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99–823PDF 2005

U.S. POLICY TOWARD THE PALESTINIANS IN THE

POST–ARAFAT ERA

HEARING

BEFORE THE

SUBCOMMITTEE ON THE MIDDLE EAST 

AND CENTRAL ASIA

OF THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

MARCH 9, 2005

Serial No. 109–88

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

ROBERT MENENDEZ, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA

ILEANA ROS-LEHTINEN, Florida, Chair 

STEVE CHABOT, Ohio, Vice Chair 

THADDEUS G. MCCOTTER, Michigan 

JOHN BOOZMAN, Arkansas 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

JO ANN DAVIS, Virginia 

MIKE PENCE, Indiana 

KATHERINE HARRIS, Florida 

DARRELL ISSA, California 

GARY L. ACKERMAN, New York 

HOWARD L. BERMAN, California 

ELIOT L. ENGEL, New York 

JOSEPH CROWLEY, New York 

SHELLEY BERKLEY, Nevada 

ADAM B. SCHIFF, California 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

YLEEM POBLETE, Subcommittee Staff Director 

DAVID ADAMS, Democratic Professional Staff Member 

MATT ZWEIG, Staff Associate 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable David M. Satterfield, Acting Assistant Secretary, Bureau of 

Near Eastern Affairs, U.S. Department of State ............................................... 8

The Honorable James Kunder, Assistant Administrator for Asia and the 

Near East, U.S. Agency for International Development ................................... 10

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the 

State of Florida, and Chair, Subcommittee on the Middle East and Central 

Asia: Prepared statement .................................................................................... 3

The Honorable David M. Satterfield: Prepared statement .................................. 9

The Honorable James Kunder: Prepared statement ............................................ 12

APPENDIX 

Responses from the Honorable David M. Satterfield to Questions Submitted 

for the Record by the Honorable Ileana Ros-Lehtinen ...................................... 27

Responses from the Honorable James Kunder to Questions Submitted for 

the Record by the Honorable Ileana Ros-Lehtinen ........................................... 41

The Honorable Dan Burton, a Representative in Congress from the State 

of Indiana: Prepared statement .......................................................................... 48

(1)

U.S. POLICY TOWARD THE PALESTINIANS IN 

THE POST–ARAFAT ERA 

WEDNESDAY, MARCH 9, 2005

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON THE MIDDLE EAST

AND CENTRAL ASIA, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:08 p.m. in room 

2172, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen 

(Chair of the Subcommittee) presiding. 

Ms. ROS-LEHTINEN. The Subcommittee will come to order. Thank 

you so much, all of you, the panelists, the audience, and the Members, for being here this afternoon. 

The departure of Yasser Arafat, a man who spent most of his life 

sponsoring and supporting terrorism, and the recent summit between Prime Minister Ariel Sharon and Abu Mazen, in which they 

stated their intention to initiate and achieve a lasting truce, 

prompts much optimism about the future and the potential for a 

lasting peace. 

It serves to indicate progress in transforming President Bush’s 

vision of a new Palestinian leadership, a leadership not compromised by terror and marketed to governing over its own people 

within a practicing democracy based on tolerance and liberty, into 

an achievable goal. 

The principle, advocated until now only by the United States and 

Israel, that establishing the institutional viability of the Palestinian Authority (PA) as a precondition for future discussions on 

final status issues, is now being echoed by many in the international community. In this respect, the Palestinian Legislative 

Council recently asserted some independence from the executive 

branch and twice rejected proposed cabinets made up largely of 

former Arafat cronies. 

This event, in particular, reflects a growing public demand both 

for greater accountability and for a reassessment of, at least, Palestinian tactics and strategies. 

Thus, we remain optimistic about the post-Arafat period and understand the need to support the Palestinian people. Yet we must 

proceed with caution in expanding our assistance programs, as the 

Administration is requesting, to ensure that those are not manipulated to serve the interests of those who seek the destruction of 

Israel and its people. 

In that vein, I have been working closely with the leadership to 

require reporting on certain critical items as part of the suppleVerDate Mar 21 2002 09:56 Dec 05, 2005 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\MECA\030905\99823.000 HINTREL1 PsN: SHIRL
2

mental appropriations request. Items of concern that I would like 

our witnesses to address during their presentations include the status of reform within the Palestinian security services—their numbers, their lines of authority, accountability, and chains-of-command, and whether the PA has purged from their security services 

individuals with ties to terrorist entities. 

Also, what specific steps have been taken by the Palestinian Authority to dismantle the terrorist infrastructure, to confiscate unauthorized weapons, to arrest and bring terrorists to justice, to destroy unauthorized arms factories, to thwart and preempt terrorist 

attacks, and cooperate with Israel’s security services? 

Also, specific actions taken by the Palestinian Authority to stop 

incitement in Palestinian Authority-controlled electronic and print 

media and in schools, in mosques, and other institutions that it 

controls, and, instead, promote peace and coexistence with Israel. 

Also, the degree to which the Palestinian Authority has taken effective steps to ensure democracy, the rule of law, and independent 

judiciary, and has adopted other reforms ensuring transparent and 

accountable governance, and the extent to which the Palestinian 

Authority has been cooperating with United States officials in their 

investigations into Arafat’s finances and the President’s assessment 

as to whether such cooperation has been sufficient. 

We also expect United States assistance in the supplemental to 

go to specific programs to meet the immediate needs of the Palestinian people. The United States should not be expected to write 

a blank check to the Palestinian Authority. The distribution of assistance must be based on the achievement of specific benchmarks 

and results. The PA must demonstrate sustained progress toward 

peace, carrying out the necessary political reforms toward accountability and transparency and, most critically, the verifiable dismantlement of all terrorist organizations. 

Also, we cannot expect any cease-fire to hold if thousands of terrorists retain their weapons and explosives, free to decide at any 

moment that now is the time to attack Israel. For example, there 

were reports last week that Israeli security forces uncovered a 

Hamas explosives lab containing Qassam rockets ready for the 

launching. Fourteen Hamas operatives were arrested. Is the ability 

to rein in Hamas and others a question of capacity or political will? 

Abu Mazen must undertake the necessary actions to develop this 

cease-fire into a meaningful security plan. This includes dismissing 

even his most trusted security officials and freezing additional accounts of terrorist organizations and financiers. 

President Bush, in a speech yesterday at the National Defense 

University, stated:

‘‘The United States will help the Palestinian Authority build 

the security services that current peace and future statehood 

require: Security forces which are effective, responsive to civilian control, and dedicated to fighting terror and upholding the 

rule of law . . . [and] will coordinate with the Government of 

Israel, with neighbors such as Egypt and Jordan, and with 

other donors to ensure that Palestinians get the training and 

equipment they need.’’

3

So I ask, is the Administration considering the provision of direct 

security assistance to the PA? What will that assistance entail? 

What sort of oversight and monitoring mechanisms are being implemented to ensure that the objectives are being met? And would 

you argue that this assistance is vital to the national security interests of the United States, and, if so, why? 

The PA must understand that assistance from the United States 

is not an entitlement. It needs to be earned through verifiable actions, including by addressing problems, such as incitement and 

anti-Semitism, which fuel the terror mentality. 

International technical and financial assistance, though readily 

available, cannot serve as a substitute for the efforts by the Palestinian Authority to comply with its commitment to the United 

States, to the international community, to Israel, and, most importantly, its obligations to its own people. 

We look forward to hearing the views of our panelists on how 

these proposed programs further U.S. goals and objectives, and we 

look forward to receiving detailed information on exactly how our 

funds are going to be used and what sort of safeguards are in place 

to prevent the manipulation of U.S. assistance. 

I am glad to turn to the Ranking Member of our Subcommittee, 

Mr. Ackerman, for an opening statement. 

[The prepared statement of Ms. Ros-Lehtinen follows:]

PREPARED STATEMENT OF THE HONORABLE ILEANA ROS-LEHTINEN, A REPRESENTA- TIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND CHAIR, SUBCOMMITTEE ON

THE MIDDLE EAST AND CENTRAL ASIA

The departure of Yasser Arafat, a man who spent most of his life sponsoring and 

supporting terrorism, and the recent summit between Prime Minister Ariel Sharon 

and Abu Mazen, in which they stated their intention to initiate and achieve a lasting truce, prompts much optimism about the future and the potential for a lasting 

peace. 

It serves to indicate progress in transforming President Bush’s vision of a new 

Palestinian leadership—a leadership not compromised by terror, and committed to 

governing over their own people within a practicing democracy, based on tolerance 

and liberty—into an achievable goal. 

The principle, advocated until now only by the United States and Israel, that establishing the institutional viability of the Palestinian Authority, as a precondition 

for future discussions on final status issues, is now being echoed my many in the 

international community. 

In this respect, the Palestinian Legislative Council recently asserted some independence from the executive branch and twice rejected proposed Cabinets made up 

largely of former Arafat cronies. 

This event, in particular, reflects a growing public demand both for greater accountability and for a reassessment of, at least, Palestinian tactics and strategy. 

Thus, we remain optimistic about the post-Arafat period and understand the need 

to support the Palestinian people. 

Yet, we must proceed with caution in expanding our assistance programs, as the 

Administration is requesting, to ensure that these are not manipulated to serve the 

interests of those who seek the destruction of Israel and its people. 

In that vein, I have been working closely with the leadership to require reporting 

on certain critical items as part of the supplemental appropriations request. 

Items of concern that I would like our witnesses to address during their presentation include:

• the status of reform of the Palestinian security services - their numbers, lines 

of authority, accountability and chains of command, and whether the PA has 

purged from their security services individuals with ties to terrorist entities;

• specific steps taken by the Palestinian Authority to dismantle the terrorist infrastructure, confiscate unauthorized weapons, arrest and bring terrorists to 

justice, destroy unauthorized arms factories, thwart and preempt terrorist attacks, and cooperate with Israel’s security services;

4

• specific actions taken by the Palestinian Authority to stop incitement in Palestinian Authority-controlled electronic and print media and in schools, 

mosques, and other institutions it controls, and to promote peace and coexistence with Israel;

• the degree to which the Palestinian Authority has taken effective steps to ensure democracy, the rule of law, and an independent judiciary, and has adopted other reforms ensuring transparent and accountable governance; and

• the extent to which the Palestinian Authority has been cooperating with US 

officials in their investigations into Arafat’s finances and the President’s assessment as to whether such cooperation has been sufficient.

We also expect U.S. assistance in the Supplemental to go to specific programs to 

meet the immediate needs of the Palestinian people. 

The United States should not be expected to write a blank check to the Palestinian Authority. The distribution of assistance must be based on the achievement 

of specific benchmarks and results. 

The PA must demonstrate sustained progress towards peace, carrying out the necessary political reforms toward accountability and transparency and, most critically, 

the verifiable dismantlement of all terrorist organizations. 

Also, we cannot expect any cease-fire to hold if thousands of terrorists retain their 

weapons and explosives, free to decide at any moment that it is time to attack 

Israel. 

For example, there were reports last week that Israeli security forces uncovered 

a Hamas explosives lab containing a Qassam rocket ready for launching. Fourteen 

Hamas operatives were arrested. Is the ability to reign in Hamas and others a question of capacity or political will? 

Abu Mazen must undertake the necessary actions to develop this ceasefire into 

a meaningful security plan. This includes dismissing even his most trusted security 

officials, and freezing additional accounts of terrorist organizations and financiers 

if need be. 

In that vein, President Bush, in a speech yesterday at the National Defense University, stated that: ‘‘the United States will help the Palestinian Authority build the 

security services that current peace and future statehood require: security forces 

which are effective, responsive to civilian control, and dedicated to fighting terror 

and upholding the rule of law . . . (and) will coordinate with the government of 

Israel, with neighbors such as Egypt and Jordan, and with other donors to ensure 

that Palestinians get the training and equipment they need.’’

• Is the Administration considering the provision of direct security assistance 

to the PA?

• What would that assistance entail?

• What sort of oversight and monitoring mechanisms are being implemented to 

ensure that the objectives are being met?

• Would you argue that this assistance is vital to the national security interests 

of the U.S.? If so, why?

The PA must understand that assistance from the United States is not an entitlement. It needs to be earned through verifiable actions, including by addressing precursors such as incitement and anti-Semitism which fuel the terrorist mentality. 

International technical and financial assistance, though readily available, cannot 

serve as a substitute for the efforts by the Palestinian Authority to comply with its 

commitments to the United States, the International community, Israel, and most 

importantly, its obligations to the Palestinian people. 

We look forward to hearing the views of our panelists on how the proposed programs further U.S. goals and objectives, and look forward to receiving detailed information on exactly how our funds are to be used and what sort of safeguards are 

in place to prevent the manipulation of U.S. assistance. 

I will turn to the Ranking Member of our Subcommittee, Mr. Ackerman, for an 

opening statement.

Mr. ACKERMAN. Thank you very much, Madam Chair. Thank you 

for your continued leadership in this very important arena. I want 

to thank you for scheduling today’s hearing on our policy toward 

the Palestinians. 

On January 9th, the world witnessed the peaceful expansion and 

expression of Palestinian national aspirations. By holding the 

freest and the fairest elections in the Arab world, it is clear that 

5

the Palestinian people, like any people, want to choose their own 

destiny. 

We all hope that this election will mark the beginning of a new 

relationship between Israelis and Palestinians and that this change 

in Palestinian leadership will embolden the Palestinian Authority 

to take the courageous steps required to achieve peace that we 

have long argued are necessary. 

But between our hopes for the future and the tragedy of the past 

41⁄2 years of renewed violence and terror is the reality of a Palestinian Authority in shambles. Infested with holdovers from Arafat’s 

goon squad, mired in a swamp of stultifying corruption, and crippled in its development by a decade of misrule by an unreformed 

arch-terrorist, the Palestinian Authority is hardly in a position to 

sign a conflict-ending peace deal. The PA can scarcely pay its own 

salaries, so what can we expect of it when it comes to seizing weapons or establishing the rule of law or even collecting taxes and 

making sure that people pay their bills? The Palestinian Authority 

is a weak and wobbly arrangement, at best, but it is certainly the 

only bet worth playing. 

Clearly, President Abbas faces many challenges, but if he genuinely intends to address any of them, first, foremost, and absolutely, he must act to stop terror and the potential for its resumption. Without this step, none of the other necessary reforms will be 

possible. For the first time, however, we can take hope in the fact 

that Palestinians are now led by a man who understands this fundamental truth. 

Madam Chair, we all know that to achieve the legitimate aims 

of the Palestinian people, President Abbas must reform the Palestinian security services, end incitement against Israel, and deliver 

a government free of corruption and capable of producing the economic growth and prosperity the Palestinian people deserve. This 

is the agenda to which the Palestinian Authority committed at last 

week’s conference in London. The question is how to achieve these 

goals, and here the United States and the international community 

can, and should, help. But here, too, is the crux of the problem. 

