Partners in Peace: LACC for Development Assistance in the West Bank and Gaza Strip

Partners in Peace:

The Local Aid Coordination Committee (LACC) for Development Assistance in the West Bank and Gaza Strip 

July 1996, revised and updated HTML edition.

Prepared jointly by the United Nations and World Bank Secretariat of the LACC.

I. PARTNERS IN PEACE: CO-ORDINATION AND ORGANIZATION OF THE DEVELOPMENT EFFORT 

1. Preface 

2. Coordination mechanisms: An overview 

3. The Ad Hoc Liason Committee (AHLC) 

4. The Local Aid Coordination Committee (LACC) 

5. The Sector Working Groups (SWG's) of the LACC 

6. The Joint Liason Committee (JLC) 

7. United Nations Coordination: The Priority Sector Groups 

II. THE DEVELOPMENT EFFORT: REPORT ON RESULTS 

1. Summary of results 

2. Methodology for measuring results 

3. 1996 Donor Pledges and Commitments 

III. REPORTS OF THE SECTOR WORKING GROUPS 

I. Partners in Peace: Coordination and Organization of the Development Effort

The signing of the Declaration of Principles on Interim Self-Government Arrangements by the Government of Israel and the Palestine Liberation Organization in Washington, DC on 13 September 1993, marked the first major breakthrough in the peace process initiated at Madrid two years earlier. Recognizing that achieving improved living conditions for Palestinians in the West Bank and Gaza Strip would be a necessary condition allowing for the implementation of the Declaration of Principles and the continuation of negotiations, the international community met in Washington on 1 October 1993. Hosted by the Government of the United States, the Conference to Support Middle East Peace concluded with pledges to the Palestinians from the international community amounting to over $2.4 billion, to be disbursed over a period of five years.

The mobilization and implementation of this assistance would require the establishment of appropriate mechanisms for coordination between the Palestine Liberation Organization (and later the Palestinian Authority), and donor governments and institutions. The following provides an overview of the coordination mechanisms that have been developed over the past three years. The overview concludes with the terms of reference for each of these mechanisms. The purpose of these coordination mechanisms is to ensure the greatest possible degree of cooperation between all the parties in the development effort, enhance the efficiency of decision-making processes and maximize the pace of implementation. The results of the development effort are described on a project-by-project basis in the reports of the twelve Sector Working Groups. These results demonstrate that the combination of a consistently high degree of commitment by the partners in the development effort and effective coordination structures have led to an impressive range and depth of activity in three short years.

I.1 Coordination Mechanisms: An Overview

Following the 1 October 1993 Conference, the Ad Hoc Liaison Committee (AHLC) was established by the Multilateral Steering Group of the multilateral talks on Middle East peace. The AHLC is the principal coordination mechanism on policy and political matters related to the development effort in the West Bank and Gaza Strip. The members of the AHLC are: Canada, the European Union, Japan, Norway, Russia, Saudi Arabia and the United States. Israel and the Palestinian Liberation Organization are fully associated members of the AHLC, as are Egypt, Jordan, Tunisia and the United Nations. The Chair of the AHLC is held by Norway and the Secretariat is the World Bank. Since its establishment, the practice of the AHLC has been to meet in both formal and informal sessions approximately three times per year.

The all-donor forum at the international level is the World Bank-led Consultative Group. After consultations with the Chair of the AHLC, the World Bank calls for and chairs meeting of the Consultative Group. These meetings are primarily fora for addressing technical aspects of the development effort and for committing pledges to specific programmes of assistance.

At a meeting in Brussels on 29 and 30 November 1994, the AHLC decided to devolve certain aspects of the donor coordination process to the level of representatives located in the West Bank and Gaza Strip. This step was taken at the suggestion of the United Nations Special Coordinator in the Occupied Territories and in recognition of the need to accelerate the development effort and increase efficiency. To achieve this, the AHLC established the Local Aid Coordination Committee (LACC), which is composed of the Palestinian Authority and all donors to the Palestinians with representation in the area. Approximately 30 donors, including Israel, are represented at the monthly meetings of the LACC. The co-chairs of the LACC are Norway, in its capacity as Chair of the AHLC, the Office of the United Nations Special Coordinator in the Occupied Territories (UNSCO) and the World Bank. The latter two act as joint secretariat to the LACC. The International Monetary Fund also participates in the meetings. The LACC, which reports to the AHLC, provides a forum on the ground for discussing the main challenges and priorities in the development effort. Through these discussions, consensus often emerges on the main issues and means are suggested for addressing them.

At its first meeting in December 1994, the LACC agreed on the establishment of twelve sectoral sub-committees, known as Sector Working Groups. These working groups seek to direct donor assistance towards the needs and priorities identified by the Palestinian Authority, with input from the United Nations and the World Bank. Each working group is composed of all donors interested in that particular sector, with one donor representative acting as Shepherd of the group; representatives of relevant Palestinian Authority ministries, as Gavel Holders; and the World Bank and/or the United Nations as Secretariat. The twelve working groups cover: agriculture, education, employment creation, environment, health, infrastructure and housing, institution-building, police, private sector, public finance, tourism, and transport and telecommunications. The sector working groups provide an opportunity for focussed examination of the sectoral priorities and programmes of the Palestinian Authority and of related technical issues. As a result of the information exchange at SWGs among interested donors, the United Nations and the World Bank, duplication of effort has been largely avoided and development assistance more effectively coordinated to meet priority needs identified by the Palestinian Authority.

Also at the November 1994 Brussels meeting referred to above, the AHLC established the Joint Liaison Committee. The JLC provides a forum for discussing economic policy and practical matters related to donor assistance. The JLC is comprised of the Palestinian Authority as Gavel Holder, Norway, in its capacity as Chair of the Ad Hoc Liaison Committee, as Shepherd; the United States, the European Union; and the United Nations and the World Bank as joint Secretariat. Japan and the International Monetary Fund also take part in JLC meetings, as does Israel. In certain respects, the JLC functions as an AHLC Ôon the groundÕ, in which policy matters of immediate concern may be discussed between the Palestinian Authority, the Government of Israel, major donors, and the multilateral institutions. Discussions and recommendations of the JLC are reported to both the AHLC and the LACC.

Preface

This report provides a project-by-project overview of donor-funded activities in the West Bank and Gaza Strip since the signing of the Declaration of Principles on 13 September 1993. The report is a revision of the overview published in July 1996. With demand higher than expected, copies of the July report were quickly exhausted and it was decided to print additional ones. At the same time, the United Nations Special Coordinator in the Occupied Territories (UNSCO) and the World Bank sought updated information from donors and general comments from readers which have been integrated into this revised report. Similar to the July 1996 report, the revised edition describes the coordination mechanisms that have been established to facilitate the development effort in the West Bank and Gaza Strip and provides information on donor-funded activities. The report is structured around the twelve Sector Working Groups of the Local Aid Coordination Committee. For each sector, general background information is provided, followed by an overview of the activities of the Sector Working Group and a list of donor-funded projects undertaken since October 1993. The report has been assembled under the guidance of the SWG Shepherds and Palestinian Authority Gavel Holders by UNSCO and the World Bank in their role as co-chair and co-secretariat of the Local Aid Coordination Committee.

I.1 Coordination Mechanisms: An Overview

Following the 1 October 1993 Conference, the Ad Hoc Liaison Committee (AHLC) was established by the Multilateral Steering Group of the multilateral talks on Middle East peace. The AHLC is the principal coordination mechanism on policy and political matters related to the development effort in the West Bank and Gaza Strip. The members of the AHLC are: Canada, the European Union, Japan, Norway, Russia, Saudi Arabia and the United States. Israel and the Palestinian Liberation Organization are fully associated members of the AHLC, as are Egypt, Jordan, Tunisia and the United Nations. The Chair of the AHLC is held by Norway and the Secretariat is the World Bank. Since its establishment, the practice of the AHLC has been to meet in both formal and informal sessions approximately three times per year.

The all-donor forum at the international level is the World Bank-led Consultative Group. After consultations with the Chair of the AHLC, the World Bank calls for and chairs meeting of the Consultative Group. These meetings are primarily fora for addressing technical aspects of the development effort and for committing pledges to specific programmes of assistance.

At a meeting in Brussels on 29 and 30 November 1994, the AHLC decided to devolve certain aspects of the donor coordination process to the level of representatives located in the West Bank and Gaza Strip. This step was taken at the suggestion of the United Nations Special Coordinator in the Occupied Territories and in recognition of the need to accelerate the development effort and increase efficiency. To achieve this, the AHLC established the Local Aid Coordination Committee (LACC), which is composed of the Palestinian Authority and all donors to the Palestinians with representation in the area. Approximately 30 donors, including Israel, are represented at the monthly meetings of the LACC. The co-chairs of the LACC are Norway, in its capacity as Chair of the AHLC, the Office of the United Nations Special Coordinator in the Occupied Territories (UNSCO) and the World Bank. The latter two act as joint secretariat to the LACC. The International Monetary Fund also participates in the meetings. The LACC, which reports to the AHLC, provides a forum on the ground for discussing the main challenges and priorities in the development effort. Through these discussions, consensus often emerges on the main issues and means are suggested for addressing them.

At its first meeting in December 1994, the LACC agreed on the establishment of twelve sectoral sub-committees, known as Sector Working Groups. These working groups seek to direct donor assistance towards the needs and priorities identified by the Palestinian Authority, with input from the United Nations and the World Bank. Each working group is composed of all donors interested in that particular sector, with one donor representative acting as Shepherd of the group; representatives of relevant Palestinian Authority ministries, as Gavel Holders; and the World Bank and/or the United Nations as Secretariat. The twelve working groups cover: agriculture, education, employment creation, environment, health, infrastructure and housing, institution-building, police, private sector, public finance, tourism, and transport and telecommunications. The sector working groups provide an opportunity for focussed examination of the sectoral priorities and programmes of the Palestinian Authority and of related technical issues. As a result of the information exchange at SWGs among interested donors, the United Nations and the World Bank, duplication of effort has been largely avoided and development assistance more effectively coordinated to meet priority needs identified by the Palestinian Authority.

Also at the November 1994 Brussels meeting referred to above, the AHLC established the Joint Liaison Committee. The JLC provides a forum for discussing economic policy and practical matters related to donor assistance. The JLC is comprised of the Palestinian Authority as Gavel Holder, Norway, in its capacity as Chair of the Ad Hoc Liaison Committee, as Shepherd; the United States, the European Union; and the United Nations and the World Bank as joint Secretariat. Japan and the International Monetary Fund also take part in JLC meetings, as does Israel. In certain respects, the JLC functions as an AHLC Ôon the groundÕ, in which policy matters of immediate concern may be discussed between the Palestinian Authority, the Government of Israel, major donors, and the multilateral institutions. Discussions and recommendations of the JLC are reported to both the AHLC and the LACC.

