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67–381PDF 2011

PROMOTING PEACE? REEXAMINING U.S. AID TO

THE PALESTINIAN AUTHORITY

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE MIDDLE EAST AND SOUTH ASIA

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

JULY 12, 2011

Serial No. 112–51

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

VACANT 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND SOUTH ASIA

STEVE CHABOT, Ohio, Chairman 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

JEFF FORTENBERRY, Nebraska 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

CONNIE MACK, Florida 

MICHAEL T. MCCAUL, Texas 

GUS M. BILIRAKIS, Florida 

TOM MARINO, Pennsylvania 

GARY L. ACKERMAN, New York 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

WILLIAM KEATING, Massachusetts 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Jacob Walles, Deputy Assistant Secretary of State, Bureau 

of Near Eastern Affairs, Department of State ................................................... 7

Lieutenant General Mike Moeller, United States Security Coordinator for 

Israel and the Palestinian Authority, Department of State ............................. 12

The Honorable George A. Laudato, Administrator’s Special Assistant for the 

Middle East, U.S. Agency for International Development (USAID) ................ 17

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Jacob Walles: Prepared statement ............................................... 9

Lieutenant General Mike Moeller: Prepared statement ...................................... 14

The Honorable George A. Laudato: Prepared statement ..................................... 19

APPENDIX 

Hearing notice .......................................................................................................... 44

Hearing minutes ...................................................................................................... 45

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 46

(1)

PROMOTING PEACE? REEXAMINING U.S. AID 

TO THE PALESTINIAN AUTHORITY 

TUESDAY, JULY 12, 2011

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON THE MIDDLE EAST

AND SOUTH ASIA, COMMITTEE ON FOREIGN AFFAIRS, Washington, DC. 

The committee met, pursuant to notice, at 10 o’clock a.m., in 

room 2172 Rayburn House Office Building, Hon. Steve Chabot 

(chairman of the subcommittee) presiding. 

Mr. CHABOT. The committee will come to order. Good morning. 

I want to welcome all my colleagues to this hearing of the Subcommittee on the Middle East and South Asia. This hearing was 

called to assess the Obama administration’s aid policy to the Palestinian Authority and to take stock of the challenges we continue to 

face. 

On January 22, just 2 days after his inauguration, President 

Obama appointed Senator George Mitchell as Special Envoy to the 

Middle East. Two and a half years later, just days after accepting 

Senator Mitchell’s resignation, President Obama reiterated his belief that the resolution of the Israeli-Palestinian conflict is one of 

America’s core interests in the Middle East. 

Throughout these 21⁄2 years, assistance to the Palestinian Authority has consistently remained a central pillar of the administration’s policy toward the Israeli-Palestinian conflict. Unfortunately, recent developments on the ground require that we reassess 

our current policy trajectory and, if necessary, adjust accordingly. 

I recently traveled to Israel and the West Bank where I was able 

to once again gain firsthand knowledge of our efforts there. Unfortunately, however, some of the challenges we face appear to intensify by the day. 

The current Palestinian leadership appears all too willing to sacrifice the tremendous gains that have been achieved by Prime Minister Fayyad’s state building effort in the name of political theatrics. 

Instead of capitalizing on those gains through honest negotiations with Israel, the Palestinian leadership appears dead set on 

pursuing a unilateral declaration of independence before the U.N. 

General Assembly this September. True Israeli-Palestinian peace 

will only be made between two peoples, Israelis and Palestinians, 

and not the other 191 other members of the General Assembly. 

The road to Palestinian statehood does not start in New York, 

and it is not the place for the United States or the United Nations 

2

nor any other country or institution to short circuit the requisite 

negotiations between the two parties. A unilateral declaration of 

independence is simply rejectionism by another name. 

Similarly, the recent unity agreement between Hamas and Fatah 

is a very troubling development. I was, in fact, in Ramallah discussing with Palestinian Prime Minister Fayyad his tremendously 

important state building efforts when this agreement was likely 

agreed upon, apparently without the blessing or maybe even the 

knowledge, of Prime Minister Fayyad. 

Shortly thereafter, I had the opportunity to meet with Israeli 

Prime Minister Netanyahu, who expressed grave concern both for 

Israel’s security as well as for the prospects for peace. ‘‘How,’’ he 

asked us, ‘‘could the Palestinian leadership be a serious partner for 

peace if it welcomed into its ranks vicious terrorists who continue 

to deny the very right of the state of Israel to exist?’’ His concern 

is more than justified. 

Although very few details have emerged since this document was 

signed, and although it does not appear much has changed on the 

ground, the mere presence of this agreement raises serious concerns that, regrettably, we must now address. 

The Palestinian Antiterrorism Act of 2006 very clearly stipulates 

conditions that must be met in order for U.S. assistance to continue, including that any Palestinian Government accept the three 

Quartet principles: Acknowledging Israel’s right to exist; renouncing violence; and agreeing to abide by past agreements. 

No U.S. taxpayer money can or should go to a Palestinian Government that does not embrace these three simple principles. For 

years, we have invested heavily both money and effort to help the 

Palestinians build a state for themselves, and our work has yielded 

results. The economy in the West Bank continues to improve. Parents are able to send their children out at night. 

Israelis have felt comfortable making concessions on security 

that would have been unthinkable even a few years ago. In no 

small part, this is due to the hard work of the United States Security coordinator for Israel and the Palestinian Authority. 

General Moeller, I would like to thank you for your continued 

service to our country. I am extremely impressed with the program 

that you are running, as well as the professionalism of the soldiers 

who are trained in it, and although I may have my concerns, given 

recent developments, it would be extremely unfortunate if we were 

to have to end this important program because of an irresponsible 

decision by those who would prefer the path of rejection to the path 

of peace. 

We are rapidly approaching a watershed moment in U.S.-Palestinian relations. Both the reconciliation government and the pursuit of a unilateral declaration of independence at the U.N. could 

not be more contrary to U.S. interests in the region. 

The fact remains that rejectionist elements within the Palestinian leadership still refuse to sit and negotiate in good faith, even 

as Israel repeatedly reiterates its commitment to the establishment 

of a Palestinian state. 

Israel, like the United States, welcomes those who would make 

peace even as it fights those who would make war. Time and again, 

Israel has demonstrated its commitment to a Palestinian state, livVerDate 0ct 09 2002 14:37 Aug 25, 2011 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\MESA\071211\67381 HFA PsN: SHIRL
3

ing as its neighbor in peace and security, but there are no shortcuts on the path to this outcome, and there is no getting around 

the hard concessions that will have to be made. Although short 

term security may be achievable unilaterally, peace is not. Palestinian rejectionism, whether by Hamas or Fatah, must be abandoned. 

I would now like to yield to the distinguished gentleman from 

New York, the ranking member of the committee, formerly the 

chair of the committee, Mr. Ackerman. 

Mr. ACKERMAN. I thank the chairman very much for a very, very 

important hearing, and a personal welcome to our very, very distinguished experts today. 

The first question we should consider at today’s hearing is which 

Palestinian Authority we are talking about, since there appears to 

be two of them. This entity is quite apart from Hamas, which is 

a de facto authority in Gaza by way of perpetuating a military 

coup. The PA itself exhibits the kind of contradictory behavior that, 

in a person, might be diagnosed as a split personality disorder. 

So what do we make of this Jekyll and Hyde government? On the 

one hand, under the leadership of President Mahmoud Abbas and 

Prime Minister Salam Fayyad, the PA has ceased to be a coordinator and instigator of terror, and now combats it with growing efficacy and professionalism. On the other, Abu Mazen, as President 

Abbas is also known, has agreed to a unity agreement with the 

blood-soaked terrorists in Hamas who have never—not even for the 

briefest of moments—never considered or diminished or revised 

their insistence on Israel’s utter annihilation, and the glory of 

using violence against Israeli civilians. 

This political reconciliation agreement may well never be implemented as both major political Palestinian factions, Abu Mazen’s 

Fatah, and the terrorist Hamas, may have a greater interest in the 

concept of reconciliation than its implementation. Nonetheless, I 

would suggest to the PA leadership that, when you get into a cage 

with a tiger, you are not a partner. You are a lunch. 

Fatah leaders may think they have worked out a deal for a merger. They should consider the possibility that their more vicious 

counterparts in Hamas think they have got a deal for an acquisition. Abu Mazen, the PLO and his Fatah faction are all officially 

in favor of peace, support the Oslo Accord and the other subsequent 

Israel-Palestinian agreements. 

I, like many of my colleagues, have often met with and spoken 

with Abu Mazen, his key advisors, and Prime Minister Fayyad, as 

recently as 2 weeks ago. It becomes obvious immediately that their 

goal is to create a Palestinian state living side by side with Israel. 

These are men interested in creating a new Palestinian state, not 

in destroying the existing Israeli one. Nevertheless, as continues to 

be regularly documented, the PA, Abu Mazen’s Fatah faction, and 

senior Fatah leaders continue to glorify terrorists and fail to recognize in ways both large and small Israel’s existence and its right 

to live in peace and security. 

Incitement and the ongoing failure of Palestinian leaders to 

speak frankly with the Palestinian public about the need for give 

and take in negotiations continues to raise questions about Palestinian intentions. It is long past time for this convenient ambiguity 

4

to be resolved clearly and finally regarding the unacceptability of 

violence and the need for sacrifices on both sides to achieve peace. 

While Abu Mazen may continue to insist that Palestinians are 

still committed to directly negotiating a two-state solution to the 

conflict with Israel, his actions demonstrate a very different and 

dangerous alternative approach. The current Palestinian campaign 

to seek bilateral recognition around the world, culminating in September with an effort to force a vote in the U.N. on Palestinian 

statehood, is fraught with peril for all parties concerned, most of 

all the Palestinians. 

The Palestinian leadership seems to be running headlong off a 

cliff, because it can’t figure out how to do what they probably already know would be best, to sit down to direct negotiations with 

Israel. So we in the United States, as the chief sponsor of the peace 

process and Israel’s key ally, need to figure out where we, in light 

of our own fiscal reality, have to draw some red lines to get this 

process back on track and to keep it from getting out of control. 

