We are the victims of collective punishment, say Palestinians

The Palestinian leadership yesterday accused the US Congress of inflicting "collective punishment" upon its people by holding up almost $200m in aid earmarked for the West Bank and Gaza by the Obama administration.

The freeze on funds earlier allocated for the financial year which ends today is the first concrete Congressional reprisal against Palestinian President Mahmoud Abbas to come to light since he angered US legislators by pursuing his application for full UN membership last week.

The unpublicised block has been in force since August and was imposed in response to the then planned UN recognition bid and to earlier – so far fruitless – efforts to effect reconciliation between Mr Abbas's own Fatah faction and Hamas.

USAID has been unable to allocate the funds, designated for a wide range of humanitarian, educational and state capacity building projects, pending negotiations between the US government and Congressional leaders aimed at lifting the freeze. Ghassan Khatib, chief spokesman for the Palestinian Authority, said yesterday: "This is not constructive at all. Such moves are unjustified. These are mainly humanitarian and development projects-it is another kind of collective punishment which is going to harm the needs of the public without making any positive contribution."

He added that the Palestinian Authority had not done anything wrong or illegal and that, "it is ironic to be punished for going to the United Nations".

The present block is threatening to delay the start of four new USAID funded projects, covering teacher-training, large-scale road and water infrastructure developments and an Enterprise Development programme designed to improve the competitiveness and capacity of the Palestinian private sector.

A series of existing projects are also at immediate risk unless the funding is unlocked in continuing negotiations between Congressional leaders and the Obama administration.

They include the purchase of supplies by the UN's World Food Programme for food distribution to impoverished Palestinian families in early 2012, health service reform, training and equipment for the Holy Family hospital in Bethlehem, a pre-school "Sesame Street" workshop, and a Palestinian Authority political programme for developing the functions of ministers.

In the months ahead, if the funding is not restored, a wide range of other projects are at risk. They include the Youth Entrepreneurship Development programme aimed at enhancing the skills of young unemployed people, an Independent Media programme for fostering independent electronic media outlets, a trade facilitation programme designed to improve cargo movement in the West Bank and Gaza, a water supply and sanitation programme, and a Community Assistance programme which is the main USAID funded aid project in Gaza.

The block by three Congressional committees has been in force since 18 August when it was formally notified that USAID wanted to transfer the remaining $192m funding for the current fiscal year. The Administration is currently unable to commit the new funds unless and until it persuades Congressional leaders to lift the freeze. The new projects will still be able to go ahead as planned if the funds are released.

The Congressional move is likely to intensify debate over threats from leading US legislators to impose an even wider block on funding for 2012 if Mr Abbas persists with his UN recognition bid, as the Palestinian Liberation Organisation agreed he should on Thursday. This could include a halt to direct funding of the PA, including up to $100m for its security forces.

While the Administration has so far been cautious about confronting Congress on its threats on 2012 funding, a US official said: "Our assistance to the Palestinian people is an essential part of the US commitment to a secure future and two-state solution for Palestinians and Israelis."

Some senior figures in the Israeli government, reportedly including Defence Minister Ehud Barak, have been arguing against such a move on the grounds that it could jeopardise Israel's security, given the co-operation hitherto between those security forces and the Israeli military.

Avi Dichter, a former head of the intelligence agency Shin Bet and a Knesset member in the opposition Kadima Party, said this month that even if UN recognition went ahead "the state of Israel cannot think in terms of punishing the Palestinians. A Palestinian state is a national Israeli interest."

Mr Khatib also pointed out yesterday that Fatah's terms for reconciliation with Hamas – which had anyway not happened – provided for a non-affiliated technocratic unity government which would abide by all previous Palestinian agreements with Israel.

The PA this week argued that, without the Israeli occupation, the Palestinian economy would almost double in size, returning a fiscal surplus and removing the need for foreign aid.