I.2 The Ad Hoc Liaison Committee

The Ad Hoc Liaison Committee (AHLC) was established by the Multilateral Steering Group of the multilateral talks on Middle East peace in the context of the 1 October 1993 Washington Conference to support Middle East peace, at which approximately US$ 2.4 billion was pledged by donor countries in support of the Palestinians.

The Ad Hoc Liaison Committee was established to:

Key needs addressed by the AHLC are: relief, rehabilitation, medium and long-term investments, Institution building, and infrastructure. Assistance should take account of the regional context.

The AHLC consists of representatives of Canada, the European Community, Japan, Norway, Russia, Saudi Arabia and the United States. The Palestine Liberation Organization and Israel will be fully associated members of the AHLC, as will Egypt, Jordan, Tunisia, and the United Nations. The seven full members of the group have equal status. The Chair of the AHLC, held by Norway, may call meetings as necessary. The Committee operates on the basis of consensus. Meetings of the AHLC are held at the World Bank's European office in Paris.

The AHLC asks the Israelis and Palestinians to keep the Committee informed of the work of the Israeli-Palestinian Economic Cooperation Committee. The AHLC will operate in cooperation with the relevant Palestinian institutions, such as PECDAR, the joint mechanisms of the Israeli Palestinian Declaration of Principles and consistent with Palestinian priorities.

The World Bank – complemented by officers on secondment from institutions with expertise and operational experience in the region – acts as a Secretariat to the AHLC. The Secretariat carries out on an ongoing basis the operational functions assigned to the AHLC. Under the guidance of the AHLC, the Secretariat acts to ensure transparency. The Secretariat is the recipient of information on donor activities in order to fulfil its role.

A Consultative Group will be established. The World Bank can, as appropriate, after consultations with the Chair of the AHLC, call for and chair meetings of the Consultative Group.

A data base of initiatives, projects and other activities will be set up and made available to the AHLC, donors and recipients.

Organizations with expertise and a presence in the West Bank and Gaza, including the United Nations Agencies, will continue and augment their activities in consultation with the Palestinians.

The Working Groups of the multilateral talks of Middle East peace will continue to be concerned with regional issues in support of the overall strategy of economic development in the region.

I.3 The Local Aid Coordination Committee

At Brussels in November 1994, the AHLC established the Local Aid Coordination Committee (LACC) and the Joint Liaison Committee at the suggestion of the United Nations Special Coordinator in the Occupied Territories. At that time, two co-ordination mechanisms operated at the level of the donor capitals: the Ad Hoc Liaison Committee (AHLC) and the Consultative Group (CG). In order to accelerate the development effort and increase efficiency, aid co-ordination at the local level was also needed. The AHLC therefore agreed that international level co-ordination would be supplemented by a Local Aid Co-ordination Committee (LACC) and a Joint Liaison Committee (JLC) of donors and recipients.

Donor coordination would henceforth take place at two levels:

o An AHLC meeting at a senior level would take place approximately every six months;

o LACC meetings at the level of local aid experts representing AHLC members and other donors as appropriate will take place at least once a month or as frequently as necessary. Those without local representatives would be invited to send representatives from their capitals. Approximately thirty donor representatives attend the monthly meetings of the LACC.

The Chair of the AHLC chairs the LACC together with the Resident Representative of the World Bank in the West Bank and the Gaza Strip and the United Nations Special Coordinator in the Occupied Territories, as co-chairs. The offices of the World Bank and United Nations Special Coordinator perform the secretariat function of the LACC. The LACC co-chairs are mandated to represent the donors vis-a-vis the parties.

The LACC chair will report on the Committee's activities to the Chair of the AHLC and to the Consultative Group through the World Bank. The Palestinian Authority appointed a counterpart committee of three representatives at the Ministerial level; one of the members is from PECDAR.

I.4 The LACC Sector Working Groups 

The Local Aid Coordination Committee established twelve Sector Working Groups (SWGs) in December 1994. The SWGs promote and coordinate activities of the donors in various sectors according to Palestinian Authority priorities. There are twelve SWGs: agriculture, education, employment creation, environment, health, infrastructure and housing, institution building, police, private sector development, public finance, tourism, and transport and telecommunications.

The membership of each SWG includes representatives of the Palestinian Authority and representatives of those donors involved, or those intending to be involved in the respective sector. A Palestinian Authority representative is the Gavel Holder of the SWG and different donor representatives act as Shepherds for the various SWGs. The secretariat functions are carried out by the World Bank and the Office of the United Nations Special Coordinator (UNSCO). UNSCO, in turn, has delegated most secretariat functions to specialized United Nations organizations with a presence on the ground, namely, ILO, UNDP, UNICEF, UNRWA and WHO.

The SWGs operate on the basis of the terms of reference of the Ad Hoc Liaison Committee (AHLC) and the Local Aid Coordination Committee (LACC), and decisions made in these bodies.

The Shepherds of the Sector Working Groups, in order to achieve efficiency, practicality, accountability, transparency and coordination in the sector assistance program, lead the SWG in:

The Shepherds, in consultation with the Palestinian Authority representatives, call for regular meetings and suggest agenda. The Shepherds bring to the attention of the Chair of the LACC any issues requiring the Chair's attention according to its mandate. Donor members of the SWG will see that the Shepherd is a point of contact for relevant missions to the field. The Secretariat draft reports and programmes and also carry out other relevant work within its resources. The Secretariat also prepares minutes following each meeting which are submitted to the Shepherd, who in turn presents them to the Chair of the LACC.

The Chair of the LACC reports on the activities of the SWGs to the members of the LACC, AHLC, and the Consultative Group through their respective chairs.

* Key-donor funding meetings for the proposed Police Academy. 

I.5 The Joint Liaison Committee

The Joint Liaison Committee (JLC), as noted above, was established by the Ad Hoc Liaison Committee at the Commit  eting at Brussels in November 1994. The membership of the Joint Liaison Committee was composed of the Chair of the Local Aid Coordination Committee (Norway) and the two co-chairs (the United Nations Special Coordinator in the Occupied Territories and the Resident Representative of the World Bank) and three ministerial representatives of the Palestinian Authority. The JLC was formed to overcome problems which might arise in donor-recipient relations.

At its meeting in Paris in April 1995, the Ad Hoc Liaison Committee, at the suggestion of the United Nations Special Coordinator in the Occupied Territories, agreed to include in the JLC representatives from the European Union and the United States, in addition to the original members. The JLC was also reorganized so that the Chair of the Ad Hoc Liaison Committee would assume the role of Shepherd, with a representative of the Palestinian Authority holding the gavel at JLC meetings. At the first meeting of the JLC, held in Gaza in May 1995, it was decided to invite the participation of representatives from Israel and Japan.

The JLC has a standing agenda consisting of donors’ and recipient’s reports on the status of projects, and other related issues. A number of permanent agenda items are also reported on and discussed at each meeting as follows:

The results of JLC meetings are reported to the AHLC by the Chair of the LACC.

At the April 1995 meeting of the Ad Hoc Liaison Committee, a Tripartite Action Plan on Revenues, Expenditures and Donor Funding for the Palestinian Authority was signed by Norway, in its capacity as AHLC Chair on behalf of the donors; the Palestine Liberation Organization for the benefit of the Palestinian Authority; and the Government of Israel. Under the Tripartite Action Plan, each of the three signatories agreed to undertake certain commitments and meet certain targets in relation to the development effort. A revised Tripartite Action Plan signed by the three parties at the January 1996 ministerial-level Conference on Economic Assistance to the Palestinian People. The Joint Liaison Committee is the forum in which the implementation of the Tripartite Action Plan is monitored and discussed.

I.6 United Nations Coordination: The Priority Sector Groups

At the United Nations Inter-Agency meeting held in Gaza on 7 and 8 December 1994, the plenary identified six priority areas for the United Nations to urgently coordinate activities in order to facilitate in the development of an integrated United Nations Strategy for the benefit of the Palestinian people. The United Nations Priority Sector Groups (PSG) parallel the sector working groups in the following six fields: education, employment creation, health, infrastructure and housing, institution building and the private sector. United Nations Focal Points were identified at this time and appointed by the United Nations Special Coordinator. The resulting symmetry between the donor coordination and United Nations coordination structures provides United Nations an opportunity to develop a unified and integrated strategy for social and economic development that answers Palestinian Authority identified needs and takes into consideration donor concerns.

The six priority sector groups were established around the following guidelines:

United Nations Inter-Agency Meetings

The first United Nations Inter-Agency Meeting was held in Gaza at the Shawwa Cultural Centre on 6-7 December 1994.

The second United Nations Inter-Agency Meeting was held in Gaza at UNSCO on 15-16 June 1995.

The third United Nations Inter-Agency Meeting was held in Gaza at UNSCO on 15-17 April 1996.

II. The Development Effort: Measuring Results

The total amount of funds available to support social and economic development in the West Bank and Gaza Strip and assist the Palestinian Authority was US$ 2.984 billion as of September 1996. As noted above, donors had pledged about US$ 2.4 billion at the 1 October 1993 Conference to Support Middle East Peace. The time-frame for these pledges ranged from one year to five years, depending on the donor. Donors that pledged for less than five years have announced their pledges on an annual basis. This is the main reason why the total amount of funds has increased over the last three years, in addition to pledges by countries that either had not participated in or had not pledged at the October 1993 Conference.

In their role as joint-Secretariat of the Local Aid Coordination Committee and of the Sector Working Groups, UNSCO and the World Bank have, in each of 1995 and 1996 assisted the SWGs in compiling an overview of donor-funded projects. Information is collected on a project by-project basis in an effort to provide as complete a picture as possible of the status of donor funds. This exercise is undertaken to enable all the parties in the development effort to examine progress to date as well as consider how donor funds should be used in future years. The Reports of the Sector Working Groups that follow cover the period from 1 October 1993 to 1 October 1996. Most of the information was gathered between March and May 1996, with revisions sought in September 1996.

According to information provided by donors, there has been an impressive range of activity undertaken in the West Bank and Gaza Strip in three short years. Of the US$ 2.984 billion noted above, approximately US$ 2.241 billion has been committed to specific projects or activities and about US$ 1.180 billion of this has been disbursed by donors.

The pie-chart below shows how donor funds are being used in the West Bank and Gaza Strip:

II.1 Summary of Results

II.2 Methodology for Measuring Results 

In the October 1995 edition of "Partners In Peace", sectoral matrices were produced by the SWG Shepherds or, in the case of Education and Police, the SWG Secretariats. These matrices provided information on a project-by-project basis for donor-funded activities in each of the 12 sectors covered by the working groups. Noting the time consuming effort of compiling a matrix, and responding to suggestions by donors and the Palestinian Authority for a more standardised approach, UNSCO offered to support the SWGs in revising the matrices in 1996.