I would suggest that there should be three requirements for our 

assistance, based not only on our interest in sound policy but consistent with our own current political reality. 

First, this reconciliation deal was, is, and will remain a bad idea. 

Palestinians may like the idea of their leaders all getting along, 

and may be willing to live with the contradiction of a government 

half-committed to peace and half-committed to attacking school 

buses with anti-tank missiles, but we are not, and we never will 

be. As a matter of both law and basic decency, we will never do 

business with or provide aid to a government controlled by or reporting to terrorists, period, full stop. 

Number two: If you represent a party that says it is in favor of 

peaceful negotiations, then it is not unreasonable to expect you to 

engage in direct negotiations for peace. Abu Mazen, Prime Minister 

Netanyahu is waiting for you. A proposed initiative to force the 

issue of statehood at the U.N. is a clear and material breach of the 

Oslo Accords and a dangerous proposition for all parties. It needs 

to be shelved, and direct talks need to begin. 

No one but the Palestinian leadership is forcing the issue to the 

U.N., and no one but the Palestinian leadership can pull the plug 

on this misbegotten idea. American aid is intended to support the 

peace process. If the Palestinian leadership unwisely chooses to 

abandon that process in favor of running after the illusion of statehood at the U.N., that decision will likely come with an annual 

price tag in the hundreds of millions of dollars and, more expensively, the loss of any claim to common sense. 

Finally, the PA needs to get its act together with regard to its 

public communications, media approach, and official attitude regarding peace and the use of violence. The view of its senior leaders in favor of peaceful negotiations needs to be consistently represented in all areas in which the PA acts, whether in the PA 

media outlets, the naming of streets or grant awards, or school 

books. 

The PA can’t wink and nod at the glorification of terrorism here 

and there, and expect the word not to get out, and that it will not 

have consequences. Incitement is not a phony issue. It speaks to 

intentions and undermines confidence in the Palestinian leadership 

5

which, given the issues of reconciliation and the U.N. initiative, is 

already severely strained. 

Since 2000, Israeli Governments under Prime Ministers Barak 

and Olmert have offered Palestinians full blown peace offers. Prime 

Minister Sharon orchestrated Israel’s unilateral withdrawal from 

Gaza, and Prime Minister Netanyahu instituted the first ever 

freeze on settlements solely as an act of good faith. It is time for 

Abu Mazen to find the same kind of courage in his own convictions, 

and find a way to get back to the negotiating table. History is waiting for him. Thank you, Mr. Chairman. 

Mr. CHABOT. Thank you very much. If other members of the 

panel would like to ask questions, we would be happy to give members 1 minute. The gentleman from Pennsylvania, Mr. Marino, 

were you interested in making a statement? Okay, thank you. Mr. 

Cardoza from California is recognized for 1 minute. 

Mr. CARDOZA. Thank you, Mr. Chairman. I just wanted to say 

that I associate myself with the remarks of the chairman and the 

ranking member entirely. I also was in Israel speaking to Mr. 

Fayyad on nearly the day that Hamas and the PA reconciled, and 

I think it is an abomination. 

I don’t support any further funding if they continue this process. 

I think we need to cease and desist. We can’t be a party to providing dollars to terrorist organizations and to organizations who 

commit themselves to the destruction of the state of Israel. I won’t 

vote for it, and I will work with the chair and others to lead the 

charge against it, if they continue along this path. 

Mr. CHABOT. Thank you very much. The gentleman from South 

Carolina, Mr. Duncan, is a member of the full committee, not a 

member of this subcommittee, but asking unanimous consent that 

he be at the end of each on our side, be able to either make a statement or ask questions. Without objection. So ordered. Mr. Duncan, 

would you like to make a 1-minute opening statement? 

Mr. DUNCAN. Thank you, Mr. Chairman. Thank the committee 

for allowing me to participate today. I sent a letter around for 

other members to sign. This letter would be to the chairman of the 

House Committee on Appropriations, Mr. Rogers, basically requesting that in the upcoming appropriations process the committee restrict funding from going to the Palestinian Authority. 

So this is a very timely issue for me, and I appreciate the opportunity to participate, and I would ask other members of the committee to consider signing that letter. The deadline is close of business this Friday. Thank you. 

Mr. CHABOT. Thank you very much. And the gentleman from 

New York, Mr. Higgins, is recognized for 1 minute. 

Mr. HIGGINS. Thank you, Mr. Chairman and ranking member. I, 

too, want to associate my thoughts to your statements and that of 

the ranking member, in that negotiating with the Palestinian Authority is not complicated by the integration of Hamas, its various 

groups. It obliterates its viability. 

When we look at the toughest places and toughest neighborhoods 

throughout the world, the precondition toward a negotiated settlement has always been renouncing violence and recognizing your 

adversary’s right to exist. That is a fundamental basis from which 

you develop a peace agreement. 

6

The involvement of Hamas or the integration of Hamas seriously 

undermines the credibility of the Palestinian Authority to negotiate 

in good faith toward a peaceful settlement. So I look forward to the 

expert testimony of our witnesses. Thank you, sir. 

Mr. CHABOT. Thank you very much. The gentleman from Virginia, Mr. Connolly, is recognized for 1 minute. 

Mr. CONNOLLY. Thank you, Mr. Chairman. The recent reconciliation between Fatah and Hamas caught the attention of the international community. Last week’s passage of the House Resolution 

268 by an overwhelming vote of 407 to 16 displays the overwhelming support for the firm belief that any Palestinian unity 

government must publicly and formally foreswear terrorism, accept 

Israel’s right to exist, and reaffirm previous agreements already 

made with Israel. 

The resolution also reaffirmed the United States’ statutory requirement precluding assistance for a Palestinian Authority that 

includes Hamas unless and until the PA and all of its ministers 

abide by the three previously mentioned conditions, which have 

long been part of the United States’ Middle East policy. 

When examining this policy, it is important to closely scrutinize 

one of those key components, economic aid, designed to facilitate 

basic services for the future. I look forward to the testimony this 

morning, Mr. Chairman, and thank you for holding this hearing. 

Mr. CHABOT. Thank you very much. I would like to introduce our 

very distinguished panel here this morning at this time, and we 

will start with Jacob Walles who is the Deputy Assistant Secretary 

of State for Near Eastern Affairs, responsible for U.S. policy with 

respect to Egypt, Israel, Jordan, Syria, Lebanon, and the Palestinians. In over 25 years with the State Department, he has been an 

active participant in Middle East peace efforts dating back to the 

1991 Madrid Conference. From September 2009 to June 2010, Mr. 

Walles was the Cyrus Vance Fellow for Diplomatic Studies at the 

Council on Foreign Relations. Before that, he served as U.S. Consul 

General and Chief of Mission in Jerusalem from July 2005 to August 2009. Mr. Walles also served as Director of the Office of Israel 

and Palestinian Affairs from 1998 to 2001, and as Deputy Principle 

Officer at the U.S. Consulate General in Jerusalem from 1996 to 

1998. We welcome you here this morning. 

Next, I would like to introduce General Moeller, General Michael 

Moeller. Lieutenant General Moeller is the U.S. Security Coordinator for Israel and the Palestinian Authority. He is responsible to 

the Secretary of State for assisting the Palestinian Authority to 

transform and professionalize its security sector, advocating for security initiatives that build trust and confidence, and supporting 

whole-of-government efforts to set the conditions for a negotiated 

two-state solution. 

General Moeller received his commission from the U.S. Air Force 

Academy in 1980. Prior to his current assignment, he was the Director for Strategy, Plans and Policy for U.S. Central Command. 

General Moeller is a command pilot with more than 4,440 flying 

hours and 670 combat hours for Operations Desert Storm, Enduring Freedom, and Iraqi Freedom, and we welcome you here this 

morning, General, and thank you very much for your service, sir, 

to our country. 

7

Last but not least is George A. Laudato. Mr. Laudato leads the 

Middle East Bureau as the Administrator’s Special Assistant for 

the Middle East at the U.S. Agency for International Development, 

USAID. He has more than 45 years of experience in international 

program development and management in the private and public 

sectors in Asia, the Middle East, Latin American, and Central Europe. 

From 1998 to 2007, Mr. Laudato was Managing Senior Vice 

President of the International Health Area at Abt Associates, directing programs across 40 projects and more than 350 employees 

worldwide. Prior to joining Abt, Mr. Laudato served for 29 years 

with USAID where he directed major regional and policy bureaus 

and led country missions. He was Deputy Assistant Administrator 

for the Bureau for Asia and the Near East from 1991 to 1995, and 

we welcome you here, Mr. Laudato. 

I am sure all the panel members are aware of the rules, which 

basically give each of the witnesses here this morning 5 minutes, 

and there is a lighting system. The yellow light will come on when 

you have 1 minute to wrap up, and we ask that when the red light 

comes up, that you stop right on time or be wrapping up. 

We will begin with Mr. Walles. 

STATEMENT OF THE HONORABLE JACOB WALLES, DEPUTY 

ASSISTANT SECRETARY OF STATE, BUREAU OF NEAR EASTERN AFFAIRS, DEPARTMENT OF STATE 

Mr. WALLES. Thank you, Chairman Cabot, Ranking Member 

Ackerman, members of the committee. I am honored to be here 

today to provide you with an overview of U.S. assistance to the Palestinian Authority, and discuss how it promotes U.S. national security interests. I will keep my remarks brief, and I would ask that 

my full written statement be included in the record. 

Mr. CHABOT. Without objection, so ordered. 

Mr. WALLES. This administration believes that achieving comprehensive Middle East peace is in the national security interest of 

the United States. The administration has worked vigorously to 

achieve a negotiated Israeli-Palestinian agreement based on the 

core concept of two states for two peoples: Israel as a Jewish state 

and the homeland for the Jewish people, and Palestine as the 

homeland for the Palestinian people. 

A just, lasting, and comprehensive peace between Israel and all 

her neighbors is central to American interests in the Middle East, 

and it has been the objective of every U.S. administration dating 

back to President Harry Truman. 

