Palestinian state on hold

“After 20 years of support from donor countries like Norway, Palestinian institutions are now strong enough to serve as a basis for an independent Palestinian state. At today’s meeting, the donors agreed to increase their contributions. But without a credible political process towards a two-state solution, it will become increasingly difficult for the Ad Hoc Liaison Committee (AHLC) to continue as before,” said Minister of Foreign Affairs Espen Barth Eide.

Mr Eide chaired the meeting of the Ad Hoc Liaison Committee (AHLC) for assistance to the Palestinians in Brussels today. The meeting was hosted by EU High Representative for Foreign Affairs and Security Policy Catherine Ashton. The Palestinian delegation was led by Prime Minister Salam Fayyad.

Two years after the donors concluded that the Palestinians have the necessary institutions in place to form a Palestinian state, the situation is serious. Financial problems in Palestine are threatening to undermine Palestinian government institutions and the peace process is at a standstill. 

“The meeting demonstrated that the international community remains united on the issue of the development of a Palestinian state. There was broad agreement on the political assessments and understanding of the challenges ahead. Overall budget support for this year will increase substantially, and it looks as if the contributions will be sufficient to cover the budget deficit of USD 1.2 billion. This is a significant improvement on 2012,” Mr Eide said.

At the same time the donors agreed that aid cannot solve the economic problems Palestine is experiencing. The financial crisis is the result of a combination of the effects of the occupation, irregular transfers from Israel of Palestinian customs and tax revenues and weaker growth in the Palestinian economy.

“The donors have indicated that they will provide support to cover this year’s budget deficit, but sustainable growth in the economy will only be possible if Israel lifts the restrictions it has imposed on Palestinian exports and on the freedom of movement of Palestinians. The Israeli occupation is weakening the framework conditions for the private sector and its competitiveness,” said Mr Eide.

“The Palestinians for their part must continue efforts to build an open, modern and effective state,” Mr Eide said.

“Efforts to solve Palestine’s acute economic problems are essential, but will only be meaningful within the framework of a negotiated two-state solution. The Ad Hoc Liaison Committee has contributed to the development of effective Palestinian institutions, but we will have to seriously consider whether we can continue our efforts if the parties fail to take steps to promote political progress towards the establishment of an independent Palestinian state,” Mr Eide said.