The 1996 Reports of the Sector Working Groups that follow offer a detailed overview of donor funding since October 1993. However the Reports cannot claim to be a complete picture. This is because it was not always possible to obtain full funding information on activities supported by donors without local representation. In addition, information concerning all activities tends to lag behind actual progress on the ground. Thus, the situation is, in nearly all cases, better than that reflected in the Reports.

UNSCO first contacted Shepherds and the Ministry of Education (having taken over UNICEF's matrix efforts) to enquire if assistance was desired. All were in need of assistance except for the Ministry of Education, which had the institutional capacity to update the sectoral matrix. The Ministry followed, where possible, the specifications for standardization suggested by UNSCO. There is no matrix for the SWG on Transport and Telecommunications, as substantial amounts of donor funds exclusively devoted to this area have not been reported. Road-related projects which might have been included in this sector were instead reported under the Report of the Sector Working Group on Infrastructure and Housing.

Collection Process

Beginning with information from the matrices of 1995, UNSCO sent several requests to LACC members for confirmation of projects listed and for clarification of commitments. To this UNSCO added any updated information presented to Shepherds during the Sector Working Group meetings. Following written requests, UNSCO arranged for meeting with individual donors to ensure accurate presentation of project details. Communication by telephone and fax was used in cases where donor offices were located in the Gaza Strip or Tel Aviv. UNSCO returned to individual donors once a draft overview of donor assistance was ready for final feedback and comments. The entire process took two and a half months.

Data

The sectoral matrices portray donor commitments following the 1 October 1993 Conference to Support Middle East Peace. In most cases, the term "commitment" is defined as a specific project agreement having been signed or, at minimum, an implementing agency having been chosen to implement a specific amount of donor funds in an ongoing activity. The projects listed in the matrices may be completed, ongoing or even planned. Those marked "planned" under the "committed" column refer to projects for which commitments were highly probable, although project agreements were awaiting signing. The projected funding costs of planned projects are not included in the calculations of total commitments.

Donors were asked their preference for projects which clearly could be placed in more than one sectoral matrix. However, once counted in a "primary" matrix funding total, they would again be included in secondary sectors without funding counted, e.g., <see Institution Building (US$ 245,000)>.

Since the categorization of projects was channelled through the twelve sectors identified by the LACC for donor coordination working groups, some projects did not clearly correspond to any of the designated sectors. These projects were classified under the institution building matrix after noting that almost all of these additional projects had, to some extent, an institution building objective. Such projects include support to elections, to the rehabilitation of ex-detainees, children/youth and culture related projects, integrated rural development, democracy and governance projects.

1996 Pledges

Data collection for this matrix was provided by donors to the World Bank, as Secretariat to the Ad Hoc Liaison Committee, for an update produced by the World Bank in August 1996. Since then, UNSCO and the World Bank have received further clarifications. This matrix has been included because it reflects the total pledges made at the 9 January 1996 ministerial Conference on Economic Assistance to the Palestinian People held in Paris.

The report on 1996 pledges indicates those pledges that had been committed to specific projects by the time of publication. A portion of 1996 pledges remain uncommitted. Where 1996 pledges have been committed, these commitments are included under the appropriate sector report. Pledges not yet committed to specific project activities or which were reported only earmarked for multi-sectoral activities without a sectoral breakdown, were not reported in the SWG matrices. 

Definition of terms used in the Sector Working Group Reports

Donor:

The donor country or donor organization supporting a specific project. In cases of co-financing, the secondary donor country is mentioned in the project description column between brackets, e.g., < (See Italy)>.

Project Description/Location:

This includes the project title and, where information was provided, a brief description of

the project. Location is indicated by the following abbreviations:

WB – West Bank

GS – Gaza Strip

WBGS – West Bank and the Gaza Strip

City and/or district is included if provided.

Category:

A self-explanatory legend, describing the acronyms of each heading, are placed at the bottom of each page.

Executing Agency/Contact Person:

This usually denotes the agency administering the funds. Where available, names and telephone numbers of persons directly in charge of implementation are mentioned. The Palestinian Authority or executing organization is included in cases of bilateral assistance. For multilateral assistance, the contractor or international organization is listed. The acronym "NGO" is stated for assistance from or channeled through non-governmental organizations.

Counterparts/Contact Person:

For multilateral and bilateral assistance, the relevant Palestinian Authority Ministry or agency is listed.

Starting Date:

Projects which began no earlier than October 1993. In most cases, the data reflects the actual signature date of the project agreement.

End Date:

Actual or projected completion date.

Disbursed:

This figure represents money transferred out of donor bank accounts to the implementing agency. The figure therefore reflects what the donor has disbursed to date, but not necessarily the implementation status of the project. Any discrepancy in donor disbursement figures may be due to differing fiscal or calendar year, and/or disbursal time lines.

Committed:

This column heading refers to the actual contract or agreement value for the specific project or activity. In cases of co-financing, the figure represents only the specified donor contribution and not the total project amount.

Agriculture: Sectoral Profile 

Agriculture is the main sector of the Palestinian economy, generating about one-third of GDP, and accounting for 25 per cent of exports.

Since 1986, agricultural production has been expanding despite an environment of declining external markets, a constrained regulatory framework, a declining level of public services and restricted access to natural resources. In general, direct export of agricultural products has faced high export costs as a result of administrative, taxation and security measures, which have formed disincentives to expanded investment in these sectors. Price fluctuations, insecurity as a result of closures and lack of uninterrupted access to external and internal markets, have contributed to the inability of the agricultural export sector to develop to full economic – and job-creating – potential.

Despite these structural problems, the West Bank and Gaza Strip are endowed with ideal temperatures for the cultivation of many varieties of crops and fruit. In addition, the technological basis for improved rain-fed and irrigated production is well established. Major field crops include wheat, barley, lentils, chickpeas and sesame. Vegetables are primarily produced in the coastal, semi-coastal and the Jordan Valley zones, utilizing different production systems, including rainfed conditions, open field irrigation, plastic green houses and plastic tunnels. Despite its small size, the Gaza Strip produces 48 per cent of Palestinian vegetables. Citrus production has traditionally been the mainstay of the agricultural sector in the Gaza Strip, but its importance is declining due to increasing demands for water and restrictions on exports to international markets.

The majority of olive trees are grown under rainfed conditions in Jenin, Tulkarem, Nablus, Ramallah and Hebron. Olives constitute 70 per cent of fruit trees and accounted for 27 per cent of the total agricultural production between the years 1986-1990. The remainder was made up of vegetables 33%; citrus 9%; field crops 7%; grapes 6%; bananas 5%; figs 4%; melons 3% and other fruits 7%. However, the share of olives in the total value of agricultural output varies considerable due to the highly cyclical nature of production, which may fluctuate between 20,000 and 100,000 tons per year. The economic viability of the crop has become increasingly marginal, productivity is low, and input costs, notably labour, have increased.

Palestinian agriculture still faces challenges, allowing scope for donor intervention. The current institutional infrastructure cannot address the needs of future development. There is a shortage of credit facilities, an absence of uniform legislation, restricted access to rangeland, and insufficient laboratories and field stations to sustain operations. In the longer-term, water, and to a lesser extent, land constitute the main constraints to growth.

Sector Working Group on Agriculture

Introduction

In the Sector Working Group (SWG) on Agriculture, the Shepherd is Spain, the Gavel Holder is the Palestinian Authority Ministry of Agriculture, and the Secretariat is UNDP. The SWG is supported by organizational meetings between the Shepherd, Gavel Holder and Secretariat.

Background 

Initial meetings of the SWG on Agriculture were devoted to the exchange of information including the discussion of priorities and obstacles facing agricultural development. The group has since expanded its focus to encourage fund-raising and to hold meetings on core issues such as veterinary medicine and agricultural credit. Representatives from non-governmental organizations (NGOs) are invited.

The Shepherd and Secretariat encouraged the Ministry of Agriculture, as Gavel Holder, to define priorities under expanding autonomy and to prepare a master plan for the sector. These efforts resulted in a presentation, at the 20 November 1995 meeting, of the Ministry of AgricultureÕs report Agricultural Development Strategy for Palestine.

The priorities included:

At the April 1996 meeting, the group discussed the development of Experimental Stations and potential funding for high priority, labour-intensive projects in response to the unemployment crisis resulting from the recent border closures. The SWG initiatives addressed multi-sectoral development issues linking sectoral priorities with employment generation, infrastructure, environment, institution building, and the activation of the private sector. They included:

The Gavel Holder remains concerned about a lack of funding for institutional and infra structural needs of the sector. In addition, private sector investment in agriculture has been disappointing. The Shepherd and Secretariat continue to work with the Gavel Holder to identify unfunded priority projects.

About the Matrix 

The matrix was originally prepared by the Shepherd (Spain) and updated by UNSCO. It is clear from the revision that bilateral donor support of technical assistance has increased in the last year. Funding information was updated with donor inputs received in the SWG and through individual meetings conducted between UNSCO and the donor countries.

Education: Sectoral Profile 

Democracy and good governance must be built on the solid foundation of an informed and literate citizenry. Investment in education is fundamental to economic growth, with the rate of return highest for investment in primary education.

Primary and secondary education is provided by the Palestinian Authority (1,084 schools), UNRWA (259 schools) and private institutions (131 schools). In 1994-95, 238,000 students were enrolled in the Gaza Strip and 345,000 in the West Bank (excluding private schools). There are eight universities, all private, with an enrollment of 29,508 students in the 1994-95 academic year, and 21 community colleges with 2,500 students.

The task of restructuring and developing the educational system inherited by the Palestinian Authority in 1994 is enormous. Infrastructure was deteriorated and facilities had failed to keep up with population growth, leading to double and sometimes triple shifting in many schools. The curriculum differed between the West Bank and Gaza Strip and vocational training and extracurricular activities were neglected. In addition, academic standards were affected as a result of the Intifada and Israeli countermeasures.

Approximately 30 per cent of teachers are teaching in fields for which they are not properly trained. Results from the 1991 International Assessment of Education Progress study indicate poor pedagogical skills in science and mathematics teaching. Given the demographic profile of the West Bank and Gaza Strip, an estimated 40 new schools need to be built each year. In the realm of higher education, the imbalance between enrollment in universities on the one hand, and technical and community colleges on the other, needs to be adjusted.

Since 1994, the Ministry of Education and Higher Education has concentrated on building up its capacity in educational and management planning. Steps have been taken to unify the West Bank and Gaza Strip educational systems into a uniform Palestinian curriculum. Additions to the present Jordanian and Egyptian curricula were introduced in Arabic, history and civic education to overcome the lack of Palestinian specificity. A major achievement was the organizing of the secondary school matriculation exam, the Tawjihi.