To that end, we have been working intensively with the parties 

to resolve the issues between them through direct negotiations. 

This administration, like those before it, has been clear. Permanent 

status issues between Israel and the Palestinians must be decided 

through direct negotiations between the two sides, not at the 

United Nations or anywhere else. 

Our assistance to the Palestinian people is guided by this paramount U.S. national security interest. We strongly believe that 

building Palestinian Government institutions and a viable Palestinian economy serve our interests and are essential for peace, the 

stability of the region, and the security of both Israel and the PalVerDate 0ct 09 2002 14:37 Aug 25, 2011 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 F:\WORK\MESA\071211\67381 HFA PsN: SHIRL
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estinians. Our programs are focused on helping the Palestinians 

build institutions of government and security forces that have 

gained the trust of the Palestinian people and their Israeli counterparts. 

As you know, institution building is a long and arduous process. 

I have been involved in different aspects of our assistance for the 

Palestinians for over two decades, starting with President Ronald 

Reagan. In the 1990s after the first Israeli-Palestinian agreements 

were signed, we began to support the newly created Palestinian 

Authority. In the last decade, we began a program to provide security assistance to the Palestinian Authority with the creation of the 

United States Security Coordinator in 2005. President Obama has 

continued these efforts in his strong support for the security assistance program and for our extensive economic and humanitarian 

programs for the Palestinians. 

Through our USAID programs, we are helping the PA to improve 

public services. These activities are designed to help the PA meet 

essential needs and to offer an alternative to those who reject a 

two-state solution and seek to exploit human suffering to radicalize 

the population and recruit supporters. 

Our assistance to PA Security Forces has been critical to the improved security situation in the West Bank. U.S. trained PA Security Forces have worked effectively with their Israeli counterparts 

to maintain stability in the West Bank. I recently returned from 

a visit to Israel and the West Bank and had the opportunity to 

meet with both Israeli and Palestinian officials. The Israeli officials 

I met with confirmed that Palestinian security efforts in the West 

Bank remain robust, and Palestinian officials assured me this 

would remain the case, regardless of political developments. 

We strongly believe that the continuation of U.S. assistance is essential to support a Palestinian Government prepared to make 

peace with Israel. Nevertheless, as President Obama has made 

clear, the Hamas-Fatah reconciliation agreement ‘‘raises profound 

and legitimate questions.’’ Since the agreement was signed in May, 

however, key issues have remained unresolved between the two 

sides, and the agreement has not yet been implemented. If a new 

PA Government emerges, we will evaluate it carefully, and our assistance will be guided by all relevant U.S. laws. 

Let me be clear. In our decision making, the administration will 

ensure the full implementation of U.S. law, but as of now, the current PA Government under the direction of President Abbas and 

headed by Prime Minister Fayyad remains in place. President 

Abbas has made clear that he and his government accept the Quartet’s principles, and Prime Minister Fayyad continues to make 

progress in building institutions and maintaining security. For 

these reasons, we believe they deserve our continued support. 

In conclusion, Mr. Chairman, I want to emphasize our view that 

assistance to the Palestinian Authority and to the Palestinian people is an important element in our effort to advance U.S. national 

security interests in the Middle East. On behalf of the administration, I thank you for the opportunity to brief you on this program, 

and for your support for our efforts. Thank you very much. 

[The prepared statement of Mr. Walles follows:]

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Mr. CHABOT. Thank you. 

General Moeller, you are recognized for 5 minutes 

STATEMENT OF LIEUTENANT GENERAL MIKE MOELLER, 

UNITED STATES SECURITY COORDINATOR FOR ISRAEL AND 

THE PALESTINIAN AUTHORITY, DEPARTMENT OF STATE 

General MOELLER. Thank you, sir. Mr. Chairman, Ranking Member Ackerman, distinguished committee members, thank you for inviting me here today. As United States Security Coordinator for 

Israel and the Palestinian Authority, I have the privilege of leading 

a 145-person joint, coalition and interagency team that includes 

nine international partners, of which Canada and the United Kingdom play critical leadership roles. 

The 16 U.S. Department of Defense personnel form the heart of 

this unique organization. These DoD members are assigned to the 

State Department, and my boss is the Secretary of State. We live 

in the region, with our headquarters in Jerusalem. 

Before I talk about the detailed part of the program, I would like 

to remind you that the Government of Israel approves all aspects 

of U.S. support to the Palestinian Authority Security Forces, and 

that the USSC would never advocate or sponsor activities that 

could threaten Israeli security. Additionally, our funding is separate from the $2.9 billion in direct assistance to the State of Israel. 

We use I&L funding to resource our security assistance efforts, 

which is the core of what we do. The program assists the PA in 

building the security force structure and infrastructure, including 

the required equipment and training needed to conduct the full 

range of missions currently allowed under Israeli and Palestinian 

security agreements. The program has enabled the Palestinian Security Forces to make significant progress. 

To date, almost 4800 Palestinian Authority troopers have graduated from the U.S. supported Jordanian International Police 

Training Center. All graduates receive extensive professional skills 

training that emphasizes respect for human rights, rule of law, and 

the proper use of force. 

The West Bank training initiative focuses on other specialty 

skills and leadership training and development. Palestinian instructors teach these courses. To date, we have seen 3500 service 

graduates. 

We take a holistic approach. So we also focus on the support infrastructure to match these force structure improvements. This infrastructure includes garrison camps with facilities and training 

areas required to maintain the security force’s professional skills; 

joint operations centers for joint planning and command and control; and a national training center in Jericho. All projects are on 

track and on budget. 

This year, we are moving into the next phase of the program, 

building Palestinian Authority security force institutional capacity. 

In this phase, we will help the PASF develop the indigenous capability to maintain and sustain their force structure and infrastructure. The USSC also supports other U.S. rule of law programs that 

assist the Palestinians to improve the performance of their justice 

and corrections sectors. 

13

Despite recent events, including the Fatah-Hamas reconciliation, 

there have been no changes in personnel, no changes in security 

practices on the ground and, I should emphasize, no change in the 

chain of command. The current Palestinian Authority Government 

under President Abbas retains sole authority over the PASF. 

Additionally, Palestinian Security Forces continue to pursue bad 

actors across the West Bank, including members of Hamas. Security coordination is still very strong, and the Government of Israel 

continues to support our security assistance requests. 

Meanwhile, the Palestinian Security Forces just sent 50 civil defenders to Jordan, including firefighters and ambulance drivers, for 

basic training. Last week, the Government of Israel approved the 

next deployment of the National Security Force’s Special Battalion, 

which includes 500 Palestinian recruits, to begin their basic training in Jordan. 

As you know, militaries do not relax a security regime without 

a trusted, capable partner. In the last year, the Israelis have dramatically reduced the number of manned checkpoints and cut the 

number of combat brigades assigned to the West Bank. The PASF 

performance during the May 15 and June 5 demonstrations provide 

excellent examples of the growing professionalism and competence 

of the Palestinian Authority Security Forces. 

These forces deployed to troubled areas, coordinated effectively 

across the military services, and expertly conducted their assigned 

missions. As a result, there was very little violence and limited 

criminal activity during those periods. 

In conclusion, we deeply appreciate your continued support for 

this critical program with a demonstrated record of success. The 

consensus is that the Palestinian Authority Security Forces is becoming an effective professional force, and that we must maintain 

our security assistance efforts. 

We understand the challenges and uncertainty ahead, but we believe that the USSC mission enables regional stability, enhances 

Israeli security, improves the lives of the Palestinian people and, 

most importantly, supports U.S. national security interests. Thank 

you, sir. 

[The prepared statement of General Moeller follows:]

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Mr. CHABOT. Thank you very much, General. 

Mr. Laudato, you are recognized. 

STATEMENT OF THE HONORABLE GEORGE A. LAUDATO, ADMINISTRATOR’S SPECIAL ASSISTANT FOR THE MIDDLE 

EAST, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

(USAID) 

Mr. LAUDATO. Chairman Chabot, Ranking Member Ackerman, 

distinguished members of the committee. Thank you for asking me 

to testify today. 

Mr. CHABOT. Could you pull the mic just a little closer? Thank 

you very much. 

Mr. LAUDATO. Thank you for asking me to testify on this timely 

and important topic today. I would like to highlight the impact of 

the U.S. Government’s economic assistance programs and USAID’s 

procedures to ensure that the programs reach their intended beneficiary. 

With our colleagues throughout the U.S. Government, USAID is 

supporting Palestinian efforts to create robust institutions and a 

viable economy, essential to a future Palestinian state, a state that 

will be a responsible neighbor and contribute to regional peace, security, and stability. 

Palestinian development efforts are based on a solid policy 

framework for sectors like health, infrastructure, economic growth 

and governance. These development policies provide a very solid 

foundation for effective donor programs. The U.S. Government’s assistance program reinforces President Abbas’ and Prime Minister 

Fayyad’s vision for a viable Palestinian state that is responsive to 

the needs of its citizens. 

I would like to highlight just a few examples of how USAID programs support this vision and affect the lives of Palestinians. The 

U.S. Government has supported long term development of institutions necessary for a future Palestinian state, living side by side 

with Israel, by promoting rule of law, respect of human rights, and 

civil engagement. 

At the municipal USAID helps the Palestinian Ministry of Local 

Government to work effectively with local governments in delivering essential services to residents and in promoting community 

development through training officials in strategic planning, accounting, outreach, and other key government and management 

skills necessary for local governments. 

We also support the Palestinian Authority’s justice sector strategy, and we are helping to strengthen performance and credibility 

of the justice sector institutions. We are increasing public knowledge of the rule of law and how to engage the justice system, an 

essential element of any balanced society. For example, USAID 

works to increase the legal literacy among Palestinians. We foster 

broader support for an effective and independent judiciary, and 

strengthen linkages between professional and academic legal communities. 

We have supported the development of water resources and 

roads throughout the West Bank. USAID’s assistance in developing 

Palestinian capacity to manage scarce, fragile water resources is 

key to this effort. This is an area of mutual Palestinian and Israeli 

18

concern, and where there will be shared benefits from the improved 

management of limited—very limited resources. 

