bilateral and multilateral aid agencies have participated in discussions and signed agreements to improve the way aid strategies are designed and carried out. In 2005, a major landmark was reached when 91 donor and aid recipient countries signed the Paris Declaration, making a commitment to improve aid effectiveness. Donors agreed to extend their accountability beyond project inputs and outputs towards demonstrating the outcomes and impact of aid on recipient countries. The PA's medium-term development plans were introduced in an attempt to fulfil Paris Declaration commitments.

The 2007 Fragile States Principles (FSPs) form another important landmark, published by the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD) as a set of guidelines for donors involved in conflict-affected or conflict-prone countries. The vast majority of ODA to Palestine comes from DAC members. Therefore, the FSPs provide a compelling benchmark for assessing the peacebuilding impacts of governance reform strategies.

The FSPs put emphasis on political development as providing the necessary framework for economic growth and development. According to the FSPs, ODA actors have an obligation to prioritise strengthening the ‘legitimacy and accountability’ of the state when it cannot ‘provide the basic functions needed for poverty reduction, development and to safeguard the security and human rights of their populations’ (OECD 2007). ODA actors must secondly emphasise the institutional capacity needed to ensure citizens are able to obtain justice, security and social services. Further, economic growth models must be geared to provide more employment opportunities.

In conflict-affected countries such as Palestine, achievement of both political and economic development is especially urgent since failure on either front can lead to a recurrence of conflict.

In politically loaded contexts, donors may inadvertently cause harm unless they effectively and accurately assess the political and social consequences of aid flows.

In politically loaded contexts, donors may inadvertently cause harm unless they effectively and accurately assess the political and social consequences of aid flows.

In terms of country-level strategy, ODA institutions in Palestine have yet to find a successful way to address the context of occupation that impinges on every aspect of development. In order to continue designing and implementing projects, they have opted to work within the constraints set by occupation. Consequently, the approach taken to statebuilding in particular has become increasingly technocratic, confined to administrative and bureaucratic functions with an emphasis on reporting and documentation. Governance reforms have consequently failed to effectively bolster citizen participation or political leadership.

This article focuses on the development planning process that has been a key part of governance reform since 2007 under the leadership of former Palestinian Prime Minister Salam Fayyad. It further analyses the policies and strategies embodied in the 2008–2010 and 2011–2013 development plans. While undertaken with the explicit intention of improving ‘downward accountability’ to Palestinian citizens, the planning process was designed for a ‘normally’ functioning political and economic context. It consequently ignores the authority and strategic interests of the most powerful player in aid administration, the Government of Israel. The planning process is therefore an example of a strategic disconnect in governance reform programming between project output (i.e., improved planning mechanisms) and outcome (i.e., improved accountability).

This article addresses the question: What are some key shortfalls in the strategy underlying the development plans and planning process when benchmarked against the FSPs? It does so by presenting a case study of the political economy context faced by ODA agencies participating in the development planning process. Case studies are used frequently to assess the effectiveness of development agency programming and strategies, and tailor them to particular country contexts. The data used here is drawn from reports and documents that are publicly available from the World Bank and the United Nations Conference on Trade and Development (UNCTAD). It also draws on bi-annual reports from the PA presented to the Ad Hoc Liaison Committee (AHLC), as well as planning documents and sectoral strategies. Finally, it uses reports released by Palestinian research institutes in the non-governmental sector.

Personal perspectives and experiences in aid planning and administration were gathered in 22 semi-structured personal interviews with stakeholders in donor-funded development projects and planning. The bulk of interviews were carried out during the months of June and July 2013 in Ramallah and Bethlehem with PA officials, aid agency consultants, NGO staff and analysts. The interviewees were asked to respond to questions about their daily work and experiences. Anecdotes from these interviews are used through the study to complement published analysis and commentaries from Palestinian civil society.

This article is organised as follows: the second section explains the developmental context put in place by the Oslo Accords and ODA agency relations with the PA post-Oslo. The third section lays out the analytical groundwork for understanding the political economy impacts of ODA interventions in an aid-dependent country such as Palestine. In the fourth section, the PA's medium-term planning process and resulting plans are assessed in terms of five of the FSPs. The fifth and final section addresses obstacles faced by donor agencies operating in Palestine, and recommends strategies for overcoming impediments to effective planning and programming.

Aid to Palestine: An Overview

Following the peace settlement reached with the signing of the Oslo Accords in 1993, Israel withdrew from parts of the West Bank occupied in the 1967 war. The PA was created as an interim technocratic government until a final settlement with Israel was reached. The PA was given authority over ‘Area A’, joint control with Israel over ‘Area B’, and Israel retained control of ‘Area C’. The latter constitutes 61% of the territory of the West Bank and includes the majority of agricultural land. The areas under PA control have, over the years, been reduced to islands sequestered by Israeli settlements and roads that are off-limits to Palestinians, such that Israel effectively controls movement throughout the West Bank. Under the Paris Economic Protocol signed in 1994, Israel retained control over the major structural features of the Palestinian economy: movement of people and goods, supply of water and electricity, imports for consumption and production, access to export markets, government revenue from customs, and monetary policy.

