United States Government Accountability Office

Washington, DC 20548 

March 5, 2007 

The Honorable Patrick J. Leahy 

Chairman 

The Honorable Judd Gregg 

Ranking Minority Member 

Subcommittee on State, Foreign Operations, 

 and Related Programs 

Committee on Appropriations 

United States Senate 

The Honorable Nita M. Lowey 

Chairman 

The Honorable Frank R. Wolf 

Ranking Minority Member 

Subcommittee on State, Foreign Operations, 

 and Related Programs 

Committee on Appropriations 

House of Representatives 

Subject: Foreign Assistance: U.S. Assistance to the West Bank and Gaza for Fiscal 

Years 2005 and 2006 

For decades, the United States has worked toward the resolution of the IsraeliPalestinian conflict, most recently under the 2003 Roadmap for Peace, which calls for 

an independent Palestinian state coexisting peacefully with the State of Israel. Since 

fiscal year 1993, the United States has provided more than $2.2 billion in assistance to 

the West Bank and Gaza to support the Middle East peace process and encourage 

progress in reforming the Palestinian Authority.1

 

 1

These funds included $121 million in direct budget support for the Palestinian Authority and 

$1.3 billion to the United Nations Relief and Works Agency. 

GAO-07-443R West Bank and Gaza Funding
In fiscal years 2005 and 2006 alone, the United States provided over $420 million in 

Economic Support Funds2

 for the West Bank and Gaza; this funding is primarily 

administered by the U.S. Agency for International Development (USAID). About 

$200 million of this assistance was provided through a fiscal year 2005 supplemental 

appropriation.3

 In the conference report accompanying the 2005 supplemental 

appropriation legislation, the Congress directed that the assistance be allocated to 

two broad development categories—economic revitalization and infrastructure 

development—each with five subcategories.4

 The Congress did not provide similar 

direction for the remaining funds appropriated in fiscal years 2005 or 20065—about 

$223 million. 

In January 2006, Hamas—designated a terrorist organization by the United States and 

others—won a majority of the seats in the Palestinian parliament. On January 30, 

2006, the United Nations (UN), the United States, the European Union, and Russia—

known as the Quartet on the Middle East—stated that they would provide support 

and assistance to the Hamas-led government only if it agreed to nonviolence, to 

recognize the State of Israel, and to respect previous Israeli-Palestinian peace 

agreements.6

 In June 2006, the Congress directed that the Department of State 

(State) submit a new assistance plan; State provided that on July 21, 2006.7

For fiscal years 2005 and 2006, the Congress mandated that the Comptroller General 

of the United States report to the Congress on U.S. assistance to the West Bank and 

Gaza.8

 In response to this mandate, we reported in September 2006 on the steps 

USAID had taken to help ensure that U.S. assistance did not support terrorist 

 2

According to a Department of State publication, the Economic Support Fund promotes the economic 

and political foreign policy interests of the United States by providing assistance to allies and countries 

in transition to democracy, supporting Middle East peace negotiations, and financing economic 

stabilization programs. Also, legislation authorizing the Economic Support Fund provides 2 years to 

obligate the funds; that is, USAID does not have to obligate the funds appropriated in fiscal year 2005 

until the end of fiscal year 2006, or September 30, 2006. In addition, none of the funds appropriated for 

assistance under the West Bank and Gaza program may be made available for the purpose of

recognizing or otherwise honoring individuals who commit, or have committed, acts of terrorism 

(Consolidated Appropriations Act of 2005, Pub. L. No. 109-102, § 559(c), 118 Stat. 2809, 3019 (2004)).

3

Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami 

Relief, 2005, Pub. L. No. 109-13, 119 Stat. 231 (2005). 

4

H.R. Conf. Rep. No. 109-72, at 132 (2005). 

5

Pub. L. No. 108-447, 118 Stat. 2809 (2004) and Consolidated Appropriations Act of 2006, Pub. L. No.

109-102, 119 Stat. 2172 (2005). 

6

As of March 1, 2006, Hamas had not accepted these conditions. 