We have also refurbished over 450 kilometers of roads in the 

West Bank, making travel more commercially viable and opening 

access to health and education services for all residents. We are 

also helping to create jobs, increase competitiveness of key economic enterprises, and increase growth and opportunities across 

the region. USAID is working with Israeli based offices of U.S. high 

tech firms, such as Google, Sysco, and others, to help Palestinian 

firms integrate into the global IT community, and we have generated $12 million in investments with Palestinian counterparts 

under this program. 

To ensure that USAID programs reach the intended beneficiaries, USAID has designed a very stringent oversight procedure 

that prevent inadvertent support going to foreign terrorists organizations, including the Hamas controlled de facto government in 

Gaza. Before awarding a contract or grant to a local nongovernmental organization, USAID vets the organization’s key officers 

through the law enforcement and intelligence systems, and checks 

the organization’s lists against the lists of the Office of Foreign Assets Control at the U.S. Treasury. 

Organizations applying for grants must also certify that they do 

not provide material support for terrorism. 

Mr. Chairman, I appreciate the opportunity to discuss USAID’s 

programs, and look forward to taking any questions that you may 

have. 

[The prepared statement of Mr. Laudato follows:]

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Mr. CHABOT. Thank you very much. 

We appreciate the panel’s testimony, all three, and at this time 

I would begin the questioning myself. So I recognize myself for 5 

minutes. 

Since the mid-1990s—this would be for you, Mr. Walles. Since the mid-1990s, the U.S. Government has committed over $4 billion 

in bilateral assistance to the Palestinians. Unfortunately, despite 

our commitment, the Arab countries of the Middle East have not 

been so forthcoming. A recent news story reported that the Palestinian Authority would only be able to pay its employees half of 

their July salaries due to the budget shortfall. The story further 

noted that, ‘‘Of the $971 million pledged by donors for this year, 

$330 million of it has been paid so far, and Mr. Fayyad said the 

only Arab countries that had fulfilled their pledges this year were 

the United Arab Emirates, Algeria, and Oman.’’

Frankly, I find it outrageous that Arab countries, who claim to 

care so much about the plight of the Palestinians, are not willing 

to put their money where their mouths are. How much specifically 

have the Arab states contributed to help the PA over the past few 

years, and do you believe the Arab states are providing the appropriate levels of assistance to the Palestinian Authority and, if not, 

why not? 

Mr. WALLES. Thank you, Mr. Chairman, for that question. According to the statistics that are maintained by the PA Ministry of 

Finance, Arab countries have contributed about $1.8 billion in assistance to the Palestinian Authority since 2007. Of the Arab donors, Saudi Arabia has contributed the most, $749 million since 

2007. 

What I would note, however, is that in recent years the level of 

assistance from Arab donors has declined. Just to give you some 

numbers, in 2009 the total amount provided to the PA from Arab 

donors was $462 million. In 2010 that number was $287 million, 

and so far this year in 2011 the Arab states have provided only 

$78.5 million. Of that amount, the largest contribution has come 

from the United Arab Emirates. That is $42.5 million. Algeria has 

provided $26 million, and Oman has provided $10 million. 

Clearly, the numbers provided—or the amounts of assistance 

provided by the Arab states this year are not at the same levels 

as before. This has contributed to the significant problems that 

Prime Fayyad has faced, particularly in the past month in meeting 

the needs of the Palestinian Authority. 

You are correct. This month Prime Minister Fayyad has not been 

able to pay full salaries. They have only been half-salaries, and 

that is very worrisome. Those salaries, of course, include the salaries of the security forces that are being trained by General Moeller 

and his team. So this is very worrisome. It is a matter that we 

have discussed over the years with the Arab states. We will be discussing this with them again, and urging them to at least meet the 

levels that they have provided in past years, so that the Palestinian Authority can continue to function. 

Mr. CHABOT. Thank you, and it seems the United States gets a 

lot of criticism on us not being supportive enough for this two-state 

solution, but they are getting a lot of lip service, I think, from a 

lot of the Arab countries, and it needs to stop. 

25

Let me go into another question here quickly. The Palestinian 

Authority has launched a campaign outside of direct negotiations 

in order to win admission as a full member of the United Nations, 

and is setting pre-conditions on final status issues which are supposed to be resolved through direct negotiations. 

Will the administration pledge to veto any Security Council resolution on Palestinian statehood, and can you assure us that there 

will not be a last minute effort to issue a statement that undercuts 

the very purpose of the veto, as happened, unfortunately, back in 

February 2011? 

Mr. WALLES. Well, first, I think the President was very clear in 

a speech he gave on May 22nd that we do not support U.N. recognition of Palestinian statehood. We do not believe that unilateral 

attempts by the Palestinians to deal with permanent status issues 

in the United Nations or any other international body is the correct 

path. 

The correct path to achieve a two-state solution and to create a 

Palestinian state is a path of direct negotiations, and that is what 

we have been working hard with both the Israelis and the Palestinians to accomplish. We believe that a Palestinian state must 

emerge from these negotiations and cannot be created by the 

United Nations. We have worked closely with the parties on the negotiated outcome, and we have been clear in our conversations with 

the Palestinians that we will not support any unilateral effort of 

any kind in New York or in any other international organization. 

Mr. CHABOT. Thank you for your answer, but I didn’t hear any 

specific—and it may be above your pay grade to pledge not to recognize this and to veto any action at the United Nations, and again 

the statement that was issued last February gave many of us great 

concern about the administration. We appreciated the veto. We 

didn’t like the statement. You don’t have to respond. Thank you 

very much. 

I yield to the gentleman from New York, the ranking member, 

Mr. Ackerman, for 5 minutes. 

Mr. ACKERMAN. Thank you very much, Mr. Chairman. Just a 

comment on the last observation. I would observe that President 

Bush was the first President of the United States of America to 

proclaim that there should be a Palestinian state, and I don’t know 

of any other President outside of President Obama who has said 

that he would veto any vote in the United Nations declaring the 

Palestinian state unless it was one that was negotiated between 

the parties. 

I am not saying that to find fault with either President, because 

I think in both contexts they were each right. I have to proceed, 

but I just wanted to make that clear, that we have to come up with 

a common sense policy that is in the American interest, that the 

parties themselves negotiate and live with. 

It seems to me we have a dilemma. We have two parties, mainly, 

within the Palestinian community. One is a terrorist organization, 

and one that proclaims peace, and they each seem to control a bit 

of real estate within the region. Commonsensically, you can’t make 

peace with half of a wannabe country; with one that you are at 

peace with, and one that claims that their reason for existence is 

to destroy you. It just doesn’t happen that way. 

26

Everybody understands that they have got to get their act together somehow, if they are going to be indeed, someday, a country 

and speak with one voice. What that voice will be is the question. 

So there seems to be international pressure for them to get together, and now there is an international pressure that they not—

at least from this part of the world—that they not get together, because of the identities that they represent. 

The only way to do it, one would think, is for one of them to give 

up their identity, either the guys who want to make peace, or the 

guys who want to destroy. What the world is saying under our 

leadership is that the people who are looking to make war have to 

give up their stripes, or their spots, depending on how you want 

to describe it. 

Can that happen? It seems to me that the Hamas faction only 

agreed to go into this unity government out of weakness. They are 

very concerned about what is happening in Syria. Do you think 

that is going to happen? 

Also, my understanding is that there have been no appointments 

from the Hamas faction into this new proposed or agreed-to coalition government. It is the same guys that have been there all 

along, most of whom have no political party affiliation, either with 

Fatah or Hams. There is probably a couple of Fatah guys, but certainly no Hamas people. Is that a fair observation? 

Mr. WALLES. Well, thank you, Mr. Ackerman. I think you make 

a good point, that the Palestinian is divided, and it is hard to make 

peace with a divided—the other side of the divided. Our view has 

been that we are not opposed to the Palestinian immunity, but Palestinian immunity only makes sense if it is a road to peace and a 

negotiated outcome. 

That is why we have insisted on the Quartet principles, recognition of Israel, renunciation of violence, acceptance of all previous 

agreements. So that is the kind of government that could actually 

foster a two-state solution. That is why we have been very clear 

with the Palestinians about how our laws apply and the need to 

see that kind of government. 

I would say that we have tried to, through our assistance programs, indicate that there is a way, as we have seen in the West 

Bank, where the Palestinians can take responsibility for their affairs. They can provide security. They can provide services to their 

people. That is a path that is a model toward a Palestinian state 

that can live peacefully with Israel. The model we have seen in 

Gaza is something that is highly different. 

Mr. ACKERMAN. Let me ask you a second question in the few seconds I have. The chairman has brilliantly put together a most distinguished panel representing the humanitarian, the security aspects, and the political aspects in our three expert witnesses. We 

have to come up with a policy, should this thing come together between, this so called merger between the Hamas and Fatah. 

This is not a fairy tale. We don’t have the wisdom of those people 

who write those things, and we very rarely get it just right. Either 

the porridge is too hot, or too cold; never just right with the work 

that we do. We will either underreact or overreact in our policy. 

What happens here—because I don’t think we are going to 

underreact—my view of our colleagues suggests that we will probVerDate 0ct 09 2002 14:37 Aug 25, 2011 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 F:\WORK\MESA\071211\67381 HFA PsN: SHIRL
27

ably, if that merger goes through, without the Hamas people reforming, if I can use that word, is that, likely as not, because of 

the U.N. and the merger, there will be a cessation of aid. 

What does that do to our humanitarian efforts? What does that 

do, General, to the security efforts? What does that do to our political inclinations, and does that become a disaster or does that become a good policy? 

Mr. CHABOT. The gentleman’s time has expired, but you can answer the question. 

Mr. WALLES. Let me just provide a chapeau, and then I will ask 

my colleagues to respond as well. 

Just a few bits of background: The agreement between Hamas 

and Fatah was signed in Cairo on May 4th. Since then, no aspect 

of that agreement has been implemented. The first issue which 

they have tackled is who would be the Prime Minister of the new 

government, and they have reached an impasse on that. I think, 

as you are aware, President Abbas has proposed that Salam 

Fayyad continue as the Prime Minister. Hamas has not agreed to 

that, and they have not been able to resolve that question. 