The President’s proposal for $200 million in the supplemental 

and another $150 million in the fiscal year 2006 budget request is 

a step in the right direction, but I want to make if perfectly clear 

that I am deeply concerned, and I believe we should be deeply concerned, that the specific programs funded by these requests, 

though, each supportable on its own terms, will not transform this 

moment of opportunity into a foundation for success. 

The proposals that have been briefed so far not only lack imagination but political coherence. I am convinced that they will not 

provide us nor the Palestinian Authority with the leverage necessary to move the process of reform forward. A project here and 

a project there will not show the Palestinian people that Abu 

Mazen’s choice for peace is revolutionary, that it is, indeed, the 

best way forward, and that the Palestinian Authority is a political 

entity that can deliver effective governance and public services. 

I think what is required is an extreme makeover. We need to 

redo an entire town, or better, several, in order to demonstrate the 

tangible benefits of peace and who can deliver them. What is lacking in the Administration’s proposal is not that the projects are not 

6

new—many, if not most of them, are; it is that they seem disconnected from the larger strategic goal of the peace process. For instance, there is a rule-of-law program proposed that seems to consist mostly of constructing courthouses. While I think courthouses 

are necessary, shouldn’t we be focusing on programs that promote 

transparency, accountability, and help the PA root out corruption? 

Similarly, I am concerned about the proposal to assist municipalities. Surely, the Municipal Services Governance program 

should be for assistance to reformers in the PA to help them abolish corruption and deliver services and is not, nor should it be, intended to strengthen the newly elected Hamas mayors and their 

terrorist allies. 

One last point on the proposed assistance package: I do not see 

a clear linkage between the reform commitments that the Palestinian Authority made in London last week and our assistance 

package. The Administration seems to be operating on the assumption that all we have to do is throw a big number on the table and, 

presto, the PA does the hard work necessary to root out corruption 

and compete with Hamas for the hearts and minds of Palestinians. 

I would like, Madam Chair, to make a proposal to the Administration. It is my understanding that the Palestinian Investment 

Fund is considering establishing an economic development fund for 

Gaza. They would start with $100 million or $150 million of their 

own money. These funds could be used for capital investment, infrastructure improvements, recapitalizing distressed businesses, 

and even courthouses. It could be structured in such a way that it 

would be managed according to international standards of transparency and accountability. For the international community’s 

part, credit enhancement or loan guarantees could be provided to 

encourage private sector participation. 

Such a fund would further United States policy by demonstrating 

that the Palestinian Authority could, with its own money, develop 

Gaza on a scale that Hamas could never reach. It would also stimulate durable economic growth, empower the private sector, and encourage long-term, viable business development, which is a key 

step in moving away from the dependence on international assistance. Our assistance should be used to help make this a reality. I 

believe that the United States must use whatever leverage we 

have, and right now we have a lot, to press the Palestinian Authority to establish a fund for the development of Gaza. Peace and 

prosperity must go hand-in-hand if we expect to have either one. 

Madam Chair, now is the time for U.S. leadership in support of 

Abu Mazen’s efforts to fight terror, reform his security services, 

and eliminate corruption. In the coming weeks and months, we will 

have time to judge his efforts, but bearing in mind the potential 

for failure, now is the time to act in pursuit of peace. I look forward 

to hearing our very distinguished guests today. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Ackerman. 

We are going to have two votes, so sorry, but I would like to recognize the Vice Chair of our Subcommittee, Congressman Chabot, 

for an opening statement, and then Mr. Berman as well before we 

break. Mr. Chabot? 

Mr. CHABOT. Thank you, Madam Chair. In light of the fact that 

we have the votes on the Floor, I will be very brief. 

7

I just want to thank you for holding this particular hearing, and 

thanks for your leadership in this whole area, and this is a very 

critical time, so I think it is a very timely time to have this hearing, and I will yield back. 

Ms. ROS-LEHTINEN. Thank you so much. I am always ready to 

recognize you for praise. 

Mr. Berman, you do not have to praise me. 

Mr. BERMAN. I want to praise the Chairwoman of this Subcommittee. 

Mr. ACKERMAN. All praise the Chairwoman. 

Mr. BERMAN. I have no opening statement, Madam Chairman, 

except for congratulations for calling this hearing. It is a real important subject and a very important time to hear about it. 

Ms. ROS-LEHTINEN. Peer pressure. Well, thank you. If you will 

excuse us, we will put democracy at work, and we will come back. 

So the Subcommittee is just briefly in recess. 

[Whereupon, at 2:24 p.m., a brief recess was taken.] 

Ms. ROS-LEHTINEN. Thank you so much for your patience, and 

we will come to order. 

I want to recognize a great organization that is with us today, 

WAIT. The back of their t-shirts say: ‘‘I was worth waiting for you, 

and so are you,’’ the other way. Okay. Very good, and they have 

an exchange program in Israel, and we congratulate you for what 

you are doing, a good message. 

I would like to introduce David Satterfield, who is the Acting Assistant Secretary for Near Eastern Affairs. He has served as Principal Deputy Assistant Secretary of State, Deputy Assistant Secretary, Ambassador to Lebanon, and was confirmed by the Senate 

in May 2004 as the next Ambassador to Jordan. A career member 

of the Senior Foreign Service, Ambassador Satterfield entered the 

Foreign Service in 1980 and has served at many posts, both overseas and in Washington. Ambassador Satterfield is the recipient of 

the Presidential Meritorious Executive Rank Award, the Department’s Senior Performance Award, and six Department of State 

Superior Honor Awards, notably for his work on the Middle East 

peace process. Thank you, Mr. Ambassador, for being here. 

And also we will hear from James Kunder. He is the Assistant 

Administrator for Asia and the Near East at the U.S. Agency for 

International Development (USAID). Mr. Kunder has extensive 

government and private sector experience in international development. He has served as Deputy Assistant Administrator for Asia 

and the Near East, Director for Relief and Reconstruction in Afghanistan, Deputy Assistant Administrator for USAID’s Bureau for 

External Affairs, and in many other capacities. He was also Vice 

President for Program Development at Save the Children Foundation. 

Thank you both for being here today. Your entire statements will 

be made part of the record and feel free to summarize. Thank you. 

Mr. Ambassador? 

8

STATEMENT OF THE HONORABLE DAVID M. SATTERFIELD, 

ACTING ASSISTANT SECRETARY, BUREAU OF NEAR EASTERN AFFAIRS, U.S. DEPARTMENT OF STATE 

Mr. SATTERFIELD. Thank you very much, Madam Chair. I would 

like to open with a brief summary, but I would like to say at the 

outset, the Administration shares both the optimism and the concerns which you expressed, and we also take very seriously the 

quite trenchant observations of Congressman Ackerman with respect to the very significant challenges which the Palestinian administration, the community, and the United States face as we 

seek to change the situation for the Palestinian people and for 

Israel on the ground today. 

There have been dramatic changes over recent months that have 

significantly improved the prospects of achievement of the President’s vision of a two-state, peaceful resolution to this conflict. Following the election of Mahmoud Abbas, the PA has, indeed, moved 

on reforms that are critical to the establishment of a stable, democratic, economically prosperous Palestinian State. Palestinian municipal and legislative elections scheduled for later this year are 

another strong signal of regional democratic transformation and a 

milestone for the PA. 

Now, we anticipate a strong challenge to all of this from Hamas 

and from others. Our policy needs to demonstrate to the Palestinians that their interests are best served by supporting leaders and 

leadership that is committed to reform, peace, and the abandonment of terror. 

Now, the recent reform efforts which we have seen—renewed 

Palestinian partnership, Israel’s bold plan to disengage from Gaza 

and parts of the northern West Bank, and region-wide momentum 

in the direction of democratic reform and democratic transformation—all have created a window, but a fragile window, of opportunity. Terror, as always, seeks to destroy the chances for peace, 

and we have made clear as we can to the Palestinian Authority 

that it must act against the terrorists. 

For our part, we need to support the PA leadership as it takes 

the necessary, required steps in its own interest to address security, governance, and economic reforms. The President’s plan to 

provide $350 million in assistance to the Palestinians provides the 

support. The $200 million in supplemental assistance is the centerpiece of the urgent aid needed now. 

The supplemental request for Gaza and the West Bank will spur 

reform, expand opportunities for the Palestinians, and address economic and technical issues which are critical to the success of 

Israeli disengagement and, just as importantly, the success of the 

day after disengagement for Israelis and for Palestinians. It will 

also focus on the key issue of security through the mission of General Ward, which begins today, which will greatly enhance our capacity to support Palestinian security reform measures, including 

those which you raised, Madam Chair, in your remarks. 

Our proposed assistance does not occur, does not take place, is 

not given, in a vacuum. We have been deeply engaged with the 

international community, including regional states, in providing 

their fair share of assistance to the Palestinians, and I will underscore this message today, as we have underscored it in the past. 

9

It is not just in United States and Palestinian and Israeli interests 

to see this peace process succeed. It is very much in the interests 

of all of our partners in Europe and, above all, our friends and 

partners in the Middle East. This is their concern, their crisis, as 

well, and we look very much and very specifically to the states of 

the Gulf, who have profited so much from the windfalls of the last 

year, to provide their share of help to the Palestinian people at this 

critical moment. 

We are also encouraging the broadest coalition of partners possible to focus not just on monetary assistance but also on support 

for the critical reforms necessary to set up democratic institutions 

of governance. Most encouraging, as we look at the challenges before us and the reality we see today, is that Israeli-Palestinian dialogue has resumed after 4 years of brutal violence and too much 

suffering and loss of hope. There is a new beginning being made 

for a new and different kind of future. 

As for many in the Middle East who have so long been plagued 

by cynicism and disappointment, there really is reason to be hopeful today. We are optimistic, we are realistic, we look forward to 

working with you in the Congress as together we seek to take advantage of this chance for peace. 

[The prepared statement of Mr. Satterfield follows:]

PREPARED STATEMENT OF THE HONORABLE DAVID M. SATTERFIELD, ACTING ASSIST- ANT SECRETARY, BUREAU OF NEAR EASTERN AFFAIRS, U.S. DEPARTMENT OF STATE

Madam Chairman and Members of the Committee: 

Thank you very much for providing me the opportunity to come here today and 

discuss our policy toward the Palestinians. 

Recent dramatic changes within the Palestinian Authority and between Israel and 

the Palestinians have significantly improved the prospects for achieving the President’s vision of two states, Israel and Palestine, living side by side in peace and security. As Secretary Rice has made clear: we are at a moment of opportunity and 

we must seize it. 

Following the overwhelming electoral victory by Mahmoud Abbas in a largely free 

and fair presidential election at the beginning of the year, the Palestinian Authority 

has begun to take positive steps to implement many of the reforms that we have 

long stressed are critical to the establishment of a stable, democratic, and economically prosperous Palestinian state, and critical to the successful implementation of 

the roadmap. We find encouraging the shape of the new cabinet, and the insistence 

of a majority of Palestinian legislative members that ministers be free of the taint 

of corruption and cronyism that has long plagued the Palestinian Authority. 

Palestinians will go to the polls again later this year to elect a new legislative 

council for the first time in nearly a decade. These elections will be another strong 

signal in favor of democratic reform throughout the region and will be a critical 

milestone for President Abbas and his reform agenda. We anticipate that he will 

face a strong challenge from Hamas and other extremist Palestinian groups. Our 

policy must demonstrate to Palestinians that their interests are best served by supporting leaders committed to reform, pursuing the path of peace, fighting terror. 

Recent efforts to reform the Palestinian Authority, a renewed Israeli-Palestinian 

relationship, and a reinvigorated press for democratic change regionwide have created a window of opportunity. It is imperative that we assist President Abbas and 

his government as they work to create changes on the ground that will assure Palestinians that this new path is a better path and help build support for peace. 

There is reason for hope, but the opportunity for peace is fragile. The Administration is attuned more than ever to the reality that terrorists seek to disrupt—and 

destroy—this opportunity, as illustrated by the horrific terrorist bombing in Tel 

Aviv on February 25. Therefore, we have made clear to the PA that it must take 

immediate and decisive action against terrorists who kill innocent civilians and act 

to subvert progress. The need for action is all the more pressing as we look ahead 

over the next six months, which will witness Palestinian municipal and legislative 

elections, and implementation of Israel’s plan to disengage from Gaza and parts of 

the northern West Bank. 

10

For our part, we need to support the new Palestinian leadership as it takes the 

necessary steps to address security, as well as governance and economic reforms. 

We must make clear that we stand with leadership willing to take the necessary, 

and often difficult, steps towards peace. The Administration’s plan, subject to Congressional approval, to provide $350 million in assistance to the Palestinians, provides this necessary, tangible support. Our proposed $200 million in proposed supplemental assistance is the centerpiece of this support. 

The supplemental assistance for the West Bank and Gaza will quickly be put to 

use in a number of areas, primarily economic, social, political and security infrastructure. The proposed supplemental assistance will spur reform and expand economic opportunities for the Palestinian people and address the economic and technical issues that are critical to ensure successful Israeli disengagement. It will assist Palestinians with institution building, civil society strengthening and infrastructure development—necessary foundations for emerging democracy. It will also be focused on the key issue of security, and will support security reform through the mission of General William Ward, who arrives in the region today. Working closely with 

the new Minister of Interior, General Nasir Yusuf, General Ward’s mission will 

greatly enhance our capacity to support Palestinian security reforms. Finally, this 

proposed assistance will strengthen our ability to persuade other states in the region that they need to share the burden and do more in the way of monetary assistance to the Palestinians and the PA. 

In addition, we are working both bilaterally and in multilateral channels to encourage our partners in the region and internationally to increase their own economic assistance to the Palestinians to alleviate Palestinian poverty, reduce unemployment, re-build critical infrastructure, and promote new private sector investment. We will work closely with the Palestinian Authority to ensure that the economic reforms required to make these assistance programs succeed are implemented. 

We also look to the regional neighbor states, especially Egypt and Jordan, to take 

steps that will contribute constructively to the efforts of the two parties in making 

progress towards peace. Egypt’s willingness to work with Palestinian security forces 

to improve the security climate in Gaza, its hosting of the Sharm al-Sheikh summit, 

and the decision by both Egypt and Jordan to return their Ambassadors to Tel Aviv 

are all indicative of the many ways that these two states can play a crucial supportive role in the peace process. Beyond the immediate neighbors, other states in 

the region also have important roles to play, not only in providing Palestinian economic assistance, but also in lobbying for internal Palestinian Authority reform, resuming contacts with Israel, re-opening trade or other representative offices, and finally and forever abandoning the Arab League boycott, which remains an obstacle 

to peace and economic advancement. With promising openings between Israelis and 

Palestinians, we will be working aggressively over the coming months to encourage 

our friends and partners in the region to help create a positive environment for 

peace. 

