Last month has seen a flurry of activity designed to fund the Palestinians under occupation. A private sector investors’ conference took place in London to discuss ways of boosting the Palestinian economy. It followed the G7 finance ministers’ meeting at the beginning of December, which pledged its support, saying that ‘economic development of the West Bank and Gaza is an indispensable element of lasting peace’. The G8 summit at Gleneagles in summers promised the Palestinian Authority an annual $3 billion for three years. In March, the donor countries will decide their allocations to the PA.

Sounds good. But will these donors consider that Israel’s occupation of Palestine is set to continue so long as they remain prepared to underwrite it? The Palestinians’ dire need for help is indisputable: the PA is virtually bankrupt and has asked for an immediate injection of $200 million, just for basic services. Humanitarian aid alone, however, will not solve the problem. The kidnapping of aid worker Kate Burton and her parents in Gaza this week is a sharp reminder of the political context of aid. International aid reaches the Palestinians directly, but also through international NGOs. They are thick on the ground in Palestine: it was estimated in 2003 that there were 38 in Ramallah alone and 60 overall, in addition to 80 Palestinian NGOs funded by them. The relationship of funders to NGOs is complex and potentially coercive. The need for renewed funding often obliges NGOs to shape their agendas to those of donors. In 2004, the US Agency for International Development insisted that Palestinian NGOs pledge not to support anyone with ‘terrorist links.’ The EU threatened last week to withdraw all funding if militant groups were allowed to participate in forthcoming Palestinian elections. Subtler forms of pressure are also common, and will affect the political decision making.

Being kind to Palestinians is now a big industry, spawned initially by the Oslo Agreement of 1993. International aid poured in to support the nascent Palestinian Authority, to build up the infrastructure damaged by decades of Israeli occupation. From 1995 onwards, $7 billion was spent on this enterprise. Underlying this aid was the assumption that a two-state solution was the desired aim, and that the Palestinians would need help to prepare for statehood. So, until 2000, much aid was directed towards state-building projects and those fostering a ‘positive climate’ for peace negotiations.

The second intifada that erupted in 2000 halted this process. Donors were forced to switch from state building to emergency support, now running at $1 billion annually. The EU and member states bear the brunt of this financial burden. The US also contributes, though far less than it does to Israel. The Palestinians are today the largest per capita recipients of foreign aid in the world. According to the 2004 World Bank report, they are suffering ‘the worst economic depression’: 75 per cent are impoverished, and unemployment rates are 60-70 per cent in Gaza and 30-40 per cent in the West Bank. The donors know the causes of this desperate situation. Last July, the World Bank’s representative, Nigel Roberts, admitted that Israel’s occupation was the problem. Yet the funding continues. In the context of an occupation what should be the rationale of international aid? Emergency relief is vital to Palestinian survival. But should not Israel’s occupation be addressed too? Otherwise aid becomes an adjunct to the occupation.

By paying up without caveat, donors in effect relieve Israel of its obligations under international law. Israel must deliver assistance to the Palestinians. As high contracting parties to the Geneva conventions, the donors are obliged to ensure Israel’s compliance with the law. None of this has happened. Instead, international aid has rendered the occupation cost-free.

Aside from the recent EU criticism of Israel’s policies in Arab Jerusalem, the donors have made no serious attempt to challenge Israel’s actions, not even to demand compensation for its destruction of Palestinian projects they had funded. On the contrary, the process of preparing Palestinians for western-style ‘statehood’ has accelerated.

In the absence of a Palestinian state or any hope of one, this becomes an exercise in cynicism. The donors’ efforts to ensure the Palestinian security services can fight ‘terrorism’ while Israel’s army freely assassinates Palestinians, bombs them and demolishes their homes, is immoral.

By focusing on the effects of occupation rather than ending it, the donors have made the conflict into a scramble for socio-economic survival. But distancing the Palestinians from their national struggle can only help Israel impose its final terms on them. If that is not to happen, then the donors must resolve their dilemma: not abandoning the Palestinians to their fate, and not challenging Israel, is incompatible. Facing up to the bully is a moral imperative, and, ultimately, the only practical way forward. — The Guardian