None of the other issues that must be resolved—who else would 

be in the government, a government program, or the policies of 

that government—None of those things have been agreed. So the 

prospects for this agreement are very uncertain. I have learned not 

to predict the future in the Middle East, but we have seen so far 

is that there are considerable problems between Fatah and Hamas 

in implementing that agreement. 

Now in terms of the implications, if there is an agreement, we 

would certainly review any government that is formed based upon 

our law. We would look at the composition of the government. We 

would look at the government program, and we would look at the 

policies of that government. In particular, security would be an important factor that we would want to look at. 

Let me ask General Moeller to comment on that and how we 

view things now and how we might factor that into our consideration in the future. 

General MOELLER. Thank you, sir, for the question. If we talk 

specifically about a cutoff of security assistance to the Palestinians 

as an instantaneous policy, as you know, sir, it would immediately 

halt our efforts to—our advise and assist efforts to help the Palestinians institutionalize that professional culture. 

It will also stop our build, train, and equip efforts at a time when 

we are beginning to transition them to the Palestinian Authority, 

so that they can have that self-sustainment capability to conduct 

professional security operations. 

I believe that both the Israelis and the Palestinians would see it 

as a—It may not be as strong as a breach of faith, but they certainly would be very, very concerned that we are not continuing as 

their enduring security partners in this important part of the Middle East peace process. 

There is a negative regional aspect as well, as you know, because 

the Jordanians, along with the Israelis and the Palestinian Authority, have this trust and confidence circle that really offers us opportunities rather than challenges. So I would see a cutoff of security 

assistance in a negative light today. 

28

All that being said, again in all of my discussions with the senior 

Israeli general officers, they are adamant that we need to continue 

to help the Palestinians build a professional security force. In fact, 

they have been very helpful with offering me all kinds of different 

options. 

On the Palestinian Authority side, again we are at a very pivotal 

moment in the security assistance program where we are beginning 

to see that cultural, professional performance institutionalized at 

the lower levels, as well as the beginnings of an institutional depth 

in the ministerial levels as well. 

Mr. CHABOT. Thank you very much, General. Mr. Laudato, did 

you have anything to add, briefly? 

Mr. LAUDATO. Just that the level at which we work at the institutional level is that it is the building block of a new Palestinian 

state, and we would, obviously, ensure that the full implementation 

of U.S. law—It would mean the end to that kind of work, and also, 

therefore, I think, compromise the environment that would be 

needed to move forward on any peace effort. 

Mr. CHABOT. Thank you very much. The gentleman from South 

Carolina, Mr. Duncan, is recognized for 5 minutes. 

Mr. DUNCAN. Thank you, Mr. Chairman. If Hamas partisans do 

not take a direct role in the Palestinian Authority’s power sharing 

government, but the movement is giving power to approve of the 

government’s composition, would the level of Hamas’ involvement 

disqualify the Palestinian Authority from continued U.S. assistance? Mr. Walles? 

Mr. WALLES. Thank you. The standard in the law is a power 

sharing government, or a government that would be controlled by 

Hamas. So we would have to look very carefully, if there is a new 

government, at how that is structured, what is the composition, 

who are the ministers. Also we would look at whether there are 

any other committees or anything else outside the government 

itself that Hamas could use to exercise influence over the government and its decision making. We would also look as well at the 

legislative council where Hamas has a majority, if that were to be 

revived. 

So there are a number of actors that we would look at. We would 

have to take all those things into consideration to see whether 

there is any power sharing; in other words, whether Hamas does 

have any role in making decisions in the government. 

At this point, as I said, nothing in this agreement has been implemented yet. There is no new government. So it is a bit of a hypothetical question in terms of what the government would be, but 

if there is a new government, we would certainly look at it very 

carefully and, as I said earlier, we would ensure that our law is 

fully and completely implemented. 

Mr. DUNCAN. General Moeller, there was an article today in Financial Times talking about the Quartet that is meeting on the 

Middle East talks, and a senior Obama administration official said 

that more work needs to be done to close the gaps that exist before 

the Quartet can go forth publicly with the kinds of statements that 

might enable the parties to break through that impasse. 

What sort of statements might be necessary in order to break an 

impasse? 

29

General MOELLER. Sir, I would defer to my distinguished colleague here to answer that question. I don’t believe that the Quartet principles we are talking about, capability gaps when it came 

to the Palestinian Authority Security Forces or concerns by the 

Israeli Defense Forces on where the gaps on the security side need 

to be filled. 

Mr. WALLES. If I could, I will just answer briefly. We have been 

very clear that the path forward to a peace agreement is direct negotiation between the two sides, and we are trying to create that 

as an alternative to any unilateral actions in New York and elsewhere. 

What we have been calling on the parties to do, both ourselves 

and through the Quartet, is for both sides to return to the direct 

negotiation on the basis of the speech the President gave in May. 

We have been working with the Quartet in a way to have that call 

come from the Quartet itself on both of the parties. 

Yesterday there was a meeting of the Quartet. Secretary Clinton 

led the U.S. delegation there. What we found, as you referred to 

in your article, is that there continue to be gaps between the two 

sides, and that is what sort of underlies the difficulties we have got 

in trying to get back to a negotiating process; but we are continuing those discussions. There are meetings at a lower level as 

we speak among the Quartet to try to find ways to submit a call 

to the Israelis and the Palestinians to return to negotiations on 

that basis. 

Mr. DUNCAN. You mentioned the speech in May, but Prime Minister Netanyahu has said that the ’67 border is indefensible, and 

so the other side needs to come to the table, I think, with something different than that. 

The Quartet needs to come to the table with something different 

than the 1967 borders. We need to see, I think, more on the part 

of the Palestinian Authority coming closer to recognizing the State 

of Israel and not continuing to have Hamas fire missiles into—or 

rockets, rather, into the territory. I think, just yesterday, there 

were more rockets fired. 

So one quick question I had: About 6,000 tons of food and other 

aid goes into the Gaza Strip every day. Where does most of that 

come from, just for my edification? 

Mr. WALLES. The food, the other things that are shipped into 

Gaza—some of those are commercial purchases, as in any other 

place, and some of those are donations financed by international 

donors. We provide roughly $77 million in assistance right now to 

projects in Gaza. These are administered by USAID. It includes 

support for the U.N. Food Program. 

We also do a number of health care, education, and small infrastructure projects. Everything that goes into Gaza for these 

projects or anything else must pass through Israeli checkpoints, 

and are inspected. So in order to implement these projects in Gaza, 

we work closely with the Israeli authorities to make sure that 

these bids can move in. Thereby, everything we are doing in Gaza 

is supported by the Israeli Government. 

In fact, as I mentioned, I was just in Israel and had some meetings with the Ministry of Defense officials, and they all expressed 

support not only for the programs that we are implementing in 

30

Gaza, but also from other donors, from Europe, from the World 

Bank, and from U.N. organizations as well. 

Mr. CHABOT. The gentleman’s time has expired. The gentleman 

from New York, Mr. Higgins, is recognized for 5 minutes. 

Mr. HIGGINS. Thank you very much, Chairman. General Moeller, 

you had indicated the Israeli officials have indicated that help in 

building the Palestinian Security Force is something that they continue to encourage. Is that in recognition of this power sharing 

agreement between Hamas and Fatah and the Palestinian Authority? 

General MOELLER. Thank you for the question, sir. Actually, it 

is a result of, I believe, a longstanding appreciation for the Palestinian Security Force capabilities. The PASF has become very capable in ensuring—helping to ensure law and order across the entire 

West Bank, and of course, when it comes to the Israelis, especially 

in the Israeli Defense Force senior leaders, they understand that 

having a stable, secure West Bank is critically important to and reflects positively on Israeli security. 

Mr. HIGGINS. But doesn’t the inclusion of Hamas, bent on the destruction of Israel, seriously compromise the credibility of that effort? 

General MOELLER. Sir, as of the current date, there is no Hamas 

participation in any parts of the government. There is no participation by any members of Hamas in the Palestinian Authority Security Forces, and——

Mr. HIGGINS. Right, but if they had a Fatah, Mahmoud Abbas is 

accepting of a power sharing agreement. I presume that that relationship, including the significant involvement of Hamas, will 

evolve and serve to undermine the credibility of the progress that 

has been made there, including especially in terms of the security 

force. 

General MOELLER. Yes, sir. I think the Israelis, especially the 

senior leaders—they have the same philosophy that we do. Watch 

very closely as events unfold. Make sure that we are very cautious 

as we continue to support and provide assistance to the Palestinian 

Authority Security Forces, and with an understanding that, if there 

is any change in the environment, if there is any change in the 

willingness and the professional performance of the Palestinians, 

then we will reevaluate our support. 

That is, I think, consistent from the USSC perspective, as well 

as from the Israeli perspective. 

Mr. HIGGINS. When you look at the models throughout the 

world—and unfortunately,. there are too few—certain preconditions 

should exist, and if those parties don’t agree to those preconditions, 

our commitment should be substantially pulled back. 

I look at the situation in Northern Ireland. It was required that 

Sinn Fein and the Irish Republican Army, to participate in peace 

talks, had to renounce violence, had to actually destroy their arms. 

International observers had to observe the destruction of those 

arms before negotiations could begin. 

It seems to me that what this effort on the part of the Palestinian Authority in this power sharing agreement—it lacks credibility, because if you are looking for a peaceful solution, a peaceful 

two-state solution, it would seem that all of the parties included 

31

should agree to certain preconditions that allow a basis for trust 

and understanding to allow the peace profess to evolve, and that 

doesn’t seem to exist here. 

I yield back. 

Mr. CHABOT. Thank you very much. I appreciate it. And the gentleman from California, Mr. Rohrabacher, is recognized for 5 minutes. 