Gaza and the West Bank have been walled off from each other, despite Israeli commitments to allow trade and movement between the two territories. In 2006, Hamas won parliamentary elections in Palestine; however, the PA did not cede power and violent conflict ensued, leaving Gaza under Hamas control. Since 2007, Gaza has been under Israeli blockade and subject to repeated and increasingly devastating bombardments. Frigid relations between donor countries and Hamas, together with the economic impacts of blockade, have meant the aid to Gaza is largely humanitarian rather than development-oriented. ODA agencies have therefore focused governance reform efforts on an increasingly complex ‘partnership’ with the PA in the West Bank.

The occupation of the West Bank has kept a stranglehold on economic development. In this context, the PA has grown highly dependent on foreign aid. According to Ibrahim and Beaudet (2012, 482), aid programmes have accounted for as much as 46% of GDP in some years. Among ODA actors, the US stands out as the largest donor, followed by EU institutions and UNRWA. (Table 1) It should be noted that the US gives US$3 billion annually to Israel, largely in military aid, nearly 10 times the amount it gives to Palestine.

Table 1 Top 10 Donors of ODA 2008–2009

Top 10 donors of gross ODA 2008–2009	USD millions
1 United States	667
2 EU Institutions	601
3 UNRWA	476
4 Arab Countries	110
5 Norway	108
6 Spain	101
7 Germany	89
8 United Kingdom	82
9 France	77
10 Sweden	69

Source: OECD-DAC ‘Aid Statistics’ in Ibrahim and Beaudet (2012, 484).

This paper focuses on ODA institutions participating in the development planning process, overseen by the Ad Hoc Liaison Committee which is co-sponsored by the US and EUREP, the EU's funding mechanism for Palestine. Individual ODA agencies vary in terms of priority sectors and standards of cooperation with PA systems and civil society partners (Ministry of Planning and Administrative Development [MoPAD] 2012). Certain countries have taken leadership in specific aspects of governance programming, with the UK and the US standing out as major donors to the security sector. However, as those roles shift over time, this paper will reference what is understood to be the core strategy. It is one that focuses on technical aspects of reform without addressing the violent dynamics of the Israeli occupation, nor political repression on the part of the PA.

Palestine is also one of the largest recipients of aid in the world, receiving US$24.6 billion between the signing of the Oslo Accords in 1993 and 2013. Yet aid has failed to achieve progress in standard indicators of economic development. Most notably, gross domestic product (GDP) growth rates have been volatile, driven by influxes of aid, and falling to − 0.1% in the West Bank in 2013 (World Bank 2013a, vii) (figure 1). Unemployment rates have not declined since the end of the Second Intifada in 2006, hovering between 18% and 28% (figure 2). Poverty rates have risen since the introduction of medium-term development planning (the topic of this study), from 22.6% in 2009 to 25.8% in 2011.1

Figure 1 Palestine GDP Growth Rate 1999–2013 Source: World Bank (2013b, 15).

Figure 2 Palestine Unemployment Rate 2006–2013Source: Trading Economics: www.tradingeconomics.com/palestine/unemployment-rate, accessed 11 November 2014.

Meanwhile, there is consensus in the donor community that Israeli restrictions on movement within the West Bank and across its borders constitute the major impediment to development (World Bank 2013a, vii). The World Bank issued a report indicating that PA access to ‘Area C’ would allow GDP to grow by 35% and reduce the PA's budget deficit by 50% (World Bank 2013b, x). A report by the Applied Research Institute — Jerusalem estimates the cost of the occupation at 84.9% of GDP (Ministry of National Economy [MoNE] and Applied Research Institute — Jerusalem [ARIJ] 2011).

The consensus is clear, yet

Donors have so far lacked a strategy for addressing the structural impediments to development placed by the Israeli occupation.

donors have so far lacked a strategy for addressing the structural impediments to development placed by the Israeli occupation. Fatigued by the persistent need to keep the PA and Palestinian economy afloat under occupation, foreign aid is declining. For instance, budget support to the PA was cut in half between 2009 and 2011, from 20% of GDP to 8% (MoPAD 2013, 15).