Perhaps most encouraging is the resumption of Israeli-Palestinian dialogue; it 

gives both Israel and the Palestinians new hope for the future. Successful implementation of the Israeli planned withdrawal from Gaza this summer will be a key 

milestone marking a move away from the violence and terrorism of the past four 

years and towards a political process that will allow implementation of the road 

map, which remains the internationally agreed strategy for achieving the President’s vision of two democratic states, Israel and Palestine, living side by side in 

peace and security. 

As with many areas in the Middle East, which have for so long been plagued by 

cynicism and disappointment, today there is reason to be hopeful. We are realistic, 

yet optimistic, and look forward to working with you on these issues as we move 

ahead.

Ms. ROS-LEHTINEN. Thank you so much, Mr. Ambassador. 

Mr. Kunder? 

STATEMENT OF THE HONORABLE JAMES KUNDER, ASSISTANT 

ADMINISTRATOR FOR ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT 

Mr. KUNDER. Thank you, Madam Chair. I also want to thank you 

and the Committee for having the interest in this topic. Your hearing could not have been more timely. I will summarize very briefly 

my main points. 

11

To meet and support the dramatic changes taking place in the 

Palestinian territories, we at USAID are both reprogramming existing funds to provide immediate assistance as well as requesting 

additional funds to lay the foundation for longer-term support for 

the creation of a viable Palestinian State coexisting peacefully and 

productively with its neighbors. 

There are four broad objectives with these reprogrammed and 

additional funds: Number one, ongoing humanitarian assistance to 

provide essential food aid and emergency assistance to needy families in the territories; number two, immediate response to the successful elections—we are using reprogrammed funds to support activities that have a direct impact on the well being of Palestinians, 

in particular, small-scale projects that have high employment-generation capability. Third, we are focusing on opportunities to seize 

the day during this initial transitional period. The new funds we 

are seeking would provide continued income-generating opportunities and provide some larger scale economic and institution-building work to support the Gaza disengagement plan and to help 

strengthen the foundation for an eventual Palestinian State. And, 

finally, we are seeking funds in fiscal year 2006 and beyond for 

sustained programs to promote systemic transformation. To get to 

the point that Congressman Ackerman was making earlier, these 

new funds in the fiscal year 2006 budget would continue work initiated through the supplemental funding, as well as initiate additional projects designed to facilitate meeting the objective of statehood. 

In general, we are working very closely with our State Department colleagues, with our World Bank colleagues, with the other 

bilateral donors involved. 

We have learned a lot of lessons in terms of accountability. I 

know that this is an issue the Chair is very much interested in. 

We have systems in place in terms of working with civilian partners, American contractors, American NGOs, and local NGOs. We 

have extensive oversight mechanisms in terms of our working with 

our own Inspector General, the General Accounting Office. We have 

a system of getting folks out to make sure that the money is being 

spent in the ways in which it is intended to be spent by the taxpayers, and we have got a requirement, both a requirement for 

counterterrorism cotification by our partners and a vetting process 

within the U.S. Embassy in Tel Aviv, to ensure that the partners 

we select are worthy of receiving the taxpayers’ dollars. 

So in the experience we have had in the program thus far, we 

are convinced that as these programs are scaled up, the money that 

is delivered will meet the objectives that have been outlined in the 

President’s plan. We are prepared to provide any level of detail 

that the Committee would want in terms of specific uses for the 

supplemental funds and for the requested fiscal year 2006 appropriation. I would be glad to answer any questions the Committee 

has. Thank you. 

[The prepared statement of Mr. Kunder follows:]

12

PREPARED STATEMENT OF THE HONORABLE JAMES KUNDER, ASSISTANT ADMINIS- TRATOR FOR ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL DEVEL- OPMENT

Madam Chairwoman, thank you for the opportunity to testify today on the USAID 

program in the West Bank and Gaza. 

The unprecedented opportunity created by the Palestinian presidential, municipal 

and legislative council elections, combined with Israel’s planned disengagement from 

Gaza, is being addressed by the US government through a combination of diplomacy, donor coordination, and assistance packages. 

To meet and support the dramatic changes taking place in the Palestinian territories, we are both reprogramming existing funds to provide immediate assistance, 

and requesting additional funds to bridge the immediate and medium term, and to 

provide longer-term support for the creation of a viable Palestinian state coexisting 

peacefully and productively with its neighbors. We are using these reprogrammed 

and additional funds for:

(1) Ongoing humanitarian programs: to provide essential food aid and emergency assistance to needy families.

(2) Immediate response to the successful elections: Reprogrammed funds are 

supporting activities that have a direct impact on the wellbeing of Palestinians, in particular small-scale projects that have high employment generation capability.

(3) Opportunities to seize the day during the initial transition: New funds provided in the proposed supplemental would continue generating income opportunities, and would begin some larger scale economic and institutionbuilding work to support the Gaza disengagement plan and help strengthen 

the foundation for an eventual Palestinian state.

(4) Sustained programs to promote systemic transformation: New funds in the 

longer term (FY 2006 and beyond) would continue work initiated through 

the supplemental funding as well as initiate additional projects designed to 

facilitate meeting the objective of statehood.

Our current West Bank and Gaza program is designed to help alleviate the hardships faced by many average Palestinians since the beginning of the Intifada in 

2000, and at the same time address longer-term development needs by promoting 

reform, revitalizing the private sector, and building human capital. Under the program, jobs have been created, businesses revitalized, roads and water infrastructure 

built, health care and nutrition needs of the most vulnerable met, and the rule of 

law and anti-corruption measures promoted. 

Our private sector programs have assisted some 1,000 businesses to penetrate 

new markets, creating 5,000 jobs and generating $25 million in exports. USAIDfunded water infrastructure has provided a reliable source of clean water for 

500,000 Palestinians across the West Bank and Gaza. We have also funded programs to develop the capacity of the Palestinian Legislative Council (PLC) and the 

Palestinian Monetary Authority, to assist the Minister of Finance in strengthening 

the internal audit capacity of the Palestinian Authority, and to restructure the new 

Ministry of National Economy. One benefit of this assistance was evident recently 

when the PLC used its newly developed capabilities to influence the Executive 

Branch in the selection of a reform-oriented cabinet. Under the health program, we 

trained health workers, provided medical supplies and essential drugs, and distributed health education kits to more than a 1,000 women living in isolated communities, training them to recognize danger signs during pregnancy and newborn care. 

Let me briefly summarize the new assistance programs and what we are doing 

to address the specific development challenges that we face on the ground. 

IMMEDIATE ASSISTANCE

Immediate assistance has taken two forms. First, on December 8, 2004 President 

Bush signed a determination that waived limitations on assistance to the Palestinian Authority in order to allow $20 million in aid to the interim Palestinian leadership. This urgently needed budgetary support gave a financial boost to the new 

government as it pushed its reform agenda and prepared for elections, and was used 

wholly to meet utility costs the Palestinian Authority had incurred. This was the 

second time the USG has provided direct budgetary support to the PA. In the summer of 2003, USAID and the PA entered into a cash transfer agreement that financed the provision of utility services and the repair and rehabilitation of municipal infrastructure. Safeguards were built into these agreements to make sure that 

funds were used for the purposes intended. 

13

Second, over the next ninety days, USAID will use $41 million reprogrammed 

from a planned water infrastructure project to implement a number of activities 

that will demonstrate tangible economic and social benefits of reform. Activities include a robust microfinance program that will benefit 10,000 Palestinians, an agricultural program that can provide sustained increases in employment opportunities, 

and a variety of small water infrastructure projects that will benefit as many as 

400,000 residents. Community facility construction and road reconstruction will provide employment as well as a safe recreational environment for young Palestinians. 

Health facilities and emergency assistance will be provided to 480,000 needy Palestinians. 

$200 MILLION FY 2005 SUPPLEMENTAL REQUEST

Our $200 million FY 2005 supplemental request is designed to further signal the 

USG’s deepened engagement and allow us to maximize the opportunities available 

during this critical time. In addition to emphasizing new programs in the areas of 

democracy and governance, the supplemental will enable Palestinians to seize economic opportunities that may emerge after Israel’s withdrawal from Gaza and the 

four settlements in northern West Bank and address such pressing social issues as 

the productive engagement of youth. 

We intend to allocate $110 million for the economic revitalization of the West 

Bank and Gaza, in particular after disengagement. Activities will support job creation, improved access to trade in international markets, loans for home construction, improved municipal services, and infrastructure development. We will use up 

to $50 million of these funds to support the establishment of a World Bank-recommended pilot program to upgrade and improve the passages through which Palestinian goods and people transit to Israel and the rest of the world. This urgently 

needed project will help ensure that Israeli security needs are met as disengagement goes forward, will respond to Israel’s continuing effort to find the appropriate 

balance between the imperative need to respond to terrorism and the humanitarian 

interests of the Palestinian people, and will help the Palestinian economy recover 

and become less dependent on outside assistance. 

We also intend to allocate $90 million for economic, social, political and security 

infrastructure development, with a focus on judicial, legislative and civil society 

strengthening, political party development, media strengthening, health and social 

services in particular to the poor, and strengthened security structures to confront 

terror and violence and restore the rule of law. 

By supporting the above activities the USG will strengthen political moderates as 

well as the institutions of statehood, will help to provide an alternative source of 

public services to those offered by Hamas, and will provide tangible, immediate benefits to Palestinians. 

$150 MILLION FY 2006 REGULAR REQUEST

Our FY 2006 request will, among other things, build on and enhance the activities 

that were started under the FY 2005 Supplemental Budget Request. During the 

Intifada much of USAID assistance was reprogrammed towards humanitarian relief 

and emergency programs. USAID intends to use the increased FY 2006 funding as 

a way to further its longer-term development objectives. 

For example, under its private sector objective USAID will continue its support 

for: (1) creating jobs and improving the performance of a micro, small, and medium 

enterprises and financial institutions; (2) assisting the Palestinians in establishing 

a national trade promotion organization; (3) an initiative that would support development of a state of the art business school at one of the Palestinian universities; 

and (4) developing a major agriculture revitalization initiative that will establish 

private sector partnerships and linkages with Israeli marketing firms to increase 

agricultural production and exports to regional and international markets. 

In the area of water resources development, USAID will continue well drilling activities in the West Bank, and for construction activities under the wastewater 

treatment plant activity in Hebron. We will support the institutional development 

of both the Palestinian Water Authority and the Department of Roads within the 

PA Ministry of Public Works and Housing, addressing water development and planning related institutional challenges. Finally, USAID will fund the continuation of 

the village water distribution project, which provides safe and sustainable water 

and sanitation services to about 150,000 residents of 10 villages near Nablus. 

Under its democracy and governance initiatives the major priorities USAID intends to address in FY 2006 are (1) strengthening the rule of law and the judiciary; 

(2) supporting the Palestinian Legislative Council and Executive Branch policy 

14

units; (3) improving the quality of governance and the service delivery capabilities 

at the local level; and (4) continued support for civil society programs. 

In the area of higher education USAID will provide support for scholars under the 

Presidential Scholarship Program; continue to strengthen Palestinian institutions of 

higher learning by providing local scholarships to students in fields that meet immediate and critical needs; provide funding to enable access to electronic journals and 

databases at universities worldwide; and provide funding for research proposals in 

the scientific and social sectors. USAID will also introduce a vocational training activity. 

In the health sector, USAID will continue to provide training and quality improvement, management assistance, capacity building, behavior change, communication, 

policy dialogue, advocacy, and procurement of medical equipment, supplies, vitamins 

and minerals for its family planning, child survival, health and nutrition programs. 

Palestinian NGOs and other institutions will also be supported with research to provide data for decision making and USAID will continue to assist Palestinian institutions in strengthening their policies and programs regarding food fortification and 

micronutrient deficiencies. 

In the community services area, two new programs will be introduced. The first, 

a four year program to support youth and organizations that provide youth services 

will focus on: (1) youth incomes and job opportunities; (2) awareness and training 

to change youth behaviors; (3) recreational infrastructure for youth; and (4) educational and vocational training. A second program, also to be implemented over 

four years, will support municipalities and town and village councils in the West 

Bank and Gaza with an aim to strengthen democratic governance, accountability, 

and responsiveness, while improving municipal planning and management capacities. USAID will seek to ensure that the municipalities, town and village councils 

that it supports, are able to deliver a range of services that are sustainable, tangible 

and highly visible. 

PROGRAM MANAGEMENT

Managing the West Bank and Gaza program is a challenging exercise. Special vetting procedures in addition to USAID’s anti-terrorism certification process are in 

place to guarantee that no US Government resources fall into terrorist hands. The 

USAID Mission also works closely with Embassy/Tel Aviv and the Consul-General’s 

office in Jerusalem to assure that program identification, development and implementation are coordinated with policy interests, in recognition that our development 

assistance to the Palestinians is part and parcel of overall US foreign policy in the 

region. The U.S. assistance program is a key factor in the development of a viable 

Palestinian state coexisting with its neighbors, in particular Israel. 

Travel restrictions imposed due to security concerns present additional challenges. 

Often parts of the territories have been closed to travel by USG officials for long 

periods of time. USAID has adapted its programs to these extraordinary circumstances, balancing the desire to maintain program presence while at the same 

time assuring prudent management. Extensive use of qualified foreign service national staff and contract personnel has allowed various activities that do not require 

intense American oversight to continue. 

CONCLUSION

The West Bank and Gaza program has successfully responded to the ever-changing conditions on the ground. The program has provided a robust response to the 

difficult humanitarian situation, while maintaining longer term development 

projects, including the strengthening of institutions that will underpin a future Palestinian state. In this way, the program has played an important role in furthering 

US foreign policy objectives in the region.

Ms. ROS-LEHTINEN. Thank you so much, and thank you for your 

brief presentations because that gives us more time for questions, 

and I would like to turn to the Vice Chair of our Subcommittee, 

Mr. Chabot, to start the round of questions. Thank you. 

Mr. CHABOT. Thank you, Madam Chair. I appreciate that. 

Thank you for your testimony here this afternoon. I was in Egypt 

a month or so ago and had an opportunity to go up and visit the 

Gaza area, obviously, on the Egyptian side. My question would be, 

are U.S. Embassy personnel in Tel Aviv prohibited from visiting 

the Gaza Strip? 

15

Mr. SATTERFIELD. Since the October 2003 murder of three United 

States security contractors in the Gaza Strip, for reasons related to 

the security of American personnel, yes, we have denied entry to 

the Gaza Strip under the chief of missions authority in Tel Aviv 

for American officers. This is a very serious situation, and, Congressman, since those murders, we have underscored, through a 

succession of Palestinian leaders, the critical importance of moving 

forward a meaningful, transparent, credible investigation into 

those responsible for those killings. 

We suspended water projects, vital for the Palestinians in Gaza, 

because of our concern over those killings and our ability to adequately monitor, in accordance with USAID regulations, those 

projects. So there is a price being paid by the Palestinians for failure to pursue this case. 

Now, with the new Palestinian leadership, President Abbas, we 

have directly raised, at his level, the level of his security chiefs, the 

necessity of moving forward, and we have his commitment to doing 

so, but we have not seen the kind of tangible progress on this case 

which we require. 