7

Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane

Recovery, 2006, Pub. L. No. 109-234, § 1304, 120 Stat. 418, 435 (2006). 

8

Pub. L. No. 109-13, § 2103, 119 Stat. at 266; Pub. L. No. 109-102, § 559, 119 Stat. at 2222. 

Page 2 GAO-07-443R West Bank and Gaza Funding
activities in the West Bank and Gaza.9

 In this report, also in response to the mandate, 

we examine the status of (1) USAID’s obligations and expenditures10 of the fiscal

years 2005 and 2006 appropriations for the West Bank and Gaza and (2) the fiscal 

year 2005 supplemental appropriation in greater detail to determine whether USAID 

allocated the funds in accordance with congressional guidance. 

To address these objectives, we analyzed data provided by USAID for fiscal years 

2005 and 2006 appropriations for assistance to the West Bank and Gaza as of 

December 31, 2006. We asked for and obtained additional information on how the 

2005 supplemental appropriation had been allocated to the congressionally directed 

categories and subcategories. To determine whether the data were sufficiently 

reliable for purposes of this report, we interviewed officials at the USAID mission in 

Tel Aviv, Israel, about their procedures for entering contract information into

USAID’s data system. We also interviewed USAID officials at the Washington, D.C., 

headquarters about the underlying financial data system. We verified much of the 

USAID project information with similar data we had developed and verified with 

USAID project officers at USAID’s Israel mission for a previous engagement related 

to awards for the West Bank and Gaza. We determined that the USAID data were 

sufficiently reliable for purposes of our report. See enclosure I for a more detailed 

description of our scope and methodology. We conducted our review from October 

2006 through March 2007 in accordance with generally accepted government auditing 

standards. 

Results in Brief 

As of December 31, 2006, USAID had obligated $300.8 million and expended 

$109.1 million of the $422.9 million in assistance provided by the United States to the 

West Bank and Gaza from fiscal years 2005 and 2006 appropriations. After Hamas 

won a majority of the seats in the Palestinian parliament in January 2006, USAID 

slowed and, in April 2006, selectively suspended assistance to the West Bank and 

Gaza to prevent U.S. assistance from potentially benefiting a terrorist organization. 

USAID resumed assistance in July 2006 after the Department of State notified the 

Congress of its new U.S. assistance plan, along with a revised spending plan, for the 

West Bank and Gaza in response to the June 2006 congressional mandate. The 

revised spending plan emphasized humanitarian projects, private sector support, and 

democracy/civil society programs directed to the Palestinian people. In February 

2006, USAID requested that the Office of the President of the Palestinian Authority 

return $50 million in fiscal year 2005 appropriations. The Palestinian Authority 

returned $45 million, and USAID has since reobligated these funds to other projects.11

 

 9

GAO, Foreign Assistance: Recent Improvements Made, but USAID Should Do More to Help Ensure 

Aid Is Not Provided for Terrorist Activities in West Bank and Gaza, GAO-06-1062R, (Washington,

D.C.: Sept. 29, 2006). 

10In this report, we use “expenditures” to mean cash disbursements. 

11According to a USAID mission official, the Palestinian Ministry of Finance returned $30 million on 

March 1, 2006, and $15 million on May 8, 2006. 

Page 3 GAO-07-443R West Bank and Gaza Funding
The remaining $5 million funded road projects that USAID canceled. According to a 

mission official, as of January 30, 2007, USAID and the Palestinian Authority had not 

yet resolved the value of the pre-cancellation construction, close-out and security 

costs, and the remaining funds to be returned. 

USAID obligated the fiscal year 2005 supplemental appropriations for projects in the 

West Bank and Gaza almost equally between the two congressionally directed 

categories: economic revitalization and infrastructure development. However, as a 

result of the parliamentary election and the subsequent shift in U.S. strategy for 

assistance to the West Bank and Gaza, USAID’s obligations to the 10 subcategories 

differed from the allocations originally put forward by the Congress. Before the 

election, the U.S. assistance plan supported the administration of the Office of the 

President of the Palestinian Authority with a wide range of development projects; 

after the election, all funds going to the Palestinian Authority were canceled or, in the 

case of existing obligations, withdrawn and funneled through other organizations. 

