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EU Development aid in the occupied Palestinian
territory, between aid effectiveness and World
To cite this article: Jeremy Wildeman (2018): EU Development aid in the occupied Palestinian
territory, between aid effectiveness and World Bank guidance, Global Affairs
To link to this article: https://doi.org/10.1080/23340460.2018.1507285
Published online: 16 Aug 2018.
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EU Development aid in the occupied Palestinian territory,
between aid eﬀectiveness and World Bank guidance
Department of Social and Policy Sciences, University of Bath, Bath, UK
The European Union (EU) and its member states shoulder a
signiﬁcant part of the aid devoted to the Palestinian Authority
(PA) and Palestinians in Occupied Palestinian Territory (OPT). They
do so according to a development aid model that is driven
intellectually by the World Bank, under US political oversight. This
article locates European aid in the World Bank-led approach and
analyses its shortcomings. It starts with an overview of how such
an approach came to characterize economic development in the
Oslo Peace Process. It highlights its fundamental ambiguities
when it comes to analysing the occupation and settlements. It
then focuses on the issue of settlement-building and de-
development in the Occupied Palestinian Territory (OPT) that
punctuates the failure of the aid model. It concludes by analysing
current thinking in aid eﬀectiveness and how it could be adopted
as an alternative approach by the Europeans.
Received 15 January 2018
Accepted 26 July 2018
European Union; aid
eﬀectiveness; World Bank;
territory; development aid;
do no harm
All donors in a conﬂict situation become de facto actors in the conﬂict itself (Anderson,
1999), as well as ethically responsible for the well-being of the people for whom they are
intervening. This article looks at the case of donor development aid spending in the occu-
pied Palestinian territory (OPT) in support of the 1993 Oslo Accord. It is a process domi-
nated politically by the United States, with an aid model structured for international
donors by the World Bank. There the EU and its individual member states have
though provided the largest amount of funding to sustain the model (Le More, 2008,
p. 109), spending a combined 4.360 billion $USD from 2012 to 2016 (OECD QWIDS con-
catenated, 2012 to 2016 [Dataset], 2018), and covering as much as 40% of the Palestinian
Authority’s (PA) 2012 to 2014 budget (Tartir & Wildeman, 2017, p. 17) This aid model
and aid provision were meant to foster Palestinian economic and institutional develop-
ment, and represented an investment in peace (The World Bank, 1993), meant to
nurture conditions favourable to the political process of peacebuilding with Israel.
However, as we are going to see, the disconnect between the aid model and political rea-
lities on the ground does not mean that aid provision is politically neutral or grounded in
strong analysis, and in fact the Europeans, as main donors to the PA, are towing a ﬁne line
between denouncing the occupation through their declarations, on the one hand, and
© 2018 European International Studies Association
CONTACT Jeremy Wildeman firstname.lastname@example.org
contributing to its further entrenchment by following the World Bank’sﬂawed develop-
ment model, on the other.
The EU considers itself the most important donor for the Palestinian people, and “a
reliable and predictable partner”(EEAS, n.d.). The EU has in particular been aiming to
build up the PA’s institutions to have a “democratic, independent and viable Palestinian
State living side-by-side with Israel in peace and security”(EEAS, 2016). As Table 1 shows,
the Europeans have invested signiﬁcant funds in the OPT. There the EU institutions work
alongside member national authorities, providing the PA with resources to support not
only its activities, but its very existence. At the same time, Europeans have adopted a stan-
dard response to excuse a lack of political protagonism in the so-called Peace Process by
highlighting their contribution to the PA, their role in keeping the PA aﬂoat and therefore
in contributing to sustain a “partner for peace”with which the Israelis could potentially
Using OECD data, from 2012 to 2016 the EU institutions gave 45% of the total funds
spent on the OPT from EU sources. Those funds are provided by the EU through a
number of organizational units –particularly the European External Action Service
(EEAS) and the Directorate-General for International Cooperation and Development
(DEVCO) –under a number of budget lines, funding the payment of PA civil servants’
salaries and pensions, social allowances by the PA for the poorest and most vulnerable
Table 1. Total EU and EU member funding.
