“No Results: 12 Billion Dollars Disappeared in Palestine”.
This headline popped recently to my eyes. First I was thinking that it
is Zionist propaganda or comment in some hard-line Israel newspaper.
Then I saw that headline was based to a learned discourse of Dr. Ghania
Malhis - chairwoman of the board of trustees at The Palestine Economic Policy Research Institute
(MAS) and former senior economist in the League of Arab States. MAS was
founded in Jerusalem in 1994 as an independent non-profit institution
to contribute to the policy-making process by conducting economic and
social policy research. Presentation of Dr. Malhis was held in UN
Seminar on Assistance to the Palestinian People on 25 March 2010 in
core conclusions of Dr. Ghania Malhis were that, despite the
considerable economic help from various institutions of the
international community and NGOs – about 20 billion US Dollars over the
last 15 years
“it has been almost impossible to trace any positive impact of these mobilized resources on the ground”
and “the GDP of 2009 is 13% lower than the GDP of 1999, and the GDP per capita is 30% lower for the same years
Her original study “International Assistance in Support of the Palestinian Economy: The Role of Regional Partners”
can be found here
as pdf file and it has been my main source for this article.
Dr. Malhis summarizes the International assistance to the Palestinian people as follows:
international assistance to the Palestinian people has an accelerated
annual growth rate. The average annual contribution from 1994-2000
represented 500 million dollars and jumped to an average of 1 billion
dollars a year from 2001-2005. Although 2006 witnessed a slight
decrease registering 716 million dollars, the numbers rapidly escalated
to 1.5 billion dollars in 2007, 1.7 billion in 2008, 1.8 billion in
2009 and is expected to reach almost 2 billion dollars in 2010.
International community and Arab countries have managed to mobilize
substantial resources to assist the Palestinian people amounting to no
less than 12 billion dollars over the past 15 years. An additional 6 to
8 billion dollars were also mobilized during that same period through
an array of active Arab and international civil society organizations
numbers are also exclusive of the assistance provided through popular
national campaigns from the Arab region, NGOs and other informal
channels. These are estimated to have exceeded 5 billion dollars over
the past decade mostly in the form of relief campaigns and food and
cash donations. These numbers neither include the contributions
provided by Arab governments to the UNRWA budget where the bulk of its
expenditures are used to support its activities in the occupied
Palestinian territories, nor the expenses associated with hosting more
than 4 million Palestinian refugees in Jordan, Lebanon, Syria and Egypt.
numbers are of course highly encouraging when taking into consideration
the size of the targeted part of the Palestinian people which do not
exceed 3.9 million people in the occupied Palestinian territories and
their GDP does not exceed 4.5 billion dollars annually according to the
The impact of the international assistance is however poor if not even non-existent. Quote from study:
It has been almost impossible to trace any positive impact of these mobilized resources on the ground,
even when taking into consideration the substantial investment carried
by the Palestinian private sector in the occupied Palestinian
territories, including those made by the Palestinian Diaspora as
according to findings, these investment represent one third of the
despite donors’ generous assistance and contribution, we witnessed an
incessant increase in the need for the Palestinian Authority to borrow
from local banks to meet its obligations whereas the accumulated public
debts of the Palestinian Authority to the local banking system has
exceeded 733 million dollars in mid 2009 with accumulated arrears
payments to the private sector of 188 million dollars; and therefore
affecting the private sector’s ability to mobilize financial resources.
The main economic and social indicators are confirming the poor impact as expressed in table below:Main Economic and Social Indicators (from study of Dr. Malhis)
- In 2009, the GDP is 13% lower than that of 1999 and the GDP per Capita 30% lower for that same year.
The production capacity in the occupied territories was higher in the
early nineties prior to the peace process, and the registered
contribution of the agricultural and industrial sectors to the GDP did
not exceed a mere 18.2% and only contributed to 29.2% of employment.
- The exports coverage to imports became a feeble 19%.
The ability of Domestic Production to cover domestic national
consumption has highly deteriorated resulting in an increase in
dependency on Israeli imports and a heavy reliance on Arab and
international aid to finance the cost of these imports.
We have also witnessed a decrease in the Palestinian authority revenue
stream resulting in its turn in an evident deterioration in its ability
to provide basic services such as health, education, social development
and security unless heavily subsidized by Arab and international
donations and aid to support its expenditures.
