USAID agrees to transfer $50 million to Palestinian Authority

Arafat’s destroyed compound in Ramallah following Israel’s April 2002 “Operation Defensive Shield”. The Muqata’ as the compound is known, is the Ramallah district headquarters of several Palestinian Authority offices and security forces. (Ronald de Hommel)

RAMALLAH -– The American Government and Palestinian leaders have signed an agreement for the transfer of $50 million in direct assistance to the Palestinians. The U.S. officials made a formal announcement with Minister of Finance Salam Fayyad at the Palestinian Prime Minister’s office on Wednesday.

The agreement between the Palestinian Ministry of Finance and the U.S. Agency for International Development (USAID) underlines U.S. confidence in the Palestinian Authority’s reform program and aims to ensure that the Gaza disengagement is a success.

With U.S. oversight, the funds will be used to rehabilitate new housing for 6000 families, roads, water facilities, schools, and health clinics in Gaza to help ease the transition after the Israeli disengagement.

“We expect that more than 700,000 person days of employment will be generated in Gaza by this direct assistance,” said USAID West Bank/Gaza Mission Director Jim Bever.

U.S. Consul General Jake Walles said that the U.S. is looking forward to the Palestinian Authority’s continued efforts to provide a better future for the Palestinian people. “We see this as an important opportunity to build on a successful Gaza disengagement,” he added.

A special presidential waiver is necessary for direct financial assistance to the Palestinian Authority. President George W. Bush announced the direct aid last May during the White House visit of Palestinian leader Mahmoud Abbas.

This is the third time the U.S. Government has provided direct budgetary support to the Palestinian Authority.

In July 2003, USAID and the PA Ministry of Finance entered into an agreement that provided $9 million to finance the provision of utility services and $11 million to finance approximately 75 infrastructure projects in Gaza and the West Bank. Most of the projects involved the repair and rehabilitation of roads, municipal halls and water and wastewater facilities. All the projects were approved in advance by USAID.

Some 49 projects have been completed and the others are at various stages of implementation. To date, 90 kilometers of roads have been paved, more than 6,000 square meters of municipal halls have been constructed, and more than 55,000 work-days of employment have been generated.

At the end of 2004, the American Government transferred $20 million in direct assistance to the then interim Palestinian leadership. The funds were used to meet budget priorities identified by the Ministry of Finance, including the costs of utilities.

Most U.S. aid to the Palestinian people is provided through nongovernmental organizations, but under the direct assistance structure, the Palestinian Authority itself will administer and implement approved projects.

USAID will deposit the funds in a separate account managed by Palestinian Finance Minister Salam Fayyad, who has won kudos from donors for his sound management.

The funds are subject to regular, quarterly audits to monitor how the money is spent. In the latest review, the auditors reported that the documentation of expenditures was reliable, and the Palestinian Authority quickly remedied the minor deficiencies that were noted.

USAID has spent more than $1.7 billion in the West Bank and Gaza since 1993 to combat poverty, create jobs, improve education, build roads and water systems, construct and equip medical clinics, and promote good governance.

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