Total ODA by year by EU Donor 2012 to 2016 (in 2018 July 13 $USD millions)
Donor(s) 2012 2013 2014 2015 2016 Totals
EU Institutions 315.72 357.89 481.26 406.26 417.04 1978.17
Austria 4.8 6.35 8.2 4.78 6.1 30.23
Belgium 33.45 33.54 20.66 24.23 34.76 146.64
Bulgaria .. .. 0.07 .. .. 0.07
Croatia .. .. .. .. .. 0
Cyprus .. 0.01 0.08 0.49 .. 0.58
Czech Republic 1.68 0.81 0.7 1.24 0.42 4.85
Denmark 25.72 40.33 30.41 25.79 5.58 127.83
Estonia 0.08 0.13 0.52 0.32 0.14 1.19
Finland 14.74 14.17 15.24 13.41 10.06 67.62
France 71.53 66.06 57.45 42.78 40.43 278.25
Germany 136.74 117.38 124.8 92.34 137.42 608.68
Greece 5.14 0.78 1.52 0.71 0.16 8.31
Hungary 0.06 0.01 0.11 0.27 0.49 0.94
Ireland 5.87 7.66 7.54 6.38 5.63 33.08
Italy 7.27 12.13 20.2 31.27 18.84 89.71
Latvia .. .. .. .. .. 0
Lithuania .. .. 0.04 0.01 0.03 0.08
Luxembourg 4.32 5.23 4.38 8.33 7.03 29.29
Malta .. .. 0.13 0.01 .. 0.14
Netherlands 31.91 20.22 31.5 22.52 22.79 128.94
Poland 0.47 0.77 1.02 1.03 1.21 4.5
Portugal 0.01 0 0.27 0.13 0 0.41
Romania 0.2 0.29 0.32 0.44 0.49 1.74
Slovak Republic 0.12 0.17 0.23 0.16 0.08 0.76
Slovenia 0.2 0.21 0.16 0.24 0.35 1.16
Spain 23.02 16.88 19.45 16.75 18.71 94.81
Sweden 62.77 61.02 67.16 54.61 53.15 298.71
United Kingdom 67.96 108.63 137.24 78.58 30.67 423.08
All EU Institutions and EU Member Totals 4359.77
Note: In million $USD at 2018 July 13 values. Data calculated by the author using the OECD QWIDS data-set. (OECD QWIDS
concatenated, 2012 to 2016 [Dataset], 2018).
Palestinian families; as well as, infrastructure projects, judicial and ﬁnancial reform initiat-
ives, and programmes supporting Palestinian security, health and education systems
(EEAS, n.d.). Separately as member states Germany, traditionally considered close to
Israeli interests (see Busse in this special issue), is by far the biggest contributor to the
PA, delivering nearly 50% more in aid than the next donor, the UK. Moreover, Germany’s
contribution is more than twice France’s contribution, despite the popular perception of
France as a champion of Palestinians’rights (See Voltolini in this special issue). Mean-
while, Sweden has consistently provided more aid than France in spite of having about
10% the population of France. Notably, Sweden, Denmark, Belgium and the Netherlands
contributed signiﬁcantly more per capita than other more populous states like the UK and
France, and more in total than either Italy or Spain. From a per capita perspective, Lux-
embourg and Finland are particularly generous donors.
As these ﬁgures show, aid to the Palestinians has mobilized signiﬁcant amounts of
money from Europeans’taxpayers.
This article scrutinizes the aid model embraced by
European actors. It starts by providing an overview of how the Oslo development aid
process came into being, before then analysing the key aspects and the main weaknesses
of the policy approach charted by the World Bank. It further delineates the deterioration
in the Palestinian economy, upon which political peace had been meant to be built, and the
indicators that could have predicted the result. The article concludes that Europeans could
choose to plot a diﬀerent course in search of Israeli-Palestinian peace, based on principles
for aid eﬀectiveness and for aid giving in a fragile and conﬂicted state, and by taking full
account of the political context of Israeli settlement policies as the key element undermin-
ing any chance for Palestinian statehood, development or peace.
