Tracking External Donor Funding.pdf - NDC

Strip. In the West Bank, President Abbas appointed an
emergency ‘technocratic’ government, who after
exceeding its 60 day became known as the ‘caretaker
government’.
According to the MoP, ‘the Caretaker Government is
favorably viewed by the international community, and
(its appointment) led to an immediate reversal of donor
financial sanctions and no-contact policies (with the PA).
Donors reengaged with the PA in the West Bank on a
development agenda (…) However, this donor-PA
engagement is limited to the West Bank – in the Gaza
Strip, aid remains purely humanitarian’ (ibid).
‘Donor re-engagement’ in the West Bank, as described
by the MoP, is an understatement when one looks at the
trends in external aid to both the WB&GS in general and
PNGOs in particular. Through frameworks such as
Temporary International Mechanism (TIM) and INGOs,
aid to Palestine as a whole and the PNGO sector in
particular, actually increased dramatically between 2006
and 2008 despite the embargo.
2.1.3 In Focus: From TIMS to PEGASE
Following the 2006 elections, the EU established a mechanism that tried to meet the basic needs of the Palestinians while by
passing the coffers of the Hamas-led PA. The expenditures to be covered were limited to three Windows:
Window I:
Essential supplies and approved recurrent non-wage expenditures for the health sector, and basic allowances to health care
service providers who had not been receiving salaries 20 ;
Window II:
Support for uninterrupted supply of utilities, including fuel; and
Window III:
Basic needs allowances to meet the essential needs of the poorest segments of the population.
The aid that did come through these windows came attached with important preconditions. Contact with the PA was to only
take place at the ‘lowest possible levels’, with the Office of the President acting as the only interface for the management
unit of the TIM and charged with signing and ratifying all legal agreements. Furthermore, international banks were selected
to pay eligible expenditures directly to Palestinians within an agreed-upon process for validation, certification and
oversight 21 .
In February 2008, seven months after the formation of the Emergency Government, the TIM was replaced by the PEGASE, a
new aid channeling mechanism that aligned to the key priorities of the Palestinian Reform and Development Plan (PRDP) 22 .
In the words of the European Commission,
‘The European Union is strongly committed to support the Palestinian Authority’s reform and development priorities
aiming at boosting the economy and improving the life of all Palestinians. PEGASE will provide greater stability and
predictability to our action as the largest donors to the Palestinians and emphasize the ownership of the Palestinian
Authority in the process of reform and development.’ 23
Unlike the annual TIM, the PEGASE has a schedule of three years, the same length as the PRDP. A second difference is that
rather than flowing through the OoP, the PEGASE shifted toward the Ministry of Finance and the PMO, both headed by Dr
Salaam Fayyad.
Distribution
Since June 2006, the European Commission has contributed €455.5 million to the TIM, with further contributions coming
from individual EU Member States, Norway and Switzerland (€157.5 million). Since its establishment in February of 2008,
PEGASE has disbursed €409 million out of the €550 million pledged. The mechanism has channeled a further €131 million
from other donors and EU Member States.
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By 2006, the salaries of 172,000 public employees constituted 60% of the PA’s budget (Aronson, 2006)
Critics of the TIM mechanism, such as Oxfam (2007), have pointed to the fact that 'more than a million Euros of European aid for Palestinians is
being paid to the HSBC bank each month in bank charges for transferring allowances to over 140,000 Palestinians'.
PEGASE channels aid through five different payment systems, tailored to match the nature of each activity. Donors can contribute to any of these,
depending on their priorities and their specific requirements.
EC Press Release (2007). Commission launches PEGASE – a new mechanism to support the Palestinian people.
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