Examples of specific projects funded in part with the 2005 supplemental funds 

include labor-intensive construction projects to improve infrastructure and generate 

employment, and the training of doctors to improve medical care in the region. The 

results of these projects included new classrooms being built, doctors being trained, 

and facilities being rehabilitated. 

Background 

The Palestinian territories, comprising the West Bank and Gaza, cover about 2,400 

square miles and have a combined population of 3.8 million people.12 The Palestinian 

Authority administers Gaza while both the Palestinian Authority and Israel administer 

areas within the West Bank. 

 12The West Bank has a land area of 2,263 square miles and a population of about 2.4 million. Gaza has 

a land area of 139 square miles and a population of about 1.4 million.

Page 4 GAO-07-443R West Bank and Gaza Funding
Figure 1: Map of West Bank and Gaza and Surrounding Countries 

In 1993, the Oslo Peace Accords13 were signed, and USAID established its West Bank 

and Gaza mission. In September 2000, the second intifada (uprising) began and the 

Oslo peace process unraveled. Peace efforts were renewed in June 2002 when 

President George W. Bush outlined the principles for a strategy called the Roadmap 

for Peace. The Quartet on the Middle East,14as well as Israel and the Palestinian 

Authority, endorsed the strategy in April 2003. In January 2005, Mahmoud Abbas, a 

 13The accords called for the withdrawal of Israeli forces from parts of Gaza and the West Bank and 

affirm the Palestinian right to self-government within those areas through the creation of the 

Palestinian Interim Self-Government Authority. Palestinian rule would last for a 5-year interim period 

during which a permanent agreement would be negotiated (beginning no later than May 1996).

14The quartet is involved in mediating the peace process between the State of Israel and the Palestinian

Authority. 

Page 5 GAO-07-443R West Bank and Gaza Funding
supporter of the peace strategy, was elected president of the Palestinian Authority. A 

year later, in January 2006, the Palestinian people elected a Hamas majority to the 

Palestinian parliament. 

Since establishing its mission in the West Bank and Gaza in September 1993, USAID 

has directed assistance to the Palestinians toward five development sectors: 

economic growth, water and infrastructure, democracy and governance, health, and 

higher education. It has supported these objectives through efforts such as job 

creation programs, construction of reservoirs and roads, election support projects, 

projects to improve maternal and child health, and university scholarship programs. 

The January 2006 Elections

In January 2006, Hamas won a majority of the seats in the Palestinian parliament. On 

January 30, 2006, the Quartet on the Middle East stated that its members would 

continue to provide support and assistance to the Hamas-led government only if the 

government would agree to nonviolence, recognize the State of Israel, and respect 

previous Israeli-Palestinian peace agreements. As of March 2006, Hamas had not 

accepted these conditions. 

In June 2006, the Congress directed that no Economic Support Funds in 2006 or any 

prior appropriation for foreign operations, export financing, and related programs be 

obligated for assistance to the West Bank and Gaza until the Secretary of State 

reported to the appropriations committees (1) how the funds would be spent and 

(2) that appropriate measures were in place to ensure that no funds would support 

terrorist activities.15 The Department of State released its new assistance plan on July 

21, 2006. 

Status of U.S. Assistance to the West Bank and Gaza for Fiscal Years 2005 

and 2006 

In fiscal years 2005 and 2006, the United States provided a total of $422.9 million in 

bilateral assistance to the West Bank and Gaza through three separate 

appropriations.16 After Hamas won a majority in the Palestinian parliament in 

January 2006, USAID slowed aid pending a review of how to proceed. 

Fiscal Years 2005 and 2006 Appropriations

As of December 31, 2006, USAID had obligated $300.8 million and expended 

$109.1 million of the total U.S. assistance provided to the West Bank and Gaza in 

fiscal years 2005 and 2006. (See table 1.) 

 15Pub. L. No. 109-234, §1304, 120 Stat. at 435.

16Pub. L. No. 108-447; § 595, 118 Stat. at 3039; Pub. L. No. 109-13, § 2111, 119 Stat. at 268; and Pub. L. No. 