Mr. CHABOT. What impact would these restrictions have, or do 

they have, on monitoring and verifying the PA’s compliance with 

its commitments and our ability to properly audit organizations 

provided that are United States assistance? 

Mr. SATTERFIELD. I will defer to my colleague on the second part 

of your question, but with respect to the first, obviously, a United 

States presence in Gaza will be very important to any adequate 

work with Palestinian security services as they reform, as well as 

to monitoring of what restructuring has taken place. Can it be done 

elsewhere? Yes, it can. It can best be done, though, on the ground. 

Mr. KUNDER. To be clear, sir, when you mentioned assistance to 

the Palestinian Authority, as you know, there has been very, very 

limited direct assistance to the Palestinian Authority. Most of the 

money that is flowing into both Gaza and the West Bank is going 

to civilian organizations, community service organizations, and so 

forth. And United States personnel are still working in the West 

Bank, subject to the chief of missions review, depending on the security situation, but most of the time, we are able to get our United 

States officers stationed in Jerusalem or Tel Aviv into the West 

Bank to see the projects and verify them with their own eyes. 

In those cases where we cannot, as in the Gaza Strip, as Ambassador Satterfield said, we rely on a number of mechanisms. We do 

have American NGO partners, nongovernmental organization partners, working on grant agreements with us, who do continue to 

travel, and we rely on their reports. We have foreign service national personnel, primarily Palestinian or Arab-Israeli citizens who 

work for the USAID mission, who do travel into those areas, even 

where Americans cannot. We do have contract personnel, and we 

do rely on our inspector general’s trips as well. So there is a very 

extensive series of mechanisms to ensure compliance with the purposes for which the funds were intended. 

Mr. CHABOT. Thank you. What is the policy direction being given 

by State to USAID in selecting programs and contractors and 

grantees under programs for the Palestinians? I noticed you indicated they are somewhat limited now. What criteria and screening 

16

process is in place to assess the eligibility of principal contractors 

and subcontractors and grantees? 

Mr. KUNDER. As I mentioned, sir, we are working very, very 

closely. Obviously, we meet regularly here in Washington, but our 

mission director and staff out there are working very closely, both 

with the Ambassador in Tel Aviv and with the Consul General in 

Jerusalem. So there are no projects that USAID is doing that have 

not been fully vetted throughout the entire Embassy community. 

Specifically, when we determine that we desire to work with a 

certain Palestinian organization, be it a nongovernmental organization, a community service organization, the name of that organization is vetted among the full Embassy team, starting with the Ambassador and all of the agencies present there, and then we also 

go one step below that, and we identify the chief officers of each 

one of those Palestinian organizations, and they are vetted additionally as individuals. So we make sure that the people we are 

working with meet all of the standards you would expect. 

Mr. CHABOT. Thank you. My time has almost expired. I am going 

to ask one last question here. 

In Congressional Notification No. 39, dated February 3rd, over a 

million dollars in ESF is allocated to ‘‘support family planning programs,’’ including the ‘‘promotion of healthy reproductive behavior.’’ 

Would you please elaborate on what U.S. Government funds are 

promoting, and is this in keeping with the clearly articulated policies of the President and the majority in the U.S. Congress? 

Mr. KUNDER. You are taking me by surprise with that question, 

sir, but I can guarantee you, without any equivocation whatsoever, 

that the USAID programs are programmed in complete accord with 

all of the applicable congressional requirements and with the Administration’s policies. These programs are very carefully monitored. I would be glad to provide additional assistance at any level 

of detail you want, but there are no dollars being programmed that 

do not comply with all of the congressional requirements and the 

Administration’s policy in this area. 

Mr. CHABOT. We would expect that. 

Ms. ROS-LEHTINEN. If the gentleman would yield,——

Mr. KUNDER. Yes, sir. 

Mr. CHABOT. Yes. 

Ms. ROS-LEHTINEN [continuing]. So you could provide us with 

that——

Mr. KUNDER. I would be glad to give you a detailed explanation 

for that. 

Mr. CHABOT. We would appreciate that. Thank you very much. 

Mr. KUNDER. Yes, sir. 

[The information referred to follows:]

WRITTEN RESPONSE RECEIVED FROM THE HONORABLE JAMES KUNDER TO QUESTION

ASKED DURING THE HEARING BY THE HONORABLE STEVE CHABOT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO

SUPPORT FOR FAMILY PLANNING AND HEALTHY REPRODUCTIVE BEHAVIOR

USAID’s proposed investments in reproductive health in the West Bank and Gaza 

are in full compliance with U.S. policy and law. Funds under the West and and 

Gaza Misson’s Congressional Notification #39, dated February 3, 2005, will be used 

to promote ‘‘healthy reproductive behavior.’’ This refers to counseling provided to 

Palestinian couples on child spacing. Birth spacing on 3–5 years between pregVerDate Mar 21 2002 09:56 Dec 05, 2005 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 F:\WORK\MECA\030905\99823.000 HINTREL1 PsN: SHIRL
17

nancies is recommended as one of the best ways to assure the health of the mother 

and children. This is also in keeping with the Palestinian Ministry of Health policies 

and guidelines. The funding complements other maternal and child health interventions and is provided as a part of a comprehensive health program. The USAID program does not promote or fund abortions; it is in compliance with the Administration’s policies regarding reproductive health.

Mr. CHABOT. My time has expired. 

Ms. ROS-LEHTINEN. Thank you very much, Mr. Chabot. 

My good friend, Mr. Ackerman of New York. 

Mr. ACKERMAN. Thank you, Madam Chairman. 

In July 2003, during President Abbas’s term as Prime Minister, the United States provided $20 million in direct assistance to the 

Palestinian Authority. Nine million dollars of this went to pay for 

utility services, and the balance was for repair and rehabilitation 

of the municipal infrastructure. Can you tell us how much of that 

$11 million has actually been spent, and has it all been obligated? 

Mr. KUNDER. I am looking over my shoulder, sir, to see if they 

have that number right here. 

Mr. ACKERMAN. We do that a lot up here. 

Mr. KUNDER. If I do not have that number right there, I will be 

glad to get it to you very quickly. 

Mr. ACKERMAN. Can we wait for that, or do you want to move 

on? 

Mr. KUNDER. I am sorry, sir. I do not have that number right 

now. 

Mr. ACKERMAN. Okay. In December 2004, we also provided $20 

million directly to the PA for payment of electricity bills. It is my 

understanding that the electricity sector, in particular, is rife with 

corruption within the Palestinian areas, and yet we have paid $29 

million worth of bills without demanding any sort of reform of the 

electricity sector. Can we explain that? 

Mr. SATTERFIELD. Congressman, that assistance was provided to 

the Palestinian Authority, but the monies were transferred to the 

Government of Israel to its electric infrastructure. We have absolute accounting, provided both directly by the Government of Israel 

and the Palestinian Authority, for that billing, and the bills were 

not a product, in our view, of any questions raised on the Palestinian side. These were legitimate expenses owed by the Palestinian Authority to the Government of Israel for services rendered. 

By providing that assistance through the Palestinians to Israel, we 

freed up additional funding for Palestinian Authority use on their 

own projects. 

Mr. ACKERMAN. Yes, but the corruption within the electricity sector allows all of those—and I am told it is significant—who are involved within that sector to loot and plunder funds from within the 

electricity sector. That, then, leaves the bills that were due Israel 

unpaid, which we then went in and, through them, paid. 

Mr. SATTERFIELD. Congressman,——

Mr. ACKERMAN. In other words, we are not holding anybody responsible. They should have been paying their bills with their 

money at that time, and, instead, that money went into personal 

pockets, and we came and bailed them out without asking for any 

accountability. 

Mr. SATTERFIELD. Well, Congressman, we have asked for accountability and transparency throughout the assistance process 

18

with the Palestinian Authority, but in the case of these bills, the 

Palestinian Authority has been in a state of financial crisis for 

some time now. The Government of Israel has been transferring 

certain amounts of withheld funds to the PA, but there is a larger 

amount of funds still held by the Israeli Government against court 

judgments which may or may not be made by the Israeli system. 

Mr. ACKERMAN. I know that. In accounts receivable, the Israelis 

can take care of themselves, I am sure. The question is: What are 

we really doing to eradicate corruption within the Palestinian Authority in this sector, in particular? Because it is our money that 

comes in at the end after they steal all of the other money. 

Mr. SATTERFIELD. Well, Congressman, what we and, more importantly, what the Palestinians themselves have done is, over the 

course of the last several years, even prior to the death of Chairman Arafat and the new government taking power, Minister of Finance Fayyad has undertaken and put in place very significant 

budgetary reforms. The amount of lost monies to waste and corruption and mismanagement has been significantly reduced, not just 

to our standards but to the standards of the international community and the international financial institutions. We have seen 

enormous progress made on the budgetary side, including in the 

electrical sector. 

Mr. ACKERMAN. I have met with the finance minister as well. I 

am very confident in his abilities as well as his integrity. But if you 

could get back to me on what specifically we have been pressing 

in the electricity sector——

Mr. SATTERFIELD. On the electricity sector specifically, we can do 

that, Congressman. 

Mr. ACKERMAN. I appreciate that. 

Mr. KUNDER. Sir, if I may, just to answer your earlier question, 

that $11 million was programmed against 71 small road and water 

projects across the West Bank and Gaza. Twenty of those, according to our latest report, have been fully completed, and the other 

50 are in some stage of completion. So I would estimate that about 

half of the money is out the door and paid to construction contractors. We will get you the exact number. 

Mr. ACKERMAN. It is all obligated? 

Mr. KUNDER. It is all obligated, yes, sir. 

Mr. ACKERMAN. And half of it is already spent? 

Mr. KUNDER. Expended. It looks like about 50 percent, but I will 

get you the exact number, sir. 

Mr. ACKERMAN. And the rest is in the pipeline, and you will get 

back with me on that? 

Mr. KUNDER. In the pipeline, yes, sir. 

[The information referred to follows:]

WRITTEN RESPONSE RECEIVED FROM THE HONORABLE JAMES KUNDER TO QUESTION

ASKED DURING THE HEARING BY THE HONORABLE GARY L. ACKERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

OBLIGATION OF FUNDS FOR THE REPAIR AND REHABILITATION OF MUNICIPAL

INFRASTRUCTURE

The entire $11 million balance, which was designated for building and repairing 

roads, wells and other municipal infrastructure, has been obligated. As of January 

31, 2005, $9 million of the $11 million had been expended. The biggest delaying expending these funds has been due to: (1) the unanticipated increase in the number 

19

of projects from 30 to 70, which was necessary to address the key infrastructure 

needs articulated by the Palestinian Authority; (2) the need for a wide set of clearances and approvals by USAID for the design and contracting of each discrete 

project; and (3) the amount of time required for USAID’s contractor vetting, oversight, and monitoring responsibilities, as delineated in the cash transfer agreement 

with the Palestinian Ministry of Finance. Each of the final infrastructure activities 

is now on track and all should be completed by the end of July 2005.

Mr. ACKERMAN. Okay. Thank you. Ambassador Satterfield, the 

Task Force on Palestinian Reform and the Ad Hoc Liaison Committee are each charged with monitoring reforms and coordinating 

donor assistance to the Palestinians. I think we fully expect that 

these two groups are talking to each other, but my question is 

whether or not their efforts are genuinely linked. Does the international community expect some measure of progress on reform in 

return for the assistance provided? 

Mr. SATTERFIELD. The answer to your first question, Congressman, is absolutely, they are linked. In fact, the last several meetings of the Ad Hoc Liaison Committee and the Task Force on Palestinian Reform have occurred in the same venue with the same 

key participants back to back. That is precisely for the reasons that 

your remarks indicate: These do not exist separately with some 

firewall between them. They are part and parcel of the same thing. 

Assistance to Palestinians is assistance not for the general principle of giving money to the PA or giving money to the general benefit of the Palestinian people. It is money given to promote specific 

objectives on the reform side, on the side of economic transparency 

to build free markets, and to build democratic institutions for statehood. So, yes, there is very much a process of interlinkage and coordination. 

With respect to reform goals, there is an absolute requirement 

here, not just in abstract benchmarks, which we have, which the 

international community has, for the reform process, but it is the 

demand of the Palestinians to reform the security services, genuine 

confrontation of those responsible for terror, and moving forward to 

build institutions for statehood. Those are part and parcel of what 

must be seen by us and by the international community and the 

international financial institutions who have their own benchmarks 

that are consistent with our own on this process. 

Mr. ACKERMAN. Thank you. I notice the timer light is not on, and 

I suspect it is not by accident that the Chair is very generous with 

us today. I do have one more area I would like to raise a question 

about. 

At last week’s London conference, the Palestinian Authority 

signed up for a long list of political and economic security-related 

reforms. This to-do list is not really very new. Why would you characterize, if you would, this commitment that they have renewed as 

different from past commitments to undertake reform, and is the 

proposed assistance package linked at all to the Palestinian Authority accomplishing any of these reforms? 

Mr. SATTERFIELD. With respect to the pledged reforms or steps 

taken, including in the security area, you are right, Congressman. 

These are obligations and requirements that have been incumbent 

upon the Palestinians for some time now and requirements and obligations that have not, in large measure, particularly on the security side, been met. 

20

But something has changed. What has changed is not just the 

character of the Palestinian leadership, and that is not just the 

person of Mahmoud Abbas as President, but the fact of Arafat’s departure from the scene, the removal of his divisive and corrosive 

presence, the support offered not just by the international community for a new, democratically-chosen Palestinian leadership, but 

also the active engagement of key regional parties, including Egypt, 

whose role directly with the Palestinians, collectively with Palestinians and Israelis and with Palestinian factions, has been absolutely 

vital to trying to move forward issues such as a comprehensive and 

genuine cease-fire, an end to violence and terror, support for the 

kinds of security measures which the Palestinians must take to establish the rule of law. That is what is different in today’s environment. 

Now, we need to watch very closely to ensure that obligations 

and responsibilities are being met. But the prospects for a successful opportunity being taken by the Palestinians to move themselves 

and their people forward is real; it is more genuine than it has 

been at any point in the past. 

Mr. ACKERMAN. I thank you, and I thank the Chair. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Ackerman. 

Thank you, both of you, for testifying. In 2003, there was $20 

million in direct funding to the Palestinian Authority, in addition 

to $127 million that was sent through the United Nations and private-aid groups, and it stipulated that outside auditors must be 

able to monitor how the money was used. I wanted to ask about 

the results of that. Have our auditors been provided access to the 

PA’s records detailing where the money was spent? Is the Administration considering dispatching a special envoy to ensure financial 

accountability within the PA? 

Mr. KUNDER. Even before we put that requirement in for the specific auditors, one of the additional requirements was that any cash 

transfer be put in a segregated bank account, in an account in a 

financial institution that the U.S. Government agreed to. So we established the structure and the mechanism in the first place, 

Madam Chair, in such a way to make sure that it would be, frankly, easy to follow the funds. That money has been fully audited, 

and while we understand there may be some policy questions, as 

Congressman Ackerman said, on whether we chose the right mechanism, our auditors have indicated that the monies did flow for the 

purposes for which they were intended. 