The Ministry of Education and Higher Education is directing its attention towards long-term development. The Ministry's capacity in policy formulation and planning must be developed and its management, monitoring and planning capacities need to be strengthened. Vocational and technical education should become more oriented towards local labour market needs, rather than the mere transfer of knowledge or the mastery of a craft or profession. There is a need to set new policies for the development of programmes in vocational and technical education as well as appropriate training modules.

Special Education requires particular attention. In 1990, there were 37 educational institutions in the West Bank and Gaza Strip for handicapped students. These centres are understaffed and underfinanced and specialized training is needed. Little has been done to address the increase in mental health problems which have arisen as a consequence of the Intifada.

Sector Working Group on Education 

Introduction 

In the Sector Working Group (SWG) on Education, the Shepherd is France, the Gavel Holder is the Palestinian Authority Ministry of Education and Higher Education, and the Secretariat, on an interim basis, is UNICEF until UNESCO establishes a field office. Larger, donor-attended meetings are now arranged every two months while frequent meetings of a small "steering committee" consisting of France, the Ministry, UNICEF and UNSCO have proved essential in strengthening the group's direction and strategy.

Background 

Since its establishment in January 1995, the SWG on Education has achieved significant progress in the dissemination and sharing of information, and in helping to define Palestinian priorities for donor fundraising. Representatives from the non-governmental organization (NGO) network on education and the Ministry of Youth and Sports have been invited to participate. The Gavel Holder credits the SWG forum with heightening donor awareness of the Ministry's needs and with facilitating in public relations and fundraising efforts of the Ministry. The SWG has helped Ministry staff in creating a data base concerning donations to and projects in the sector.

The Gavel Holder has encouraged the SWG meetings to focus on topics including presentations on Palestinian NGO priorities in education, the status of female education, and coordination mechanisms supported by the Ministry of Planning and International Cooperation. Future topics will focus on technical and vocational education, the World Bank strategy on Education, and donor experience in working with the Palestinian Authority. All meetings include updates from the Ministry of Education on sectoral priorities and donor contributions. In February, the Ministry organized a field trip for donors to view first hand the situation of schools in the West Bank.

The following Palestinian education priorities have been defined by the Gavel Holder:

* School rehabilitation and construction: To solve the problem of over-crowded schools and to accommodate the natural population growth rate of 4%, 40 new schools are needed each year. Estimated cost: US$ 230,000,000;

* Provision of schools with equipment and educational materials. Estimated cost: US$ 5,000,000;

* Assistance to higher education, in particular: a) US$ 15 million to cover the budget deficit of the universities, b) capital investment of US$ 50 million for expansion of facilities and c) US$ 8 million to upgrade existing facilities such as labs and workshops;

* In-service teacher training: Programmes to improve teaching standards of 16,000 teachers currently employed in the public sector. Estimated cost: US$ 3,000,000;

* Curriculum Development Centre: Production of the first set of Palestinian textbooks. Estimated cost: US$ 5,000,000;

* Planning and information systems: Analytical studies and policy formulation at an estimated cost of US$ 905,000, and an additional US$ 280,000 for the purchase and setting up of three computer units necessary for examination records, finance and administration;

* Development of vocational education and industrial secondary schools. Estimated cost not yet available;

* Community colleges: New workshops, equipment, training of instructors and renovation of buildings. Estimated cost: US$ 3,500,000;

* Recurrent expenses of the Education sector: Costs in the education budget which the Palestinian Authority cannot cover: US$ 30,000,000.

The Ministry of Education continues to be constrained by a highly restricted budget unable to meet even the most urgent costs of running a deteriorated school system. No significant funds exist for sectoral development. The SWG is committed to consolidating donor activity and to supporting capacity building efforts in the Ministry of Education to increase its absorption capacity.

The Gavel Holder has found the SWG a valuable forum for informing donors of education priorities and for encouraging donors to consider proposals for multilateral and bilateral support. The Gavel Holder has also assumed responsibility for compiling the donor-funding matrix. The Shepherd of the SWG on Education continues to coordinate and facilitate donor needs in the sector.

About the Matrix 

The matrix was originally prepared and updated by UNICEF until last autumn, when the efforts were transferred to the Ministry of Education as Gavel Holder. The Ministry receives information through individual meetings with donors and also through the SWG. UNSCO relayed to the Ministry any information it received regarding the education sector.

Projects relating to the building and renovation of schools are accounted for in this matrix and are only referenced in the infrastructure matrix. 1996 education rehabilitation projects, mainly the construction of schools, amount to approximately US$ 96 million in commitments. Recurrent cost assistance from the European Commission is included in the matrix and again mentioned in the section for Public Finance. The amounts, however, are not double counted in the global percentage analysis.

The matrix focuses on assistance to the Ministry of Education and Higher Education and does not include substantial information of NGO support to education.

Employment Creation: Sectoral Profile 

Both large-scale unemployment and underemployment cause severe damage to the social fabric of Palestinian society and threaten political stability. There are an estimated 20,000 new job seekers each year in the West Bank and Gaza Strip. With one of the world's highest labour force growth rates (nearly 4 per cent), and with nearly half the population under 15 years of age, the Palestinian economy is unable to absorb many of those presently unemployed and is unlikely to accommodate the expected increase in the number of job-seekers in the years ahead. In addition, many of those denied access to the Israeli labour market cannot find work at home.

According to the Palestinian Central Bureau of Statistics, in 1995 the rate of open unemployment was 13 per cent in the West Bank and 31 per cent in the Gaza Strip, with an additional 20 per cent registered as underemployed in the two areas. Due to border closures, Palestinian employment in Israel has fluctuated considerably, decreasing from a daily average of 116,000 in 1992 to 53,000 in 1994 and 29,500 in 1995. The figures had increased to approximately 70,000 in the first two months of 1996, prior to the wave of suicide attacks beginning in late February. The subsequent closure drastically reduced Palestinian employment in Israel; following the gradual easing of the closure, figures had returned to approximately 22,000 by mid-June 1996.

Following the signing of the Declaration of Principles in 1993, the International Labour Organisation (ILO) prepared a `blueprint' for the employment creation sector. An employment generation/public works programme was launched in the middle of 1994 which became known as the `Gaza Clean Up' Campaign. This campaign successfully created approximately 5,000 temporary jobs.

The Palestinian Authority has agreed to set up an inter-ministerial commission to guide and oversee the implementation of a comprehensive Palestinian Employment Programme (PEP). The PEP should combine both long-term policies and short-term programmes to address some of the immediate symptoms of unemployment. All components must aim at closing the employment gap, and producing income-earning opportunities for all, including the long-term unemployed. To be effective, the PEP should be developed as an integral strategy, embracing employment generation, private sector development and institution building.

As a response to the recent closures of the West Bank and Gaza Strip, another emergency employment programme has been created. Phase I, direct-hire jobs, was mainly directed at cleaning operations. The absorption capacity for these types of jobs, however, is limited. Phase II will generate skilled labour with a greater developmental impact. The prompt response of the donor community allowed for a quick start-up of the programme: 14,000 short-term jobs had been created by mid-May.

Sector Working Group on Employment Creation 

Introduction 

In the Sector Working Group (SWG) on Employment Creation, the Shepherd is Sweden, the Gavel Holder is PECDAR, and the Secretariat is shared by UNDP and ILO. The group has relied on small organizational meetings for in-depth discussions concerning employment generation strategies and the identification of labour-intensive, priority projects. These meetings usually include the Shepherd, Gavel Holder, Secretariat and relevant Palestinian Authority Ministries and United Nations agencies. Larger, donor-attended meetings are arranged for information sharing and fund-raising. The frequency of meetings reflects the employment generation needs of that particular period: of late, the SWG has been meeting on a monthly basis.

Background 

The SWG was established in January 1995 in the wake of increased restrictions applied to crossing points between the West Bank and the Gaza Strip and Israel, which had sharply curtailed the flow of Palestinian labourers into Israel. The SWG immediately focused on employment creation proposals in the Gaza Strip, emphasising priority projects which did not require feasibility studies and could therefore rapidly absorb unskilled labour and produce a distinct visual impact. A "first generation" list of projects was identified shortly after the creation of the SWG. Donor response was overwhelmingly positive: over the following months, US$ 30.8 million was committed to creating approximately 5,000 jobs ranging from a period of one month to one year. Evaluations of these funded projects, undertaken on behalf of donors (USAID, Sweden), indicated that the SWG was able to rapidly and adequately identify and propose important projects with a relatively high labour content.

The `second generation' of project proposals, presented in June 1995, reflected the SWG concern to move away from `emergency' projects to sustainable employment programmes which addressed medium and long term development priorities. The SWG, working with the Ministry of Local Affairs, identified projects which would strengthen the underutilised implementation capacity of the Palestinian municipalities, village councils and the Department of Public Works. Working with these institutions, the SWG identified high labour-intensive projects which would have a strong impact on living conditions, especially in the Gaza Strip. The `Paving and Tiling of Roads and Sidewalks' was characteristic of the second generation list, as the project not only absorbed skilled workers, but also provided a visual impact and indirectly generated local production of materials. As a result of this project, two small factories were created to meet ongoing material needs. A network of Palestinian contractors helped to strengthen the implementation capacity of local municipalities and village councils. This has proved invaluable in hastening project implementation.

The `third generation' list of projects was compiled to increase sustainable employment generation projects and to prepare a similar emergency employment programme for the West Bank. The initial list was presented on 7 March, 1996, just days after the imposition of a closure of the West Bank and the Gaza Strip following a wave of suicide attacks in Israel. The closure initially reduced Palestinian labour in Israel to zero, and the Palestinian economy was further hit by a ban on exports to and imports from Israel. The sudden fall in income had a dramatic impact on living conditions, especially in the Gaza Strip.

The list, proposing a over US$ 100 million of unfunded, labour-intensive projects, was divided into immediate (Phase 1) and intermediate (Phase II) projects. Phase 1 projects are generally unsustainable projects with a high labour content, such as cleaning, sweeping and the rehabilitation of municipal infrastructure, which could be implemented within a month. Since March, the Phase I projects through the SWG have created approximately 14,000 short-term jobs in the West Bank and the Gaza Strip.

Phase II projects, which support sustainable job creation with a greater developmental impact, can be implemented within two to three months. Projects characteristic of Phase II include rehabilitation of existing infrastructure such as roads, drinking water networks and schools, and will generate skilled labour with a more lasting contribution to the economy of the West Bank and the Gaza Strip.

The Shepherd, Gavel Holder and Secretariat are intimately involved in the decision making of each list of unfunded projects. None of the proposals chosen for the lists were previously under active funding consideration by donors. Over US$ 109 million has been pledged to projects proposed through the SWG on Employment Generation. 