109-102 § 596, 119 Stat. at 2239. 

Page 6 GAO-07-443R West Bank and Gaza Funding
Table 1: U.S. Appropriations, Obligations, and Mission Expenditures for 

West Bank and Gaza, Fiscal Years 2005 and 2006 

Dollars in millions 

Appropriations Obligations Expenditures

Fiscal year 2005 $74.4 $74.4a $27.6

Fiscal year 2005 

supplemental 200.0 200.0b

 79.4 

Fiscal year 2006 148.5c

26.4 2.1

Total $422.9 $300.8 $109.1

Source: USAID 

aIncludes a $36 million transfer to the United Nation Relief and Works Agency that is not reflected in 

mission expenditures. 

b

Includes $27.35 million in Washington, D.C.-based obligations that are not reflected in mission 

expenditures. 

c

Includes $33.3 million in direct allocations to other agencies. 

Note: Economic Support Funds are available for 2 years for obligation and for 5 years for expenditure. 

Expenditures are exclusively mission-directed project expenditures.

The combined total 2005 appropriations of $274.4 million—the largest yearly amount 

of U.S. bilateral assistance for the West Bank and Gaza since the second intifada—

was provided, among other purposes, to support the President of the Palestinian 

Authority, elected in January 2005, and to facilitate the Israeli disengagement from 

four northern West Bank settlements and Gaza. 

• In December 2004, the United States provided $75 million in assistance to the 

West Bank and Gaza through the fiscal year 2005 annual appropriation. A 

subsequent 0.8 percent rescission reduced that appropriation to $74.4 million. 

• In May 2005, the United States provided an additional $200 million to the West 

Bank and Gaza in a fiscal year 2005 supplemental appropriation, which was 

accompanied by a conference report that allocated the funds to 10 different 

subcategories17 under the two broad categories of economic revitalization and 

infrastructure development. 

Additionally, in November 2005, the United States provided $150 million in assistance 

to the West Bank and Gaza through the fiscal year 2006 annual appropriation. A 

subsequent 0.99 percent rescission reduced that to $148.5 million. The legislation 

 17The 10 subcategories are (1) Palestinian agriculture and agribusiness production and marketing; (2)

trade promotion and capacity building; (3) home construction financing; (4) job creation, with an

emphasis on construction of schools and community centers; (5) improved flow of people and goods

into Israel; (6) roads and water; (7) democratic reform and the rule of law; (8) community policing; 

(9) education, including vocational training; and (10) health care and food assistance.

Page 7 GAO-07-443R West Bank and Gaza Funding
authorizing the 2006 assistance did not contain the same congressional directives 

relating to categories of assistance as the conference report accompanying the fiscal 

year 2005 supplemental appropriation. 

USAID Response to the Change in the U.S. Assistance Plan for the West Bank and 

Gaza 

After the January 2006 parliamentary elections, USAID slowed assistance to the West 

Bank and Gaza pending a comprehensive review. In April 2006, in concert with State, 

USAID notified its implementing partners that it intended to suspend certain 

activities. On July 21, 2006, the Secretary of State issued a new assistance plan with a 

revised spending plan totaling $468 million,18 about a third of which had previously 

been obligated, focused primarily on democracy and governance, health, and higher 

education. This revised spending plan affected the use of all three appropriations 

from fiscal years 2005 and 2006. 

USAID Deobligated Certain Funds from the Fiscal Year 2005 Annual 

Appropriation 

Along with the revised spending plan, USAID requested the return of $50 million from 

its fiscal year 2005 annual appropriation of $74.4 million that had been obligated for 

the use of the Palestinian Authority. Between March 1, 2006, and May 8, 2006, the 

Palestinian Authority returned a total of $45 million, which USAID reobligated. The 

remaining $5 million funded road projects that USAID canceled. According to a 

mission official, as of January 30, 2007, USAID and the Palestinian Authority had not 

yet resolved the value of the pre-cancellation construction, close-out and security 

costs, and the remaining funds to be returned. 

