State Department Announces Transfer of Budget Assistance Funds to the Palestinian Authority

Washington, D.C.–(ENEWSPF)–November 10, 2010.  

MR. CROWLEY: Good morning and welcome to the Department of State. We have a global traveler back with us after 30,000 air miles in the Asia region. But clearly, what the Secretary will talk about today underscores our ongoing, significant commitment to the Palestinian Authority and to helping build the institutions of the Palestinian Authority as we continue to press the parties for direct negotiations.

But without further ado, Madam Secretary.

SECRETARY CLINTON: Thank you so much, P.J., and good morning, everybody. Now, are we going to have the prime minister on the screen?

STAFF: (Inaudible.)

SECRETARY CLINTON: There he is. (Laughter.) Hello. Well, I am delighted to see Prime Minister Fayyad, and this link-up is the next best thing to being together in person. And I welcome our guests here in Washington and say hello to everyone in Ramallah.

Before I address the subject of my announcement today, I want to also address what I know is on the minds of many of you. The United States was deeply disappointed by the announcement of advanced planning for new housing units in sensitive areas of East Jerusalem. This announcement was counterproductive to our efforts to resume negotiations between the parties. We have long urged both parties to avoid actions which could undermine trust, including in Jerusalem. We will continue to work to resume negotiations to address this and other final status issues.

We, along with many others, are working every day, indeed every hour, to help create the conditions for negotiations to succeed. We still believe that a positive outcome is both possible and necessary. I will be seeing Prime Minister Netanyahu tomorrow in New York and consultations continue on all sides and we will persevere.

Now, as Prime Minister Fayyad understands so well, we have to move forward together simultaneously, and mutually reinforcing on two tracks – the hard work of negotiations and the hard work of building institutions and capacities. We need to work with the Palestinian Authority to support their efforts to build toward a future Palestinian state that is able to govern itself, uphold its responsibilities to provide for its own people, and ensure security. Progress on this second track gives confidence to negotiators, removes excuses for delay, and underscores that the Palestinian Authority has become a credible partner for peace.

Now, earlier this fall, I was able to visit Ramallah and see firsthand the continuing progress that the Palestinian Authority is making under President Abbas and Prime Minister Fayyad. Thanks to their hard work, the Palestinian Authority is reversing a history of corruption and producing results that actually matter and improve the lives of Palestinians. As a result, new businesses are opening, taxes are being collected, services are being delivered, security is much improved and the economy is growing.

When you look around Ramallah and other Palestinian communities today, you see new buildings going up, professional police officers on the streets, and a sense of opportunity and purpose. In fact, the World Bank recently concluded that if the Palestinian Authority maintains its momentum in building institutions and delivering public services, it is, and I quote, “well positioned for the establishment of a state at any point in the near future.” So I want to congratulate President Abbas and you, Prime Minister, on everything that your government has accomplished. It is a testament to your leadership and skill as well as to the talents and determination of the Palestinian people themselves.

Now, of course, the prime minister would be the first to say that all this progress remains tenuous and there is much more work to be done, and he would be right. Unemployment remains high, especially among young people. Smaller communities have yet to see the benefits of greater prosperity despite the increase in new businesses, the rise in tax receipts, and the generous contributions from the international community. The Palestinian Authority still faces a serious budget shortfall.

But the United States and our international partners are committed to supporting the Palestinian Authority as it works to overcome these challenges. So today, I am pleased to announce that the United States has transferred an additional $150 million in direct assistance to the Palestinian Authority. This brings our direct budget assistance to a total of $225 million for the year and our overall support and investment to nearly $600 million this year. This figure underscores the strong determination of the American people and this Administration to stand with our Palestinian friends even during difficult economic times, as we have here at home.

This new funding will help the Palestinian Authority pay down its debt, continue to deliver services and security to its people, and keep the progress going. It will support our work together to expand Palestinians’ access to schools, clinics, and clean drinking water in both the West Bank and Gaza. And it will allow Prime Minister Fayyad’s government to build and modernize courthouses and police stations, train judges and prosecutors, and launch new economic development initiatives.

Strict safeguards are in place to ensure the money will be used responsibly. The United States, the World Bank, and the International Monetary Fund all carefully monitor the use of donor funds and we have great confidence in Prime Minister Fayyad and his ability to provide accountability and transparency.

I am pleased that a number of our other partners have stepped forward recently and also increased their support for the Palestinian Authority. Saudi Arabia recently transferred an additional $100 million. The United Arab Emirates provided a funding infusion in September and the European Union also announced major new funding.