The Oslo development aid model
Liberal “idealists”in international aﬀairs (and neoliberals) extol the virtues of cooperative
interaction between states. This is built upon a classical liberal enlightenment faith in the
innate goodness of the individual, the capacity of political institutions to promote social
progress and the idea that states are capable of meaningful cooperation leading to positive
change and progress. This cooperation is characterized by trade, where every participant
state contributes their strengths to the world economy, altogether beneﬁtting from the
overall gains. Cooperation in turn leads to a connectedness deﬁned by open markets
and global economic integration, which makes it too costly for states to turn away
from, and this helps preserve peace (Keohane & Nye, 1998, p. 84). In such a world, the
primary path to prosperity and leadership on the global stage is through peaceful inter-
action and law. Rosecrance described this as a major crossroads in international aﬀairs
where the military option for states to seize territory for growth became much more
costly than cooperation and trade (Rosecrance, 1986, p. 39). In the liberal perspective,
this vision of peace and progress goes hand in hand with liberal and capitalist states,
which in turn are assumed to be naturally predisposed towards peace (Doyle, 1983,
These ideas have informed the approach taken by international policy makers engaged
in Israeli and Palestinian peacebuilding. There, in support of the Oslo Peace Process, they
have sought to enhance cooperation between Israelis and Palestinians for mutual ben-
eﬁcial economic gain. Essentially proposing peace by economics, they believed that the
GLOBAL AFFAIRS 3
international community could give peace a boost by engaging in institution building to
catch the underdeveloped Palestinians up to their liberal and capitalist Israeli counter-
parts’standards. This could be done by investing in development programmes, which
would have the beneﬁt of incentivising Palestinians to abandon violence and cooperate
with Israel in building peace. Thus, Western –and particularly European –donors
decided to instil liberal democracy into Palestinian state-building, in order to create con-
ditions for peace to take hold (Amundsen, Giacaman, & Khan, 2004; Hanieh, 2016).
To develop the aid model, the US quickly pushed for the World Bank to play a lead role
in 1993, trusting the Bank to represent the American viewpoint, given that the US
remained the biggest shareholder of the World Bank (Le More, 2008, p. 110). Further,
the US administration always choses the President of the Bank, and that person has
always been an American. The World Bank is so closely linked to the US that rival
states in fact consider it an extension of American foreign policy (Inside Story - China
The World Bank ﬁrst laid out the conceptual model for Palestinian aid in its 1993 paper
An Investment in Peace (The World Bank, 1993). It had been developed coincidentally as a
six volume report in 1993 at the request of the organizing group behind the separate 1992
Madrid negotiations between Israelis and Palestinians (Schiavo-Campo, 2003, p. 4).
Together with other Western donors, the Bank optimistically chose to classify the OPT
as a post-conﬂict scenario (Schiavo-Campo, 2003, p. 4). As a consequence, Palestinian
poverty was categorized as a “technical problem”, which could be considered separate
from politics and addressed through well-constructed and “non-political”policies. This
reﬂected a popular neoliberal development belief that aid policy can be “neutral, rational
and objective”(Mosse, 2004a, pp. 3–4). It also ﬁt within a larger donor vision –advocated
by the Bank –that a political resolution through negotiations would take place separate
from development, but that positive conditions for that political resolution would be
established by eliminating Palestinian poverty as a driver for violence through develop-
ment. That is, Palestinian poverty could begin to be addressed separate of, and irrespective
of the political context,
The focus instead is on policies, institutions and investments-where optimal choices are
largely invariant to the eventual political arrangements that may emerge from the bilateral
negotiations (The World Bank, 1993, p. 1).
This led to a blue-print approach to Palestinian development centred upon: ﬁnancial lib-
eralization, open markets, economic growth through trade, and liberal mechanisms like
regional institutions, regional economic integration, economic integration with Israel,
good governance, democratization, mutual recognition of national rights, and fostering
mutual trust through cooperation (Hanieh, 2016; Rynhold, 2009).