Mr. ROHRABACHER. Thank you very much, Mr. Chairman. Let me 

just note that my colleague who just finished his time was actually 

touching on a very important approach, and maybe a mistaken approach, that has been made in bringing peace to that region. Seems 

to me, following up on your line of questioning, that there is a difference between setting a precondition on one’s assistance versus 

maintaining assistance, even though the parties who are receiving 

it are not necessarily committed to changing the status quo. 

So in one situation, actually, your assistance aids in maintaining 

the unacceptable situation, versus saying, when you do this or that, 

we are going to actually continue our aid, which leads me to one 

point that I think—I’m sorry, I can’t pronounce your name. 

Mr. LAUDATO. Laudato. 

Mr. ROHRABACHER. Okay. Probably still can’t, but we are talking 

about water. Would it be something that we could, for example, set 

as a precondition that, if indeed there is an agreement between the 

Israelis and the Palestinians, couldn’t we not set out our assistance 

in terms of water, saying we will build you the water system you 

need, but we are not going to do that until both parties have 

reached an agreement necessary for peace. 

Mr. WALLES. Let me respond to your first point, and then I will 

ask my colleague to talk about water a little bit. 

One point I wanted to make clear is that we feel we have accomplished a lot with the assistance programs that we have run over 

the number of years with the Palestinians. Let me just read one 

fact. This is related to our security program, and this is information from the Israel Defense Forces, and it is public information. 

According to the IDF, the number of terrorist attacks in the West 

Bank has decreased from 841 in 2005 to 36 in 2010. This represents a 96 percent decrease in the number of terrorist attacks in 

5 years. Now that is, obviously, significant, not just for the Palestinians. It is very important for Israeli security. It is very much 

in our national interest. 

So we believe we have been accomplishing things. We are not, in 

a sense, perpetuating an unacceptable status quo. We are actually 

accomplishing things, and we don’t want to lose that. 

Mr. ROHRABACHER. Let me note that 15 years ago the idea of a 

two-state solution was not accepted by both parties, and both parties seem to want—The Palestinian wanted Israel to disappear, 

and the Israelis wanted the Palestinians to disappear; and just the 

fact that we have got both sides now supposedly agreeing to a twostate solution is a major step forward, but let me just also amend 

that by saying it seems to me the major stumbling block to peace 

right now is nothing more or less than the Palestinians accepting 

that Israel has a right to exist as a Jewish state, meaning that the 

Palestinians will give up and just say, ‘‘We do not believe in the 

right of return.’’

32

The moment that happens, you are going to have a huge step forward in the cause of peace. I think that perhaps the $550 million 

we are giving to the Palestinians might be predicated on you might 

think about making this public commitment. Otherwise, we are not 

going to have another step forward like we have, like you are suggesting today. 

Mr. WALLES. Thank you for those comments. We have, as I said, 

been very clear with the Palestinians on the need to return to direct negotiations. Those issues that you referred to are issues that 

have to be negotiated between Israel and the Palestinians. That is 

the only pathway to achieve the kind of peace which the sides both 

say they want. 

Mr. ROHRABACHER. Let me put it this way. Once this idea of the 

right of return is—they acknowledge that this is no longer something that they believe in, at that point we are just discussing what 

are the borders going to be between the Palestinians and the 

Israelis, and whether or not there is going to be resources like 

water available for both entities. 

I would hope that our aid program is not letting people just 

maintain their current situation in a status quo that is unacceptable, when the course is very easy to see. Of course, it is easy to 

see that, but it is harder to get people to actually make the commitment that, yes, Israel has a right to exist, because at that point 

it does say, okay, we have given up this dream that the Palestinians are going to retake this entire area that perhaps most of it 

used to belong to them. 

Mr. CHABOT. The gentleman’s time has expired. Thank you very 

much. We will now recognize the gentleman from Virginia, Mr. 

Connolly, for 5 minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and welcome to the 

panelists. Mr. Laudato, AID has a fairly extensive presence in the 

West Bank. 

Mr. LAUDATO. Yes, sir. 

Mr. CONNOLLY. Cooperating with the Palestinian Authority, 

working with the Prime Minister, Mr. Fayyad. Do you have any 

programs in the Gaza? 

Mr. LAUDATO. Yes, we do, sir. 

Mr. CONNOLLY. And what is the level of cooperation or how 

would you compare the level of oversight and cooperation with the 

Hamas authorities in charge there compared to the Palestinian Authority and the West Bank? 

Mr. LAUDATO. Oversight and cooperation are two separate issues. 

With regard to the cooperation, we do not work with the de facto 

Hamas government in Gaza. All of our assistance is coursed 

through international NGOs or international organizations, and we 

monitor it very closely to the extent that we can, utilizing the kinds 

of instruments and processes that you use when you can’t have 

boots on the ground. 

Mr. CONNOLLY. So the contrast is that we do work with the government—the functioning government of the West Bank. 

Mr. LAUDATO. Yes, we do, sir. 

Mr. CONNOLLY. And you work through it sometimes. 

Mr. LAUDATO. And through it, and with it. 

33

Mr. CONNOLLY. But in the Gaza we work through nonprofit or 

international NGO entities. Presumably, however, at some point 

they intersect with the Hamas authorities. 

Mr. LAUDATO. They operate with the tacit concurrence of the authorities, but we will not permit that the Hamas government organization to directly control or shape how this assistance is utilized. 

That is determined by the NGOs or by the international organizations, with our concurrence and with the concurrence of the 

Israelis. 

Mr. CONNOLLY. What is your understanding about that modus 

operandi and how it would change under the new power sharing 

arrangement being proposed? 

Mr. LAUDATO. I can’t imagine it would change under the new 

power sharing. 

Mr. CONNOLLY. Why would you not imagine it would change? 

Now you would have a unified government. 

Mr. LAUDATO. Because we have U.S. law to contend with, and we 

must follow and we must implement U.S. law, which would not 

permit us to operate with a group, Hamas or controlled organization, as long as that organization was still considered by the U.S. 

Government to be a terrorist organization. 

Mr. CONNOLLY. So conversely, it could change your operations in 

the West Bank. 

Mr. LAUDATO. Yes, it could, sir. 

Mr. CONNOLLY. Because you could find yourself technically in 

violation of United States law. 

Mr. LAUDATO. We would not violate it. We would end it. 

Mr. CONNOLLY. I understand. General Moeller, the same question for you. What are your operations, if any, in the Gaza? Presumably, none. Secondly, what is your understanding about how 

that would change, once this power sharing arrangement is underway, either in the Gaza or in the West Bank or both? 

General MOELLER. Yes, sir. That is correct. We have no work in 

Gaza. We are focused exclusively with the Palestinian Authority 

and with the security forces that operate on the West Bank. 

As Mr. Walles said, it is impossible to predict the future, especially in the Middle East. So the different sequels and branches 

that could occur based on a power sharing type government on the 

West Bank, it is impossible for us to predict. But again, as all of 

us have said, if in fact, there is Hamas presence in a power sharing 

government, we will meet U.S. law, the requirements of U.S. law. 

Mr. CONNOLLY. Which would include possibly cessation of the activities you described earlier in the West Bank? 

General MOELLER. That is correct, sir. 

Mr. CONNOLLY. Thank you. Mr. Walles, in the brief time I have 

left, one of the things I hear from the Palestinian community in my 

community is opposition to the two-state solution. They actually 

advocate for one state. Why can’t we just make one state work? 

Have the authorities you are working with in the Palestinian Authority, in fact, publicly embraced the two-state solution, and are 

they committed to it? 

Mr. WALLES. Yes, sir. President Abbas and Mr. Fayyad, all of the 

senior officials at Palestinian Authority have been very clear in 

public and also in our private conversations. They are seeking a 

34

two-state solution. They are seeking integration of the Palestinian 

state that would exist side by side in peace and security with 

Israel. That is the objective that we have been aiming at. That is 

also the position of the current Israel Government as well. They 

also support a two-state solution. 

I know there is discussion, both among your constituents but also 

in the West Bank and Gaza about a one-state solution. That is not 

something that we see makes any sense. It is also something that 

in the polling that we have looked at among Palestinians in the 

West Bank and Gaza, there is still a strong support for peace with 

Israel and for a two-state solution. It is not unanimously, obviously, but the strongest support is for a two-state solution. 

Mr. CONNOLLY. Thank you, Mr. chair. 

Mr. CHABOT. The gentleman’s time has expired. The gentleman 

from Kentucky, Mr. Chandler, is recognized for 5 minutes. 

Mr. CHANDLER. Thank you, Mr. Chairman. Welcome, gentlemen. 

Nice to see you all, and thank you for all of your work on behalf 

of our country in, I guess, the most confusing, difficult, and complex region in the world, and I think we all understand how complex these issues are. There are no easy solutions, and I know you 

all are working and doing your best to get through them. There 

are, of course, a number of things that are troubling, though. 

We have got a request in the 2012—The 2012 request from the 

President is for $400 million or so in aid. That request assumes a 

certain level, as has previous aid, a certain level of cooperation on 

the part of the Palestinian Authority to move toward the two-state 

solution, and all the aid is geared toward that. Yet we see, in particular, two very, very troubling things occur. 

One is, of course, the Hamas Fatah agreement and where that 

seems to be leading, and we all know what trouble exists there. We 

also see an effort to move outside of direct negotiations, to try to 

go for the September vote in the United Nations. Surely, you all 

can understand how that is troubling to people in Congress and, 

frankly, I think, to the citizens of this country, that we continue 

to provide substantial aid, and we feel like we are not getting cooperation. 

That is the situation, I think, a lot of us feel cannot continue, 

and at some point we are going to have to just say, you know, if 

you guys are not going to cooperate, we are going to have to cut 

the aid off. There are times when that is all that people understand, and I think we are going to have to look toward that, and 

I think that is coming if we don’t get a little bit more cooperation. 

Could you give me an assessment of the effectiveness of these 

projects, and you have talked about some of the security concerns 

that have been addressed, and I understand that you have some 

statistics on terrorism and how some of that has been reduced. But 

on the economic side, what economic projects have been effective, 

and which ones have not? Do you have projects where the money 

has been spent in the past that have not been effective? 

Secondly, what are we doing to move this issue forward, of seeing 

that these folks cooperate in exchange for this money? With budgets as difficult as they are now, performance is extremely important. We have got to get—Our money has got to get results. 