On the statebuilding front, ODA agencies have claimed massive successes, touting PA institutions as among the most reformed in the developing world (Rad 2011, 181). Indeed, decades of reforms have targeted the PA's institutional functions, most recently with an emphasis on the efficient use of ODA. However, transparency to donors has not translated unambiguously into improved Palestinian perceptions of PA governance. For instance, the percentage of citizens perceiving the PA as corrupt hovers around 80% in opinion polls (for example, Palestinian Center for Policy and Survey Research [PCPSR] 2013). ODA actors appear to have different priorities from Palestinian citizens. Further, the impact of aid on Palestinian development has been increasingly criticised, both for demobilising Palestinian civil society2 and for failure to achieve economic outcomes.3

Starting in the early 2000s, ODA for budget support was made conditional on specific reforms in economic policy, institutional arrangements, and political systems (Rad 2011). In particular, reforms targeted the ‘Palestinian judicial system, reform of the tax system, Palestinian NGO projects, strengthening parliamentary democracy, and civil service reforms’ (Rad 2011, 72). The shift was informed by the post-Washington Consensus move to ‘bring the state back in’. In particular, external actors took on a greater role in shaping government administration, expenditure allocations, and regulatory environments for business and finance. Rad argues that, while these reforms may have been helpful under ordinary circumstances, their achievements have been limited by the realities of occupation (Rad 2011, 72). In effect, as discussed below, the reforms were confined to ‘building more efficient institutions’ rather than strengthening democracy (Rad 2011, 180).

In the years and months leading up to the PA's 2011 bid for statehood recognition in the UN Security Council, countries around the world recognised Palestinian statehood for the first time. Alternatively, some governments upgraded the status of Palestinian diplomatic representation in their countries. The reason given by countries such as Denmark, the UK and Norway for doing so was the progress made by the PA in achieving ‘readiness for statehood’. According to these donors, Palestine had accomplished the objectives laid out in the 2007 Paris donor conference and embodied in the 2008–2010 Palestinian Reform and Development Plan: institutional reform, development of the private sector, openness to trade, and government expenditure control. These accomplishments were made the measure of institutional preparation to handle the responsibilities of statehood; they were operationalised through new levels of government cooperation with ODA agencies, and especially the realisation of a high degree of accountability and transparency.

Improving Donor Impact

Underlying the FSPs (Table 2) is a consensus that political development and economic development are interdependent, particularly in conflict-affected countries (Burnside & Dollar 2004; Boyce & O'Donnell 2007; Booth 2012; de Haan & Everest-Phillips 2010; OECD 2010; Tarp 2010; Williams et al. 2011). Achieving economic growth that alleviates poverty requires a conducive political context for three main reasons. First, legal institutions must have the capacity to facilitate investment and economic activity; second, transparent and accountable political institutions help ensure that government revenues are funnelled back into economic development; and third, administrative capacity is needed to coordinate a cohesive development strategy.

Table 2 Fragile States Principles

1.	‘Take context as the starting point’: international actors must utilise political analysis to assess the constraints and opportunities of each particular fragile state context, differentiating between distinct types of fragile state scenarios and coming to a shared understanding of the appropriate type of intervention.
2.	‘Ensure all activities do no harm’: international actors must devise and put in place safeguards to ensure that aid does not aggravate or cause horizontal inequalities, public corruption or violations of human rights.
3.	‘Focus on statebuilding as the central objective’: international actors must be ‘focused on building the relationship between state and society’ by efforts to build both the ‘legitimacy and accountability of states’ and strengthening capacity for service delivery.
4.	‘Prioritise prevention’: develop and apply strategies that address the ‘root causes’ of conflict, coordinating with and strengthening the capacities of regional organisations, actors such as women, and cooperating with other international actors.
5.	‘Recognise the links between political, security and development objectives’: a ‘whole of government approach’ is urged, coordinating efforts and communication between different government agencies and functions.
6.	‘Promote non-discrimination as a basis for inclusive and stable societies’: the ‘voice and participation’ of all marginalised social groups should be included and strengthened in statebuilding and service delivery.
7.	‘Align with local priorities in different ways in different contexts’: alignment with government strategies is key; where government capacity is weak, international actors must work with alternative indigenous organisations and groups and avoid creating a service delivery system parallel to the public one.
8.	‘Agree on practical coordination mechanisms between international actors’: international actors must coordinate efforts as much as possible in all aspects of strategy, funding and implementation; it is further important to coordinate with local leadership, either inside or outside the government ‘to develop a shared analysis of challenges and priorities’.
9.	‘Act fast but stay engaged’: institutional change generally requires a minimum of 10 years; volatility in the level and type of donor engagement not only undermines lasting change, but is also destabilising to state institutions. Shifts in programme direction must be carried out with prior consultation and careful preparation.
10.	‘Avoid creating pockets of exclusion’: donors must coordinate efforts and aid flows in order to avoid ‘aid orphans’ with potentially destabilising impacts for statebuilding efforts.

Source: Adopted in 2007 by OECD-DAC ministers. Summarised from the OECD website: http://www.oecd.org/dacfragilestates/, accessed 13 June 2015.