USAID Shifted the Emphasis of the Remaining 2005 Supplemental 

Appropriations 

USAID’s obligations of U.S. assistance to the West Bank and Gaza varied from the 

allocations set forth in the conference report to the fiscal year 2005 supplemental 

appropriation because the revised assistance plan that State presented to the 

Congress on July 21, 2006, redirected some funds to humanitarian assistance. While 

U.S. assistance before the January 2006 election supported the administration of the 

Office of the President of the Palestinian Authority with a wide range of development 

projects, all funds going to the Palestinian Authority after the election were canceled 

or, in the case of some obligations, withdrawn and funneled through other 

organizations. For example, State notified the Congress that food fortification and 

nutrition management programs would be redirected from the Palestinian Ministry of 

Health to individual private mills and the Palestinian Association of Food Industries. 

Funds for one existing activity were redirected away from pubic infrastructure works 

 18Although the fiscal year 2006 supplemental appropriation act required a revised plan for unobligated 

Economic Support Funds for the West Bank and Gaza, State also included some programs funded 

from other sources or from already obligated Economic Support Funds in the revised spending plan. 

Page 8 GAO-07-443R West Bank and Gaza Funding
to ensure that the Palestinian government would not benefit and to shift support 

away from the Palestinian Authority. As of December 31, 2006, USAID had obligated 

the full $200 million from the supplemental appropriation. Those obligations included 

$27.35 million made by USAID in Washington, D.C. The West Bank and Gaza mission 

expended about $79.4 million. 

State Retained a Significant Proportion of Fiscal Year 2006 Funds 

Appropriated for Use in the West Bank and Gaza 

In its July 2006 revised spending plan, State notified the Congress of its intent to 

retain approximately $83 million of the $148.5 million fiscal year 2006 appropriation 

for the West Bank and Gaza, transfer or directly provide about $33 million to other 

U.S. entities,

19 and allocate $31.9 million to USAID’s West Bank and Gaza mission. As 

of December 31, 2006, USAID had obligated approximately $26.4 million and 

expended approximately $2.1 million in fiscal year 2006 funds for projects in the West 

Bank and Gaza. On January 30, 2007, State notified the Congress of its intent to 

obligate $86.4 million in fiscal year 2006 funds to carry out security measures in the 

West Bank and Gaza. As of the date of this report, the Congress and State continue to 

discuss the use of those funds and, as a result, these funds have not been obligated. 

USAID-Funded Projects Highlight Areas of Humanitarian Aid and 

Infrastructure Development 

After the election and the change in the U.S. assistance plan for the West Bank and 

Gaza, USAID restructured its assistance to place an increased emphasis on 

humanitarian projects and to shift funds away from the Palestinian Authority. The 

West Bank and Gaza mission provided us with detailed information about the use of 

the fiscal year 2005 supplemental funds for the 10 subcategories of assistance 

directed by the Congress. Table 2 shows these subcategories for the fiscal year 2005 

supplemental appropriation with USAID’s actual obligations of those funds, the 

percentage differences between the congressional direction and USAID’s obligations, 

and USAID’s expenditures. It should be noted that the table displays the 

congressional allocations (determined prior to the January 2006 election) and USAID 

West Bank and Gaza mission obligations and expenditures (as of December 31, 2006), 

which reflect USAID’s restructured plan after the election. 

 19These included the Overseas Private Investment Corporation, USAID’s Office of Transition Initiatives, 

and State’s Near East Asia Middle East Peace Initiative, among others. 

Page 9 GAO-07-443R West Bank and Gaza Funding
Table 2: U.S. Economic Support Funds Obligated per Congressional Allocation for 

