U.S. Aid to West Bank Diverted

One of the best-kept secrets of U.S.-Israeli relations—at least as far as the general public is concerned—was revealed during April, when the State Department acknowledged that Israel has been hampering American efforts to help Palestinians in the West Bank and Gaza to develop their economies.

The acknowledgment came in response to the publication in Jerusalem on April 6 of a study analyzing the expenditure of $36 million in U.S.-government grants that have been provided to private voluntary agencies since 1977 for projects in the Israeli-occupied territories.

According to the study, prepared by Jerusalem's former deputy mayor Meron Benvenisti, who now heads a research institute, the U.S. government has wanted to foster small industrial and agricultural projects that would give the Palestinians a stake in their own economies—but the study says that Israeli authorities have thwarted this aim through their power to grant or withhold approval for projects to go ahead.

After declining to comment for several days, the U.S. State Department issued a written answer on April 10 to questions by reporters. The answer confirmed that U.S. assistance to the West Bank and Gaza is intended to be "oriented towards activities that will contribute to economic development," and expressed "concern that Israel has not been forthcoming in allowing such activities to go forward." It added:

"As you know, the Secretary (of State) has expressed interest in what he has described as the human aspect of the Palestinian problem. It is important, in our view, that the Palestinians of the West Bank and Gaza be permitted a stake in the development of those areas. We therefore believe that Israel should be more flexible in permitting them to undertake economic activity, at their own initiative, to develop local industry."

Statistics provided by Mr. Benvenisti in his study show that Israel has approved only 23.1 percent of the industrial and 35.6 percent of the agricultural expenditures endorsed by the U.S. Agency for International Development (USAID). Projects which have been rejected include the construction of a dairy, the purchase of tractors, and the establishment of an egg hatchery.

Ready approval, on the other hand, has generally been given to U.S.-funded projects that are in the public works sector (drinking water, domestic electricity, and internal roads). This "enables Israel to free its own public funds for other purposes," Mr. Benvenisti says. He adds that in any event the discouragement of industrial and agricultural projects is viewed by Israeli authorities "as an important component in controlling a hostile population. Curbing development of a viable and independent Palestinian economic sector forces the Palestinians into dependence on Israel."

The USAID is not directly involved in the negotiation of a project it wants to help finance, because this is carried out by one or more of the private voluntary agencies (ANERA, Catholic Relief Services, Save the Children Fund, Community Development Foundation, Holy Land Christian Mission, or AMIDEAST) that have access to the U.S. funds. In fact, according to Mr. Benvenisti, "the private voluntary agencies are left to their own devices, and usually cannot rely on U.S. government clout" to gain approval for a project from Israeli occupation authorities. In the opinion of Mr. Benvenisti, "it seems that the low-profile, passive and indirect role of U.S. government officials concerning project implementation is deliberate, and intended to reduce friction with the Israeli authorities on what is perceived to be a secondary issue."

Whatever the attitude of U.S. officials may be, there is, in any case, no sign of change in what is now a 17-year-old Israeli policy of stifling Palestinian economic initiatives. Palestinians are denied permission to dig new irrigation wells; discouraged in their attempts to form cooperatives; limited in their planting of trees and vegetables; constrained from selling their produce in Israel; turned down—or made to wait indefinitely—when applying for licenses to start up a business project or construct a building; and deprived of adequate credit and money market facilities.