On the other hand, political development depends on economic growth because the latter contributes to political stability (Boyce & Forman 2010). Further, economic activity generates the resources needed to fund crucial public services provided by the state, such as health and education. In addition, taxation is a mechanism for accountability between citizens and governments; however, a good tax base depends on a healthy domestic economy (Hubbard 2010). All of the economic constraints faced by the PA described in the preceding section severely curtail the potential for success in institution-building projects.

Starting in the 2000s, ODA agencies made a shift toward systematically assessing the larger political economy context faced by aid workers and programmers in recipient countries. This can be seen in the development of tools for what can be loosely termed ‘political economy analysis’ developed by the majority of ODA institutions. For instance, USAID began utilising ‘democratic government assessments’ in 2000, and DFID's Drivers of Change approach was first launched in 2002. The World Bank published its ‘Problem Driven Governance’ document in 2009, and the European Commission introduced ‘political economy analysis’ to its approach in 2010.

These approaches have attempted to shift programme design towards confronting the unavoidably political nature of ODA flows and activities. In conflict-affected countries, aid tends to flow along the fault lines of conflict because of power dynamics over which ODA actors have no control (Boyce 2002). Peace and Conflict Impact Assessments (PCIAs) can be used to avoid unintended negative effects of aid programming. In fact, PCIAs have the potential to inform the design of programmes that can help strengthen vulnerable groups (Abitbol 2014). They may also guide aid agencies toward advocacy for foreign policies to deter violence or protect specific groups (Goodhand 2001).

However, using these tools and frameworks to improve programme design has proved to be a sticking point (Unsworth 2009). Reforming aid strategy at the level of overall institutional policy is even more difficult. Governance reform interventions, like so many others, continue to emphasise short-term ‘wins’, relying on existing institutions and power centres to do so. The complexities of fostering channels of accountability beyond spaces for ‘citizen voice’, for instance by supporting political mobilisation, are frequently beyond the scope of programmes funded by ODA institutions.

In Palestine, heavy emphasis on institution-building in the early 2000s was an attempt to remedy a strategy that allowed Yasser Arafat to concentrate his political power through corruption and cronyism (Khan 2004). However, a focus on technocratic approaches to statebuilding did not succeed in creating a more robust and accountable political system, even though the capacity and functioning of state institutions was strengthened.

Sahar Taghdisi Rad (2011) utilises the case of donor assistance to the oPt to demonstrate the futility of strategies that fail to address structural obstacles to development. Rad finds that donor policy recommendations as well as strategic interventions in conflict-affected countries have tended to use generalised approaches deemed universally applicable to developing countries. Conflict, she argues, is frequently treated as a transitory characteristic of the economy that will be effaced once a political resolution is reached. In contrast, Rad argues that conflict is a structural feature of an economy, impinging on development efforts in sustained rather than temporary fashion. Consequently, aid will not have the desired effect unless donor strategies address the interaction between aid and the structures of conflict.

While Rad focuses on achieving economic outcomes from aid interventions, Graham Harrison (2004) is concerned about the political impacts of governance reform programmes. Analysing three African countries, Uganda, Mozambique and Tanzania, Harrison coins the term ‘governance state’ for states that have progressed beyond a relationship of conditionality with donor agencies (in particular, the World Bank) to one of ‘partnership’. The process frequently involves a strengthened Ministry of Finance with disproportionate influence on government policy through a technocratic mandate of conservative monetary and fiscal policy. Upward accountability to the World Bank operates through rigorous systems of monitoring and evaluation; hence, the culture in the governance state is oriented around reporting and planning, and utilises a rhetoric of political neutrality.

Harrison (2004, 35) makes clear the transformation of the self-assigned role of the state from ‘nationalist developmentalism to neoliberal conditionality’. Mushtaq Khan (2004) draws attention to a similar shift in the PA, as policies designed to strengthen political and economic capacity to confront the occupation were sponged away through anti-corruption reform and a laissez-faire role assigned to the quasi-state. As a consequence, he argues, the PA abandoned the project of designing a development programme that contributed towards self-determination.

Harrison finds that the relation between the civil service and the World Bank ‘aggressively shapes the discursive limits of the “politics of the possible”’ (2004, 129). The citizen ‘voice’ that is supposedly invited to the policy debate is denied agenda-setting power since the government's mandate, priorities and systems are not up for discussion. Harrison's work is relevant to the Palestinian case, where the era of reforms ushered in with Salam Fayyad's leadership in 2002 led to a consolidation of power in the Ministry of Finance. The result of his reforms is strikingly well described by Harrison's conception of a ‘partnership’ culture of documentation and ‘politically neutral’ planning that defines the scope of government action. This article argues that

The PA's preoccupation with planning and reporting to donor agencies has edged out its role of political leadership.

the PA's preoccupation with planning and reporting to donor agencies has edged out its role of political leadership.