On my recent trip to Asia, I was encouraged to hear widespread support for the Palestinian Authority’s state building efforts underscoring, again, the global resonance of this issue. The United States will step up our work with partners like Japan, Malaysia, Australia, and others to find new ways to increase financial support for the Palestinian Authority. Now, unfortunately the Palestinian people still have some friends who prefer to support their aspirations with words rather than deeds. But that won’t put food on the table, create jobs, build credible institutions, or help speed the creation of a new state. Palestinians need results, not rhetoric. And they need partners willing to invest in their future. And that is exactly what the United States is doing. And together we are moving forward despite the challenges, and there are many.

We take confidence from the steady leadership and bold vision of President Abbas and Prime Minister Fayyad. So let me thank the prime minister for his tireless efforts to realize the dreams of the Palestinian people and for being a consistent voice for progress and common sense. So now, Mr. Prime Minister, it’s your turn to say a few words. And we hope that our connection works better than it did the last time we tried this.

PRIME MINISTER FAYYAD: I sure hope so. Thank you very much.


PRIME MINISTER FAYYAD: We tested it. Let me first introduce my party here I have with me. First, Consul General of the United States Daniel Rubinstein, Head of – Director of USAID Mission, here Mr. Michael Harvey. I have also with me my colleague in government, Dr. Ali Jarbawi, our Minister of Planning. Documentation that pertains to the transfer has just been signed and concluded. So let me now begin, Madam Secretary, by once again thanking you for taking the time to be with us this morning your time, evening ours, to announce the transfer that you just announced of $150 million in support of the Palestinian Authority budget.

We really appreciate this assistance because it is highly responsive to our needs in two ways. First, in terms of the type of assistance, it being of the form of budget support is the kind of assistance that we need the most, as it helps us deal with the needs that we have to deal with and actually meet the duties, obligations, the responsibilities that we have to discharge in the course of doing the best we can in the interest of bringing about better life for our people. It also is highly responsive to our needs in the sense of its timeliness. As you well know, Madam Secretary, and we have talked about this a number of times, we have faced quite serious financial difficulty for the past few months that made our life extremely difficult in terms of meeting those obligations that we have in a timely fashion.

So the money and the substantial amount it is, the transfer, that is, of $150 million and the timeliness of it, could not really be better. We thank you very much for the responsiveness and also for splendid staff work on your part both in Washington as well as here to make this happen (inaudible) actually happen. It’s an opportunity for me to once again reiterate the Palestinian Authority’s deep appreciation for the longstanding support of the United States of our common development and adjustment and reform efforts. As a matter of fact, over a period – since the inception of Palestinian Authority, the United States has actually extended assistance in the total amount of about $3.5 billion over the period 1994 through 2010. About half of this money actually was made available over the past three years plus a few months. Half of that is in the form of budget support. And to be exact, $800 million of this total assistance has been over the past three years in the form of direct budgetary support. And this brings me to the second point.

Apart from the volume, the magnitude of this generous transfer, the form in which it was delivered, the modality of its delivery, meaning directly to our budget, underscores the confidence which once again the United States Government Congress also have in the integrity of our public finance system. We Palestinians take this as a matter of pride, immense pride, in fact. And in fact, it reflects the kind of progress that we have been able to make over the past few years in trying to get our institutions in the state of being – in the shape of being state ready.

Readiness for statehood is, in fact, the key objective of the program that we launched, Madame Secretary, in August of 2009 with the aim of completing the task of capacity building and also amass a critical mass of positive change on the ground in the form of maturing governance processes but also infrastructure of state. We are well on our way, also judging by that statement which you were kind to, as a matter of fact, read out today again by the World Bank about the expectation of us being ready for statehood at any point in the near future on the strength of what we have been able to accomplish over the first half of this three-year program. So we are well on track. We are determined to stay the course despite the difficulties and obstacles that we continue to have to contend with every day. Nevertheless, we, as I said, remain hopeful that we are actually going to be state ready come summer of 2011. It’s a goal that we are doing our (inaudible) best, in fact, to meet.

I said what I said about the U.S. assistance that has been made available in support of our budget, the direct budgetary assistance, but that is in addition, of course, to other forms of assistance that you have mentioned, Madam Secretary, that went a long way toward supporting the Palestinian Authority in various spheres of government and also infrastructure. I can tell you for sure without much difficulty that there is hardly any sign of visible progress on the ground in Palestine today that does not have the caring fingerprints of USAID on it.

I’m talking to you, Madam Secretary, and to your colleagues in Washington about, for example, physical infrastructure, including water, electricity, road networks. I’m talking to you also about social services, importantly, education, health, social assistance. I’m talking to you also about the assistance that you have so generously provided to help us with capacity building in all spheres of government, including security. I can go on, but as I said, there’s hardly a sign of visible progress that does not have a contribution of the United States Government associated with it.