About the Matrix 

The matrix reflects funding as a result of unfunded projects introduced through the SWG since January 1995. Approximately US$ 25 million of employment generation projects funded by the Holst Fund as also included. These projects were presented by the World Bank and Pecdar, and in coordination with the SWG. A column for "Labour Content" was added to the standardized form as this statistic is central to the overall objective of the SWG work.

Environment: Sectoral Profile

The environmental problems facing the new Palestinian Authority are enormous, especially in the Gaza Strip. According to the Palestinian Environmental Protection Authority's study, Gaza Environmental Profile, the population density of the Gaza Strip's eight refugees camps, which cover an area of not more than 5 km² in total, ranges from 29,000 to 100,000 persons per km². Overpopulation has an adverse effect on living conditions and on the quality of health and social wellbeing of the population.

Years of occupation and neglect have also led to significant degradation of the natural environment, especially in the Gaza Strip. The indiscriminate use of pesticides threatens the quality of groundwater, the only source for drinking water and agriculture. Groundwater is also polluted by uncontrolled waste water disposal and over-exploitation of this resource has lead to increased salinity and the depletion of the aquifer. Salinisation of agricultural soils has lead to decreased crop yields. Unplanned solid waste disposal poses an additional environmental hazard.

In the West Bank, Israeli confiscation policies have placed large tracts of land outside the control of the Palestinian Authority. This has resulted in the destruction of thousands of trees and a reduction in the amount of cultivated land and water available for Palestinian farmers. According to the Ministry of Planning and International Cooperation, Israel is in the process of constructing a new road network to interconnect settlements, which will result in the confiscation of an additional 7,000 hectares of arable land.

Per capita water consumption in the West Bank and Gaza Strip is 127m³ per year compared to 404m³ per year in Israel. Sewage networks service less than 40 per cent of total residential areas. Although sewage disposal feasibility studies have been conducted, projects do not yet provide for sufficient treatment facilities. In the West Bank, such projects are concentrated in the cities, neglecting the majority of the population. Efficient solid waste disposal equipment is lacking and it is estimated that land fill sites would cost US $60 million for the West Bank alone.

However, much has been accomplished since the establishment of the Palestinian Authority (PA), especially in the Gaza Strip where environmental conditions call for greater attention. Ongoing projects include schemes to upgrade the Rafah water supply and sewage disposal systems and solid waste disposal projects for Rafah and Gaza City. A physical planning project for the West Bank and Gaza Strip is also under way. Among the PA's priorities are institution building to enable Palestinians to manage their own environmental systems and the creation of specialized environmental monitoring centres in the West Bank and Gaza Strip to collect data and conduct studies.

Sector Working Group on Environment 

Introduction

In the Sector Working Group (SWG) on Environment, the Shepherd is the Netherlands, the Gavel Holder is the Environmental Planning Department of the Ministry of Planning and International Cooperation (MOPIC), and the Secretariat is
UNRWA.

Background 

The creation of the SWG on Environment was not the first attempt to coordinate sectoral activities in the field. However, it was hoped that this more formal setting would result in greater cooperation and communication. In the first meeting of the SWG, it was decided to temporarily limit the group's focus to issues not included in other SWGs, namely environmental management systems and solid waste.

As Gavel Holder, the Environmental Planning Department (EPD) has identified the following priorities:

Despite donor support from the Canada, Denmark Germany and the Netherlands, funding gaps remain in all of the above areas, most notably in marine pollution control. Last year the Netherlands sponsored a consultant to compile a summary of donor-funded environmental projects in the West Bank and the Gaza Strip. The resulting data assisted the Palestinian Authority in its strategic planning, when its authority was expanded to the West Bank.
The Shepherd and Gavel Holder rely mostly on informal, technical meetings with the most active donors in the sector. The Gavel Holder is planning a larger meeting under the SWG umbrella to brief donors on current activities and key priorities of the Environmental Planning Department.

About the Matrix 

The original matrix was compiled by a consultant funded by The Netherlands, as Shepard. This matrix tended to include all environment-related projects, many of which overlapped with project information included in the Infrastructure and Housing matrix. In order to avoid overlap, the Gavel Holder and Shepherd advised UNSCO to include in its revision projects relating only to the sub-sectors of solid waste and environmental management.

Health: Sectoral Profile 

The health sector in the West Bank and Gaza Strip was under the jurisdiction of the Israeli Civil Administration until the Palestinian Authority (PA) assumed overall responsibility for health in the Gaza Strip and Jericho in May 1994, and most of the West Bank in December 1994. Following the establishment of the Ministry of Health, health matters are being addressed with reference to the needs and expectations of the local population. The PA has made commendable progress in implementing its Interim Action Plan, based on the National Health Plan, which was developed in consultation with Palestinian health professionals. The PA's achievements during its first year of operation included the setting up of the organizational structure of the Ministry of Health, the development of a number of sectoral priorities and policies, and addressing the sector's requirements in the area of human resources and basic needs.

Life expectancy is 70 years for males and 73.5 for females. The total fertility rate is estimated to be 7.44 children per woman in the Gaza Strip and 5.61 children per woman in the West Bank. The estimated infant mortality rate in 1995 was 32/1,000 in Gaza and 25/1,000 in the West Bank. The major causes of infant mortality are low birth weight and acute respiratory tract infections: the latter is also a leading cause of child mortality. Preventable diseases are under control due to an expanded programme of immunization. The causes of morbidity and mortality in the adult Palestinian population resemble those of societies in transition, with non-communicable diseases on the increase and preventable infectious diseases in decline.

There are 24 hospitals, of which six are operated by the Ministry of Health and the remainder by NGOs and by UNRWA. There are 1.1 hospital beds per 1,000 people. The number of general practitioners is 1/5,000 population; for nurses the figure is 1/1,800. There is geographical disparity in terms of health facilities and personnel, with a tendency to favour urban centres in general, and East Jerusalem in particular. On average, one clinic serves approximately 3,000 people in the West Bank and 11,000 people in the Gaza Strip.

The fragmentation of health services has been a limiting factor in the development of an integrated, efficient health system. The ongoing harmonization of policies between the two main providers, UNRWA and the Ministry of Health, is essential and should be extended to include non-governmental organizations and the private sector. The development and implementation of clearer health policies and a major reorientation of the system is essential for the future. The introduction of strategic planning, and a comprehensive system to regulate, monitor, evaluate and harmonize services remain an important objective. Furthermore, there is the need for a comprehensive and cohesive revision of health legislation, as existing health legislation consists of inherited Ottoman, British, Egyptian and Jordanian laws and Israeli Civil Administration orders, which reflect neither recent trends and developments in health, nor the policy choices made by the Palestinian Authority.

Sector Working Group on Health 

Introduction 

In the Sector Working Group (SWG) on Health, the Shepherd is Italy, the Gavel holder is the Ministry of Health and the Secretariat is the World Health Organization (WHO). Larger, donor-attended meetings are arranged every two to three months and are prepared in smaller, organizational meetings consisting of the Shepherd, the Gavel Holder and the Secretariat. The SWG met most recently in June 1996 after a five month gap due to the absence of a Minister of Health, who was only newly reappointed in late May.

Background 

The SWG on Health has met seven times since its formation in January 1995. From an early stage the SWG proved to be a useful forum in which the Ministry of Health could provide donors an overview of its project and policy development, enabling donors to better plan their programmes.

In each meeting the Ministry of Health, as Gavel Holder, updates donors on current activities, donor funding, and sectoral priorities. The following 1995 priorities were identified by the Minister of Health:

* reenforcing the structure of the Ministry of Health, especially in planning;

* developing norms and standards;

* developing policies to increase access to health care;

* developing policies to make optimal use of knowledge and resources available in the non-governmental sector;

* developing a financial framework to guarantee the sustainability of the health system.

The SWG also encourages presentations on specific areas of interest, including the Palestinian health insurance programme, the creation of the Health Services Management Unit, cooperation between UNRWA health programmes and the Ministry, improvement of hospital infrastructure, and coordination between the Ministry and NGOs. The Ministry has welcomed the presence of a representative of the Israeli Ministry of Foreign Affairs, who was instrumental in placing a Palestinian Liaison Officer at the Ashdod Port to facilitate the delivery of goods.

Priorities for 1996/97 focus on infrastructural development, most notably hospitals, clinics and equipment. However, the Ministry has emphasized that `software programmes', such as technical assistance, should also remain a priority. This concern is supported by the SWG, following the absence of software programmes for the health sector from the 1996 core list of unfunded projects.

In view of "software needs", the Minister has selected the following, general priorities for 1996/98:

* Primary Health Care, with an emphasis on education and prevention, rather than high technology curative services;

* Implementation of the National Health Plan and the Interim Action Plan aimed at rehabilitating the health system and providing a framework for all health activities;

* Emphasis on the quality of care;

* Support and strengthening of non-governmental and private sector sectoral involvement;

* Development of regulations and standards to govern the delivery of all aspects of care;

* Continued development of a national health care system;

* Special attention to women, children, handicapped and poor.

It is suggested that the Ministry of Planning and International Cooperation attend the SWG to establish a consensus with the Ministry of Health on sectoral needs.

About the Matrix 

The matrix was updated jointly by Italy, as Shepherd, and later by UNSCO. From the revised matrix it is clear that donor assistance to the Ministry of Health has increased substantially in the last year. 1996 pledges for "health rehabilitation projects", mainly the construction of hospitals and clinics, total over US$ 22 million.

Infrastructure and Housing: Sectoral Profile 

Infrastructure development is intimately related to the development of every other economic and social sector. Roads, water and sanitation, electricity and communication systems, hospitals and schools all constitute the foundation for the development of education, health care, industry, business and agriculture.

Despite the assistance provided so far to housing, as well as the recent strong growth in private sector activity, the sector remains underdeveloped. The number of units constructed in the past few years falls well short of the present need of 40,000 housing units for the West Bank and Gaza Strip. Only minimal improvements have been effected in existing housing and related services. Comprehensive planning is still lacking as is the establishment of formal financing mechanisms. The price of land remains relatively high, especially in the Gaza Strip, due to the limited availability of land for house construction. However, the Palestinian Authority is currently devising a strategy to promote private sector finance for housing and to increase the supply of affordable housing for the low-income segment of the population.

Existing telecommunication systems are unable to satisfy growing public demand. The private sector is expected to become involved in this area through the recently-established Palestinian Telecommunications Company. The postal service infrastructure is lacking in most respects. The post office network is inadequate and buildings need to be rehabilitated and properly equipped. Although electricity demand for both domestic and industrial use continues to increase, supply remains static. Supply may soon increase due to the involvement of the private sector and donors interested in assisting the construction of a power generator in the Gaza Strip.