Mr. SATTERFIELD. Madam Chair, I would add to that, there is an 

audit authority that has been established by recent Palestinian legislation, and that is part of compliance by the PA with World Bank 

requirements for transparency and accountability for World Bank 

Trust Fund-administered monies. We have seen a lot of progress 

made in terms of measures to increase the ability of the Ministry 

of Finance to do adequate, world-class monitoring of funds. We 

have seen an external auditing body set up now in the Palestinian 

Authority, and we in the international financial institutions and 

the other donors, notably, the EU, will insist upon complete accountability and transparency——

21

Ms. ROS-LEHTINEN. So you have a sense of comfort with the 

transparency, with the auditing, with the kind of financial oversight that is taking place both at the U.S. and international levels. 

Mr. SATTERFIELD. Yes, Madam Chair. 

Ms. ROS-LEHTINEN. It has been reported, and we have been discussing, that the United States is going to be providing training 

and support to a new Palestinian security apparatus. What type of 

training will they receive? What are the components for this security plan? What is the structure, the chain-of-command, which is 

being developed for the Palestinian security apparatus? Will the 

Administration be seeking separate funding apart from what we 

are going to be providing for the coordination and the activities of 

this team that is working on the Palestinian security plan, and 

where will these funds be coming from? 

Mr. SATTERFIELD. Madam Chair, General Ward, as I said, has 

launched today, after a preliminary inspection trip, assessment 

trip, to begin his actual mission. One of his charges is to determine 

precisely what is required, not just what is being done, should be 

done, by the Palestinians, what is happening in terms of IsraeliPalestinian dialogue, but what is going to be needed here, needed 

not just from the United States, but also what is going to be needed from the international community. 

There is a great deal of interest that was expressed in London 

on March 1st in how the international community could provide for 

a targeted, very specific assistance, sometimes in kind, sometimes 

in the form of training, for the Palestinian security forces. But the 

key issue here is reforming those forces into, if you will, a single 

gun under the authority of an empowered civilian leadership, and 

the Minister of Interior, General Yusuf, is charged with that responsibility by President Abbas. 

Eliminating the multiple services created during the Arafat era 

and allowing an effective resumption of law and order to take place 

on the ground—now, General Ward will help in that process, help 

coordinate international efforts, help facilitate what is going on on 

the ground, but with respect to assistance which may be required, 

we have already requested $8 million in strengthening security 

structures for the Palestinian Authority. We will see what General 

Ward’s recommendations hold, but his mission is to find international assistance for the Palestinian security services, not just 

United States assistance. 

Ms. ROS-LEHTINEN. If you could explain a little bit more about 

General Ward’s mission and his recent appointment as the Security 

Coordinator for the Palestinian Authority. Please explain a little 

more in depth about the makeup of the team and the specific mission, what kind of oversight, and United States, international 

forces; what countries have said that they are going to participate. 

Mr. SATTERFIELD. We can provide, Madam Chair, a very specific 

briefing to you, to the Committee, on General Ward’s mission, informing as this mission proceeds during the weeks ahead. But in 

general terms, his role as Security Coordinator is to provide an onthe-ground presence, a facilitative presence, for the United States 

and, through us, for those in the international community who 

have indicated an interest in participating from the region, from 

the European Union primarily, in helping to set up newly restrucVerDate Mar 21 2002 09:56 Dec 05, 2005 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6601 F:\WORK\MECA\030905\99823.000 HINTREL1 PsN: SHIRL
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tured Palestinian security forces who are capable of and effective 

in establishing and maintaining law and order. 

Now, General Ward’s mission is not to serve as an intermediary 

between Israelis and Palestinians. We want them talking to each 

other directly, but it is to facilitate the overall process of restoring 

law and order on the ground. That grosimoto is his mission, and 

he will draw on whatever resources from the international community, contacts with the Israeli Government and its security forces, 

contacts in the Palestinian security services and civilian leadership, that he requires to do this. 

Ms. ROS-LEHTINEN. Thank you. Mr. Berman? 

Mr. BERMAN. Help me review the state of play on the assistance 

to the Palestinians. The President has proposed a total of $350 million, of which $200 million would be in the supplemental that the 

House is probably going to vote on next week and which has been 

marked up by the Appropriations Committee. Of that $200 million, 

how much did the Administration design for project aid through 

nongovernmental organizations, how much for project aid to the 

Palestinian Authority, and how much for direct cash assistance to 

the Palestinian Authority? 

Mr. KUNDER. At this point, sir, there is no request for direct cash 

assistance to the Palestinian Authority. There will be assistance, 

for example, technical training, as Congressman Ackerman mentioned earlier. There might be technical training for judicial officials, but that would be done through a contract mechanism or 

through a nongovernmental organization. There might be technical 

assistance, as there is now for better auditing practices at the Ministry of Finance. There might be technical assistance to reform organizations of the Palestinian Authority, but it does not propose a 

cash transfer to the Palestinian Authority. 

Mr. BERMAN. So no part of this money that was envisioned by 

the Administration to be money going to the Palestinian Authority, 

either for general expenses or to do certain things,——

Mr. KUNDER. Correct. Yes, sir. With the exception of small 

amounts in 1994, we have only twice provided direct assistance, as 

you are describing, to the Palestinian Authority, once in 2003 and 

once in 2004. 

Mr. BERMAN. The $20 million that we talked about——

Mr. SATTERFIELD. And then the 2004, yes. 

Mr. BERMAN. All right. So when the appropriators marked up in 

the Committee and included a lot of language, one about reports, 

but, secondly, essentially prohibiting a waiver of the language 

which prohibits direct assistance to the Palestinian Authority, in 

and of itself, that language was not inconsistent with your aid request? 

Mr. SATTERFIELD. Congressman, the Administration wishes to 

preserve the flexibility——

Mr. BERMAN. Well, you probably hate any language which does 

not allow you to waive anything. 

Mr. SATTERFIELD. The President wants to retain, specific to this 

issue, the ability to provide further direct assistance to the Palestinian Authority in consultation with the Congress if we believe circumstances so warrant. There are no plans——

23

Mr. BERMAN. But nothing in the appropriations language deals with any assistance other than the $200 million. 

Mr. SATTERFIELD. Nothing in the current language. We wish, 

though, to preserve the future flexibility for the President to provide direct assistance should he deem that appropriate. 

Mr. BERMAN. But nothing in that language takes away that flexibility in the future to provide future monies directly, right? The 

prohibition on the waiver of the utilization of the waiver only affects the $200 million appropriated in the supplemental. 

Mr. SATTERFIELD. Congressman, we would like to retain the maximum degree of flexibility, including for this $200 million. 

Mr. BERMAN. Even though you have no intention of——

Mr. SATTERFIELD. Even though, at present, we have no such intention, we would like to reserve the flexibility necessary to deal 

with the situation on the ground, in consultation with the Congress, that could involve the provision of direct assistance. We have 

no such plans to do so at this time. 

Mr. BERMAN. This sounds like a philosophical comment, not a 

practical one. 

Mr. SATTERFIELD. It is a very practical comment, Congressman, 

and I will draw the example of Iraqi assistance where we have 

needed to move on the ground very rapidly to shift priorities, to 

change somewhat dramatically the direction of assistance. We have 

done this in coordination with the Hill. With the Palestinian Account, developments on the ground may well require a reconsideration of how best to administer those funds, how best to provide 

them, and for what projects to provide them. We would want to be 

able to have the flexibility to do so, including out of the supplemental request, should the President so desire, in consultation with 

the Hill. 

Mr. BERMAN. I am trying to understand. You have absolutely no intention, and never did, of providing the $200 million in cash assistance, but you are firm in wanting the flexibility to do something 

that you, at this point, do not want to do. 

Mr. SATTERFIELD. It is not ‘‘do not want to.’’ I have no plans, 

Congressman, to undertake at this time. We wish to retain the 

flexibility should circumstances on the ground, in what has been a 

very dramatically changing situation, so warrant. 

Mr. BERMAN. But that concern would not cause you to say that 

we should vote against the supplemental? 

Mr. SATTERFIELD. Certainly, not. 

Mr. BERMAN. Okay. We have two very important goals. One is 

to see the reform and the unification of the security services under 

the political leadership of the Prime Minister and his—I guess it 

is his interior minister. We also have a strong desire to see corrupt 

practices of the past ended. Is there a tension between the two? 

Are the people who are most able to play a positive role in unifying 

the security forces people who, at one time or another, have perhaps not met common cause standards for good governance? 

Mr. SATTERFIELD. Congressman, we do not see a conflict today in 

dealing with this issue. We see the conflict as having existing in 

the past when individuals who were currently engaged in corruption, currently had dirty hands on issues beyond corruption but including association with terror and violence, were in positions of 

24

leadership. That was a real conflict, and it was ultimately responsible for the failure to move this process forward. 

Mr. BERMAN. Put another way, past corruption is not necessarily 

an indicator of future corruption, and you are not going to spend 

a lot of time looking at what somebody might have done 4 or 5 

years ago or 10 years ago, and you are going to support the people 

who are most able to create this kind of unified, responsive-to-political-leadership security force dedicated to stopping terror attacks 

and bringing stability and order to the Palestinian areas. 

Mr. SATTERFIELD. Congressman, the Palestinian people, through 

the debate in the Legislative Council which has just taken place, 

have made very clear that they do not want to see dirty hands in 

governance. They want to see things move forward. So do we, and 

the issue is, are individuals now in positions of authority now executing those positions in a manner that is free of corruption and 

effective in the confrontation of terror and violence? That is going 

to be the standard not just for the United States and our partners; 

it is very clearly the standard for the Palestinian Legislative Council and for the Palestinian people. 

Mr. BERMAN. Could I ask two more questions, Madam Chair? 

Ms. ROS-LEHTINEN. Yes. 

Mr. BERMAN. One, the context for a lot of our hopes is that 

things on the ground, quality of life for Palestinians, will change 

quickly. Maybe this is perhaps to Administrator Kunder: How are 

we going to organize this money and the Europeans, their money, 

and if the Arab donors ever decide to make their commitments, 

their money, into things that are real, tangible, affect quality of life 

in the short term, are not stuck in procurement bureaucracies and 

lengthy delays, to some extent, as we saw earlier with the Iraq reconstruction money? 

Mr. KUNDER. That is a fair question, Congressman. If there is 

one area in which I can guarantee there is probably not a policy 

concern, it is in the area of moving money quickly because, unlike 

Iraq where we did not have established partners on the ground, because we have been doing a very substantial program now for over 

a decade, we have a good array of American and Palestinian, nongovernmental organization partners on the ground, contractor partners on the ground, and in terms of moving money quickly, we 

have the contract and grant mechanisms already in place. 

In fact, as you know from the breakout of the request for $200 

million, a substantial portion of that is to do exactly what you said, 

to show some immediate, tangible results on the ground, and in 

terms of improving classrooms, wells and other water projects, road 

improvements, community centers, we can move that money very 

quickly through the contract and grant mechanisms that are on the 

ground right now. 

Mr. SATTERFIELD. If I could just add to the Assistant Administrator’s comment, we have a quite well-developed, local coordinating 

mechanism. We meet daily when it is necessary, weekly on a constant basis, to ensure that what we are doing, what the Europeans, 

what the Japanese, what other key donors are doing is fully coordinated, that we reflect new developments, new priorities, on the 

ground. That is relayed back to capitals. We have a periodic, Ad 

Hoc Liaison Committee grouping of key chairs in this donor process 

25

that comes together. It did so at the beginning of December, most 

recently, and, informally so, at London, March 1, to review at a policy level what is going on. But the object here is fully coordinated, 

international assistance. 

Mr. BERMAN. The Israelis have expressed concerns a number of 

times about the role that Hezbollah has begun to play not just in 

the context of the Sheeba Farms and the border and the weapons 

and southern Lebanon, but in terms of directly financing and helping to coordinate terror attacks emanating from, I guess, the West 

Bank and perhaps Gaza as well. Are their concerns well-founded, 

based on your intelligence and information, that Hezbollah has become more directly engaged in promoting terror emanating from 

the Palestinian areas? 

Mr. SATTERFIELD. Congressman, we can provide a more detailed 

discussion of this in other settings, but in this setting, I can tell 

you, yes, the United States Government is very concerned at the 

phenomenon of Hezbollah-financed, Hezbollah-sponsored terror and 

violence directed against Israel. It is a growing phenomenon. It is 

an extremely worrisome one not just to us but to the Palestinian 

Authority as well. 

Mr. BERMAN. And my final, final, two-part question is: Has anyone in the Administration publicly called on the Arab Governments, who made substantial commitments to the Palestinians, to 

meet their commitments in a way that both lets them know and 

the world know that they promised to do something that they have 

not yet done, even as they reap windfalls of money from the price 

of oil that they might never have anticipated, even when they 

made those commitments? That is Part A. 

And Part B is, on the Hezbollah issue, is there any progress in 

getting the Europeans to treat Hezbollah as a terror organization? 

Mr. SATTERFIELD. On Part A, Secretary Rice has made very clear 

our expectations from Gulf States, that they will step up to the 

plate and, in their own interest in facilitating a peace between 

Israel and the Palestinians, provide assistance. Yes, she has made 

public calls for such assistance. 

With respect to the European record on Hezbollah, the issue here 

is twofold. Many European States currently proscribe what they 

describe as Hezbollah’s military wing from engaging in any form of 

financing or fundraising activities in Europe. It is proscribed as a 

terrorist organization. 

Mr. BERMAN. They do not know that money is fungible? 

Mr. SATTERFIELD. The U.S. view is that Hezbollah, as an organization, is a terrorist organization and that you cannot disaggregate 

one select portion of either leadership or function, religious, social 

political, or terror. We have been working with the European 

Union quite actively, particularly over recent months, on this issue 

to highlight to them our grave concern over Hezbollah’s active involvement, with Iranian backing, in promoting acts of violence 

against Israel and the Palestinians. Needless to say, Congressman, 

this has been a key aspect of our bilateral dialogue with the Government of Syria as well. 

Mr. BERMAN. Thank you, Madam. You have been very generous 

with me. 

26

Ms. ROS-LEHTINEN. Thank you, Mr. Berman, and thank you, Mr. 

Ackerman. 

So just in summary, I would like to reiterate the strong interest 

that the Subcommittee has in transparency in the use of funds, the 

wise use of funds, that the funds are actually going to improve the 

quality of life, not for terrorism, not for incitement of violence. And 

we want to hear more about the aid that should be coming from 

our Arab allies, our European allies, the United Nation member 

states who have called out so loudly to help their Palestinian brothers. Where is the money? Where is the beef? 

Just to wrap up, we have heard reports of Russia resuming sales 

of military equipment to the Palestinian Authority. We want to 

make sure that we are monitoring what kind of weaponry is being 

considered sold to the PA. 

