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Hurricane, Political Questions May Impede Aid to Israel and P.A.

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The success of Israel’s withdrawal from the Gaza Strip depends, all sides have said, on the day after. But unresolved border questions, a climate of political uncertainty and even the aftermath of Hurricane Katrina have cast shadows over how the United States will help fund the next stage.

The United States may delay sending funds to Israel and the Palestinians, insiders say, because of concerns about the Palestinian Authority leadership, a wait-and-see attitude as Israelis and Palestinians both head into elections and discomfort over how Americans transfixed by Katrina’s devastation will view money spent thousands of miles away.

Senior congressional officials from both the Republican and Democratic parties, who declined to speak on the record, said it would be considered bad taste right now to announce a major aid package in the Middle East as Congress scrambles to assist hundreds of thousands of people made homeless across the Gulf of Mexico. Some predicted a delay of at least two weeks.

Israel wants cash — reports have suggested more than $2 billion — to help resettle the 9,000 settlers evacuated from Gaza and a portion of the northern West Bank, as well as to rebuild military bases inside Israel. The Palestinians are hoping for funds beyond the $50 million they received last month.

Larry Garber, director of the New Israel Fund and formerly an administrator of U.S. assistance to the Palestinians, said the “smell test” for projects in the wake of Katrina would be tougher.

Aid to either side could be questioned “if it gets into issues that seem extravagant compared to what refugees are receiving, if for example housing was made available to Palestinians beyond what we were providing to American citizens,” Garber said.

Israeli officials say they’re not concerned about the assistance for now, and instead are preoccupied with helping Americans made destitute by Katrina. A 40-50 ton planeload of supplies from Israel — including water, powdered milk, beds, blankets, mattresses, baby food and diapers — was due to arrive in the United States on Thursday, one Israeli official said.

The aid Israel is requesting “doesn’t matter right now,” the official said. “What we’ve been focused on is how we can help the United States.”

U.S. officials charged with disbursing aid to the Palestinians say they’re watching how P.A. President Mahmoud Abbas spends the $50 million he got last month in U.S. assistance before dipping into another $300 million appropriated for the Palestinians by Congress.

“Given the checkered past of the Palestinians, there’s a sense of guardedness” about disbursing the money, one administration official said on condition of anonymity. That reflects not a lack of confidence in Abbas but concerns about the limitations he faces, the official said.

U.S. officials are concerned that Abbas is not doing enough to contain terrorist groups like Hamas and Islamic Jihad. Hamas, which has distributed propaganda suggesting that Israel pulled out because of Hamas terrorist attacks, says it will observe a cease-fire only until the beginning of 2006.

“The administration is caught between these two challenges,” Garber said. “One is to learn the lessons from U.S. experience not to invest money until conditions are right with security, the movement of people and goods, and internal good-governance conditions.

“On the other hand,” he continued, “there is a desire to be associated with moving the process forward, and the easiest thing for the administration is to announce that money was being made available.”

In addition to the $50 million already sent to the Palestinians, the United States also is committed to building a water carrier for Gaza, a commitment that Garber estimated ultimately will run to at least $50 million more.

Another concern is that, despite the conclusion of the Gaza settlement evacuation, the withdrawal is not formally complete, since Israel, the Palestinians and Egypt have yet to finalize control of the borders. The Palestinians want control of the Rafah-Gaza crossing, while Israel already is building a new crossing adjacent to Gaza and is insisting that it maintain control of goods and human traffic as a security measure.

James Wolfensohn, the former World Bank president appointed as the chief envoy to the region from the “Quartet” — the diplomatic grouping of the United States, Russia, the European Union and the United Nations, which is driving the Israeli-Palestinian peace process — is in the region trying to accelerate a conclusion to the issue.

His mission is critical, said Arie Arnon, an Israeli economist associated with the Peres Center for Peace.

“Although disengagement is perceived by many today as a complete deed, in fact some of the most important elements are not yet clear, including the links of Gaza’s economy with Israel, the West Bank, Egypt and the rest of the world,” Arnon said. “There is no agreement yet, and this is very dangerous.”

Arnon is a member of the Aix Group, which brings Israeli, Palestinian and international economists together to discuss the best ways to promote peace in the region through economic assistance. Members of the group are due in Washington later this month to meet with State Department, Treasury and White House officials.

The group would advise the United States to take the long view in distributing funds, said Arnon, who explained that he would warn officials against using money to put out fires..

“Those funds, in order to play a positive role, should be invested in infrastructure, creating new employment opportunities and not wasted on emergency cases, ” he said. “We’re trying to raise those questions and convince people to help in creating a more positive atmosphere for the new economy.”

U.S. officials have another reason for holding back right now, said David Makovsky, a senior analyst with the Washington Institute for Near East Policy: Palestinians and Israelis are headed into elections. Palestinian legislative elections are scheduled for the beginning of 2006, and Sharon faces a tough primary battle in his Likud Party — a date hasn’t been set — where many members opposed the withdrawal.

“The United States needs to think about how to bridge over the political season, ” Makovsky said. “Expectations are going to be limited.”

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