The most significant development in the water sector in 1995 was the establishment of the Palestinian Water Authority (PWA) and the adoption of Appendix I, Article 40 of the Interim Agreement, relating to water. The PWA assumed responsibility for coordinating activities in this sector and for establishing priority investment and technical assistance needs. However, despite the considerable support provided by UNDP and UNRWA, services remains deficient. The rehabilitation, upgrading and expansion of existing water supply systems are the main priorities.

Waste water disposal also comes within the jurisdiction of the PWA. Most communities, even in densely populated urban areas, dispose of raw sewage in cess pits, polluting underground aquifers. Sewage treatment plants, where they exist, are inadequate and require extensive rehabilitation and maintenance.

Sector Working Group on Infrastructure and Housing 

Introduction 

In the Sector Working Group (SWG) on Infrastructure and Housing, the Shepherd is Germany, the Gavel Holders of the sub-sector working groups are the Ministry of Housing for the housing sector and the Ministry for Planning and International Cooperation for infrastructure sector. A key role is played by PECDAR and by the Palestinian Water Authority. The Secretariat is shared by the World Bank and UNSCO.

Background 

In view of the broad scope of this cross-sectoral group, the SWG on Infrastructure and Housing initially identified priorities in the areas of energy, housing, sewerage, water, road construction, and the Gaza seaport and airport. It was decided that social infrastructure and projects best suited for the private sector would be channelled to the Private Sector SWG.

SWG meetings have been held to acquaint donors with Palestinian Authority strategies, to present projects undertaken by donors to the rest of the donor community, and to promote funding for unfunded projects. Information sharing has been enhanced by donor response in providing information on current and planned projects as well as by increased logistical support provided by the joint Secretariat.

The concept of Core Group meetings has been developed in order to focus the work of the SWG on specific areas of interest and to promote priority projects. However, the sub-sectors of the Infrastructure sector (sewage, sewerage, air and seaport, water supply, roads and housing), are too vast to allow for a comprehensive discussion of all priority topics. Core Group meetings are restricted to the Gavel Holder, the Shepherd and those donors with a concrete interest in funding particular projects. Core Group meetings were held to promote and raise support for the construction of a Central Waste Water Treatment Plant for the City of Gaza. There has only been one meeting of the housing sector working group.

Furthermore, the complex situation in the sub-sector of Water necessitates the creation of a new structure for donor coordination to be headed by the Palestinian Water Authority (PWA). This issue was discussed in the SWG, and Terms of Reference for a Water Management and Sanitation Task Force are currently being prepared.

In the Gavel Holders view, the credibility of this SWG depends on the extent to which its recommendations are taken into consideration at the decision-making level of the Palestinian Authority and the donor community. The Gavel Holders have stressed the need for a more active fundraising efforts both for larger infrastructural projects and for smaller projects such as feasibility studies and detailed design. Meanwhile, the Gavel Holders encourage discussion on funding, as disbursement remains low.

The infrastructure and housing sectors will remain a top priority for some time to come. The vast field to be covered by the SWG requires a flexible approach, taking into account the interaction of various Palestinian institutions, as well as multilateral and bilateral donors. The technical nature of the issues to be discussed requires an increased participation of technical experts. Therefore, project engineers and visiting missions should be brought into contact with the SWG and its sub-sectors.

About the Matrix 

The Infrastructure and Housing matrix was originally prepared by Germany, as Shepherd, and separated into two matrices reflecting the two separate sectors. UNSCO has updated the matrix with information received through SWG meetings and through individual meetings with donors. The Infrastructure matrix includes projects in water, sanitation, sewage, sewerage and drainage, roads and technical assistance. Projects in the sub-sector of solid waste are not included.

It is evident from the information collected that few infrastructure projects are implemented bilaterally. In most cases a United Nations agency, the World Bank or an external agent is contracted to administer the funds and supervise implementation. Projects relating to capacity building in the infrastructure sector are included in the Institution Building matrix.

A special mention should be made concerning the role of the World Bank in this sector. Through substantive contributions of internal World Bank profits, the International Development Agency (IDA) has committed to this sector US$ 115 for 1995 and 1996. This figure does not include IDA grant money to the Health and Education sectors.

There was little substantive funding increase in the Housing sector.

Institution Building: Sectoral Profile 

The Palestinian Authority (PA) assumed responsibility for central administration in the Gaza Strip and Jericho in May 1994 and was extended to certain defined spheres of central government responsibility throughout the West Bank in December 1994. In addition, during the latter months of 1995, following the signing of the `Oslo II Accords', the PA assumed full self-rule and civil administration responsibilities in most West Bank cities and in many towns and villages. The PA's mandate now covers the majority of the Palestinian population in the West Bank and Gaza Strip, although a much smaller percentage of the actual territory.

Palestinian institutions in the West Bank and Gaza Strip comprise three distinct categories. The central administration has absorbed former employees of the Israeli Civil Administration, staff of the technical and operational departments of the Palestine Liberation Organization and individuals from local non-governmental organizations (NGOs) and from the private sector. In the area of local government, Palestinian public institutions have existed for decades in the form of small to medium-sized village councils, local development councils, and medium-to-large municipal administrations. At the non-governmental level, a large number of Palestinian NGOs, including charitable societies, cooperatives, research centres and community-based organizations have served – and continue to serve – vital public and quasi-public functions.

Institutional development forms a key component of the Palestinian Authority's Preliminary Statement on a Palestinian Development Strategy. This aims to achieve "the development of a new system of governance, and the building of local capabilities and a competent civil service necessary to implement the economic development strategy". Priorities include strengthening the technical, financial and managerial capabilities of municipal governments; enhancing the NGO sector; building up a legal basis for public administration and strengthening the key central institutions relating to commerce and economic management.

The PA's institution-building needs continue to grow as a result of the rapid creation of ministries and public institutions. Due to the urgency of supporting the initial start-up phase of these institutions, the vast majority of donor effort in the area of institution building has focused on capital investments and support for recurrent expenditures. Total donor funding for institution building covers many sectors: a major aim of the PA is to ensure that all development projects incorporate institutional building components.

Sector Working Group on Institution Building

Introduction

In the Sector Working Group (SWG) on Institution Building, the Shepherd is the European Commission, the Gavel Holder is the Ministry for Planning and International Cooperation (MOPIC), and the Secretariat is shared between UNSCO and the World Bank. The SWG has organized small meetings involving the Gavel Holder, Shepherd and Secretariat, and larger, donor-attended meetings every two to three months.

Background

The cross-sectoral nature of institution building demanded that the SWG immediately define objectives, terms of reference and concerns. The European Commission, as Shepherd, prepared a working paper in consultation with donors active in the field. The paper explored donor involvement in institution building, the relationship between the central authority and the non governmental organizations (NGOs), and the extent to which roles and responsibilities of the various Palestinian institutions had been clarified. The information enabled the SWG to concentrate on policy studies, planning and capacity building. Most major donors offered information concerning funds committed to projects solely focusing on institution building, or to projects in which institution building is an essential, but not exclusive, component. The results are compiled in the attached matrix.

The Shepherd and the Ministry of Planning and International Cooperation (MOPIC), as Gavel Holder, welcome presentations on institution building initiatives from Palestinian Authority ministries. In May 1995, the Ministry of Labour and the Ministry of Education discussed a national plan for vocational training as outlined in the paper, ÔTowards a National Vocational Training System’. The paper was produced by the Ministry of Labour in association with the Society for Austro-Arab Relations. More recently, the SWG discussed the NGO draft law, planned activities of the Centre for Institutional Development, donor assistance for organizational development of ministries and training ministry staff, the Palestinian Authority National Plan, ÔAgenda for Social Renewal’ (supported by Sweden and UNICEF), and World Bank study on Institution Building needs. The SWG continues to offer a forum for discussion on institution building work within the Palestinian Authority, as supported by donor efforts, the United Nations and NGOs.

The Shepherd has, in parallel, encouraged the MOPIC to regularly update the SWG on the Ministry’s overall institution building efforts within the Palestinian Authority (PA).
In addition, the Shepherd has welcomed the efforts of Australia in supporting a Ôcore group’ on legal institution building under the umbrella of the SWG. The Australians compiled a matrix on donor assistance in this sub-sector and presented their findings in an SWG attended by donors, the Ministry of Justice and MOPIC. The Minister of Justice and the Australian Am

About the Matrix

The original matrix was prepared by the European Commission, as Shepard, and was separated into a project and a components list. UNSCO has revised the matrix to include projects whose primary objective is to develop the institutional capacity of the beneficiaries. Meetings with individual donors were critical to the completion of the matrix revision.

Some projects did not clearly correspond to any of the designated sectors as categorization of projects was channelled through the twelve sectors identified by the LACC for SWGs. These projects were classified under the institution building sector after noting that almost all additional projects had, to some extent, an institution building objective. Such projects include support to elections, to the rehabilitation of ex-detainees, children/youth and culture related projects, integrated rural development, democracy and governance projects.

The technical assistance funds committed by donors to the World Bank are listed in this sector. These funds, included in the “Technical Assistance Trust Funds” (TATFs), amount to approximately US$ 24 million and are utilized by the World Bank to provide technical assistance in various social and economic sectors. These one-time pledges currently account for 54 completed, ongoing and planned activities. The World Bank did not initially request that the specific information be included.

The Australian Embassy compiled a separate matrix on legal institution building. UNSCO has added any additional projects as reported through individual meetings with donors.

In the Cairo Agreement of May 1994, the number of security personnel which the Palestinian Authority was allowed to recruit for the Gaza Strip and Jericho was 9,000. The Interim Agreement of September 1995 permitted an additional 12,000 personnel for the West Bank. The total number of police had increased to 24,000 by the end of December 1995, in line with the Interim Agreement. Police salaries account for most of the budget in this sector. According to the International Monetary Fund, the wage bill of US $41 million for 1995 was close to the corresponding revised targets set in the second quarterly fiscal report.

The United Nations Special Coordinator in the Occupied Territories continues to coordinate bilateral and multilateral training programmes for the Palestinian Police Force. The main objective has been to gradually transform international training efforts into a longer-term framework to enable the police to undertake its own specialized training. During 1995, the police force programme focused on the need to establish a police academy, to be built in Nablus. The greatest challenge facing the sector is to ensure the transformation of the Palestinian Police Force into a civilian police force accountable to the rule of law. Training courses and gifts-in-kind have been provided by donors to secure this aim.

Sector Working Group on the Palestinian Police Force 

Introduction 

In the Sector Working Group (SWG) on the Palestinian Police Force, the Shepherd is Norway, the Gavel Holder is the Ministry of Planning and International Cooperation (MOPIC), and the Secretariat is UNSCO.

Background 

Donor support is based on bilateral agreements between the Government of Israel and the Palestinian Authority, the latest agreement being the 28 September 1995 Interim Agreement on the West Bank and the Gaza Strip. Support is spread over five branches: Civilian Police, Public Security Forces, Intelligence, Civil Defence Force and the Coastal Police.

