HEBRON, West Bank – This flashpoint city, nestled in the West Bank's Judean Mountains, is rarely noted for its bustling economy, neatly paved roads, or sparkling performance center. It is far better known for the nets shopkeepers have stretched above the market streets to keep Jewish settlers from throwing rocks on Palestinian pedestrians, its "apartheid sidewalks," the disputed Ibrahimi Mosque (both a Muslim and Jewish holy site), and the recurring street clashes between Jewish and Arab residents.
And yet, U.S. government funding has led to some small glimmers of economic life for Palestinians here -- gains that may crash to a halt because of a diplomatic feud spurred by the Palestinian bid for statehood at the United Nations.
As with many cities in the West Bank, Hebron's economic vitality centers around the millions in foreign dollars that have poured in, including money from the U.S. Agency for International Development (USAID). An April 2011 World Bank report noted that real economic growth in the West Bank and Gaza reached 9.3 percent of gross domestic product in 2010, exceeding the Palestinian Authority's budget projection of 8 percent -- although the growth was largely "donor-driven."
USAID has been one of those major sources of foreign funds. Since 1994, it has spent $3.4 billion in development funds in the Palestinian territories of West Bank and Gaza, with new roads, water systems, health care facilities, and schools that have served both residents and businesses of cities like Hebron, the largest municipality in the West Bank, with some 189,000 residents.
The money has helped fuel Hebron's recent boom, especially as other economic indicators have improved. The city has doubled the number of building permits issued since 2006, and is preparing to solicit bids for a road to a new $13 million water treatment facility -- financed, of course, by USAID.
"The USAID support is very essential," said Khaled Osaily, Hebron's mayor. "It creates a lot of jobs. The situation here, the infrastructure is very bad. This USAID money stopped a lot of suffering for the people."
But since September -- when Palestinian President Mahmoud Abbas, frustrated with the lack of progress of peace negotiations with Israel, defied the United States and Israel by formally submitting a request to join the United Nations as a full member state -- the flow of U.S. funds has been in jeopardy. The congressional committees responsible for the aid moved quickly to stop it. "Despite decades of assistance totaling billions of dollars, if a Palestinian state were declared today, it would be neither democratic nor peaceful nor willing to negotiate with Israel," Rep. Ileana Ros-Lehtinen (R-FL), chairman of the House Foreign Affairs Committee, said at a congressional hearing to review the funding. "By providing the Palestinians with $2.5 billion over the last five years, the U.S. has only rewarded and reinforced their bad behavior. It raises tough questions as to just what are the tangible benefits for the U.S., or for lasting peace and security between Israel and the Palestinians, derived from decades of assistance provided by the United States taxpayers."
Although the Obama administration opposes Palestinian efforts to seek greater global standing outside of the peace process -- and cut off payments to UNESCO, as required by U.S. law after the organization accepted the Palestinian territories as a full member state in October -- it also rejected the congressional moves to punish the Palestinians. "This money goes to establishing and strengthening the institutions of a future Palestinian state, building a more democratic and stable and secure region," Victoria Nuland, State Department spokeswoman, said in an Oct. 3 briefing with reporters in Washington. "We think it is money that is not only in the interest of the Palestinians; it's in U.S. interest and it's also in Israeli interest, and we would like to see it go forward." The freeze on funds has created a climate of paralyzing uncertainty for the workers employed by USAID, for the agency's partners, for contractors who do business with the NGOs and for a Palestinian government that relies heavily on donors' largesse.
"New schools were built, wells were dug, and judges were trained," said Daoud Kuttab, director general of the non-governmental Community Media Network in the Palestinian territories. "All this positive change ... is threatened to evaporate as the United States Congress decides to punish the Palestinian population for the acts of their political leadership."
On Jan. 16, the Palestinian Authority announced that it would need to raise taxes and cut costs to cover a more than $250 million shortfall in foreign assistance, the majority of which was supposed to come from USAID.
"We're hopeful that the rest of the money will come back, but we're not sure," Ghassan Khatib, spokesman for the Palestinian Authority, told me. "This money is going mainly to development and humanitarian projects. There is no justified reason for holding it. It's important for stabilization."