U.S. Foreign Assistance in Palestine: Partners or Contractors? A Case Study of U.S. Agency for International Development Assistance Program in Palestine 1999 to 2003

This paper looks at the issue of USAID responsiveness to Palestinian development priorities during the period of 1999 – 2003. The research examines how the development agendas of both Palestinians and USAID have aligned (or not), with a particular focus on the productive sector. In addition, the paper delves into tied aid and the USAID model of delivering assistance, and compares the data gathered with three indicators of aid alignment identified in the Paris Declaration on Aid Effectiveness. This research seeks to answer the question, “To what extent has USAID assistance to Palestine supported the Palestinian development priorities between 1999 and 2003?” Through document review, the research presents both the Palestinian and USAID program priorities in the productive sector before and after the second Intifada. The thirteen people who were interviewed represent USAID and Palestinian Ministry of Planning key officials, Palestinian private sector and civil society professionals, Palestinian and international experts, and USAID project managers. Interviews provided critical insights on how USAID and Palestinians evaluate the alignment of development priorities of both parties. The research findings show that USAID had supported to some extent the Palestinian productive sector priorities. However, despite the some-what close match between Palestinian and USAID development priorities, there is not an equal ownership of the agenda setting process and the design and implementation of projects between the Palestinians and USAID. The Palestinians are on the receiving end of aid, where they are consulted depending on the political situation i.e. how much is the US satisfied with the leadership of the PA and the Cabinet. In addition, USAID designs projects and contracts mostly American organizations as implementers. Thus, a majority of aid funds is retained in the US and does not benefit development in Palestine