The SWG on Police originated as the Coordinating Committee for International Assistance to the Palestinian Police Force (COPP). The SWG has evolved into a forum to exchange of information, to enhance of coordination of Police training courses, and to encourage donor support for the PPF. Meetings were dedicated to updating sectoral priorities, the discussion of funding, improvement on procedures to import gifts-in-kind, and donor support for a proposed Police Academy. Originally, the overall monitoring and auditing of salary disbursements was overseen by the United Nations Relief and Works Agency (UNRWA).

In December 1995, UNRWA's mandate to audit and monitor disbursement of police salaries was not renewed, and salary payments to the PPF have since been made through the centralized budget of the Ministry of Finance. In addition, donor interest in the PPF has, over the last year, moved away from covering recurrent costs and has emphasised training, equipment and, more specifically, the establishment of a Police Academy. Noting this shift in foci, key donors involved in the sector requested that larger SWG meetings meet every two to three months and be regularly supported by smaller planning meetings on specific topics. The decision has been supported by the Gavel Holder.

During the spring of 1996, the Shepherd, Secretariat and key donors met to mobilize funding for the proposed Police Academy. Denmark, Germany, the Netherlands and Sweden have agreed to cover the costs of building and equipping the Academy, while the Palestinian Authority will cover the running costs. The proposed Academy will conduct courses in law, criminal science and investigation, traffic policing, crime prevention, management, languages, human rights and democracy.

The Office of the Special Coordinator in the Occupied Territories (UNSCO) continues to coordinate bilateral and multilateral training programmes for the PPF, including the facilitation and briefing of visiting missions and trainers as well as assisting in the monitoring, follow-up and evaluation of courses. Donors involved in police training schemes agreed in April to support a Joint Team to evaluate past and present police training schemes. The findings should guide both the Palestinian Authority and the donors in defining efficient and prioritized training needs for the immediate future.

In June 1996, the Gavel Holder briefed donors on the current situation, priority needs, and outlined the overall structure of the Palestinian Police Force while the Secretariat updated the group on police training and the status of the proposed Police Academy. In order to continue fund-raising, the Gavel Holder has encouraged donors respond to Palestinian priority needs with possible donor funding.

About the Matrix 

Norway, as Shepherd, has decided not to continue a matrix of gifts-in-kind due to the difficulty in collecting information. UNSCO, in its coordinating role for police training, continues to maintain a matrix on donor-funded police training. The matrix outlines training courses completed since June 1994 under the co-ordination of UNSCO and the country/ organization which sponsored the training.

Donor support of the Palestinian Police Force has extended beyond fund-raising for police salaries. In addition to training, gifts-in-kind have played a crucial role in directing this new force toward building a professional police force.

Private Sector: Sectoral Profile 

One of the major structural imbalances of the Palestinian economy is its low degree of industrialization compared to other economies at similar income levels. The private sector has accounted for about 85 per cent on average of the West Bank and Gaza Strip GDP in recent years. This unusually large share of GDP reflected the absence of a well-developed public sector, prior to the establishment of the Palestinian Authority (PA) in May 1994.

In addition, years of conflict and instability have created an inhibitive investment environment. Since the 1970s, private sector investment has been constrained, partially as a result of prolonged security-related closures. Over recent years, 85 per cent of investment has gone into construction, primarily housing, one of the few secure areas of investment open to local investors. According to the World Bank, over 20 per cent of GDP has been invested in the housing sector, with less than four per cent invested in productive assets.

In its overall development strategy, the Palestinian Authority (PA) has identified the private sector as the principal engine for growth, development and employment generation. Priorities include the creation of an enabling environment and basic infrastructure for industry, agriculture and tourism; the promotion of medium-term lending, particularly for small businesses and for farming activities; and the promotion of private sector participation in infrastructure development.

However, there still exist constraints to the development of the private sector, presenting obstacles to the implementation of the PA's development strategy. Foremost, is the volatile security environment and the frequent closures of the West Bank and Gaza Strip, which severely affects access to supplies, capital and the labour market in Israel, and preventing the export of Palestinian produce, products and services. In addition, the Palestinian trade and finance sectors are characterized by inadequate policy, institutional and regulatory frameworks, and a shortage in manpower capabilities, particularly at the technical and managerial levels. The wide spectrum of loosely assembled and outdated legislative and administrative provisions, governing various aspects of trade and finance, continue to stifle efforts aimed at steering the process of rehabilitation, revival and development of the economy.

In principle, the establishment of industrial zones has been agreed upon by the PA and Israel. However, the actual establishment of these zones will require assistance to ensure productivity and administrative soundness. The problems facing agriculture and tourism, important contributors to private sector development, are outlined in their respective sectoral profiles.

Sector Working Group on the Private Sector 

Introduction 

In the Sector Working Group (SWG) on the Private Sector, the Shepherd is the United States of America, the Gavel Holders are PECDAR and the Ministry of Planning and International Cooperation (MOPIC), and the Secretariat is shared between the World Bank and UNDP.

Background 

After the first meeting in February 1995, USAID distributed a questionnaire concerning donor funding of current and planned projects in the sector. The information collected enabled the Shepherd to identify donor involvement in three main areas: finance, banking and credit; business development and technical assistance; and capital investment. In addition, there are numerous small activities scattered among a wide variety of non-governmental organizations (NGOs), and many activities cover more than one aspect of private sector development (ie: technical assistance, credit).

The SWG has focused primarily on needs small businesses and the development of industrial zones. Two meetings on the first subject were held. The SWG also supported a number of meetings devoted to industrial zones. Missions often report their findings to the SWG, while PECDAR, as Gavel Holder, regularly briefs the SWG on the Palestinian Authority's position as well as problems and progress in negotiations between the Authority and Israeli officials. It is expected that donor involvement in the industrial estates would be channelled through off-site infrastructure projects such as water, waste water, electricity and telecommunications, with an estimated cost of between US$ 20 to US$ 35 million per estate.

In the last SWG meeting to focus specifically on industrial estates, donors were briefed on the findings of a World Bank mission. The World Bank Resident Representative noted that, although Industrial Estates were a top priority for last year, progress on bilateral agreements was slow and that `industrial zones' development had almost disappeared from the core list. With this in consideration, he had cut down the proposed budget for the project. The Gavel Holder expressed serious concern over the Israeli confiscation of lands previously identified as potential industrial zone sites.

Other SWG meetings have dealt with different agenda items. One recurring theme is the need for greater donor coordination on small business development issues and activities. Areas of assistance `overlap' are often identified as a result of information-sharing in the SWG. A related issue, raised most often by the Gavel Holders, concerns the absence of a central point of contact within the Palestinian Authority to monitor and help coordinate donor efforts in this sector. Various solutions have been discussed in the SWG meetings, but no clear resolution has been reached. The Shepherd has instigated new areas for discussion, including credit delivery and credit policy. Both the Shepherd and the Gavel Holder have reiterated their belief that the SWG offers a valuable forum for aid coordination through the exchange of views and information despite the diverse nature of the sector.

About the Matrix 

An initial attempt to compile a matrix on donor funding assistance was frustrated both by a limited response and by problems of definition. These problems appear when donor agencies often employ differing methods of classifying assistance, and in the general classification of projects. The private sector, for example, is viewed as both a beneficiary and as an intermediary for the implementation of donor-assisted initiatives. In addition, there are numerous small activities scattered among a wide variety of non-governmental organizations (NGOs). The Shepherd, however, persisted in developing an information exchange system and in 1996 presented to the SWG a preliminary matrix of activities. UNSCO has entered the information into the standardized matrix form for this publication.

Public Finance: Sectoral Profile 

A sound system of public finance in the West Bank and Gaza Strip is necessary to create an environment conducive to private sector development and to attract external assistance. The most pressing policy challenge for the Palestinian Authority (PA) is to achieve a sustainable fiscal position. The immediate objective is to balance PA recurrent expenditure and revenues. This requires the establishment of an efficient expenditure management system, as well as expanding the tax base. Further attention needs to be given to securing the pre-conditions for attracting non-debt-creating capital inflows, promoting private investments and creating jobs.

Following agreements between the PA and the Government of Israel, each side will administer tax policies within its own jurisdiction, provided that the value added tax (VAT) rate in PA-administered areas does not exceed two percentage points lower than the Israeli rate. Taxes on international trade and VAT on Israeli-Palestinian transactions will accrue to one side or the other according to the destination principle, and such revenues will be cleared between the two sides. The Palestinian Monetary Authority (PMA) will serve as the PA's sole financial agent, official economic and financial advisor, and the manager of the public sector's foreign currency reserves.

The PA has been successful in establishing VAT and income tax departments in the Ministry of Finance. The selection and preparation of public investment projects have also improved. In addition, elements of fiscal and macroeconomic policy formulation and management are being put in place. Current expenditure averages 10.5 per cent of GDP, with expenditure on education averaging 3.3 per cent and health 2.3 per cent.

According to the Ministry of Finance, budgetary developments during October 1995-February 1996 were more favourable than anticipated. However, while most revenue clearances from Israel during this period were transferred to accounts under the control of the Ministry of Finance, some accounts remained outside the authority of the Ministry.

Despite recent progress in tax administration, there is need to move further towards a more structured taxpayer-oriented approach. Institution building measures for 1996 should include the further strengthening of tax enforcement and the implementation of an issue-oriented audit strategy.

The external current account deficit is estimated to have increased to over 30 per cent of GDP in 1995, primarily because of a decline in workers' remittances, equivalent to over 6 per cent of GDP. The trade deficit also increased as a result of the doubling of public sector imports related to the implementation of the public sector investment programme.

At the end of 1995, the Palestinian Authority, with the assistance of the International Monetary Fund, projected that during 1996, real GDP growth would increase by approximately 5 per cent and that the GNP would grow by 6.2 per cent. As a result of the extended closure which began in late February 1996, the Palestinian Authority and the IMF have revised these projections. Depending on the rate at which trade flows return to pre-closure levels and the possibility of labourers returning to their work in Israel, revised projections predict a loss of up to US $800 million in GNP over the course of 1996.

Sector Working Group on Public Finance 

Introduction 

In the sector working group (SWG) on Public Finance, the Shepherd is the United States of America, the Gavel Holder is the Ministry of Finance, and the Secretariat is shared between the World Bank and the International Monetary Fund (IMF).

Background 

A representative from the Ministry of Finance, as Gavel Holder, presents the SWG on a regular basis with a progress report on budgetary developments and prospects, as well as institution building efforts in the area of public finance. IMF and World Bank representatives supplement this presentation, with particular focus on financing issues, including commitments and disbursements of donor funds. In late 1995, the IMF established offices in the West Bank and the Gaza Strip. Recent IMF missions have concentrated on tax administration and structure, expenditure control and budgetary projections, as well as on issues related to the Palestinian Monetary Authority.