- In 2009, international support was required to address a budget deficit of 61.4% equivalent to 39% of the Palestinian GDP.
progress there has been in the establishment of Palestinian Authority
institutions, along with security, fiscal and administrative reform
efforts, the bottom line is that these tens of billions of dollars
spent in the past decade have ultimately failed to bring back the
performance witnessed in 1999 on the socio-economic front.
study gives also indication about mistakes and causes of them related
to transforming Aid into progress on the ground. From study:
numbers and facts are giving us a clear indication that these practices
and contributions have failed to capitalize on the resources mobilized,
quite the contrary; one cannot but feel that these resources have been
wasted. When the outcome of more than a 12 billion dollar investment
results in such disastrous numbers, then it is obvious that immense
mistakes were made on a strategic level.
back, the mistakes done were not the responsibility of a sole partner,
rather it has been the result of collective failures of all
stakeholders from the Arab countries, to the International donor
countries and institutions to the Palestinian Authority and Israel as
well as the cumulative effect of an assistance that became donor and
even charity driven rather than investment driven.
Arab countries have also deviated from their decisions taken in the
October 2000 Arab Emergency Summit in Cairo where it was clearly stated
that emergency relief to the Palestinian people has to be coupled with
developmental aid, and that 80% of the Arab funds mobilized should be
channelled into investments to enhance the capacity of the Palestinian
Authority and supporting it in creating a viable independent economy,
more integrated with Arab, Regional and international economies in
order to reduce its heavy reliance on lessen the smothering imposition
approach taken was a reactive one, where donors’ countries responded to
crisis after crisis rather than work on an active engaged plan to build
a stable environment and therefore avoid and pre-empt crises. Thus
resources were wasted in trying to compensate and respond to the urgent
needs of the Palestinian losses as a result of the aggressive Israeli
policies and practices such as closures, embargo, confiscation of
agricultural land and, control of water resources, demolition and
destruction of agricultural produce, industrial plants and services,
public and private properties, impediments to trade and crippling the
movement of goods and people. The cost of such practices overshadowing
all resources mobilized by donors therefore resulting in an always
negative impact no matter the size of the investment.
International donors had only slight idea what they want to achieve
with their donations and even worse strategy how to implement foggy
visions in beneficiary region it's clear that the Palestinian Authority
also hold a sizeable responsibility. They failed to invest the funds
mobilized by Arab and International donors on development, they used
Aid to cover their current running expenditures and filling their own
pockets instead of sustainable development.Hundreds of millions were
invested by the PLO though private investments in businesses,
restaurants, supermarkets in the US with no records kept with tens of
millions lost for ever. With
no one bothering to protect public funds, one has to wonder how many
hundreds of millions people and individuals within the PLO and Fatah
were able to make out of having monopolies for distributions of fuel,
food, and other monopolies granted by Arafat and the PLO.
Palestinian Authority failed to provide developmental sustainable
solutions to unemployment, choosing governmental recruitment over
encouraging and nurturing a vibrant productive economy to create jobs.
They have also chosen to take the easy way to improve public revenues
by financing the budget deficit through increasing the trade balance
deficit, as well as competing with the private sector through public
investments in vibrant sectors of the economy rather than invest in
infrastructure to enable the private sector to flourish.
Palestinian Authority has also failed to timely address allegations of
misuse of funds, power and mismanagement as well as a lack of
accountability and transparency in addition to fostering a large public
sector that exceeds the national needs.
efforts need to multiply and result in well-studied strategies for
development that will reflect our sincerity and commitment to the
Palestinian people. These efforts need to be translated into massive
reforms and visionary partnerships between donors, the Palestinian
Authority and key sectors of Palestinian society, which would signify a
paradigm shift in developmental strategies, a main component of which
needs to be a capable and innovative workforce.
the working model that can most effectively translate such strategies
into positive realities is one that proposes to bring together prudent
Arab, International public and private actors, progressive coordinated
policies, a responsible private sector and an engaged civil society,
whose purpose is to create a highly skilled, dynamic workforce that
will push the Palestinians towards sustainable and balanced
development. We need to work together to create the much needed
infrastructure for a flourishing Palestinian economy, one that nurtures
creativity and innovation, a productive knowledge economy that will
allow the Palestinian people to build a life and not just an existence.
do not believe that the case of Palestine is unique with development
projects by big donors. In my earlier articles I have described some
similar aspects and critical examples. More e.g.
“Bulgaria wrestles for EU funds and credibility
” “Donors & Field: Will Kosovo rise with 2 bn bucks?
” “Squandering Kosovo's Aid Funds
” “World Bank destroyed Albanian village in joint operation with corrupted Government – a typical crime story from Balkans
my viewpoint the first task for donors should be to put Aid programs
into general context. Today seems that donors framework is fixed only
to two-state solution. So Aid is going to state-building activities
e.g. to construct some infrastructure in Gaza. When some building is
ready and Hamas use that facility for their activities, Israel Defence
Forces destroy it, then donors build it again and IDF destroys it –
again and again the same vicious circle. In my earlier articles I have
proposed other alternatives e.g. population transfer to get some buffer
zone between IDF and Hamas (more in “Gaza War: Could Balkan history show way out?
” ) or changing two-state solution to three-state option (more in “The Three-State Option could solve Gaza conflict
). Putting other options on the table could give totally different
vision to international Aid and maybe some positive outcome to
From project management point of view I like to highlight following aspects:
* At planning stage the correct information from the field should be provided, not only high level marketing reports
* The Aim(s) and output should be clearly defined and understood by both donor and beneficiary
* The final project plan should include realistic Logical Framework Approach (LogFrame)
* At implementation stage the events on the ground and the progress
reports should be compared to verification measures in LogFrame
* The feedback from the event on the ground level and about
inappropriate connections on the management level should be used to
make necessary correction to original plan
* If the aims of original plan look unreachable or the methods with
implementation are incorrect the financier should have courage to stop
project when it is still ongoing without waiting yearlong
investigations to be ready
* Internal investigations should be supported not prevented by donor management.
There is also question if aid money should be channelled through
beneficiary government or through civil society/NGOs. My answer is
complicated. First there is difference if we speak about emergency aid
or more long term state building projects. In emergency case I think
that effective actions can be made even without state authorities,
directly on the field, in second case results are very difficult to
achieve without government commitment.
development projects on the ground - not on emergency stage - there are
many alternatives depending individual cases. Easiest for donors is to
give aid through generalized budget support - results can vary from
state to state and be like in Palestine, nonexistent. Through sector
program assistance is the other option. Then it is possible contract
international or national NGOs for implementation or give aid through
multilateral mechanisms such as World Bank, UN programs etc. The core
question too is to find in each case right balance between aid through
government or aid through civil society organizations.
channel for Aid is selected from my viewpoint the core issue is to
apply the Logical Framework Approach for implementation as well some
more improved versions of it. The Logical Framework Approach is the matrix (the Logframe
which summarises what the project intends to do and how by selecting a
preferred implementation strategy. It also analyses, what the key
assumptions are, and how outputs and outcomes will be monitored and
evaluated. From following link you may find the basic matrix of
LogFrame idea: logical-framework2
In challenging and fast transforming environment there might be wise to use some improved LogFrame method such as the Appreciative Inquiry tool
developed by SIDA,
where the focus is placed on the things which are working well, and on
finding positive action alternatives for resolving a situation. As LFA
is found by many to be an overly problem-oriented model the Appreciative Inquiry tool
is analysing also motivation and driving forces. Also useful might be further developed Social
Framework, rather than a Logical Framework, because it emphasises
people and their relationships, rather than more abstract events and
like I wrote earlier even the best project plans and their
implementation can fail, unless they are coupled with a political
solution with realistic vision about future.
The bottom lineJust look at the empirical reality on the ground. There is no Palestinian state, never was intended to be, and there isn’t one!
(opinion from discussion forums)
seems to be a huge gap between fine ideas/plans/collected money in
Brussels and their reasonable distribution at local level in Palestine.
The biggest mismanagement or misuse of Aid money is not according my
opinion local criminal activities. The strategic error has made in
international level by not knowing the demands or challenges on the
ground, not adjusting ideas and plans according local needs or the
moment of Aid delivery, using indefinite mixture of emergency relief
and long term planning, lack of simple and unambiguous development
strategy and strategic leadership. The real crime will be if
international community does not correct earlier errors and practices
at strategic level – only after that one can demand smoothly flowing
project at local level. The strategic error is to use Aid funds only in
a right way, not to right purposes.