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Record donor pledges to Palestinians raise questions

JERUSALEM (Reuters) - Rich states and investors have announced a record $14 billion to aid the Palestinians and their economy in a string of Western-backed meetings meant to boost President Mahmoud Abbas in his power struggle with Hamas.

But diplomats said many of the pledges made at five donor and investor conferences held since December 2007, including one in Egypt on Monday, were counted more than once, have yet to materialize or were too vague to rely on.

Much of the money depends on Israel fully opening border crossings with Hamas-ruled Gaza, and lifting restrictions in the occupied West Bank where Abbas’s Palestinian Authority holds sway, or has been linked to progress in stalled peace talks and Palestinian reconciliation, casting doubt on future payouts.

One senior Western diplomat criticized the pledging process as “smoke and mirrors” because of double-counting. Another said the big-figure headlines from donors eager to look forthcoming, combined with a lack of transparency, were “getting ridiculous,” noting that despite the cascade of pledges, the Authority was still struggling to pay full wages to its workers on time.

Conference organizers have disclosed little about individual donor pledges or disbursement schedules, making it difficult to track how much money was really in the pipeline for Abbas.

Donors also differ over how to deliver their aid, underscoring divisions over isolating Hamas, which has decried the pledging process as financial “blackmail” to marginalize the group after its 2006 election victory. Israel and the United States say they want to prevent any money from going to the Islamists, who they consider “terrorists.”


The large sums announced at conferences in Paris, Berlin, the Egyptian resort of Sharm el-Sheikh and the West Bank over the last 15 months -- $12 billion from governments and $2 billion from investors -- were unprecedented by Palestinian standards, eclipsing the amount the Authority received in the previous 14 years since the 1993 Oslo peace accords.

Combined, the pledges would be the equivalent of $3,500 for every man, woman and child in the West Bank and Gaza, more than double per capita Palestinian GDP. Half of Gaza’s 1.5 million population live on less than $3 a day, by Palestinian estimates.

It is unclear how much of the $4.5 billion in “new commitments,” announced at Monday’s conference in Sharm to help rebuild the Gaza Strip after Israel’s devastating offensive, were really new, said Western diplomats who took part.

Diplomats and analysts pointed to the large discrepancy between what the Palestinian Authority asked for at Sharm -- $2.8 billion over two years -- and what was announced as an indication that the numbers were not realistic.

Palestinian Planning Minister Samir Abdallah dismissed doubts about the dollar-amounts, telling Reuters “most of the pledges made in Sharm were new commitments” and did not overlap with previous announcements.

Diplomats said the biggest cash offers on Monday came from a bloc of Gulf Arab states with a particularly spotty track record of fulfilling commitments to Abbas’s West Bank-based government.

Some of them were reluctant to be seen as taking sides with the Authority’s Western-backed leader, who advocates peace with Israel, against Islamists with appeal on the Arab street.

Breaking with Western donors, the Gulf bloc has opted to channel $1.65 billion through their own mechanism, angering some Authority officials. Washington wants Abbas to accrue credit.

Mazen Sonnoqrot, former Palestinian economy minister turned businessman, said some of the Arab funds may be withheld until Abbas and Hamas reconcile. It is unclear if that will happen anytime soon because of internal Palestinian divisions and U.S. demands that Hamas recognize Israel and renounce violence.

Diplomats said some other donors in Sharm, including the European Commission, largely re-pledged commitments initially made at a donors’ conference in Paris in December 2007.

In Paris, some $7.7 billion was pledged for the Palestinians to be spread over three years. According to Authority estimates, about $2.4 billion of that has been disbursed, much of it behind schedule, forcing Abbas’s prime minister, Salam Fayyad, to delay some salary payments and to scramble for emergency financing.

“It is the same money,” said a senior Western diplomat, whose government made a sizeable pledge at the conference in Sharm el-Sheikh. “It is getting ridiculous.”


The Palestinians have always relied on donor assistance. But pledging ballooned after then-U.S. President George W. Bush convened a November 2007 conference in Annapolis, Maryland to relaunch peace talks between Israel and the Palestinians and to shore up Abbas after Hamas’s Gaza takeover in June 2007.

Those talks have since stalled, Abbas’s standing looks shaky, and Hamas’s grip on Gaza remains strong.

A senior diplomat who advises European powers on aiding the Palestinian Authority said “proof” donor commitments were being overstated could be found in the mismatch between the pledges and economic activity. Since the Paris conference, Palestinian GDP has declined by more than 1 percent in per capita terms.

“If those numbers were sincere you’d see an increase in the economy. The truth is the aid is either non-existent or is being wasted on non-productive investments,” he said, pointing to donors who direct most of their funds to development projects that can take years to complete because of Israeli restrictions.

Like government pledges, it is unclear how many private sector investments were really happening. Nablus Governor Jamal Muheisen, whose city hosted one of the conferences in November, said he knew of none so far. Organizer Samir Hulileh said some West Bank projects were advancing but more slowly than planned.

Mouin Rabbani, a Middle East analyst based in Amman, said the surge in post-Annapolis pledging was partly “a PR stunt to boost Abbas,” but added: “Even if a small proportion of the pledged funds does get through, this is still a huge amount.”

Additional reporting by Mohammed Assadi in Ramallah, Atef Sa’ad in Nablus, Wael al-Ahmed in Jenin; Editing by Janet Lawrence