Two other little points. The first concerns university scholarships 

that we heard about that are going to update and modernize institutions of higher learning in the West Bank and the Gaza Strip. 

We want to make sure that the United States looks at the criteria 

for selecting scholarship recipients and also the aid that is going 

to Palestinian women entrepreneurs, the loans, and what are the 

results of that. So we will be following up with you on all of those 

questions. 

We thank you gentlemen for being with us, and we thank the audience as well for participating and your patience. 

The Subcommittee is adjourned. 

[Whereupon, at 3:39 p.m., the Subcommittee was adjourned.] 

(27)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

RESPONSES FROM THE HONORABLE DAVID M. SATTERFIELD, ACTING ASSISTANT SEC- RETARY, BUREAU OF NEAR EASTERN AFFAIRS, U.S. DEPARTMENT OF STATE, TO

QUESTIONS SUBMITTED FOR THE RECORD BY THE HONORABLE ILEANA ROS- LEHTINEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND

CHAIR, SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA

Question: 

1. In accordance with section 603 of the Foreign Relations Authorization Act for 

FY03, the President recently determined that the PLO or PA had not complied with 

some of the commitments specified in the Act, but that a waiver of the prohibitions 

was necessary and is in the national security interest of the U.S. Please elaborate 

on the commitments that were not fulfilled and what specific national security interests were promoted by the exercise of the waiver. Under what conditions would you 

consider not implementing the waiver? 

Response: 

In December 2004, the State Department reported to the Congress as follows:

II. Determinations as to Palestinian Compliance with Their Commitments Required by Section 603 of the Act

A. ‘‘Recognition of the right of the State of Israel to exist in peace and security’’: 

The PLO and PA have not complied with this commitment. Although neither 

the PLO nor the PA has retracted its recognition of Israel and acceptance of 

a two-state solution, PA and PLO failure to take action against terrorist groups 

or others engaged in violence, as detailed below, has called into question their 

commitment to recognizing Israel’s right to exist in peace and security.

B. ‘‘Acceptance of United Nations Security Council Resolutions 242 and 338’’: 

The PLO and PA have complied with this commitment. Neither the PLO nor 

the PA has retracted its acceptance of Security Council Resolutions 242 and 

338.

C. ‘‘Resolution of all outstanding issues in the conflict between the sides 

through negotiations and exclusively peaceful means’’: The PLO and PA have 

not complied with this commitment. A commitment to a peaceful resolution of 

the conflict remains the official position of the PLO and PA. As of the end of 

the reporting period, however, the failure to take action against, and in some 

cases the provision of support for, terrorist groups or others engaged in violence, 

contradicted that official policy.

D. ‘‘Renunciation of the use of terrorism and all other acts of violence and responsibility over all PLO elements and personnel in order to assure their compliance, prevent violations, and discipline violators’’: The PLO has not complied 

with its commitments to assume responsibility over all PLO elements and personnel to assure their compliance with the renunciation of the use of terrorism, 

prevent violations, and discipline violators. Similarly, the PA has not taken sufficient steps to prevent violence by PA personnel. Some PLO and PA officials 

supported the armed intifada as a proper path towards an acceptable end to the 

conflict, even as they called for renewed negotiations. Available evidence indicates that elements with varying degrees of affiliation with the PLO and PA, 

specifically the Al Aqsa Martyrs Brigades, Tanzim, and members of PA security 

forces, were involved in acts of violence against Israelis. While there is no conclusive evidence that these groups carried out specific attacks with the prior approval and encouragement of the PLO and PA leaderships, it is clear that these 

armed elements were not disciplined. In fact, there is strong evidence that some 

28

members of the PA security forces were allowed to continue serving even though 

their participation in terrorist incidents was well known. Following Arafat’s 

death, the PLO and PA leadership in November renewed negotiations with Palestinian factions, including Fatah, the PFLP, Hamas, and PIJ, regarding a 

cease-fire. They are also considering other means by which to persuade Fatahaffiliated militants to lay down their arms, including seeking guarantees from 

Israel not to target these militants and providing unemployed militants with job 

training and employment opportunities. 

PM Qurei and other senior leaders in the PLO and PA have routinely condemned suicide bombings, especially those aimed at civilians within the Green 

Line. The PA’s condemnations of terror attacks, however, were generally not followed up with concrete and sustained actions to prevent further acts of violence. 

Moreover, while PLO and PA officials often condemned terror attacks against 

civilians within Israel, they failed consistently to condemn attacks on Israeli 

settlers and soldiers in the occupied territories. This omission amounted to tacit 

support for such attacks. 

A major event during the reporting period was the death on November 11 of 

PLO Chairman Arafat. As ‘‘supreme commander of the Palestinian Armed 

Forces’’ (his title as stipulated in the Basic Law, the PA’s de facto constitution) 

and head of the National Security Council, Chairman Arafat wielded overall authority over the security services. With his passing, operational authority over 

the security services was transferred to the Prime Minister, who also assumed 

the chair of the National Security Council. 

Past PLOCCA reports have discussed direct payments from the PA to Fatah 

party activists, some of whom were deeply involved in violence against Israel. 

Such payments may have continued during this reporting period. PA expenditure on non-PA salaries and non-emergency needs was extremely restricted during this reporting period, however, due to reduced revenues and lower than anticipated foreign budget support. In addition, as part of the PA’s reform goal of 

achieving transparency and accountability in financial and personnel management, all security service salaries have been paid directly into employees’ bank 

accounts via direct deposit since March 2004. 

Despite the PA’s public condemnations of violence, the PA did not deploy its 

security resources consistently and effectively against terrorism during the reporting period; this was the case even in Gaza, where the PA retained some security capabilities. A general atmosphere of impunity persisted, allowing terrorist groups to act without fearing either legal or political consequences. As 

noted above, however, the emerging PA leadership has declared its intention to 

deploy PA security services and restore law and order.

The United States has a national security interest in helping Israel and the Palestinians end the ongoing violence and move forward with negotiations. A just, lasting, and comprehensive peace between Israel and its neighbors has been a longstanding and bipartisan goal of U.S. foreign policy in the Middle East. To be able 

to advance these interests, we must maintain our ties and contacts with all sides. 

In the wake of Chairman Arafat’s death, encouraging a new Palestinian leadership 

and reform of Palestinian institutions is a key part of our strategy towards the region. Downgrading or closing the PLO office would make it more difficult for us to 

continue to stay in contact with and support Palestinian reformers who share those 

goals. Furthermore, downgrading or closing the PLO office at this critical time 

would also complicate our relations throughout the region. For these reasons, and 

consistent with the justification provided to the Congress in waiving, the President 

invoked the waiver authority granted by section 604 (c) of the Act, based on his determination that such a waiver is in the national security interest of the United 

States. 

Question: 

2. Are U.S. embassy personnel in Tel Aviv prohibited from visiting the Gaza Strip? 

What travel restrictions does the State Department impose on its personnel stationed 

in Jerusalem and Tel Aviv to the West Bank and Gaza? Please elaborate on the impact of these restrictions on the monitoring and verification of PA compliance with 

its commitments, and our ability to properly audit organizations provided U.S. assistance. 

Response: 

U.S. government personnel (American direct-hire and contract) have been prohibited from all travel in Gaza since the deadly roadside bombing of a U.S. Embassy 

convoy in Gaza on October 15, 2003. U.S. government personnel are permitted to 

travel to the West Bank for official, critical operational needs only. These restricVerDate Mar 21 2002 09:56 Dec 05, 2005 Jkt 000000 PO 00000 Frm 00032 Fmt 6601 Sfmt 6621 F:\WORK\MECA\030905\99823.000 HINTREL1 PsN: SHIRL
29

tions have had little impact on our ability to audit, monitor and verify PA compliance with its commitments. 

To ensure that U.S. funds are utilized in accordance with applicable laws and regulations, and in a responsible manner, USAID project managers and contracting officers in Embassy Tel Aviv, Consulate Jerusalem and Washington work closely with 

local staff , even when travel restrictions preclude face-to-face meetings. USAID’s 

staff includes three engineers residing in Gaza and another three in the West Bank, 

ensuring visits to construction sites during periods when U.S. staff are unable to 

enter the West Bank and Gaza. The USAID mission also utilizes Information Communications Technology to ensure effective oversight. Telecommuting is commonplace for staff unable to travel to Tel Aviv on a regular basis, and video-conferencing 

is used to maintain contacts between project officers in Tel Aviv and USAID’s counterparts who have offices in Ramallah or Gaza. USAID’s engineers often make use 

of digital photography to help keep the home office suitably informed of construction 

project progress. The USAID Mission has pioneered a Geographic Information System (GIS)-based performance monitoring system under which project information 

data are entered by project managers. This system allows almost immediate retrieval of data on any given activity. Having ready access to this information on a 

daily basis allows effective and responsible stewardship of U.S. Government resources. 

The USAID Mission conducts portfolio reviews several times a year, and publishes 

a report detailing the status of each activity twice a year. In addition to periodic 

audits, the Mission, with congressional encouragement, has developed a robust risk 

assessment strategy. All Mission institutional contracts and grants are audited on 

an annual basis by local accounting firms under the guidance and direction of 

USAID’s Inspector General. 

With respect to monitoring and oversight of the two $20 million cash transfers 

to the PA (in July 2003 and December 2004), the USAID Mission incorporated the 

following safeguards into the agreements:

• All funds are kept in a segregated dollar account in Ministry of Finance’s 

(MoF) name.

• Withdrawals require signature by two MoF officials.

• Before funds may be withdrawn, PA must describe the specific uses and get 

USAID’s approval.

• Construction contracts are awarded by municipalities using competitive bidding procedures.

• USAID approval is required before each construction project begins.

• Before each project begins, USAID engineers visit the project site to review 

site conditions, drawings and specifications, and budget estimates.

• After each project ends, USAID engineers verify that the project was completed as expected.

• USAID reviews quarterly reports from the MoF.

• The Regional Inspector General (RIG) conducts quarterly audits to ensure 

compliance with all of the above-mentioned procedures. 

Question: 

3. Has the Administration reviewed section 1003 of the Anti-Terrorism Act to determine whether the PLO should be allowed to continue to maintain an office in the 

US? Would any determination also include the PLO observer office at the United Nations? Has the Administration determined yet whether the PLO is to be re-designated 

as a terrorist organization? 

Response: 

Last April the President exercised his authority to waive the application of section 

1003 to permit the PLO office in Washington, DC to continue functioning for another six months. He did so because the operation of section 1003 ‘‘is a serious impediment to the United States playing an effective role in facilitating crisis management as well as peacemaking and is thus important to the national security interests of the United States.’’ This issue will be reviewed again prior to the expiration 

of the current waiver in October, 2005. 

The PLO observer mission to the UN, the operation of which falls within the 

scope of the United States’s UN headquarters obligations, is not covered by section 

1003. 

30

Question: 

4. How do we ensure that contributions to the Palestinians are used to create new 

engines of social and economic development for Palestinian society as opposed to paying staff salaries and providing emergency assistance? Has the extensive track record 

of corruption within the PA resulted in the reluctance of donors to continue to work 

within these structures? 

Response: 

Following the election of President Abbas and in support of his efforts to fight terror and pursue a peaceful, negotiated settlement with Israel, the Administration is 

committed to supporting reform of Palestinian institutions and expanding economic 

opportunities for the Palestinian people. The $200 million in supplemental assistance will assist Palestinians with institution building, civil society strengthening 

and infrastructure development—necessary foundations for emerging democracy. In 

addition, it will help the Palestinians address economic and technical issues as they 

coordinate with Israel to ensure successful Gaza disengagement. 

USAID maintains a close accounting of all ESF funds for the West Bank and 

Gaza, and we have confidence in the fiscal accountability and transparency established by Palestinian Authority Finance Minister Fayyad. Working with the country 

team, USAID carries out background checks on all Palestinian NGOs that are recipients of funds to ensure that there are no links to terrorist organizations or to 

organizations that advocate or practice violence. 

With regard to donor support of the PA generally, the World Bank’s Reform Trust 

Fund (RTF) provides a mechanism through which donors can make contributions to 

the PA. Over $100 million has been contributed to the PA through the RTF to date. 

The RTF sets benchmarks for the PA in the areas of transparency and accountability that must be met by the PA in order for funds to be released. The PA has 

been successful in meeting these benchmarks. 

Question: 

5. In section 301(c) of the 1961 Foreign Assistance Act (PL 87–195) as amended, 

Congress has directed that ‘‘No contributions by the United States shall be made to 

[UNRWA] except on the condition that [UNRWA] take all possible measures to assure 

that no part of the United States contribution shall be used to furnish assistance to 

any refugee who is receiving military training as a member of the so called Palestine 

Liberation Army or any other guerrilla type organization or who has engaged in any 

act of terrorism.’’

What actions have been undertaken to ensure the proper implementation of section 

301(c)? Has the State Department defined the key terms used in section 301(c)? What 

criteria does the State Department utilize when determining whether UNRWA is in 

compliance with this statute, and that no agency can guarantee that none of the 

money was reaching Palestinians who are receiving training in the PLO or otherwise 

facilitating terrorism? 

Response: 

UNRWA is the largest provider of assistance to the 4.2 million registered Palestinian refugees in Syria, Lebanon, Jordan, the West Bank, and Gaza, a large number of whom live in poverty. United States support for UNRWA helps provide them 

education, health care, housing, and social services. The Government of Israel supports UNRWA and works with top UNRWA officials to coordinate the delivery of 

humanitarian assistance in Gaza and the West Bank. 

Assistant Secretary of State for Population, Refugees, and Migration Arthur E. 

Dewey regularly discusses section 301 (c) issues with UNRWA’s Commissioner General. The State Department’s regional refugee coordinator based at our embassy in 

Amman, Jordan also monitors UNRWA’s compliance with this legislation. The Commissioner General of UNRWA sends a semi-annual report to the State Department 

documenting any abuses, or attempted abuses, of UNRWA facilities. 

In addition to regular monitoring of section 301 (c) by the State Department, in 

2003 Congress directed the General Accounting Office to send a team to the Middle 

East to investigate UNRWA’s compliance with this legislation. Further, the United 

States funds a program in the West Bank and Gaza to help ensure that UNRWA’s 

facilities are not being misused for political purposes or militant activity. Operation 

Support Officers (OSO’s) from this program visit and inspect UNRWA facilities 

every day. The constant vigilance of the OSO’s helps ensure the neutrality and integrity of these installations. 

Question: 

6. In 2003, Congress approved $20 million in direct funding to the Palestinian Authority—in addition to $127 million sent through the United Nations and private aid 

31

groups—and it stipulated that outside auditors must be able to monitor how the 

money was used. Have our auditors been provided access to the PA’s records detailing where the money was spent? Is the Administration considering dispatching a special envoy to ensure financial accountability within the PA? Please elaborate. 