The SWG encouraged the Minister of Finance to nominate a high level technical expert to chair the meetings and act as a Palestinian Authority "focal point". The SWG decided that meetings would address specific subject matters, for example, consolidation of the PA budget, preparation of donor-related conferences, analysis of political developments and their effect on public finance, as well as explanation of mission findings by the IMF or World Bank. No meetings have been organized since the autumn of 1995.

About the Matrix 

The SWG has not compiled a matrix on Public Finance. However, in view of the significant support of recurrent costs, UNSCO has added a brief overview of two major examples, the Holst Fund and the European Union. Appreciation is given to the World Bank and the European Union for clarification of the figures.

PLEDGES AND PAYMENTS TO THE HOLST FUND 

(Pledge figures rounded upwards to incorporate exchange rate variability. 80% of funds received pledged January, 1996, the remainder of pledges has trickled in over the course of the year to date.)

( ) Signify funds targeted for Employment Generation Projects and counted in the E.G. Matrix

Since 1994, the European Union has supported the recurrent salary costs of the Ministry of Education and the Ministry of Higher Education. Funds are transferred through the Ministry of Finance to school and university staff employed by the Ministry of Education and the Ministry of Higher Education. As of October 1996, all but US$ 6,850,000 had been disbursed.

In the following table, amounts are given in US$, exchange rate of US$!.3 to ECU 1.

In addition, on 2 October 1996 the European Union Council of Ministers announced an immediate emergency assistance commitment of US$25.6 million to help in alleviating the Palestinian Authority budgetary constraint.

Tourism: Sectoral Profile 

The tourism sector has the potential to stimulate economic activity, generate income and foreign currency earnings and help to alleviate unemployment. Many important historical sites are located in the West Bank and Gaza Strip, in particular in East Jerusalem, Bethlehem and Jericho, and attract significant numbers of tourists.

The World Tourism Organization revealed that of the 2.5 million people who visited Israel in 1995, approximately 2 million visited Jerusalem, 1 million visited Bethlehem and 0.6 million visited Jericho. According to the Palestinian Central Bureau of Statistics, there are 60 hotels in the West Bank and Gaza Strip, primarily in East Jerusalem, totalling some 2,605 rooms and employing approximately 1,300 staff. A number of additional hotels are in the process of being constructed.

As a result of Israel's restrictions on construction activity within the Occupied Territories since 1967, there has been little Arab investment in new hotels and tourist infrastructure. Only four new tourist guide licenses were issued in Bethlehem and Jerusalem during that period and the number of licensed Palestinian tour guides fell from approximately 300 to less than 80. Restrictions on the entry of West Bank Palestinians into East Jerusalem, where 70 per cent of employment in the tourist sector is generated, has also adversely affected the sector.

Since the signing of the Cairo Accords in May 1994, the Ministry of Tourism and Antiquities has opened new offices in Gaza, Jericho, Hebron and Nablus. The immediate priorities of the Palestinian Authority include the formulation of a tourism policy, cross-sectoral initiatives to prepare for `Bethlehem 2000', the bi-millennium anniversary of Christ's nativity, and the rehabilitation of major urban centres. Additional priorities include the preparation of a strategic tourism plan, a tourism investment code and a tourism promotion and marketing strategy. Human resources training, including the training of tourist police and the development of a tourism and environmental awareness programme, is also necessary.

Sector Working Group on Tourism 

Introduction 

In the Sector Working Group (SWG) on Tourism, the Shepherd is Spain, the Gavel Holder is the Ministry of Tourism and Antiquities, and the Secretariat is UNDP. The SWG meets on a quarterly basis and is supported by organizational meetings between the Shepherd, Gavel Holder and Secretariat.

Background 

Private sector investment has remained below expectations and most donor funding has been limited to financing feasibility studies. In response to this situation, the SWG has expanded its forum from one of information-sharing and discussion of obstacles inhibiting sectoral development, to a forum oriented toward fund-raising. Integral to this new role is the definition of sectoral priorities and the identification of unfunded priority projects.

At the December 1995 meeting, the SWG discussed the report `Development of the Tourism Sector in the West Bank and the Gaza Strip', which was prepared by the Shepherd, the Gavel Holder and the Secretariat. The report was based upon a needs assessment conducted by the World Tourism Organization earlier that summer, and outlined three priority initiatives to activate the tourism sector. The initiatives, which addressed multi-sectoral development, included `Tourism policy, Strategic Planning and Institutional Strengthening', `Tourism Planning of Urban Centres' and `Bethlehem 2000'.

During the April 1996 meeting, the Ministry of Tourism, as Gavel Holder, presented an overview of planned activities for the Bethlehem 2000 initiative and a general summary of priority needs for 1996/97. These priorities are supported by specific project proposals and will be presented for consideration by the Palestinian Authority in the development of the 1997 core list of unfunded projects.

The priorities for 1997 are:

* formulation of tourism policy including institutional restructuring and strengthening;

* launching of a cross-sectoral initiative (`Bethlehem 2000');

* tourism marketing;

* stimulation of private sector investment, and the formulation of an investment incentives package.

Spain, as Shepherd, has emphasized that urgent need exist for short-term measures to stimulate private sector investment, while a master plan for medium and long-term development plans remains essential.

Future efforts of the SWG should concentrate on attracting foreign investors to the tourism field, instigating projects, thereby alleviating severe unemployment in the region.

About the Matrix 

The matrix was originally prepared by the Shepherd (Spain) and updated by UNSCO. It is clear from the revision that donor funding of policy oriented technical assistance to the Ministry has increased in the last year. The funding is primarily bilateral. Funding information was updated with donor inputs received in the SWG and through individual meetings conducted between UNSCO and the donor countries.

Transportation and Telecommunications: Sectoral Profile 

Following years of neglect, much has been accomplished in these sectors since the signing of the Declaration of Principles in 1993. The Ministry of Transport and the Ministry of Post and Telecommunications have been established and priorities have been defined for both sectors. Laws, by-laws, and regulations have been implemented in the Ministry of Post and Telecommunications. The main priorities are to develop a Master Plan and to establish a Communications College. Basic equipment is also needed.

A modern transportation system, including roads, an airport and a seaport is necessary for economic growth. A civilian airport is in the process of being completed in Rafah in the Gaza Strip. This airport can handle 350,000 passengers each year and, in its initial stage, the runway can accommodate medium-sized aircraft. There are plans for the establishment of a free trading zone next to the airport to accommodate business needs.

The proposed location for the Gaza port is five kilometres south of Gaza City. The port will generate employment and be the intended site of a free economic zone. The construction of the port may be phased to lessen the financial burden. The first phase will involve building a breakwater, to be followed by the construction of a new multi-purpose container terminal. In the final phase, the main breakwater will be expanded and a new multi-purpose terminal will be constructed. The geographical proximity of the international airport, the Gaza Port and the proposed Mediterranean Coastal Highway should create flexibility for trade and transport. There are also proposals to build a railway network to link neighbouring coastal states and a more ambitious project for a rail system to connect Turkey, Syria, Lebanon, Israel and the Gaza Strip.

Although a number of studies relating to urban transportation planning have been conducted, the land transportation system is underdeveloped. Urban and rural roads are in an advanced state of disrepair and present a significant obstacle to economic development. Several major road network projects have been proposed, including Road No 4 to connect the Gaza Strip with Israel and Egypt. Another project is the North-South Access Road Link to connect the West Bank cities of Jenin, Nablus, Ramallah, East Jerusalem, Bethlehem and Hebron with Israel. Such a road would greatly benefit commerce and agriculture. Other projects include the Main Road Project connecting Jenin-Haifa and Beth Shan-Jericho-Jerusalem and the renovating of the King Hussein Bridge.

The Sector Working Group on Transport and Telecommunications 

Introduction 

In the Sector Working Group (SWG) on Transport and Telecommunications, the Shepherd is France, the Gavel Holder is shared between the Palestinian Authority Ministry of Transport, the Ministry of Telecommunications and Post and PECDAR. The secretariat is UNDP. Meetings are often “split” between the sub-sectors on the same day to allow for substantial focus on each.

Background

During its introductory meeting in February 1995, the SWG defined priorities and introduced donors to the various Palestinian Ministries and departments concerned. Participants agreed to limit the group's focus to practical issues and concrete on project proposals in the areas of telecommunications, post, transportation and the Palestinian Broadcasting Corporation (PBC). Further meetings were initially delayed due to a limited donor response concerning a PECDAR assisted funding questionnaire, and to a lack of substantive project proposals available from the respective ministries and institutions.

Transportation 

During the SWG meetings dedicated to sub-sector of transport, the Ministry of Transport has discussed with donors the most urgent sectoral priorities. In November, the Ministry updated priority project proposals with the following:

The Gavel Holder then prioritised national transport projects to include roads projects, railway projects, freight centres projects, pilot lines projects, seaport and airport projects. The SWG on Infrastructure, in coordination with the SWG on Transport and Telecommunications, has organized more project-specific meetings on the infra structural development of road expansion, the seaport and airport. These meetings have encouraged detailed discussions between the donors, sector-specific ministries and the Ministry of Planning and International Cooperation, as Gavel Holder for the SWG on Infrastructure. The SWG forum has helped to address concern in the donor community over a need to consolidate approaches between Palestinian Authority ministries and other institutions involved in the Transport sector.

Telecommunications: 

Donors were initially concerned over the limited number of developed proposals in the sector of Telecommunications and Post. The SWG has offered a forum for the Ministry of Telecommunications to inform donors of its progress in developing a clear sectoral strategy and in compiling priority project proposals. In April 1995, the SWG concentrated on the immediate equipment, materials and training needs of the PBC, and was briefed on Palestinian Authority legislation in the sub-sector. In November 1995, the Ministry updated equipment and training priority needs, specifying the following:

The Gavel Holder has expressed concern over minimal donor funding in the sector. He has encouraged greater funding support by pointing out the Ministry’s achievements in establishing telecommunication by-laws and regulations, and improvements in the staffing of qualified technicians. The Ministry views a master plan project and the establishment of a communications college as essential priorities for 1996. In addition, general 1996 sectoral priority needs include:

The last few years have witnessed little donor interest in institutional projects presented by both the Ministry of Transport and the Ministry of Telecommunications and Post. Despite a donor preference for concrete infrastructure projects in the field, serious concern has been expressed for sectoral development in the near future. With an increasing percentage of funds becoming available as loans, few infrastructure projects would be considered by lenders without an institutional framework in place. No substantial funds exclusive to this area were reported. Road-related projects which could be included in this sector were added instead to the infrastructure matrix.