the West Bank and Gaza, Fiscal Year 2005 Supplemental Appropriation, as of 

December 31, 2006 

Dollars in thousands

Category and subcategory Congressional 

allocation 

Obligations Percentage 

difference 

from 

congressional 

allocation 

Expenditures

a

Economic revitalization postdisengagement $110,000 $101,291 (8) $35,729 

Support for production and marketing 

in Palestinian agriculture 15,000 15,209 1 9,219 

Trade promotion and capacity 

building 24,000 6,693 (30) 8,932 

 Home construction financing 1,000 1,000 0 989

Job creation, with emphasis on 

construction of schools and 

community centers 20,000 18,389 (8) 5,284 

Improved flow of people and goods 50,000 50,000 0 11,305

Economic, social, political, and 

security infrastructure development 90,000 98,709 10 43,712 

Basic infrastructure (roads and water) 48,500 33,196 (32) 18,181

Democratic reform and government 17,500 14,932 (15) 7,232 

Support to confront terror and

violence 3,000 3,500 17 2,415 

Expanding education opportunities 8,000 6,032 25 1.285

Provision of social services to the

poor 13,000 41,048 215 14,599

Total $200,000 $200,000 0 $79,441

Source: USAID (data) and GAO (analysis). 

a

Expenditures are exclusive to the USAID mission in the West Bank and Gaza and do not include 

USAID expenditures by its Washington, D.C. headquarters officials. The mission is wholly responsible

for project expenditures. 

USAID obligated the $200 million fiscal year 2005 supplemental appropriation almost 

equally between the two congressionally directed categories. USAID further 

obligated the funds to approximately 40 different awards under the 10 subcategories 

directed by the Congress, including some ongoing contracts that had been initiated as 

early as 2004. The average award size was about $4.2 million. As discussed earlier, 

the January 2006 parliamentary election resulted in USAID shifting the focus of its 

assistance to humanitarian projects. For example, following the redirection of funds, 

the category receiving the largest funding was health care and food assistance 

projects ($41 million). A $50 million allocation to border security measures—labeled 

“improved flow of people and goods” in table 2—was specified in the congressional 

allocations and was not affected by the change in the U.S. assistance plan for the 

West Bank and Gaza. 

Page 10 GAO-07-443R West Bank and Gaza Funding
Based on information provided by the West Bank and Gaza mission, 13 awards had 

been completed for projects using some portion of the fiscal year 2005 supplemental 

appropriation funds. We selected two awards that were completed or well 

established with preliminary results from each of the two major congressional 

categories—economic revitalization and infrastructure development—in order to get 

a cross section of the types of projects being completed. The four awards 

represented projects classified under 4 of the 10 congressional subcategories set out 

in the fiscal year 2005 supplemental appropriations conference report. Descriptions 

of the projects we chose follow. 

Palestinian Economic Opportunity Program for Lending and Economic 

Development 

USAID awarded a total of $8.6 million, including $1 million in fiscal year 2005 

supplemental funds, to a contractor to continue its Palestinian Economic Opportunity 

for Lending and Economic Development program. This program seeks to provide 

housing solutions that are technically appropriate and meet basic standards of 

livability and safety. The program gives 12- to 42-month microfinance loans for home 

improvements to low-income Palestinians to repair, expand, or improve their homes. 

All loans are extended at market rates and under strict repayment conditions to 

families with a demonstrated ability to repay. Monthly loan installments are limited 

to 33 percent of income to ensure repayment capacity. Since the program began, the 

contractor has opened site offices in Ramallah, Nablus, Hebron, Khan Younis, Jenin, 

Bethlehem, and Tulkarem and hired qualified staff in all required positions. 

According to USAID reports, as of September 30, 2006, the program had disbursed 

home improvement loans totaling $21.7 million and generated over 648,000 person 

days of employment, almost exclusively in the construction sector, far exceeding the 

595,200 days projected by the contractor. 

Partnership for Expanded Access to Quality Maternal and Neonatal Health 

Care for Palestinian Women and Infants 

USAID awarded a total of $3.5 million, all in fiscal year 2005 supplemental funds, to 

the Holy Family Hospital of Bethlehem for a project to provide quality maternal and 

child health services, especially for high-risk pregnancies and newborns. The project 

also seeks to expand its current services in response to evolving community needs, 

promote sustainability of the facility’s specialized care capacity, and enhance the 

quality of existing maternal and neonatal services. Project components included 

expanded access to advanced neonatal health care, expanded access to gynecology 

services, expanded access to health education services for families, expanded access 

to training for health care professionals, and expanded support for essential 

equipment and supplies. According to USAID, program achievements, as of 

September 30, 2006, include the following: 

• a contract was awarded for the construction of a labor ward, emergency 

department, and nursery/day care unit, with construction started on the new labor 

ward; 

Page 11 GAO-07-443R West Bank and Gaza Funding
• a new part-time gynecologist was hired for the Well Women program; 

• two obstetric/gynecologist resident doctors began board certification training; 

• two pediatric resident doctors were chosen and began to receive long-term 

training; 

• three student midwives were currently studying at Bethlehem University; and

• the hospital procured a vehicle and medical equipment. 