Response: 

In July, 2003, $20 million from the Wartime Supplemental Appropriations Act 

was transferred to the Palestinian Authority (PA) though a ‘‘Cash Transfer Grant 

Agreement’’ between the PA (represented by the Ministry of Finance) and the U.S. 

Government (represented by USAID). Use of the $20 million was subject to a variety 

of controls and monitoring mechanisms. 

Under the terms of the agreement, up to $9 million could be spent on the financing of utility payments. On August 28, 2003, the USAID West Bank/Gaza mission 

approved the use of $9 million to pay the Israeli Electric Company for bills owed 

by the PA. The PA made the payment on the same day. 

For the remaining $11 million of the Grant, the Ministry of Finance has proposed 

65 projects—25 in the West Bank and 40 in Gaza—with a total estimated cost of 

$10,878,280. Most of the projects involve repair and rehabilitation of roads, water 

and wastewater facilities, and municipal halls. 

On September 22, 2003, following site visits by USAID staff engineers, USAID approved 30 projects, totaling $4,410,000. On October 21, 2003, USAID approved an 

additional 11 projects totaling $1,310,000. This brought the total of approved 

projects to 41, with an estimated cost of $5,720,000. 24 projects ($5,158,280) proposed by the Finance Ministry have not yet been approved. Several of these will 

likely be approved once project designs and cost estimates are completed by the 

Ministry and reviewed by USAID engineers. The Finance Ministry will propose substitutions for any projects that are rejected. 

Funds for a given project are drawn down by the Finance Ministry in five 

tranches, corresponding to work completed. The following mechanisms, incorporated 

into the Agreement and subsequent Implementation Letters, allow USAID to monitor the use of the money:

• The Ministry of Finance has certified that none of the money will go to anyone involved in ‘‘armed hostilities or other acts of violence’’ or for the purchase of military or police equipment;

• The Ministry has established a separate bank account solely for this money, 

so as to ensure it will not commingle with funds from any other source;

• The Ministry has sent an authorization letter to its bank, authorizing USAID 

to access directly information about the account;

• The PA has agreed to keep detailed records and provide them for USAID to 

review and audit;

• Contractors are vetted using standard USAID procedures; 

Question: 

7. It has been reported that the US will be providing training and support to a 

new Palestinian security apparatus. What type of training will they receive? What are 

the components of a security plan, structure, chain of command, which is being developed for the Palestinian security apparatus? Will the Administration be seeking separate funding for the coordinator and the activities of the team working on the Palestinian security plan? Where will the funds be coming from? 

Response: 

On March 1, Secretary Rice appointed General Ward as the U.S. Security Coordinator to support efforts to reform and restructure the Palestinian security services 

and to coordinate the efforts of the international community to make that crucial 

task a success. General Ward will lead a team of advisors and will report back to 

Secretary Rice on the progress of his mission. His mission will be supported by the 

U.S. and by international donors. Given the very recent appointment of Gen. Ward, 

the details regarding the mission and its funding components have yet to be finalized. We would be happy to report back on the progress of the Ward Mission as it 

develops. 

Question: 

8. How would U.S. security assistance to the PA be conditioned, and how will this 

be articulated to the PA? Would the United States enter into a memorandum of understanding with the Palestinian Authority on the nature and conditions of technical 

and other assistance provided to that body? 

32

Response: 

We are at a moment of opportunity to make progress toward the President’s twostate vision. We have sought to capitalize on this opportunity through the appointment of U.S. Security Coordinator General Ward, who will help coordinate the reform and restructuring of the Palestinian security services. He will also coordinate 

the international community’s security assistance in the form of training, equipment, and resources for the reform efforts. Any U.S. direct assistance to the Palestinian Authority will be done in close consultation with the Congress and in accordance with existing law and regulation. The United States Government has no plans 

to enter into a memorandum of understanding with the Palestinian Authority, although a number of accountability measures have been previously agreed upon and 

are already in place. 

Question: 

9. Lt. General Ward has recently been named the security coordinator for the Palestinian Authority. Could you please explain the make-up of the team as well as what 

its specific mission will be? Will the team be comprised solely of US personnel? 

Response: 

General Ward has recently been appointed the U.S. Security Coordinator, to lead 

and coordinate U.S. and international efforts to assist the Palestinians in reforming 

and restructuring their security services. He is providing a focal point for other 

international security assistance to train, equip and help the Palestinians rebuild 

their forces. His mission will greatly enhance our capacity to support and encourage 

necessary Palestinian security force reforms. Upon arriving in the region this week, 

he will meet with Palestinians and Israelis, assessing and planning what must be 

done to make this happen. The composition of his team has not yet been determined. 

Question: 

10. With regard to the reform of Palestinian security services, will we oppose the 

inclusion in the security services and in any newly organized Palestinian Authority, 

of anyone involved in violent attacks on Israelis within the Green Line, or for that 

matter, the Karine-A incident, for example? What criteria has been established for 

the recruitment of Palestinian security personnel? 

Response: 

President Abbas has made clear his commitment to end the violence and terror 

and to pursue a peaceful resolution of this conflict. He has taken concrete steps to 

take control of the security situation, and we will continue to ensure that this remains one of Abbas’ top priorities. Reform and consolidation of the Palestinian security services have been goals of the United States’ for some time. Part of that process is a proper vetting of individuals in the security services. General Ward will be 

closely engaged in President Abbas’ security reforms, offering training and support, 

and he will report back to Secretary Rice on Abbas’ progress. 

Question: 

11. What commitments has the President received from our Arab allies on both the 

financing of and other support to Palestinian terrorist organizations? More specifically, what steps is Egypt taking to crackdown on the smuggling of illegal weapons 

into the West Bank and Gaza? Does the United States have any independent assessment about how illegal weapons are being smuggled into the West Bank and Gaza? 

Response: 

We have made it clear to our Arab allies that support for Palestinian terror 

groups such as Hamas directly undermines the prospects for peace. We are actively 

working with them to stop the flow of financing from private individuals and groups 

to these organizations and to support President Abbas’ efforts to eliminate the terrorist infrastructure. 

Egypt has been a constructive partner and mediator on issues specific to the 

Israeli-Palestinian conflict, and we will continue to support efforts by them, the 

Israelis, and the Palestinians on how to effectively combat, and ultimately stop, the 

illegal smuggling of weapons into the Gaza Strip. 

Question: 

12. What knowledge do you have about the use, in operations against Israel, of 

techniques and equipment provided by the US to the PA? When training official Palestinian security organizations, how does the government ensure that the materials 

33

and knowledge provided to them does not disseminate to militant organizations openly engaged in terror? 

Response: 

Our plans to support reform of the Palestinian Authority security apparatus will 

enhance Israel’s security, and better enable both sides to fulfill their Roadmap obligations. Part of General Ward’s mission is to provide USG oversight of PA security 

reforms in order to ensure materials and knowledge is not disseminated to groups 

or individuals seeking to engage in terror against Israel. 

Question: 

13. The Israelis have compiled over the years lists of Palestinians engaged in terror. Did the government compare those lists with the list of those individuals trained 

by our government? What are the results of these comparisons? As far as you know, 

were any officers or other recruits from the PA’s security services trained by the U.S. 

ever implicated with terrorist activities of any sort? How will our assistance to newlyreconstituted Palestinian security services be conditioned to guard against such an 

occurrence? 

Response: 

On March 1, Secretary Rice announced the appointment of U.S. Security Coordinator General Ward to lead and coordinate U.S., regional, and international efforts 

to assist the Palestinians in reforming and restructuring their security services. 

Among other reforms, General Ward will work with the Palestinian security services 

to ensure that they employ only individuals committed to helping enforce the cessation of violence and who respect and uphold the rule of law. He will work closely 

with our Embassy in Tel Aviv and our Consulate General in Jerusalem as he sets 

up his mission to ensure that candidates for training are properly vetted. He will 

keep the Secretary of State fully informed as his mission progresses. His efforts on 

the security front complement our efforts in the areas of political and economic reform. 

All U.S. Government assistance to Palestinian security reform will go directly to 

support General Ward’s mission. 

Question: 

14. To what extent should the European Union or individual European states be 

involved more directly in the new process? What role does the Administration see for 

the United Nations in the process? 

Response: 

The European Union, the United Nations and Russia are our Quartet partners. 

They are important allies in the search for peace in the Middle East, and like us 

are committed to the achievement of a just, lasting, and comprehensive peace between Israel and all its neighbors. The Quartet seeks the creation of a democratic, 

independent, viable state for the Palestinian people. The Quartet is also committed 

to the security of Israel. 

The focus now is a successful Israeli disengagement from Gaza and parts of the 

northern West Bank. We are working with our Quartet partners to ensure that disengagement is a success, as that can serve to move the two parties back to fulfilling 

their obligations under the roadmap. We are urging our Quartet partners, including 

the UN, to offer assistance to the mission of the U.S. Security Coordinator General 

Ward, who was sent by Secretary Rice to the region to assist in the training, restructuring, and reform of the Palestinian security services. 

Question: 

15. Can you describe the division of labor between the United States and other 

Quartet members regarding the training of the Palestinian security services? What 

other countries will be involved in the training of reformed Palestinian security organs? What will be the role of Egypt and Jordan? 

Response: 

U.S. Security Coordinator General Ward has been appointed by Secretary Rice to 

help the Palestinians reform and restructure their security forces, assist the two 

parties in moving forward on security cooperation, and coordinate the efforts of the 

international community, including Quartet members and regional partners, in assisting Palestinian security reform efforts. We appreciate Egypt’s actions to support 

peacemaking efforts, and will continue to be in close coordination with them, the 

Jordanians, and with other key regional and international actors. Quartet members 

and our Arab allies have been encouraged to offer training, equipment and resources 

to General Ward’s mission. 

34

Question: 

16. Will there be a role for the Quartet on security issues? What will this be? Will 

quartet members other than the US judge whether progress is being made on the security front? Who will decide when and whether the process can move forward from 

one phase to another? 

Response: 

We and our Quartet partners are working together closely to provide support for 

the new Palestinian leadership as it moves forward with its reform efforts. The 

Quartet partners are supporting our efforts to promote economic, political, and security reform in the PA, including working with the mission of General Ward, the Senior U.S. Security Coordinator. They, like us, are committed to seizing this moment 

of opportunity and working toward a successful Israeli disengagement from Gaza 

and part of the northern West Bank and an orderly transfer of authority there to 

the PA. 

General Ward will lead and coordinate U.S., regional, and international efforts to 

assist the Palestinians in reforming and restructuring their security services. General Ward is working closely with our Embassy in Tel Aviv and our Consulate General in Jerusalem as he sets up his mission. The Quartet and international community have offered support for his mission, including personnel, equipment, and training. 

Question: 

17. Can you comment on reports that Muhammad al-Abbar, a rich property developer and director of Dubai’s department of economic development, has offered to purchase homes and agricultural buildings in Israeli settlements in the Gaza Strip, 

scheduled to be evacuated according to the Israeli disengagement plan? What was 

the response in the UAE to his offer? How much has UAE pledged to the PA in development assistance? What has been the actual aid delivery? 

Response: 

We have seen reports regarding Mr. al-Abbar’s interest. There are a number of 

actors, both from the governmental and private sectors, who intend to help Israel’s 

plan to disengage from Gaza and parts of the northern West Bank succeed. A key 

element that both sides need to address is, of course, the proper disposition of assets 

being left behind by settlers, and the best means to ensure the revitalization of the 

Palestinian economy after Israeli disengagement. The World Bank, both in its technical capacity and in its capacity as the Secretariat of the Ad Hoc Liaison Committee of major donors, has led the coordination of such efforts in the economic context and will continue to do so. 

The United Arab Emirates has provided financial support to the Palestinian Authority (PA) in the amount of $21.5 million, pursuant to pledges made at the March, 

2002 Arab League Summit in Beirut. In light of the new PA leadership and its 

budgetary gap, we are encouraging the UAE to continue to provide support to the 

PA. We will continue to consult with the UAE and other Arab allies on how best 

to support the PA in the context of budgetary support and, more generally, to support the President’s two-state vision of Israel and Palestine living side by side in 

peace and security. 

Question: 

18. At the meeting in London, did Saudi officials give any public indication of a 

willingness to provide extra funding? If not, did U.S., British, or other officials show 

a desire to pressure the kingdom? 

Response: 

The Kingdom of Saudi Arabia has provided budgetary support to the Palestinian 

Authority in the amount of approximately $15 million bi-monthly, pursuant to 

pledges made at the March 2002 Arab League Summit in Beirut and renewed at 

several subsequent summits. The total Saudi contribution over the past three years 

is over $200 million. In light of the new PA leadership and its budgetary gap, we 

are encouraging the Kingdom of Saudi Arabia and other regional states to step up 

their assistance to the Palestinian Authority. While the March 1, 2005 London 

Meeting on supporting the Palestinian Authority was not a pledging conference, the 

participants strongly encouraged the international community to help address the 

urgent short-term financing needs of the PA. 

Question: 

19. Last week, British Prime Minister Tony Blair hosted a conference in London 

dedicated to garnering support for the Palestinian Authority, which was attended by 

35

Saudi Arabia and several other oil-rich Arab countries. These countries reaped unexpectedly high government revenues in 2004 due to increased oil prices. How much 

of this windfall was offered to bolster the Israeli-Palestinian peace process? To what 

extent has the Administration viewed these contributions as an indicator of the willingness of many governments the region to secure a settlement? 

Response: 

The Administration has consulted with our allies, including Arab states, on how 

to support peace efforts. Arab state contributions since 2002 include: Saudi Arabia, 

which has consistently provided bi-monthly budgetary support in the amount of approximately $15 million; Qatar ($11 million in 2005); Kuwait ($40 million in 2005); 

Algeria ($50 million in 2005); Libya ($11 million in 2004); and Tunisia ($2 million 

in 2004). Several other Arab states made pledges to the Palestinian Authority in 

2002, which currently remain unmet. 

While the March 1 London Meeting on Supporting the Palestinian Authority was 

not a pledging conference, the participants strongly encouraged the international 

community to help address the urgent short-term financing needs of the PA. We are 

encouraging the Kindgom, and others, to recognize the opportunity that now exists 

and do what they can to help the PA close its budget gap and support the new PA 

leadership as it moves forward with reforms and a renewed dialogue for peace. 

Question: 

20. How much assistance to the PA was pledged by Arab countries last year, and 

how much was actually delivered? How much of this assistance will be delivered bilaterally to the PA? How much will be administered through multilateral institutions? 

Response: 

The IMF provides the United States Government with updates on contributions 

to the Palestinian Authority. Bilateral contributors to the PA’s budget since 2002 

include: Saudi Arabia, which has consistently provided bi-monthly budgetary support in the amount of approximately $15 million; Qatar ($11 million in 2005); Kuwait ($40 million in 2005); Algeria ($50 million in 2005); Libya ($11 million in 2004); 

and Tunisia ($2 million in 2004). Several other Arab states made pledges to the Palestinian Authority in 2002, which currently remain unmet. We are encouraging 

them, and others, to recognize the opportunity that now exists and do what they 

can to help the PA close its budget gap and support the new PA leadership as it 

moves forward with reforms and a renewed dialogue for peace. 