For this blue-print to be carried out, a strong central authority would be required to
strike a balance between free markets and state intervention (Brinkerhoﬀ,1996,
p. 1498). Like other neoliberal development interventions, existing institutions would
need to be strengthened or whole new ones created, requiring nothing short of the whole-
sale managed reorganization of state and society (Mosse, 2004b, p. 642). Thus, insti-
tutional development was put at the top of the Bank agenda from its ﬁrst mission to
the OPT in October 1993 (Schiavo-Campo, 2003, p. 10). Since the Palestinians were in
theory leaving behind oversight by the Israeli state, the Bank became deeply involved in
building the semi-autonomous PA to be a “good”government that could manage the
balance between free markets and state intervention, and to fully implement donor/
Bank development advice to build the right kind of state. In this role, the Bank set a
legal framework for Palestinian economic activity and their economic relations with
Israel (Roy, 1999, p. 68). Some aspects were even codiﬁed into Palestinian law, like PA
Basic Law Article 21 stating that, “the economic system in Palestine shall be based on
the principles of a free market economy”(Bolstad & Viken, 2008).
In this context, donors exercise a preponderance of power over the occupied Palesti-
nians. This includes not only providing large sums of money according to their chosen
funding priorities, but also withholding funds from the aid-dependent Palestinians for
taking actions that donors do not approve of, like the embargo on the PA after Hamas
won the 2006 January 25 Palestinian election. Further, there is profound inﬂuence exer-
cised by countless European and other international specialists working closely with
and directing Palestinians on how to build institutions for good governance. That included
there being in charge of the PA from June 2007 to June 2013 an unelected, donor-backed
Prime Minister, Salam Fayyad, who had long worked at both the World Bank and IMF,
and collaborated closely with the World Bank and British Department for International
Development (DFID) to produce a Palestinian national development plan in 2007
(Hanieh, 2008; Khalidi & Samour, 2011).
Thus, the Oslo development aid model that emerged thanks to the World Bank and was
embraced by the Europeans was premised on the separation between political and econ-
omic considerations. In line with mainstream popular thought in the 1990s, it was a one-
size-ﬁts-all model built around Western neoliberal normative values and imposed on the
recipient peoples. There eﬃcient “non-political”economic policies and institution build-
ing were expected to contribute positively to an eﬀective and progressive transformation in
the political sphere. As the experience world-wide has also shown, politics and economics
cannot be separated, while attempting to do so in a conﬂict situation can easily make a
Problems in the aid model
As a general rule, for aid to be eﬀective it should respect local leadership and expertise in
the development process (OECD, 2008). Providing aid in a conﬂict situation is particularly
complex. Aid can reduce human suﬀering, and support greater economic and social secur-
ity in conﬂict settings (Anderson, 1999, p. 67). However, it can very easily have unintended
negative impacts. While aid does not create conﬂicts, it does inﬂuence whether they
worsen or abate, and whether new steps towards peace can be found (Anderson, 2005,
p. 152). This is likely to be made worse if given in a partisan manner, choosing sides in
a conﬂict. Furthermore, international interventions that lack strong conﬂict analysis
without appropriate safeguards designed to account for the context can inadvertently
cause harm in fragile environments (Karlstedt, Abdulsalam, Ben-Natan, & Rizik, 2015,
pp. 15–16; OECD, 2011, p. 25). It is therefore essential that international actors under-
stand the speciﬁc context in the region they intervene in,
Sound political analysis is needed to adapt international responses to country and regional
context, beyond quantitative indicators of conﬂict, governance or institutional strength.
GLOBAL AFFAIRS 5
International actors should mix and sequence their aid instruments according to context, and
avoid blue-print approaches (OECD, 2007,p.1).
So, sound logic holds that donors wanting to engender development in the OPT should
ﬁrst take account of the greatest problem impacting and undermining Palestinian daily
life: the settlements and Israel’s colonial policies behind them.