Labor-intensive Building for Education, Recreation, and Training of Youth 

USAID awarded a total of almost $2 million, including about $184,000 from fiscal year 

2005 supplemental funds, to a contractor to improve educational and youth 

infrastructure, thereby generating critically needed employment in the most deprived 

areas of Gaza. This program also leveraged an additional $800,000 from other 

sources to increase the scope of activities. According to USAID, the program 

provided immediate job opportunities for Palestinians in southern Gaza through a 

series of labor-intensive infrastructure interventions that generated approximately 

48,000 days of employment. These interventions included the building of classrooms 

and the beautification and rehabilitation of local schools. The program also improved 

educational and youth facilities through the implementation of several educational 

infrastructure development projects including the construction, expansion, 

renovation and minor upgrading of several schools and the construction of 

multipurpose youth centers and kindergartens. According to USAID reports, 

• 86 classrooms were built, 

• 20 schools were beautified, 

• 22 additional classrooms were rehabilitated, 

• 1 multipurpose hall was constructed, 

• 3 sports fields and 3 sanitation units were built, 

• 4 new kindergartens were constructed, and 

• 2 youth and sporting clubs were rehabilitated. 

Emergency Assistance to Palestinians through Nongovernmental Organizations 

USAID awarded a total of $28.2 million, including $7 million in fiscal year 2005 

supplemental funds, to a contractor to extend its Emergency Assistance through 

Nongovernmental Organizations program. According to USAID, this program 

provided highly targeted grants to address urgent needs of Palestinians in the West 

Bank and Gaza, using existing locally based nongovernmental organizations of 

various sizes and capabilities as the main vehicle for service delivery. Emphasis was 

placed on reaching the poorest sectors and marginalized groups of Palestinian

citizens, frequently those living in remote areas, enclaves that experienced recurrent 

and prolonged closures, and regions severely affected by occupation. Over 100 

subprojects valued at $10.2 million have been completed or are being implemented, 

addressing general humanitarian assistance, environment, education, infrastructure, 

conflict mitigation, economic growth, and health. Activities supported include aid to 

Page 12 GAO-07-443R West Bank and Gaza Funding
the disabled, agricultural revitalization, shelter for the abused, and basic social 

services infrastructure. Specific projects included the following: 

• supporting the establishment of a Palestinian pediatric surgery unit to provide 

high-quality heart surgery for children in Palestinian hospitals; 

• establishing the first Palestinian eye bank and helping raise the awareness of the 

importance of corneal donations; 

• providing sunshades and water fountains for six schools; and 

• constructing, maintaining and improving sanitary units, washing facilities, 

drinking water taps, classrooms, playgrounds, and outdoor spaces at 11 public 

schools. 

Agency Comments 

USAID provided written comments on a draft of this report (see enc. II). Overall, 

USAID was pleased that the report emphasized the changed political situation 

following the January 2006 parliamentary elections and the resultant shift in the 

allocation of resources. USAID also provided two clarifications that we incorporated. 

In addition, USAID provided technical comments and updates, which we have 

incorporated throughout the report as appropriate. 

- - - - - 

Copies of this report are being sent to the Secretary of State, the Director of Foreign 

Assistance and USAID Administrator, relevant congressional committees, and other 

interested parties. We will also make copies available to others upon request. In 

addition, the report will be made available at no charge on GAO’s Web site at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please contact me on 

(202) 512-3149 or at GootnickD@gao.gov. Contact points for our Office of 

Congressional Relations and Office of Public Affairs may be found on the last page of 

this report. 

