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Cutting Off U.S. Aid to Palestinians Not Easy

The funding jeopardized by Hamas' electoral victory supports a variety of programs, the loss of which could do more harm than good.

February 18, 2006|Ken Ellingwood | Times Staff Writer

BETHLEHEM, West Bank — The sawdust-carpeted shed where Bassam Zablah turns olive wood into rosary beads seems an unlikely destination for American largess.

Zablah and his wife, Samar, regularly borrow a few hundred dollars at a time from a Palestinian nonprofit organization that receives money from the U.S. government. The loans help the couple pay for more wood while they wait for customers to buy the beads.

But uncertainty over continued U.S. aid to the Palestinians after Hamas' electoral victory last month has thrown into question the form that American-funded assistance will take in the future. The U.S. pays for a variety of aid, much of it delivered through modest programs such as the one that helps the Zablahs keep their tiny business afloat. Palestinian officials are eager to see that assistance continue.

Amid warnings by the Bush administration that the Hamas win could threaten the flow of aid, American officials here are reviewing projects throughout the West Bank and Gaza Strip, which last year received $275 million from the U.S. Agency for International Development. That included $50 million in direct aid, which the U.S. has now asked the Palestinian Authority to return.

Some construction and planning efforts have been halted, Palestinian officials say, and the fate of other U.S. assistance hangs in the balance. U.S. officials said programs for which money was already committed would go on.

U.S. Secretary of State Condoleezza Rice has said decisions about future aid will come after the new government takes shape. The Palestinian parliament is to convene today, and formal negotiations are expected to begin then over the makeup of the government.

"We simply don't know yet what programs we are going to be working on," said Anna-Maija Litvak, spokeswoman for the USAID office in Tel Aviv, which oversees assistance in the West Bank and Gaza Strip. "At this point, we are kind of reevaluating all of our projects."

The surprise election victory by Hamas, which is officially committed to Israel's destruction and classified by the U.S. government as a terrorist group, has prompted bills in Congress that would limit aid to the Palestinians unless the Islamic group disarms, renounces violence and recognizes Israel and previous agreements.

The Bush administration already has said it will refuse to deal with Hamas unless the group changes its ways, and European nations have warned that tens of millions of dollars in aid from them also could be in jeopardy. Israel has threatened to withhold tax revenue -- around $50 million monthly -- that it collects on behalf of the Palestinian Authority under a long-standing economic agreement.

"It's a mistake to fund a terrorist organization," said U.S. Rep. Vito J. Fossella (R-N.Y.), who has sponsored legislation calling for an aid cutoff. "Until and unless the group renounces ... and reverses its views, we shouldn't spend one American taxpayer dollar supporting it."

Cuts in funding would aggravate the dire financial straits faced by the Palestinian Authority, which gets about $1 billion yearly in foreign aid from various sources, a sum that is equal to nearly half its budget. For several months, the Palestinian government has been unable to meet its $116-million monthly payroll.

But shutting off U.S. aid is more complicated than turning off a spigot, and has some limitations as a carrot or stick of American policy. One reason is that U.S. assistance almost never goes directly to the Palestinian Authority, the governing structure that Hamas is about to join. Direct aid to the Palestinian Authority was barred by U.S. law in 1997 to safeguard against it being siphoned off by corrupt leaders.

Instead, with rare exceptions, American aid is provided indirectly through contractors and nonprofit groups that carry out a variety of projects, from building sewers and roads to mentoring Palestinian youths and fostering democratic institutions.

In the Bethlehem area, for example, the U.S. government has spent $30 million since 2000 to improve the water supply by adding pumps, reservoirs and wells. USAID announced an additional $24.4 million last fall for a five-year project aimed at teaching Palestinian young people to be leaders and productive members of society.

Palestinian officials say shutting off funding for these kinds of programs would do more harm than good by reducing resources for thousands of ordinary Palestinians.

"Stopping aid, even for ongoing projects, is not a constructive idea from a development and planning point of view. It's also not wise from a political point of view," said Ghassan Khatib, the outgoing Palestinian planning minister. "These American measures are affecting the wrong targets."

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