One of the main reasons the humanitarian situation in the OPT never improved, and
only got worse was the premature initial classiﬁcation of the OPT as post-conﬂict (Sayigh,
2007, p. 9). While limited successes at PA institution building have taken hold in pockets
of the OPT, economic growth and peace did not occur. Through 25 years and $30+ billion
in spending (Tartir, 2016), there has been no tangible progress on the core political issues
ﬁrst identiﬁed by the World Bank in 1993. The report at the time indicated priorities such
as, “the allocation of land and water resources, the disposition of Israeli settlements, the
future status of expatriate Palestinians, the territorial issues surrounding Jerusalem and,
most importantly, the nature of the proposed ‘self-governing’arrangements”(The
World Bank, 1993, p. 1). In fact, in many cases these priorities have regressed during a
period characterized by extremes of pronounced misery and decline, while the OPT
economy became dependent on aid to pay for an enormous trade deﬁcit with Israel
(Hever, 2010,2015). By the end-of-the 1990s the OPT was in a much worse condition
than prior to Oslo (The World Bank, 2000, p. 14), and the economic situation so poor
that the Oslo years have been the worst since the beginning of occupation in 1967 (Tagh-
disi-Rad, 2010, p. 56). Conditions have become so acute in Gaza the UN has warned it
could become uninhabitable by 2020 (UNCTAD, 2015, p. 11).
A number of politically driven obstacles have stood in the way. The key issue driving the
deterioration in the OPT has been Israel’s appropriation of Palestinian resources and land
to build colonies, in ﬂagrant violation of international law (Lynk, 2017, p. 3) (see also Lynk
and Azarova in this special issue). These settler colonial processes began in 1967 (Khalidi,
2008; Pappe, 2006), as Israel extended its control over Palestinian land and other natural
resources exclusively for the beneﬁt of Israelis (Kanafani & Ghaith, 2012). This was
accompanied by practices that make Palestinian daily life diﬃcult and unsafe. Such prac-
tices include severe restrictions on Palestinian movement, home demolitions, deliberately
exposing Palestinians to toxic waste, the destruction of livelihoods, settler violence and
denying Palestinians access to clean water (Hart & Forte, 2013, p. 632).
The settlements are an ideological/political enterprise with no solid economic base that
justiﬁes their existence (Kanafani & Ghaith, 2012). They are sustained by an infrastructure
of roads, checkpoints and the Separation Wall. Settlement growth has been rapid as Israeli
citizens are incentivised by government subsidies to move to settlements (Amit, 2017).
Since 1995, the population of Jewish settlers in the West Bank has grown four times
faster than Israel’s (Ferzinger, 2018). When Oslo was signed in 1993 there were approxi-
mately 110,000 settlers living in the West Bank and Gaza, and another 146,000 in East Jer-
usalem (‘Israel’ssettlement policy in the occupied Palestinian territory’, n.d.). By 2002, the
total living in the OPT stood at 380,000 (B’Tselem, 2002) and increased to nearly 600,000
by 2015 (B’Tselem, 2017).
The expansion of settlements is facilitated by the fact that 61% of the land in the West
Bank (Eddin, Massimiliano, & Niksic, 2014, p. 1), labelled Area C in the Oslo Process,
remains under full Israeli control. Area C is richly endowed with natural resources and
includes almost all the West Bank agricultural land. Less than 1% of Area C is designated
by Israel for Palestinian use, while the remainder is heavily restricted or oﬀ-limits to Pales-
tinians: 68% for Israeli settlements, 21% for closed military zones and 9% for nature
reserves (Eddin et al., 2014, p. 13). By 2018, the majority of Area C was made up of
Israeli settlers, intricately integrated into and inseparable from Israel proper. As Secretary
of State John Kerry pointed out, Area C is eﬀectively restricted from Palestinian develop-
ment (Redden, 2015). In a 2014 report, the World Bank estimated the direct beneﬁts Pales-
tinians could derive from access to their land would equal a sum equivalent to 23% of GDP
in 2011 ﬁgures (Eddin et al., 2014).
Palestinians now mostly live in densely populated “Bantustans”between Israeli settled
areas. Palestinian territorial contiguity has been totally undermined and, as Lynk points
out in his contribution to this special edition, this process shows no sign of abating, as
every Israeli government has since 1967 committed signiﬁcant resources to the continuous
growth of settlements. While the World Bank does not go without acknowledging these
settlements, they play a largely secondary part because of the Bank’s“non-political”analy-
sis. Development critics argue that non-political approaches bereft of context distracts
attention away from the real cause of poverty: the unchecked power of the state against
poor people without rights (Easterly, 2014).