We thank you very much. That has helped our effort, as a matter of fact. And over the past nearly three years now, just under three years, we’ve been able to implement some 1,700 small community development programs that have contributed remarkably to bringing about better living conditions for our people in spite of the occupation and its adversity.

As you mentioned, unemployment remains high. It has trended downward over this time period. It is lower than it was a couple of years ago, but it still remains high. It’s a challenge and we’re working very hard to reduce it further.

Poverty has declined by nearly one-third over the period 2007-2009, so there are, as a matter of fact, signs of progress, signs that are strongly suggestive of this effort being on track. And if, in fact, we were to continue with it, as we fully intend to do, we believe that we are actually going to see the tangible results that our people started to feel throughout the country. I’m talking about not only dwellers of urban areas, but I’m talking especially about people in rural areas, refugee camps throughout, areas that have been long marginalized and areas that have been so adversely affected by the construction of the separation wall as well as settlement activity.

So we appreciate the assistance. We appreciate the vote of confidence that comes with that. Let me also add, Madam Secretary, that we are doing this in addition to it being done in the context of this reform effort and adjustment effort and state-building effort, it also is important to happening in a context of declining need for external assistance. This is a key objective of ours and it defines very much the kind of thinking that we have insofar as economic viability is concerned, financial viability is concerned. I can tell you for sure that our need for exceptional financial support has already declined substantially from about $1.8 billion in 2008 to about $1.2 billion this year. That is a decline of about one-third in our reliance on external assistance and aid money. The prospect is for further reduction in 2011. In fact, we look to 2011 as the year in which we expect to make decisive (inaudible) towards attaining financial viability by end 2013, at which point we will no longer, we expect, need any more the kind of assistance that we are getting from you today in the form of direct budgetary assistance, which we hope will also be seen as a sign of maturity, maturing institutions of state, governments (inaudible) the kind of accomplishment and progress that you – and delivery that you expect countries that have been around a long time to be able to do but without considerable difficulty.

So here we are, Madam Secretary. We are well on our way trying to do the best we can in a highly challenging environment. The context is very difficult. I alluded to some of the difficulties that we have. I very much appreciate the statement that you made at the outset in relation to further announcement of yet another expansion of settlement activity in the Jerusalem area this time around, as it happened before. That remains a very serious challenge and a problem for all of us.

So therefore, Madam Secretary, in the period ahead we certainly will continue to look to you for continued strong leadership as you continue to try hard to put together elements that are necessary to have a strong political process, a credible political process, one that is capable of delivering that which we all want to see happen, an end to the Israeli occupation. And of course, the day will come when that state of Palestine will be born so our people can live in freedom and dignity in a country of our own. That’s what this is about, and we look to you again for continued strong leadership as we move forward down this path which has witnessed a great deal of difficulty. Nevertheless, we are determined and we remain hopeful on the strength of what we’ve been able to accomplish here and the hope and expectation that those (inaudible) along the path of state building and getting ready for statehood, on the strength of what that is expected to do by reinforcing the effort on the political process (inaudible).

Once again, Madam Secretary, on behalf of the Palestinian people, on behalf of President Abbas, Palestinian National Authority, my colleagues in government, I thank you personally for the effort that you have made to support us and for your continued and longstanding support, for the efforts of your colleagues. I thank President Obama, U.S. Congress, and of course, the American people for this largesse. Thank you so very much.

SECRETARY CLINTON: Thank you very much, Prime Minister. We greatly appreciate your efforts and your very gracious words about our country and our support for you. Now I think I’m going to take a question here. Is that what’s happening?

MR. CROWLEY: (Inaudible.) You’ve got the meeting with the Vice President coming up.

SECRETARY CLINTON: Right. Well, I can probably take one question maybe. Okay.

QUESTION: Madam Secretary, we’ve seen all the controversy develop this week on settlements between the Israeli Government, the Palestinians, and the Administration. So what do you think you can achieve on that front by talking to Prime Minister Netanyahu tomorrow? And how do you assess the hope of resuming the peace talks at all?

SECRETARY CLINTON: Well, I believe strongly that negotiations are the only means by which the parties will be able to conclude an agreement that will lead to a Palestinian state and Israel living in security with its neighbors. That is our view. That is our commitment. And I’m going to be speaking with the prime minister tomorrow once again about the way forward. I remain convinced that both Prime Minister Netanyahu and President Abbas want to realize the two-state solution. Like any very difficult political challenge, it is often hard to find the path forward. But we are absolutely committed to doing everything we can to assist the parties in doing so.

Thank you all.

MR. CROWLEY: Thank you very much.