35

Mr. WALLES. Thank you for those comments. I would agree completely that, particularly in this day and age and the budget environment that we face in this country, that all of our assistance, 

wherever it is used, has to be done effectively, has to be based upon 

a certain level of cooperation. 

Our entire aid program, whether it is security or economic, is 

based on the premise of a two-state solution, and therefore, we 

need to be sure that the Palestinian side remains committed to 

that two-state solution. Now they say they do, but just as you have 

concerns, we also have concerns about this reconciliation agreement. We have been clear about that with them, and we also 

strongly oppose any effort to go to the United Nations on a unilateral basis. 

Mr. CHANDLER. But they are clearly involved in that effort. 

Mr. WALLES. Well, they are, but again we have to judge based 

upon what actually happens. As I said, the reconciliation agreement has not been implemented. We are not sure whether it will 

be, or not. So if there is a new government, we will react to that, 

but at this point, there is no new government, and similarly in 

New York. We have been very clear. We told the Palestinians that 

is not the pathway they should be moving down. They have an important choice to make, and it will have consequences in terms of 

our relationship, if they choose that path. 

In terms of your question on the economics, maybe I will ask my 

colleague to respond to that. 

Mr. LAUDATO. Thank you. Just briefly, three areas where cooperation is critical. Water, as Congressman Rohrabacher said. 

Water is an environmental issue, and it doesn’t recognize political 

boundaries. So working on water, you are working with both the 

Israelis and the Palestinians, getting them to cooperate. You can’t 

drill a well here and not expect the aquifer across the border to be 

impacted. 

So we are very careful about that. We have brought them together around these water issues, I think, very effectively. Roads: 

Building roads is another area where we tend to help these two entities work together because of the security implications of roads. 

Probably the most interesting is sort of working with the Palestinian private sector. 

These young people, these young entrepreneurs in Palestine recognize their natural partners are across that border in the Israeli 

private sector, and there is a tremendous desire to get together to 

make money, because that is what the private sector is all about, 

and helping to create the linkages, either utilizing U.S. firms that 

are there to stimulate or sometimes just directly between the two 

societies, it is helping to foster the kind of cooperation, and that cooperation is absolutely essential to the development of the region, 

I would say, on both sides of that border. 

Mr. CHABOT. The gentleman’s time has expired. We are going to 

do a second round here, and I will begin with myself. I recognize 

myself for 5 minutes. 

Mr. Walles, you stated in your testimony that—and I will quote 

you—‘‘Our assistance gives us strong leverage.’’ Given that statement, it is troubling that, after all these years, it is increasingly 

hard to believe that the Palestinian leadership is truly partners for 

36

peace with Israel. Eighteen years after Oslo, and despite having received billions in U.S. assistance, the Palestinian leadership continues to refuse to embrace the very vision of two states for two 

peoples that you cited in your statement, even as the Israeli Government accepts that vision. 

The Palestinian leadership also refuses to recognize Israel’s right 

to exist as a Jewish state for the Jewish people, even as they seek 

a Palestinian state for the Palestinian people, and anti-Israel incitement continues to be propagated by PA control of institutions, 

including maps of the area that show no State of Israel, with a 

State of Palestine in its place that stretches from the Jordan River 

all the way to the Mediterranean Sea. 

So is it that our assistance given us—Excuse me. Is it that our 

assistance hasn’t given us leverage in this regard or that we 

haven’t really used it, and the Palestinian Antiterrorism Act requires the Palestinian Authority to stop incitement and recognize 

the Jewish State of Israel’s right to exist, if it wants to keep receiving U.S. assistance. 

Given the PA’s record and given U.S. law, how can we justify 

continued assistance? 

Mr. WALLES. Thank you for that question. Our assistance gives 

us leverage, and we do work closely with the Palestinian Authority 

on this whole range of issues. We are speaking to them about reconciliation agreement. We are speaking to them about unilateral 

actions in New York. We speak to them about incitement, and we 

talk about problems and textbooks, a whole range of issues, and we 

have found over the years that our ability to discuss these issues 

has produced results. 

In addition, as I explained earlier, we feel that there are practical benefits that come out of the assistance we provide. We have 

seen over the years improvements in security. I alluded to that earlier. We have also seen how our assistance has helped the Palestinian Authority develop the institutions that they will need for a 

two-state solution. 

It is, obviously, not an easy process, and we have continued to 

have issues that we have to discuss with the Palestinians, and we 

do that, but I have dealt with the Palestinian leadership for a number of years. I was in Jerusalem for 4 years with our Consul General, and I have to say that, in terms of their commitment to peace, 

I am convinced that President Abbas, Prime Minister Fayyad are 

indeed committed to peace with Israel. They are committed to a 

two-state solution. I have known both of them for a long, long time. 

So I think that commitment is there. 

Clearly, there are issues that we have with the Palestinian Authority, and there remain considerable gaps between Israel and the 

Palestinians on the issues between them, borders, refugees and so 

forth. So this is not an easy problem, but it is one where we believe 

it is in our national interest to achieve that two-state solution and 

to use all the tools that we have through our assistance and other 

means, to advance in that direction. 

Mr. CHABOT. There are many of us that are getting more and 

more skeptical about that assistance. You mentioned Prime Minister Fayyad. Let me ask you this. He is a very well respected perVerDate 0ct 09 2002 14:37 Aug 25, 2011 Jkt 000000 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 F:\WORK\MESA\071211\67381 HFA PsN: SHIRL
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son by the western world. He has strengthened Palestinian institutions and, certainly, helped to turn the economy around there. 

There are questions as to whether Prime Minister Fayyad will 

retain his position, if a new unity government is formed. What, if 

any, are the implications for U.S. assistance if Fayyad is not the 

Prime Minister of the next Palestinian Government, and is replaced by a less reputable person? 

Mr. WALLES. We have a great deal of confidence in Prime Minister Fayyad. We have worked with him. He has done tremendous 

things, as you have said, in terms of improving the institutions of 

the Palestinian Authority, improving the security situation, public 

finance, and so forth. 

I don’t want to get in the position of helping the Palestinians 

choose who their prime minister is. We have, obviously, very good 

relations with Fayyad since 2007 when he has been the prime minister. I would say that, certainly in terms of our law, but also in 

terms of our policy, what is important are not the individuals. 

What is important are the institutions, and it is important that 

there be a Palestinian Authority Government, whoever heads it, 

that is committed to the principles, the Quartet, recognition of 

Israel, renunciation of violence, acceptance of all the previous 

agreements, and a two-state solution. 

That is what is important to us, the policies, the composition of 

that government. That is more important, in many ways, than an 

individual, but again everything Fayyad has done over the last 4 

years as prime minister has been remarkable in terms of the 

achievements. 

Mr. CHABOT. Thank you. I would ask unanimous consent for one 

additional minute to ask a question here, without objection. 

General Moeller, if I could, could you please describe the U.S., 

not the Israeli or the Palestinian but the U.S., vetting mechanisms 

that are in place or that are employed relative to the Palestinian 

Security Forces? How often is follow-up vetting performed? Is there 

any kind of biometric tools used to assure that there is no malfeasance and that sort of thing? 

General MOELLER. Yes, sir. As you know, Palestinian recruits, 

before they can go to their training in Jordan, go through an extensive vetting program, and it really starts with the Palestinian Authority. They do a pre-vetting for all of the recruits before they are 

actually—They submit names to the United States and to Israeli 

Government. 

We comply with all of the legal requirements or Title XXII or 

I&L funding for Leahy vetting as well as for—and it, of course, 

uses all of the tools that we have at the disposal of the Department 

of State. So the Palestinian recruits go through a vetting process 

with a pre-vetting process by the Palestinians. The United States 

does our legally required vetting. The Israelis do an extensive vetting, and then before one trooper moves, the Jordanians have an 

opportunity to do vetting for each recruit. 

A good example is that we recently received vetting results from 

the Israelis for 650 Palestinian Security Force members that will 

move either next month or in early September for their basic training. Of those 650 recruits, the Israelis rejected five. So what you 

can see is that the Palestinians are doing a very good job in their 

38

pre-vetting, as well as the vetting that all of the services go 

through. 

We have also seen, of course, for every program that they go 

through that is provided through U.S. assistance, they go 

through—each of the members go through another additional vetting process as well. 

Mr. CHABOT. Thank you very much. I thank the panel. I would 

now recognize the gentleman from New York for 5 minutes plus 1 

minute, to be fair. So the gentleman is recognized for 6 minutes. 

Mr. ACKERMAN. There is this TV game show or whatever. You 

spin a wheel, and all the parties try to keep racking up points before they solve the puzzle, and sometimes they get a little bit too 

greedy. Instead of solving the puzzle, they wind up bankrupt. They 

try to keep building their score. 

Let us go right to trying to solve the puzzle. The goal here is to 

get both sides back to the bargaining table. There is great danger 

in that not happening. The results could be disastrous for both 

sides. How do you get them back to the bargaining table? 

The President had a proposal. I wasn’t startled by it. I don’t 

think anybody who has followed this was startled by it. It is something that has been discussed by a lot of people over a lot of years 

in a lot of different administrations. There is some face saving that 

has that has to take place as well between the Israelis and the Palestinians to get back to the table. 

The President threw out what he calls pre-’67 lines. The prime 

minister rejected that, because he said those lines were indefensible. Why don’t we employ some Solomonic wisdom and cut this 

baby in half. Let us narrow the difference. If someone were to 

make a proposal that said get back to the table based on the following proposition with mutually acceptable swaps, but the impetus being, start with the fence that the Israelis picked out. 

Presumably, they could have put it down anyplace that they 

wanted. In some places, they have moved it to accommodate legal 

decisions of their court, but presumably if they put down a security 

fence, they defined a line that they thought was defensible. Otherwise, they would have put it, commonsensically, someplace else. 