Analysis bereft of context
The position of the World Bank on settlements emerges in 18 biannual reports issued over
the period 2009-2017. The reports, which span more than 500 pages, are addressed to
bilateral donors on the Ad Hoc Liaison Committee (AHLC), where the World Bank
acts as Secretary. Tellingly, a keyword count shows that not only does the Bank go
entire reports without mentioning the words “settler”or “settlements,”but the trend
across time is towards mentioning the issue less and less.
In fact, the word “settler”only appears 16 times in just 4 reports out of 18: 4 times in
May 2009, 4 times in September 2009, 3 times in September 2010 and 5 times in Septem-
ber 2012. The word “settlement”appears more often at 66 times but combined across only
half the reports: 14 times in May 2009, 6 times in September 2009, 1 time in June 2010, 13
times in September 2010, 5 times in March 2012, 22 times in September 2012, 2 times in
June 2014 and 2 times in September 2017. Settlements are also mentioned 1 time in April
2011 as an “important employer”of Palestinians (The World Bank, 2011, p. 17). In a 239-
page assessment of its work in the OPT covering the decade 2001-2009, the Bank only
mentions “settlers”3 times and “settlements”2 times (Garcia-Garcia et al., 2009).
Further, the trend is that over time the Bank acknowledges the presence of settlers and
settlements less-and-less, while they became an ever-larger presence disrupting life in
The Bank and other donors also shy away from the use of contextually accurate and
broadly accepted terminology. Thus, the Bank only rarely refers to the “occupation”or
“occupied”,the internationally accepted deﬁnition of Israeli rule, as per UN Security
GLOBAL AFFAIRS 7
Council Resolutions 298 (1971), 446 (1979) and UN General Assembly resolution 32/5
(1977 October 28).
In the World Bank’s 18 reports to the AHLC 2009 to 2017, the word “occupation”is
only mentioned 19 times and “occupied”35 times. Clear references to the occupation
occur 7 times in 2 reports: 5 times in September 2011 and 2 times in September 2012.
The word “occupied”is mentioned clearly 11 times in 3 reports: 2 times in April 2011,
3 times in March 2012 and 6 times in September 2012. While “occupation”is mentioned
6 times in September 2009, 4 are to a PA plan “Palestine: Ending the Occupation, Estab-
lishing the State”and the other 2 references mention the occupation in footnotes. In other
reports the mentions are more secondary and equivocal, such as referring in June 2009 to a
report by UNRWA, “Prolonged Crisis in the Occupied Palestinian Territory: Socio-econ-
omic Developments in 2007”; to programmes, like in September 2009 citing the PA plan
“Palestine: Ending the Occupation, Establishing the State”; and to organizations, like in
September 2010 referencing the “Oﬃce for the Coordination of Humanitarian Aﬀairs,
Occupied Palestinian Territory”(UN OCHA oPt). Meanwhile, references to the occu-
pation completely disappear after 2012, even though the occupation very much exists
and deﬁnes every aspect of Palestinian existence.
Astonishingly, in the 239-page evaluation of its work in the OPT 2001-9, the Bank uses
“occupation”only 2 times, as a reference to the PA plan “Palestine: Ending the Occu-
pation, Establishing the State.”In the same report, the word “occupied”is mentioned
16 times, but of these only 3 are clear references to the phenomenon with the other 13
being secondary citations. Meanwhile, although the Oslo development model is premised
on the establishment of a democratic Palestinian state –particularly for European donors
–the words “democracy”and “democratic”are never mentioned in the Bank’s 18 reports
to the AHLC, outside of a 2010 June report to the AHLC referring to the governance of
Partly out of fear of upsetting Israel, the Bank has defended its position as an eﬀort to
appear neutral and apolitical, focusing instead on what they consider positive dialogue and
avoiding “deconstructive recriminations”about past actions by Israel (The World Bank,
2012). However, evidence also suggests a hypothesis that the World Bank is complicit
in expunging not only the expression and the concept, but also the political and legal rel-
evance of the occupation from the reality of global aﬀairs.