In Palestine, the first systematically designed and implemented national development plan was published in 2007 in time for a major donor conference pledging a fresh round of budget support and development funding. Palestine was recovering from the destruction wrought by the Second Intifada. Salam Fayyad, newly appointed Prime Minister, promised donors like-minded leadership with his record of professional success in the World Bank and International Monetary Fund. Fayyad was prepared to implement the tough reforms that would improve administrative transparency and efficiency. A new political rhetoric, popularly termed ‘Fayyadism’, directed the focus of the PA to bureaucratic and neoliberal policy reforms (Khalidi & Samour 2011). Fayyad spearheaded his strategy with the preparation of the 2008–2010 development plan, as discussed below.

Benchmarking Against Fragile States Principles

The development planning process, the plan itself and its impact on aid disbursement are analysed here in light of five of the FSPs. It should not be understood from this assessment that the agencies providing ODA have entirely failed to fulfil the FSPs. The goal of this analysis is to identify reasons governance reform has proved largely ineffective vis-à-vis the peacebuilding mandate of aid in the oPt. The core problem threading through the five assessments is the focus on administrative function rather than the larger political economy framework of occupation.

Take context as the starting point

By failing to address structural obstacles to development, development planning in the oPt falls short of the FSP on taking context as the starting point. Fayyad's plan for liberation-via-reform was discredited in early 2013 due to faltering GDP growth and the realisation that statehood recognition at the UN did not lead to changes on the ground. Fayyad resigned from his position in April that year.

However, ODA agencies and PA ministries continued to direct resources and policy focus to improving the bureaucratic functions and processes of development planning.4 However, the 2008–2010 and 2011–2013 plans acknowledge the impossibility of full implementation while occupation continued, thereby tacitly admitting that targets set for each sector would not be achieved.

As Rad (2011) contends, the focus on a narrow set of bureaucratic functions fails to address systematic impacts of conflict. In this case, distortions within the PA cannot be effectively addressed while aid dependence undermines the PA's accountability to Palestinians. Yet aid dependence cannot be removed while the occupation remains in place (World Bank 2013b). The PA is consequently in a false position since occupation impinges on the most basic aspects of economic development, and therefore also on the design of any viable development plan. The results of planning reforms are largely constricted to achieving a high degree of administrative efficiency.

A second key problem is the failure to address the disproportionate power of the Government of Israel in the implementation of the plans. The tacit nature of the Government of Israel's authority at the highest echelon of the aid coordination structure tends to imply a functional partnership with the donor community. According to an international consultant experienced with multiple donor agencies, enormous amounts of time and energy are devoted to chasing guarantees that the Government of Israel will permit donors to complete and utilise their projects upon completion.5 Despite this effort, the Government of Israel reserves the right to reverse its decisions at any point in time.6

In a recent article describing Gaza reconstruction efforts in 2012, former head of the World Health Organization in Palestine explains,

All our efforts were thwarted by Israel's Kafkaesque obstruction and bureaucracy. They tied us up in knots negotiating how many trucks would be allowed in, when crossings would be open or closed, what information was needed for goods to be cleared, how many permits they would issue for UN drivers … (Laurance 2014, np)

Aid agencies that try to force this process face serious repercussions; for instance, the EU committed 55 million euros to develop agricultural villages in ‘Area C’ in accordance with the 2011–2013 development plan. However, out of 42 master plans submitted to the Government of Israel from 2011 onwards, none were approved. Further, roughly 200 development projects funded by the EU were destroyed by the Government of Israel between 2011 and 2013 (MoPAD 2013, 40).7

Without political or economic sovereignty, institutional reform resembles pacing on a treadmill rather than movement forward in building an economy.

Focusing more and more internally on PA function gives the impression that the PA is responsible for the failure of development efforts.

Focusing more and more internally on PA function gives the impression that the PA is responsible for the failure of development efforts. As donor fatigue leads to declining aid flows, the speed of the treadmill is turned higher in the form of increasingly sophisticated planning techniques. This strategy should be reassessed against the likelihood of achieving results and contributing to peacebuilding.

Do no harm

Governance reforms focused on tying planning to budgeting force the PA's hand in the direction of fiscal contraction in order to align expenditures with dwindling aid flows. Under Fayyad's leadership, the PA resorted to neoliberal policy solutions that negatively impacted on vulnerable populations. With results similar to those found by Harrison (2004) in Uganda, Tanzania and Mozambique, policies representing ‘best practices’ inflicted hardship on vulnerable populations. As has been the case in Palestine, plans to offset these impacts with social transfers were neglected or insufficient to effectively protect those in poverty (Harrison 2004). Such policies and their consequences are an example of the failure of ODA actors to fulfil the FSP to ‘do no harm’.

In the early days after Oslo, donor policy placed an emphasis on infrastructure development and pro-poor policies, such as providing social safety nets (Rad 2011). However, as the occupation persisted, poverty continued unabated and Israeli forces continued to demolish or deny access to donor-funded infrastructure. Donor countries took a new approach that involved instituting neoliberal economic policies the PA could effectively implement despite occupation.

