U.S. Aid to the Palestinians: How Much and Who Gets It?

“We’re obviously not going to give aid to a terrorist organization,” U.S. Secretary of State Condoleezza Rice says. “I will work with my colleagues to undertake all necessary steps to prevent U.S. foreign aid from being diverted to Hamas,” Rep. Ileana Ros-Lehtinen (R-Fla.), a leading congresswoman, adds.

Now that the Palestinians have elected Hamas in a landslide, it seems like compelling arithmetic: U.S. assistance to the Palestinian Authority equals U.S. support for terrorism. That logic explains the pledges in recent days from the administration and Congress to cut off aid to the Palestinian Authority.

In fact, a closer look at how U.S. money has reached the Palestinians since 1993 suggests the formula is more like algebra. U.S. assistance is subjected to several stringent layers of oversight, and none of it goes directly to the Palestinian Authority. In addition, there are already strict laws in place banning funding for Hamas, which is listed by the United States as a terrorist group.

However, much of the aid substitutes for assistance Palestinian officials might otherwise be expected to spend on their constituents.

“If the international community will stop only direct budgets and not indirect funds, Hamas will find a way” to fill the gaps and continue funding its militia, said Israeli Brig. Gen. Michael Herzog, currently in Washington as a fellow at the Washington Institute of Near East Policy. Herzog suggested Hamas would turn to Iran to keep its militia funded.

That indirect, “in kind” assistance is what State Department bureaucrats now considering the disbursement of aid to the Palestinians are weighing.

The deliberations come as the legislature dominated by Hamas, which calls for Israel’s destruction, negotiates a government with Mahmoud Abbas, the Palestinian president favored as a relative moderate by Israel and the United States.

A look at how the money gets to the Palestinians suggests a number of avenues where assistance could continue, and other areas where it is likely to stop, according to Larry Garber, the director from 1999-2004 of the West Bank/Gaza Strip office of the U.S. Agency for International Development, which administers all U.S. aid to the Palestinians.

“My guess is that where there’s enough of a segregation between the government and Hamas people, particularly for ongoing projects, there will not be an effort to terminate them — they’ll keep those things going,” said Garber, who now directs the New Israel Fund, which promotes civil rights and co-existence projects in Israel.

Since 1993, the Palestinians have received more than $1.5 billion in assistance through USAID, the organization says. Of that, $371 million has been for humanitarian or emergency assistance, including the purchase of food and medicines.

The rest has gone to infrastructure development, such as renovating and building schools, revamping water distribution, reforming health care and promoting democracy and an independent judiciary.

An internal USAID document says that in 2003, U.S. donations represented 48 percent of such assistance. That doesn’t include the approximately $127 million the U.S. funneled to Palestinians in 2004, the most recently accounted year, through the U.N. Relief and Works Agency, the principal body administering refugee assistance to the Palestinians.

Last year, President Bush persuaded Congress to double to $150 million the $75 million in annual assistance the Palestinians had received since 1993, and to provide an additional $100 million in emergency supplemental funds.

Of the $100 million, $50 million has already been transferred to USAID for projects.

A Capitol Hill source said the administration had discussed with members of Congress the possibility of striking the $150 million from next week’s formal budget presentation in the wake of the Hamas victory. A senior administration official suggested such talk was “premature.”

All of the USAID money is subject to stringent congressional oversight. Congress, which has become wary of the profound corruption that pervades some Palestinian institutions, demands reports every six months on how every cent is spent. A number of international bodies also monitor U.S. assistance in their reviews of how donor money is spent.

In recent years, Bush — seeking to accelerate the aid process — has bypassed Congress using national security waivers on three occasions, getting a total of $90 million in direct assistance to the Palestinians.

But even that money is spent under strict U.S. oversight and without Palestinian Authority interference. The money is deposited into a bank account accessible only to USAID officials, who approve projects and hire the contractors to carry them out.

That distinguishes U.S. funding from other nations, which often give cash directly to the Palestinian Authority.

That doesn’t mean there aren’t projects that will now, as Garber put it, be considered “problematic” under a Hamas regime.

“One example is, a contractor adds to a school or builds a school that’s run by the Ministry of Education,” he said. A school run according to Hamas’ philosophy, shot through with a virulent strain of anti-Semitism, is likely to prove a hard sell to the Bush administration.

Other projects are likely to survive, Garber suggested, because they represent long-term investments with payoffs four or five years down the line. By that time, Hamas could be out of government.

That thinking is reflected in an internal USAID document published last August and recently obtained by JTA. It is entitled “Towards a viable, democratic Palestinian State, 2005-2008.”

One section outlines plans for developing a sturdy economy, “including services, tourism, agriculture and agribusiness,” the document says. Other long-term projects include water infrastructure, including desalination, well-drilling, and sewage; a health system; and road building.

Garber said one formula for continuing such projects would be for a Hamas government to appoint non-Hamas members to administer those projects.

“There may be some wiggle room because not all the candidates are formally Hamas,” Garber said. “Some of the businessmen and academics recruited by Hamas, many of them are not members of Hamas.”

Still, it is clear that some priorities will be shifted. The USAID officials who authored the document anticipated governance by a Western-leaning Fatah party led by Abbas, and some of their ambitions now seem oxymoronic. One program “aims to divert youth away from extremism and into productive roles in the economy and society.”

With Hamas running the government, marginalizing “extremism” is likely to be a much harder sell.