The World Bank’s extreme reluctance to refer to the occupation clashes with the more
outspoken policy of the Europeans, who have been issuing declarations and reports
addressing the occupation (cf. Bicchi, 2014, pp. 248-50). In fact, the European Community
already in 1980 recognized the Palestinian right to self-determination and challenged
Israel’s rule and annexation of the occupied territories stating that settlements are
illegal under international law and a serious obstacle to peace (European Council,
1980). Moreover, the EU is itself the oﬃcial author of a number of reports on the OPT.
In them it has been more willing to use contextually appropriate analysis. For example,
in a 2014 evaluation of its aid to the OPT one EU report mentions settlements 55
times, occupation 49 times, occupied 158 times and democracy 115 times –in just 114
pages (Development Researchers’Network, European Centre for Development Policy
Management, & Ecorys Research and Consulting, 2014). Yet regardless of these diﬀer-
ences, the EU and its member states ultimately pay into and sustain the 25-year old
Oslo framework maintained, under US oversight, maintained by the World Bank.
Alongside its refusal to address and emphasize the role of settlements and of the occu-
pation, a second analytical shortcoming in the World Bank’s model is represented by
the adoption of a popular but ﬂawed theory that under Israeli occupation Palestinian ser-
vices and infrastructure improved, industry developed and the OPT thrived generally
(Starr, 1989, p. 30). Thus, the Bank wrote,
The economy of the OT grew rapidly between 1968 and 1980 (average annual increase of 7%
and 9 per- cent in real per capita GDP and GNP, respectively), triggered by a number of
factors, including the rapid integration with Israel and the regional economic boom (The
World Bank, 1993, p. 4).
This growth was said to be the natural occurrence of a poorer state integrating, “with a
larger, richer, and more technologically advanced neighbour”(Diwan & Shaban, 1999,
pp. 2–3). Further, World Bank policy-makers seemingly operated on an assumption
that governments consider it in their best interest to provide public goods and open
markets for all the people they govern, and considered Israel to have been incurring expen-
ditures in the OPT for the Palestinians (The World Bank, 1993, p. 18). This is because,
they assume, Israel naturally wanted to see the Palestinians do well economically (The
World Bank, 1993, p. 1), including for its own strategic interests (The World Bank,
2005, p. 3).
However, while Israel has at times had a strategic interest in allowing some form growth
in the Palestinian economy, or to prevent total economic collapse, this is fully compatible
with an equally strong interest in not only maintaining the occupation but proﬁting econ-
omically from it while colonizing and annexing OPT lands. When conducting research on
the Gazan economy in the 1980s, Roy showed that Gaza was becoming poorer because the
Israeli occupation had been structurally designed for the sole beneﬁt of Israel. Palestinians
provided cheap labour to propel forward Israeli economic growth, while their earnings
bought Israeli goods in a captive Gazan economy unable to trade freely with the
outside world. By absorbing Palestinian labour into its workforce, Israel was also able to
free Jewish labourers from menial jobs to further develop Israeli advanced industry
(Tamari, 1988, p. 25). Moreover, Palestinians could not develop their own economic
sectors, as Israeli policy speciﬁcally undermined sectors that might compete with any
Israeli equivalent. Roy coined the term “de-development”to describe this economic
relationship, a “deliberate, systematic deconstruction of an indigenous economy by a
dominant power”(Roy, 1995, p. 4). As Salim Tamari would argue this was also part of
long-standing Israeli government policy to reinforce its rule over and integrate the OPT
into Israel (Tamari, 1988). It was a process Roy linked to settler colonialism, because its
goal was to “rob the native population of its important economic resources –land,
water and labour –as well as the internal capacity and potential for developing those
resources (Roy, 1995, p. 5).
As a result, by the 1980s the OPT had become Israel’s most important export market; a
market that was tariﬀ-free, non-competitive and from which Palestinian goods were pre-
vented from entering Israel. With the gross trade imbalance that resulted from this econ-
omic relationship, the OPT economy came to rely ﬁrst in the 1970s on external
remittances from Palestinian labourers in Israel and family members working abroad in
the oil rich Gulf states, and later in the 1980s on “sumud”solidarity funds coming from
GLOBAL AFFAIRS 9
the Arab world. After Oslo, foreign aid replaced Arab funds and work remittances, further
helping Israel to oﬀset costs and make the occupation proﬁtable (Hever, 2010,2015),
without having to surrender OPT land or allow Palestinian freedom of movement for
labour and commerce (Anderson, 2005, p. 144). In fact, aid helped turn a once private
sector-led OPT economy into an economy dependent on aid (Tartir, 2011), achieving
the exact opposite economic goal donors had set out to do. All the while, led by the
World Bank, they kept encouraging the PA to engage and integrate with Israel, reinforcing
a grossly unequal relationship (Gerster & Baumgarten, 2011, p. 11).