These policies were deemed universally applicable, but poorly suited to the Palestinian context. For instance, ‘administrative’ reforms urged by the World Bank led to the installation of 300,000 pre-paid electricity meters in the West Bank, not excluding rural areas and refugee camps (Khalidi & Samour 2011). As a result, impoverished families lost access to electricity. Another example is sustained pressure to decrease the PA's wage bill despite the fact that civil service jobs account for 20–25% of employment.8 The destabilising consequences of cutting back on this employment are well known to actors on the ground (UNCTAD 2009, 23). Further, protests staged by public servants, especially teachers, due to prolonged delays in paying out salaries have been recurrent.

Tying planning to budgeting has meant enshrining fiscal conservatism in the language of the most recent development plan (MoPAD 2014, 14). If the greater goal of institutional reform is to demonstrate to the donor community that the PA is a ‘responsible’ recipient of donor funds through consistent efforts to reduce its budget deficit, then these reforms are doubtless achieving their goals. However, if the aim is a government with greater capacity for leadership in setting the developmental agenda and strategy of Palestine, then this reform is regressive.

Prioritise prevention of conflict

Constrained by their capitals' policies vis-à-vis Hamas, ODA actors have for many years refused to cooperate and engage with key political actors in the oPt. Further, donors have little room for manoeuvre in supporting civil society actors and organisations whose work contributes to non-violent resistance to the Israeli occupation (Murad 2014). Yet the ongoing occupation is a source of both direct and ongoing structural violence.

In order to prioritise the prevention of conflict, donors need to support political leadership and grassroots organising that effectively targets an end to the occupation.

Therefore, in order to prioritise the prevention of conflict, donors need to support political leadership and grassroots organising that effectively targets an end to the occupation.

Currently, donor programming helps shield Israel from international censure by mitigating the consequences of its brutal and insidious occupation. One way to support Palestinians' claims in the international arena would be to publicise the frustrations and existential quandaries faced by donor agencies operating under Israeli occupation. There are stories to be told. For instance, it is not well known that the Israeli economy benefits systematically from donor contracts for projects in the oPt, in the form of aid diverted to paying fees and taxes to the Government of Israel (Neslen 2014). This fact is not lost upon Palestinians and fuels their sense of injustice, given that Palestinian developmental potential is systematically blocked by the occupation.

Further, even though development actors acknowledge that the blockade is the cause of conflict in Gaza, their options are circumscribed by a ‘division of labour’ in the international community. In this arrangement, development actors cope with the occupation and do not engage in advocacy or policy pressure, leaving that to the capitals and designated bodies such as the Middle East Quartet (the UN, EU, US and Russia). As Rad (2011) argues, aid agencies continue to operate through economic structures that are produced by and help sustain conflict while waiting for a diplomatic solution. A case in point was the UN mechanism for rebuilding Gaza that effectively enforced the blockade on behalf of the Government of Israel, rather than pushing for diplomatic pressure intent on lifting it (Integrated Regional Information Networks [IRIN] 2014).

Donor cooperation with and within the limits imposed by blockade and occupation sustain a status quo that impoverishes the PA, financially as well as politically (Hijab & Buttu 2014). Further, the increase in random acts of violence leading up to and following the 2014 Gaza war has been partially attributed to Palestinian youths' frustration and disaffection with Palestinian leadership (Kershner & Rudoren 2014).

The mandate of peacebuilding, however, is not simply to see levels of violence reduced but to contribute to a political framework that addresses the root causes of conflict. To borrow from Goodhand's PCIA carried out in Sri Lanka, rather than suppressing conflict over a legitimate grievance, the goal is to build institutions with the capacity ‘to manage conflict in an inclusive and nonviolent way’ (Goodhand 2001, 25). The PA's aid dependence, a direct result of occupation, weakens ties of downward accountability and hollows out channels for legitimate grassroots pressure. Neither the PA nor the ODA agencies are prioritising an end to the conflict.

Linking political, security and development objectives

The state's capacity to provide security to its citizens is essential to the statebuilding project. However, the type of security framed in the 2008–2010 and 2011–2013 development plans is principally police security. It does not provide protection from the Israeli military in ‘Area C’ or Israeli incursions in refugee camps throughout the West Bank. Given a relatively low crime rate, the security that is needed in the West Bank is protection not from fellow citizens, but from the Israeli military.

A report by DFID lists some of the security problems Palestinians face, including evictions and home demolitions, arrest and mistreatment of children in Israeli custody, and restrictions on movement and freedom that cut Palestinians off from their sources of livelihood (DFID 2012, 13). It is therefore unsurprising that a recent opinion poll found that 45% of Palestinians do not feel safe or secure, despite high expenditures on security (PCPSR 2013, 3). As Rad (2011) has noted, the security impacts of conflict are integral to the economic system in which Palestinians operate; yet aid programming has not succeeded in addressing the problems inflicted by the Government of Israel. As a result, security programmes have bolstered dysfunction in the Palestinian political system by strengthening PA security forces capable of repressing political dissent. Meanwhile, everyday Palestinians look for improvements in access to livelihoods, or an improved business environment to attract much-needed investment.