If we said, let us take both sets of lines, the pre-’67 lines and the 

fence, and used both lines as the basis to get back to the bargaining table with mutually agreed to swaps, which means the 

Israelis could have a veto if they think there is a problem, as would 

the Palestinians, and go back to square one, that would mean that 

the large settlement blocks remain on the Israeli side, which everybody seems to agree is going to happen in any deal that can possibly be reached, and narrow those differences to somewhere between the pre-’67 lines and the security fence, is there enough 

there to talk about? 

Is there enough face saving for both sides? Could you start with 

both sides lines that both sides have claimed that they want, and 

there is a lot fewer hectares, acres, inches to squabble about? Does 

that work, politically and from a security point of view? 

Mr. WALLES. Mr. Ackerman, if you and I were negotiating this, 

I am sure we could work it out. The difficulty here, of course, 

is——

Mr. ACKERMAN. And who is going to nominate me? 

39

Mr. WALLES. The difficulty, of course, is reconciling the Israeli 

position and the Palestinian position, not just on the issue of territory but on many, many issues, and there are indeed some important gaps. 

What the President did in his speech on May 19th is to try to 

lay out what he thought was a balanced way in which we could resume negotiations, and he talked not just about the territorial aspects. He also talked about security, and that is an important part 

of that balance. 

The President also on the 22nd of May explained in a little bit 

of detail what he meant. I think it is worth just sort of reading 

that. He said that, when the two sides negotiate such a border, it 

will necessarily be different than the June 4, ’67 line. That is what 

the concept of mutually agreed swaps is. So, clearly, the parties are 

going to have to sit down in direct negotiation and work this out. 

The President’s point in laying out these ideas on territory and 

security was not to lay out the outcome. It was to start to give a 

basis on which they could begin. 

Mr. ACKERMAN. But the premise I am putting before you is, yes, 

the prime minister didn’t want to start there, because he said those 

were indefensible. So put out his defensible one—presumably, the 

fence is defensible. 

Mr. WALLES. I think it is an interesting idea. At the moment 

what we are trying to do is to get both sides to agree to come back 

to negotiate, based upon the totality of what the President said. We 

have conversations that are ongoing. 

Mr. ACKERMAN. But that incorporates what the President said. 

It incorporates what the prime minister did. 

Mr. WALLES. I think it is an interesting idea. 

Mr. ACKERMAN. I don’t want to endorse my own proposal, but I 

will, if nobody else does. 

Mr. WALLES. I will take that back, and we will see what we can 

do with it. 

Mr. ACKERMAN. General, is that logical? 

General MOELLER. Sir, heaven forbid that I would actually talk 

about Israeli security concerns from their perspective. It sounds 

like a proposal that we do need to take back and talk about. Certainly, I would be perfectly willing to talk with the IDF about how 

that fits in. 

Mr. ACKERMAN. Thank you. Mr. Chairman, I don’t need the extra 

minute. 

Mr. CHABOT. You already took it. We gave you six. Henceforth, 

we will have the Ackerman plan. The gentleman from California, 

Mr. Rohrabacher, is recognized for 5 minutes, or 6. He always 

takes six anyway. 

Mr. ROHRABACHER. How much money are we providing in assistance, all assistance to the Palestinians? 

Mr. WALLES. For the Fiscal Year 2011 budget, we requested in 

economic support funds $4,400,000. That is the same level that was 

requested in Fiscal Year 2010. That is money that is implemented 

by USAID. In addition to that, we have requested $150 million in 

INCLE money. That is International Narcotics Control and Law 

Enforcement. That is the program that funds General Moeller and 

his program. So those are the two components of the assistance. 

40

Mr. ROHRABACHER. Where is the $77 million to Gaza? What account does that come out of? 

Mr. WALLES. Well, those are projects that are ongoing now. So 

that comes out of previous appropriations. 

Mr. ROHRABACHER. So we are spending—But that is not in- cluded. So it is not included in the $600 million that you just described, or it is? 

Mr. WALLES. The projects that I described in Gaza have been 

funded out of previous year money. Those are ongoing projects. 

Now the money we are requesting for 2011, the total of those two, 

is roughly $550 million. 

Mr. ROHRABACHER. That includes the $77 million going to Gaza or is it $77 million more than that? 

Mr. WALLES. No. All of what we are doing is included in those 

two appropriations.s 

Mr. ROHRABACHER. Thank you very much. How much are we giving to Israel? 

Mr. WALLES. Our assistance to Israel is all foreign military fi- nancing. It is in the neighborhood of $3 billion a year. 

Mr. ROHRABACHER. $3 billion, and no other assistance to Israel? 

Mr. WALLES. There is no economic assistance at the moment to 

Israel. 

Mr. ROHRABACHER. It seems to me, again as we look at what is 

going on, the status quo we find ourselves in, is that the solution, 

really—the idea of just getting themselves talking to each other 

is—They could talk about whatever and get nowhere. It seems to 

me, the stumbling block is whether or not the Palestinians will 

agree that the right to return, meaning to swarm into an Israel 

that would exist and thus change its basic nature. That is the issue 

at hand, is it not? 

They can always come to an understanding about borders, but 

until they understand that, that is the essence of what the disagreement is. 

Mr. WALLES. I appreciate your perspective on this. The issues 

that the Israelis and the Palestinians have agreed form the permanent status negotiations include the borders, security, refugees, Jerusalem, water. Those are the ones that they will have to decide 

in the course of those negotiations, which includes refugees, as you 

put it, on the right of return. So that is an issue that they are 

going to have to deal with. 

Mr. ROHRABACHER. But, obviously, until the right of return is 

dealt with, nothing else matters, because Israel, obviously, isn’t 

going to say, oh, yes, 3 million people or 2 million people can come 

right back into Israel, which changes the very nature of what they 

have been fighting for their entire time. 

Let me ask you this. It seems to me from what I am hearing here 

today, that we have been treating this rather then as an impasse 

on policy, which I see it as, as instead as some kind of a development program. We spent so much money in doing this and preparing this, and even to the point of we are micromanaging the vetting of their troops or their constables or whatever you want to call 

them. 

Just for the record, Mr. Chairman, I don’t think that looking at 

the peace process as a development program is going to bring 

41

peace. However, offering some incentives, as I mentioned earlier, to 

both sides to come to grips with those specific issues is a totally 

different approach. Frankly, I think the approach we have been 

using, shoveling out dollars to the back of a truck has not worked, 

and I think we need to take a different approach in one last segment here. So I got 25 seconds left. 

Back to water: Where does the Red Sea and the Dead Sea 

project, which is one of their huge potential water projects for that 

area—Where does that stand, and could that possibly be something 

that we would say, you guys agree to the final solution here, and 

we will move forward and work with you to develop this water 

project? 

Mr. LAUDATO. Thank you, Congressman. With regard to the 

Dead/Red project, most of our discussions have been regionally on 

that project, because, obviously, it impacts on the Palestinians, on 

the Jordanians, and on the Israelis. I believe that the current status is that there is still some substantial environmental assessment work that is ongoing. That is, I believe, being financed by the 

Jordanian Government itself, but this issue does appear on agendas when we talk to each of the governments in the region on a 

regular basis, but we have treated it up to this point as a technical 

issue, because we are trying to figure out what the engineering is, 

what the environmental impact is, and those issues. 

Mr. ROHRABACHER. That assessment has been going on for 10–

20 years now. 

Mr. LAUDATO. Yes, absolutely. 

Mr. ROHRABACHER. Let me just note, it could be a great symbol 

of freedom and progress and prosperity and peace to that region, 

but I don’t think it is going to happen as a development project. 

It will happen as a promise to those people if they can find peace 

with each other, and peace will come when the fundamental issues 

are agreed upon. 

Thank you very much. 

Mr. CHABOT. The gentleman’s time has expired. The final questioner today will be the gentleman from Florida, Mr. Bilirakis. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I appreciate it very 

much. 

What can you tell me for the panel—or what can you tell me 

about Hamas’ direct involvement of the so called Gaza Flotilla efforts, whether the one launched from Turkey last year or the most 

recent attempt that was supported by the Greek Government last 

week. Let me just take a moment to publicly thank the Government of Greece for preventing the illegal launch of these boats, 

which were embarked on a campaign to render aid and comfort to 

a terrorist organization violation of a lawful blockade. 

Having said that, if a direct or indirect Hamas role can be established, what does that say about the seriousness of Fatah to negotiate peaceably with Israel, and also would you agree these types 

of flotillas are unnecessary as legal mechanisms already exist to 

provide assistance to the people of Gaza? 

Mr. WALLES. Thank you, sir, for raising that question. Due to the 

combined efforts of many parties, and you mentioned the Greek 

Government—they played an important role in this—we have been 

able so far this year to head off a repeat of a flotilla to Gaza. 

42

I would agree with you completely that such flotillas are unnecessary. They exist to establish mechanisms to allow humanitarian 

assistance and development projects to occur in Gaza. We fund our 

own projects in Gaza that we have talked about earlier. All of these 

projects are done with the approval of the Israeli Government. 

There are also established mechanisms in place to provide humanitarian support. If other private organizations or other international donors want to provide humanitarian or other assistance 

to Gaza, there are ways to do that. So these flotillas are not necessary, and we are pleased that, so far this year, we haven’t seen 

a repeat of the kind of incident that we had last year. 

In terms of any Hamas involvement in these flotillas, we haven’t 

seen that. These flotillas seem to be organized by private groups, 

many of them in Europe. There was one organization in Turkey 

that played an important role last year, but we haven’t seen any 

direct Hamas involvement. If there were, of course, that would be 

another matter of concern, but we have a great deal of concerns already about Hamas. They are a foreign terrorist organization. 

Mr. BILIRAKIS. Thank you. Anyone else on the panel? Thank you 

very much, Mr. Chairman. Appreciate it. I yield back. 

Mr. CHABOT. Thank you very much. The gentleman yields back. 

We want to thank the very distinguished panel here this morning for their testimony. It has been very helpful. 

I would note that all members will have 5 days, 5 legislative 

days, in which to insert statements or revisions to the record. 

If there is no further business to come before the committee, we 

are adjourned. Thank you. 

[Whereupon, at 11:51 a.m., the subcommittee was adjourned.] 

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