Since the 2000s agreements and norms have been adopted within the international donor
community that could be used to chart a diﬀerent course in the OPT. For instance, it is
now widely acknowledged that for aid to be eﬀective, stakeholders like the Palestinians
need to play a leadership role in designing and implementing their own aid. The Paris
Declaration (2005) on Aid Eﬀectiveness states that developing countries should “set
their own strategies for poverty reduction, improve their institutions and tackle corrup-
tion”and that “donors and partners are accountable for development results”(OECD,
2008). Further, the Accra Agenda for Action (2008) emphasizes that stakeholder countries
need to have “more say over their development processes through wider participation in
development policy formulation, stronger leadership on aid co-ordination and more use of
country systems for aid delivery”(OECD, 2008). Further, as argued in a recent report by
the Swedish International Development Cooperation Agency (SIDA), an important step in
the OPT would be to combine the so-called “fragile state principles”(FSP) with the aid
eﬀectiveness principles to support constructive donor engagement while minimizing unin-
tentional harm. There the ﬁrst of ten principles is to start with strong analysis to under-
stand the context well (Karlstedt et al., 2015, pp. 15–16), to be eﬀective and not cause
By contrast, since 1993 donors have imposed a radically transformative and one-size-
ﬁts-all model upon the Palestinians, remodelling OPT society from the top-down, with
basically no accountability to the Palestinians. Were donors to reﬂect the aid eﬀectiveness
principles that have emerged in the last decade and fully adopt Palestinian analysis and
leadership, Palestinian aid policy would look radically diﬀerent (Abu Zahra, 2005). For
instance, a poll of Palestinian public opinion conducted 2018 June 25 to July 1 found
that: 43% of Palestinians consider their ﬁrst most vital goal to be to end the occupation,
29% the right of return of refugees to their 1948 towns and villages, 14% to build a
pious society and 13% to establish a democratic political system respecting freedoms
and rights. Meanwhile, 27% consider the most serious problem confronting Palestinian
society to be the continuation of the occupation and settlement activities, 25% poverty
and unemployment, 22% the siege on Gaza and 21% the spread of corruption in public
institutions (Survey Research Unit, 2018). For Palestinians, any eﬀective aid would have
to start by taking account of the realities of occupation and settlement building.
After 25 failed years of Oslo, contributing to a harmful status quo, EU donors are even
more ethically responsible to Palestinians than ever before. They are powerful actors with
substantial ﬁnancial and political clout. As new ideas about aid eﬀectiveness and local
ownership become more widespread, it is time for them to revise their thinking behind
10 J. WILDEMAN
aid provision, in order to help build peace and improve Palestinian lives. To do this,
however, they would need to plot a path separate from the World Bank, starting with
sound political analysis, respect for both democracy and Palestinian leadership over the
aid process, and a willingness to directly address hard political issues like Israeli
1. It has also attracted the attention of the European Court of Auditors, European Union direct
Financial Support to the Palestinian Authority, Special Report n.14, 2013.
No potential conﬂict of interest was reported by the authors.
This work was supported by Economic and Social Research Council followed by the grant number
[grant number ES/P009883/1].
Notes on contributor
Jeremy Wildeman, PhD, is a Research Associate in International Development at the University of
Bath, Department for Social and Policy Sciences, where he carries out analysis in international
relations, foreign aid, and the role of donors and aid in the occupied Palestinian territory. Prior
to entering academia, he spent nearly a decade working in development aid in the region, and
remains engaged supporting the work of small charities in conﬂict and post-conﬂict regions.
Jeremy Wildeman http://orcid.org/0000-0003-3460-5473
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