Two key Palestinian staff persons responsible for aid planning and delivery expressed frustration that the medium-term development plans had failed to align ODA expenditures with national priorities. Shortfalls in donor disbursements impinge on sectors vital to the economy, but spare the well-financed security sector.9 Additional funding is provided outside of the PA budget through the US Security Coordinator with the objective of intensifying and facilitating security cooperation between the PA security forces and Israeli intelligence and military (Zanotti 2013).

The existing approach provides abundant resources without asking the key question: how are citizens being impacted? The strengthened PA security sector has been notorious for cracking down on political opposition, with police brutality in evidence against protestors and human rights violations perpetrated in prisons (Amrov & Tartir 2014).

The emphasis of donor security programmes on counter-terrorism cooperation between the Palestinian and Israeli security forces is implicated in the deteriorating security situation throughout the oPt.

The emphasis of donor security programmes on counter-terrorism cooperation between the Palestinian and Israeli security forces is implicated in the deteriorating security situation throughout the oPt. Political repression, together with frustration over the ongoing occupation and Gaza blockade have generated an intense security situation in Jerusalem and the oPt. At the time of writing, violent clashes of Palestinians with settlers in the West Bank and the Israeli military in Jerusalem were on the rise, along with random killings of Israelis and Palestinians. This is a wake-up call and also an opportunity for ODA actors to rethink their strategy vis-à-vis the security sector in the oPt.

Aligning with local priorities

The planning process fails the FSP principle of aligning with local priorities partly because the parameters for development planning largely exclude meaningful discussion about citizen priorities of reducing poverty and unemployment, and ending the occupation. As Harrison (2004) noted, technical reforms targeted by the donor community and Palestinian leadership concentrated in the ministries of finance and planning are carried out in isolation from civil society.

In the case of the medium-term development plans, a concerted effort was made to improve citizen participation. The planning protocol provided to the PA ministry in each sector of the economy includes a detailed process for inviting civil society and private sector input. However, a major problem encountered in several sectors has been the unwillingness of civil society organisations to participate in planning or otherwise coordinate activities with the PA.10

Despite numerous problems in Palestinian civil society such as factionalisation and demobilisation, part of the responsibility lies with ODA actors who have set an agenda excluding the top two priorities of Palestinians at the time: (1) poverty reduction and employment generation, and (2) ending the occupation and stopping the expansion of Israeli settlements in the West Bank (PCPSR 2013) (figure 3). It is therefore unsurprising that some civil society leaders refuse to legitimate a development planning process that ignores the Palestinian demand for political leadership in addressing the root causes of poverty and conflict.

Figure 3 Palestinian Priorities in 2013Source: Data published by PCPSR: http://www.pcpsr.org/sites/default/files/p49e.pdf, accessed 17 November 2014.

Addressing citizen priorities is also key to preventing conflict recurrence. The closure of Gaza is the most obvious case in point. Although only 9% of Palestinians made it their highest priority in the 2013 poll, it is embedded in the others. For instance, ending the occupation is likely perceived as an overarching solution that would result in lifting the siege. Further, it is widely understood in the oPt that the blockade is the reason for poverty and hardship for Gazans. Finally, ending the Hamas–Fatah split is also perceived as a first step towards cooperation on bringing an end to the blockade.

Regarding the peacebuilding objective of governance reform, it is important to note that the popularity of Hamas vis-à-vis the PA has surged following each Israeli bombardment of Gaza since the imposition of the siege (PCPSR 2014a). The percentage of Palestinians ready to vote for Hamas Prime Minister Ismail Haniyeh rose substantially from 38% prior to the 2014 Gaza war to 49% (PCPSR 2014b).

These findings suggest that more Palestinians at that time would vote based on political leadership in confronting the Israeli occupation. This being the case, it appears that governance reforms aimed at facilitating the administration of budgets and planning fall far short of donors' peacebuilding mandate due to their failure to address Palestinian aspirations.

Conclusions and Recommendations

This study has presented compelling reasons for ODA actors to rethink governance reform strategies in the oPt. Yet there are multiple obstacles to altering existing programmes, including funding constraints, competing priorities between serving foreign policy interests and Palestinian needs on the ground, and the threat of Israeli retaliation.