David Gootnick 

Director, International Affairs and Trade 

Page 13 GAO-07-443R West Bank and Gaza Funding
Enclosure I: Scope and Methodology 

To determine the status of appropriations, obligations, and expenditures of the U.S. 

Agency for International Development (USAID) assistance to the West Bank and 

Gaza in fiscal years 2005 and 2006, we relied on appropriations legislation, including 

related conference reports, and USAID data provided separately by USAID’s West 

Bank and Gaza mission (the mission) and USAID’s Washington, D.C., headquarters. 

The mission is responsible for allocating its appropriated funds to specific projects in 

the West Bank and Gaza, and headquarters controls obligations of funds to the 

Palestinian Authority and other institutions, such as the Office of Transition 

Initiatives at USAID. The mission provided data on obligations and disbursements for 

each contract and specific information on its management of each contract (the start 

and end dates and specific appropriations that funded each contract). We reviewed 

legislative documents to determine congressional policy goals for assistance to the 

West Bank and Gaza and changes in those goals after the election of Hamas to the 

Palestinian parliament. The mission and Washington, D.C., USAID officials described 

the steps they took immediately after the January 2006 parliamentary election and 

later actions in response to congressional legislation and the Department of State’s 

new U.S. assistance plan for the West Bank and Gaza. Headquarters staff provided 

supporting documentation for notifications to the Congress on the revised spending 

plan for the West Bank and Gaza released in July 2006. 

To determine USAID’s use of the fiscal year 2005 supplemental appropriations and 

whether it obligated the funds in response to the congressional guidance, we 

reviewed legislative documents and detailed data provided by the mission, including 

information on specific awards as of December 31, 2006. To assess the reliability of 

the data provided by mission and headquarters staff, we spoke with agency officials 

at headquarters and reviewed technical documentation about the agency data 

systems. We also conducted interviews with mission staff to determine how they 

implemented USAID operating procedures for entering, verifying, and processing 

data. For purposes of this report, we determined that USAID's data were sufficiently 

reliable. For the project information that we include in this report, we relied on data 

provided by the mission. Because the Congress allocated funds to 10 categories of 

assistance, the mission had detailed data for projects using fiscal year 2005 

supplemental funds. We examined the start and end dates for all projects to identify 

projects that had been under way long enough to demonstrate results. We also

interviewed mission staff on the status of projects, and the mission provided us with 

quarterly reports of the project results. We verified much of the information provided 

with similar data we developed and verified with USAID project officers at its Israel 

mission for a previous engagement related to awards for the West Bank and Gaza. 

These data provided award amounts and contractor information. 

Page 14 GAO-07-443R West Bank and Gaza Funding
Enclosure II: USAID’s Comments 

See comment 1.

Page 15 GAO-07-443R West Bank and Gaza Funding
Enclosure II: USAID’s Comments (cont.) 

See comment 2.

Page 16 GAO-07-443R West Bank and Gaza Funding
Enclosure II: GAO’s comments on USAID’s letter 

The following are GAO’s comments on USAID’s letter dated February 28, 2007. 

1. We added information to this report regarding State’s decision to retain 

$83 million out of the total $150 million for fiscal year 2006 in the West Bank 

and Gaza. 

2. We modified the text to reflect USAID’s comment. 

Page 17 GAO-07-443R West Bank and Gaza Funding
Enclosure III 

GAO Contact and Staff Acknowledgments 

GAO Contact 

David Gootnick (202) 512-3149 

Staff Acknowledgments 

Albert H. Huntington, III; Judith K. Knepper; and Michael Maslowski made key 

contributions to this report. In addition, David M. Bruno, Martin de Alteriis, Etana 

Finkler, Reid L. Lowe, and Grace P. Lui provided technical assistance. 

(320460) 

Page 18 GAO-07-443R West Bank and Gaza Funding
This is a work of the U.S. government and is not subject to copyright protection in the

United States. It may be reproduced and distributed in its entirety without further

permission from GAO. However, because this work may contain copyrighted images or

other material, permission from the copyright holder may be necessary if you wish to

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER