In February Rami Hamdallah, the Palestinian prime minister, announced that the Palestinian Authority had received only half the usual aid pledged by donor countries in 2015.
This highlights an accelerating downward trend in international financial support for the PA. The European Union, which provides 45 per cent of all foreign aid to the authority, is not immune to that trend.
Partly this reduction is due to the pressure on EU budgets from the humanitarian crisis resulting from Islamic State and the Syrian war. But the exasperation of EU member states with Israel’s policy of accelerating settlement expansion and land expropriation in East Jerusalem and the West Bank, seen as eroding the two-state solution under the cover of endless negotiation, is also a factor. Recently even Angela Merkel, the German chancellor, castigated Benjamin Netanyahu, Israel’s prime minister, for ‘failing to make a single step towards peace’.
The failure to reactivate the peace process, despite the best efforts of John Kerry, US Secretary of State, coupled with the expansionist policies of the current Israeli government, confront the EU with the unpalatable fact that the only viable solution, the two-state solution, is fast disappearing.
The purpose of EU financial support to the PA was to build the capacity of the PA and to create the institutions needed for statehood. But the Palestinian economy remains highly aid-dependent largely because of the barriers to development imposed by the continuing occupation.
There is an increasing realization that EU funding for the PA, although benefiting Palestinians by providing services as well as direct employment for 180,000 people, is also benefiting Israel, and doing so in a way that acts as a positive disincentive for the Israeli government to engage in realistic negotiation. EU funding of the PA relieves Israel of its duty as an occupying power to fund services for the occupied population. The EU-funded and trained PA security forces help to protect Israel from attacks by Palestinian groups and individuals while remaining powerless to protect the Palestinian population from violence by settlers or the Israel Defence Forces. The recent evidence from B’Tselem, the Israeli human rights group, of suspects arrested by the PA, tortured and then imprisoned in Ashkelon by the Israelis, is a graphic demonstration of this.
There is evidence that this issue is at last being debated within the EU. Already in early 2014, the EU ambassador to Israel, Lars Faaborg-Andersen, linked progress in negotiations to continued EU funding of the PA. ‘I think it is realized in Israel that this money is key to the stability of the West Bank and in Gaza. If we don’t provide the money … I think there is a great likelihood that Israel would have to provide far more.’
In February this year, an unnamed European diplomat quoted by Al-Monitor was even more explicit, saying that the EU would not disburse free money in the absence of a peace process that achieves political and security stability in the Palestinian territories. So there are signs that the EU is ratcheting up pressure on the Israeli government. But the ratchet operates very slowly.
In 2012, the EU Foreign Affairs Council agreed to enforce EU legislation by differentiating between Israel itself and the settlements, but it took two years before settlements were excluded from EU funding programmes, labelling of settlement products was announced and EU businesses were advised of the risks of involvement with settlements.
In 2014 the EU initiated a structured dialogue with Israel to achieve a freeze in demolitions in the West Bank by March 2016. Far from agreeing to a freeze, Israel has responded by demolishing more EU-funded projects in the first six weeks of 2016 than in the whole of 2015, yet the EU has still not implemented its agreed policy of demanding compensation for demolition of EU-funded projects.
If there is to be a phasing out of EU support to the PA, then it is likely to be gradual. There are good reasons for moving slowly since everyone is aware that ordinary Palestinians depend on the services provided by the PA, and no one wants to add to the danger of the further disintegration of Palestinian society.
The lesson of the EU’s attempts so far to use its economic levers to nudge Israel towards negotiation is that the disincentives need to be bigger and their imposition needs to be clearly conditioned on Israel’s actions. Only when the Israeli public understands that continuing the occupation will mean increased costs for Israel, will there be any possibility of reversing the disastrous settlement policy. The EU needs to be much more robust, before it is too late