To fulfil the Fragile States Principles, donor agencies may find it imperative to develop strategies that confront rather than circumvent these obstacles. For instance, donors may want to consider gathering data and preparing reports on the effects of occupation on their projects in the oPt. This data can be used as a focal point for discussion within and among agencies. Reports and stories publicised in the media would be central to putting pressure on donor headquarters and country capitals to create new policies to support aid-funded activities. For example, a research report published in 2011 by AIDA revealed that Israeli policies were forcing aid agencies to alter programming, leading to less effective strategies that failed to serve the most vulnerable populations.11

Coupled with an effective communications strategy, findings such as those in the AIDA report have explosive potential. Donors have the resources to combine systematic reporting and media outreach in a concerted advocacy campaign for a foreign policy framework that supports peacebuilding projects in the oPt.

Donor country capitals' diplomatic relationships with the Government of Israel provide grounds for complaint related to Israeli practices vis-à-vis donor agency activities.

Donor country capitals' diplomatic relationships with the Government of Israel provide grounds for complaint related to Israeli practices vis-à-vis donor agency activities. Aid workers are well positioned to make this case since they have both personal experience of working under occupation and the possibility of gaining the ear of international policymakers.

In order to create an opportunity for coordinated policy action in the capitals, key international players in governance reform should consider conducting a jointly sponsored PCIA. Including allied groups within Israel as well as US-funded organisations beyond USAID may help offset potential retaliation from the Government of Israel or resistance from the US government. Existing bodies for cooperation between ODA actors and the PA, such as the Ad Hoc Liaison Committee, should be utilised to facilitate this effort.

Finally, governance reform will not contribute effectively to peacebuilding without granting more agenda-setting power to civil society groups. However, donor agencies will then face the difficult task of determining policies, guidelines and forums to strengthen a weakened and fragmented civil society. For instance, an effective policy strategy is needed for engaging proponents of Boycott, Divestment and Sanctions (BDS) while maintaining political neutrality. In 2005, 170 non-governmental organisations representing Palestinians in diaspora, under occupation, and living in Israel united to launch the BDS movement. Its contentious and provocative demands and strategies have given rise to significant debate in varied civil society institutions around the world, particularly in Europe and the US. The participation of non-Palestinian religious, academic, advocacy and activist groups has gathered momentum since 2005. The prevalence and persistence of BDS organising, as well as its studiously non-violent strategies, call out for a considered policy response from international actors concerned about peacebuilding.

Such a response should be informed and guided by donor agency field teams. Programme directors and their staff on the ground are in the best position to seek opportunities for strengthening local leaders and contributing to economic growth in ways that confront rather than sustain occupation. However, donor agencies will need to allocate funding and recruit effectively to incentivise grassroots political engagement. Field staff would also need greater autonomy to develop and sustain local networks. Simultaneously, stronger feedback channels to headquarters are needed so field staff can influence programming and funding decisions.

In conclusion, it is imperative that ODA actors in Palestine join their voices with others calling for foreign policies that support vulnerable groups and prevent the recurrence of violent conflict. Further, as ODA dwindles and new crises demand attention elsewhere, it is crucial that ODA actors on the ground support local political mobilisation capable of addressing the root causes of conflict. The agencies undertaking peacebuilding under economic and political siege in Palestine have a vital role to play towards empowering a broader, more inclusive leadership to take the country forward.

Acknowledgements

The author extends particular thanks to James Boyce, Professor of Economics at the University of Massachusetts-Amherst and Program Director at the Political Economy Research Institute for his guidance and insights on all aspects of this research. Special thanks also go to Jane Fountain, Brenda Bushouse, Léonce Ndikumana, Sam Bahour, Charles Shamas and Mandy Turner for their input and support.

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Notes on contributors

Joanna E. Springer

JOANNA E. SPRINGER is Research Advisor for a rule-of-law advancement project in the Arab Gulf. She has carried out research and worked for local organisations in Morocco, Qatar and the West Bank. She holds a Master's of Public Policy and Administration from the University of Massachusetts-Amherst with a focus in economic development.

Notes

¹ PCBS: http://www.pcbs.gov.ps/Portals/_Rainbow/Documents/Poverty_2009_2011_e.htm, accessed 5 May 2014.

² See for example: Dana (2013); Khalidi and Samour (2011); Hanafi and Tabar (2003).

³ See for example: Bahour (2013); Tartir and Wildeman (2013); Nakhleh (2011).

⁴ Author interviews with a civil servant and an international consultant in the Ministry of Planning, and two Palestinians responsible for aid coordination, July 2014.

⁵ Author interview, February 2014.

⁶ Ibid.

⁷ Detailed information on demolitions according to type of structure and donor: http://www.ipsnews.net/2012/05/eu-feels-force-of-israeli-demolitions/, accessed 17 March 2015.

⁸ PCBS: http://www.pcbs.gov.ps/Portals/_Rainbow/Documents/Employed%20Person%20by%20sector.htm, accessed 16 September 2013.

⁹ Author interview, July 2013.

¹⁰ Author interview with civil servant in the Ministry of Planning, July 2013.

¹¹ AIDA (2011).