No Money in the (West) Bank

LAST October, when international donors pledged to contribute $2.4 billion to develop everything from education to agriculture in the Israeli-occupied West Bank and Gaza Strip, the prospects for genuine Palestinian self-rule seemed bright.

Nearly a year later, Palestinians are far less sanguine about their future. Most of the money promised for economic development is still stuck in the pipeline.

The guarded cordiality that prevailed Sept. 13, 1993, when Israeli Prime Minister Yitzhak Rabin and Palestine Liberation Organization Chairman Yasser Arafat shook hands in Washington, has given way to bickering and mutual charges of bad faith.

``All the talk of plans and dreams - the whole thing now seems like a kind of a trick,'' says a Palestinian who works for a nongovernmental organization (NGO) based in the West Bank.

Palestinians and Israelis blame each other for the slow progress toward interim self-rule for Palestinians, a goal of the ``Oslo'' principles signed last September.

Before Palestinians can govern themselves after 28-years of Israeli occupation, they need money. But one of the reasons the money promised by donor nations has failed to materialize is that Mr. Arafat has balked at the accounting requirements they have imposed.

In the past, the PLO has survived on generous contributions, mostly from Arab nations, which have had no strings attached. That meant that large sums could be used by Arafat and other PLO leaders for patronage and unspecified ``special projects.''

Determined to ensure higher standards of accountability and to take the development process out of the hands of PLO politicians for the first three years, the donors last year demanded the creation of an agency staffed by technocrats, the Palestinian Economic Council for Development and Reconstruction (PECDAR), to manage development funds.

The result has been a costly struggle. Arafat insists on dealing directly with the donors. The donors insist on dealing with PECDAR. PECDAR and various newly created Palestinian ministries are locked in a struggle for the control of development funds.

``It's causing a lot of tension between us and the ministries,'' acknowledges PECDAR economist Samir Huleileh.

The tension climaxed two weeks ago when another economist, Ahmed Qreia, threatened to resign from his post as head of PECDAR. In a meeting with visiting US envoy Dennis Ross on Sept. 21, Mr. Qreia said his differences with Arafat had been resolved and that Arafat had agreed that ``more experts be involved in planning and implementing economic policy.'' But other Palestinian sources say Arafat remains determined to retain control of the process.

``A lot of the delay comes down to the fact that Arafat wants more control over the money,'' says one Western NGO official. ``He may not be temperamentally prepared to have someone else sign the checks.''

Arafat has also complicated negotiations over funding by linking them to political issues that were left unresolved in the Oslo principles, including the status of Jerusalem.

``Given the weakness of the Palestinians, it's understandable that they're trying to get political leverage wherever they can,'' the Western NGO official says. ``Arafat doesn't want to have development be normalized until his political demands are met.''

While many Palestinians acknowledge the internal PLO struggles over funding and accountability, they say the main problem is that Israel is now fudging on its commitment to expand self-rule in the West Bank by refusing to redeploy troops out of populated areas and by delaying elections that, under the Oslo principles, were supposed to be held last July. They disagree on the reasons why.

The more conspiracy-minded among them allege a plot by Israel to prove that Palestinians are not capable of governing.

``You make economic pressure on the Palestinians and show that it was much better for them under Israeli rule,'' says the Palestinian NGO official.

Other Palestinians assign more complex causes. Some point to the retarding effect of the ambivalence that still exists in Israel about how far to carry the process of empowering West Bank Palestinians.

Others fault what one Palestinian journalist describes as the ``habit and mentality of occupation,'' which has created serious obstacles in the funding process. A senior Palestinian official who has worked closely with Israel credits the civilians in the Rabin government with good faith, but says many officials in the ministry of defense are deeply reluctant to relinquish their long control of the territories.

In the West Bank, Israeli defense officials retain the power to veto development projects and frequently do if they are located near Jewish settlements or in villages that were hotbeds of opposition to Israel during the Palestinian uprising. Palestinians worry that Israeli vetoes will make it impossible to absorb donor contributions as fast as they come in, which could slow the flow of funds in future years.

``At the donors' meetings Israel was very nice, but at the end of the day we can have no projects in the West Bank without their approval,'' Mr. Huleileh says. ``They are pushing hard to slow the process down. How can we take off from the occupation under these conditions?''

In 1990 the PLO called on various experts to assess the basic requirements for social and economic development in the territories during the seven-year period 1994 to 2000. They called for projects in the public sector, in areas ranging from housing to education to agriculture, at a cost of about $800 million per year.

Two subsequent World Bank missions to the territories projected development costs at about $700 million per year for a five-year period. But only $2.5 billion has been pledged by outside donors to make self-rule a reality for Palestinians. Of that amount, only $300 million has been committed for release by the end of 1994 and only about $60 million has actually made it to the Palestinians.

One NGO official faults the World Bank, which represents the donors, for holding Palestinians to higher standards of accountability than obtain elsewhere. ``Development is not divorced from politics anywhere in the world,'' the official says.