Question: 

21. What steps will be undertaken to change the Palestinian educational system 

to orient it towards a more democracy-based system, promoting values accommodating tolerance and understanding, as opposed to violence? What do you believe is 

the proper role of U.S. assistance to the Palestinians in this matter? 

Response: 

Reform of the Palestinian educational system, particularly in the context of incitement against Israel and Jews, is a priority. The Palestinian Authority is currently 

finishing the roll-out of revised textbooks for all grade levels. Since 2002, and per 

a Congressional earmark, the Administration has provided grant support through 

the Department to the Israel-Palestine Center for Research and Information 

(IPCRI), a non-profit organization, to review the content of the revised textbooks. 

In general, the textbooks are a moderate improvement, but more work needs to be 

done. Through our Consulate General in Jerusalem and USAID mission in Tel Aviv, 

we will continue to monitor progress and make clear to the PA that educational reforms must continue. 

Question: 

22. Do you believe that efforts towards reform recently initiated by Abu Mazen will 

extend to other Palestinian institutions as well? Will it include an expanded role for 

the Palestinian Legislative Council? Will this include grass-roots anti-corruption efforts? 

Response: 

Following Mahmoud Abbas’ victory in a free and fair presidential election at the 

beginning of the year, the Palestinian Authority has begun to take positive steps 

to implement many of the reforms that we have long stressed are critical to the successful implementation of the Roadmap and the establishment of a democratic, stable, and prosperous Palestinian state. We were struck by the robust debate within 

the Palestinian Legislative Council in recent days over the shape of the new cabinet, 

36

and the insistence of a majority of Council members that ministers be free of the 

taint of corruption and cronyism that has long plagued the Palestinian Authority. 

General Ward’s presence on the ground, working closely with the new Minister of 

Interior, General Nasir Yusuf, will provide us with a greatly enhanced opportunity 

to support crucial Palestinian security reform. 

Palestinians will go to the polls again this year to elect a new Legislative Council 

for the first time in nearly a decade. These elections will be another strong signal 

in favor of democratic reform throughout the region and will be a critical test for 

President Abbas and his reform agenda. We anticipate that the issue of internal reform and corruption will feature prominently in the debate surrounding the upcoming Legislative Council elections to be held this year. 

Question: 

23. How do we shift the emphasis in the Palestinian power structure away from 

a focus on the importance of the individual politicians and toward the importance 

of the institutions themselves? 

Response: 

As the President has made clear, in the post-Arafat era the Administration is 

committed to supporting Palestinian institutions committed to peace and reform. 

Continued reforms by the Palestinian Authority (PA), especially in the area of security; the various electoral processes currently in play, including municipal and legislative elections; and assistance from the USG and the international community 

aimed at supporting Palestinian reform, give the Palestinian people the best chance 

for a government that supports their legitimate aspirations. In this light, the President’s supplemental request for $200 million in assistance for the Palestinians will 

help Palestinians build institutions and strengthen civil society—necessary foundations for emerging democracy. 

Question: 

24. Has the PA launched an investigation into the whereabouts of the millions of 

dollars that Arafat and his aides stole and sequestered in numerous bank accounts 

and other holdings throughout the world? Please elaborate. 

Response: 

According to the IMF, an audit of the Palestinian Authority conducted in 2003 

by Minister of Finance Salam Fayyad revealed that between 1995 and 2000, PA 

Chairman Yasser Arafat had diverted $900 million in public funds to a special bank 

account under his direct control. The IMF and others have credited openness and 

transparency in the Palestinian Authority’s accounting under Minister Fayyad for 

disclosing these asset transfers. The Palestine Investment Fund, established in October 2000 as a separate legal entity, conducted a valuation (carried out by Standard & Poor’s) of all public assets and investments held by the PA. As a result, $800 

million of the $900 million in diverted funds has been accounted for, with the difference attributed to the change in asset valuation. 

In recent years, the Palestinian Authority has substantially improved its track 

record of fiscal transparency and accountability. The Palestinian Ministry of Finance recently hired PriceWaterhouseCoopers to conduct an audit of PA finances as 

they work to establish their own external audit capacity in accordance with the 

benchmarks established by the World Bank’s Public Financial Management Reform 

Trust Fund. This trust fund releases budget support from international donors to 

the Finance Ministry, contingent on the PA’s achieving semi-annual benchmarks. 

It is possible that there are additional assets from the era of Chairman Arafat 

that remain unaccounted for at this point. Fayyad has expressed his willingness to 

work with the U.S. Government and the World Bank to find this stolen money and 

to improve the transparency and accountability of the PA; given Fayyad’s track 

record, we have a good degree of confidence in him. In addition, the PA is very interested in cooperating with the USG on combating terror funding in the Palestinian 

territories, and has requested USG technical assistance in setting up a financial intelligence unit. We are consulting with the Treasury Department on how best to 

proceed with providing this kind of support. 

Question: 

25. Has the Palestinian Authority developed a plan to construct and to administer 

courthouses, police centers and prison facilities in the West Bank and Gaza? What 

steps will it take to ensure that the prisons do not become ‘‘revolving doors’’ once 

again? 

37

Response: 

The restoration of law and order will serve the Palestinians interest by creating 

the security and stability necessary to return to normal life. Augmenting security 

in the Palestinian areas will allow Israel to lift restrictions on Palestinian movement. Increased security and rule of law will also enable investment, create jobs, 

and encourage economic growth. Accordingly, our USAID mission to the West Bank 

and Gaza plans to fund the construction of courthouses and programs to train 

judges and prosecutors. In addition, U.S. Security Coordinator General William 

Ward will work with the Palestinian Authority to reform and restructure the Palestinian security forces, and will coordinate international offers of assistance to help 

reform the Palestinian security structures. 

Question: 

26. Can you elaborate on plans by the PA to bolster the legitimacy of government 

institutions by holding elections to the Palestinian Legislative Council in July 2005? 

When will it complete the program of rolling local elections across the West Bank and 

Gaza? 

Response: 

Elections for the Palestinian Legislative Council—the first since 1996—are scheduled for July 17; additional rounds of municipal elections throughout the West Bank 

and Gaza are expected to be held in May and in August. The renewal of these bodies through elections is an essential part of the building of Palestinian democratic 

institutions. 

Question: 

27. Addressing the 10th session of the Palestinian Legislative Council (PLC) Abu 

Mazen confirmed that the Palestinian efforts in security will remain motionless without implementing the Road Map obligations and launching the final status negotiations. Can you comment on this development? Will the Administration adjust its 

praise for Abu Mazen to reflect this position? Please elaborate. 

Response: 

Since his election in January, President Abbas has shown his commitment to improving the security situation in the West Bank and Gaza by making clear he will 

hold his security chiefs accountable for halting attacks on Israelis and firing them 

if they fail to perform. His strong condemnation of the February 25 terrorist attack 

in Tel Aviv was a welcome sign that he will not tolerate terrorist tactics. However, 

much remains to be done, and the PA must live up to its responsibilities to improve 

the security situation in Gaza and the West Bank and dismantle terrorist infrastructure. 

General Ward will work closely with the Palestinians to help them continue to 

make progress reforming their security apparatus. The U.S. Government has been 

clear and consistent with President Abbas: there must be an end to terror and violence, and dismantlement of terrorist infrastructure, as called for in the roadmap. 

That is the only way to realize President Bush’s vision of two states, Israel and Palestine, living side by side in peace and security. 

Question: 

28. The Palestinian government includes ‘‘old guard’’ politicians such as Nabil 

Shaath who have long been accused of corruption or mismanagement. Shaath, formerly foreign minister, become deputy prime minister in the new government. To 

what extent does resistance to reform and financial accountability trickle down to 

contractors and businesspeople? How can Abbas overhaul dysfunctional agencies and 

downsize a bloated government payroll of 120,000, without aggravating the unemployment problem? 

Response: 

In the wake of the election of President Mahmoud Abbas in February, the Palestinian Authority has renewed its focus on political reform. Issues of democracy, governance, and institutional reform are all key to building a strong, democratic Palestinian Authority that will be prepared to take control of Gaza after Israel’s disengagement. The new PA leadership is committed to institutional reform. A new 

electoral law is being discussed in the Palestinian Legislative Council. Important 

strides have already been made by Minister of Finance Fayyad to improve the 

transparency and accountability of the PA. A revised Palestinian Basic Law is serving as a solid interim constitution until a full constitution can be drafted. Good governance involves more than legislative and electoral reform; it involves reform of all 

governmental institutions. The PA has made great strides in reforming its handling 

38

of government finances. Over the past year and a half there has been significant 

improvement in the transparency and accountability of PA finances. 

Many very difficult, very serious issues remain, among them re-establishment of 

the rule of law, fighting terrorism, reforming the judiciary, and addressing very significant issues of pension and civil service reform. We will continue to press President Abbas to make reform and good governance his top priorities. 

Question: 

29. Can you comment on reports that Abbas had ousted many of the top brass in 

the security services in the Gaza Strip? If these reports are true do you believe that 

these removals signal that Abu Mazen is serious about extending his authority over 

the sprawling Palestinian security services or are they aimed at eliminating rivals 

of former Gaza security chief Mohammed Dahlan rather than curbing terrorism in 

the Gaza Strip? 

Response: 

Recent PA security reforms have had positive impact on the overall security environment between Israelis and Palestinians. Immediately after his election as President, Abu Mazen moved quickly to react to terrorist incidents, including deploying 

Palestinian troops in northern Gaza to try to stop Qassam rocket incidents. He also 

unequivocally condemned the February 25 Tel Aviv bombing. He recently appointed 

a new Minister of Interior, General Nasir Yusuf. That said, the U.S. has stated 

clearly that Abu Mazen needs to continue his efforts to reform and restructure the 

PA security services. Dismantlement of the terrorist infrastructure should be the 

central goal of such reform efforts. The PA security services need to be brought 

under unified civilian control and trained to enforce and respect rule of law. 

The U.S. has appointed General Ward to lead and coordinate U.S. and third-country (EU, Arab, other) efforts to assist Palestinian security reform. General Ward’s 

presence on the ground, working closely with Minister Yusuf, will provide us with 

a greatly enhanced opportunity to support crucial Palestinian security reform. 

Question: 

30. Does Nasser Yousef, the new interior minister and a long-time associate of 

Arafat exert full authority over the three security arms? Please elaborate. 

Response: 

We expect that the new Minister of Interior, General Nasir Yusuf, will work 

steadily toward crucial Palestinian security reform. He is trying to consolidate the 

Palestinian security services into three major branches. U.S. Security Coordinator 

General Ward will work with General Yusuf in the consolidation and restructuring 

of the Palestinian security services and in efforts to enhance their capability, discipline, and professionalism. 

President Abbas has affirmed his commitment to improving the security situation 

in the West Bank and Gaza by making clear he will hold his security chiefs accountable in their performance in halting attacks on Israelis and that he will fire them 

if they fail to perform. We are very encouraged by this sign that President Abbas 

will hold his security services 

Question: 

31. It has been reported that, in contrast to the situation in the West Bank, the 

IDF is relatively pleased with the functioning of the Palestinian security services in 

the Gaza Strip. Can you comment on reported Israeli accusations that in the West 

Bank the PA is still not performing what Israel describes as a ‘‘thwarting procedure’’—arresting suspected terrorists, interrogating them and putting them on trial? 

What do you believe accounts for the differing response? 

Response: 

The key issue for the PA remains performance, especially on security issues in 

both the Gaza Strip and the West Bank. The PA must take action to disarm and 

dismantle terrorist organizations, and consolidate the Palestinian security forces. 

The announcement at Sharm el-Sheikh on Feb 8 by Prime Minister Sharon and 

President Abbas that Palestinians would stop all acts of violence against all Israelis 

everywhere and Israel would cease all its military activities against all Palestinians 

everywhere was a welcome step, and we are encouraging both sides to fulfill the 

commitments they made at Sharm el-Sheikh. 

President Abbas has taken some good concrete first steps towards reforming the 

security services, including making clear he will hold his security chiefs accountable 

in their performance in halting attacks on Israelis and firing them if they fail to 

perform. However, the PA must live up to its responsibilities of improving the secuVerDate Mar 21 2002 09:56 Dec 05, 2005 Jkt 000000 PO 00000 Frm 00042 Fmt 6601 Sfmt 6621 F:\WORK\MECA\030905\99823.000 HINTREL1 PsN: SHIRL
39

rity situation in PA-administered areas and dismantling the terrorist infrastructure 

as called for in the roadmap. 

Question: 

32. Please elaborate on reports that Hezbollah’s longtime supporters in Iran have 

increased their support for attacks on Israel in their attempts to torpedo any peace 

negotiations between the Israelis and Palestinians? 

Response: 

Hizballah is designated a Foreign Terrorist Organization under U.S. law. 

Hizballah provides guidance and financial and operational support for Palestinian 

extremist groups engaged in terrorist operations in Israel and the West Bank and 

Gaza Strip. Hizballah has several thousand supporters and a few hundred terrorist 

operatives. It receives financial, training, weapons, explosives, political, diplomatic, 

and organizational aid from Iran. Hizballah also receives funding from charitable 

donations and business interests. 

In the past, Iran has maintained a high-profile role in encouraging anti-Israeli activity, both rhetorically and operationally. Supreme Leader Khamenei praised Palestinian resistance operations, and President Khatami reiterated Iran’s support for 

the ‘‘wronged people of Palestine’’ and their struggles. Matching this rhetoric with 

action, Iran provided Lebanese Hizballah and Palestinian rejectionist groups—notably HAMAS, the Palestine Islamic Jihad, and the Popular Front for the Liberation 

of Palestine-General Command—with funding, safe-haven, training, and weapons in 

2003 and 2004. 

In February 2005, at the Palestinian donors conference in London, Secretary Rice 

said that ‘‘when it comes to Iranian support for terrorism, I would strongly hope 

that all of those who . . . desire peace in the Middle East, who desire a peace between Israelis and Palestinians, recognize that the Iranians are one of the strongest 

supporters of the rejectionists in that process, whether it’s Hezbollah or Iranian help 

to the Palestinian rejectionists, and you can’t have it both ways. You can’t say that 

you want peace between Israel and the Palestinians and not do everything that you 

can to disable the Palestinian rejectionists and Hezbollah.’’

Question: 

33. Please elaborate on new reports stating that Abu Mazen is planning to send, 

or has sent a top Palestine Liberation Organization official to Lebanon to meet with 

leaders of Hizbollah. 

Response: 

According to the press, Abu Mazen’s December 2004 visit to Lebanon included 

stops at several Palestinian refugee camps and meetings with various Lebanese officials. According to press reports, Abu Mazen also sent PLO representatives to Lebanon in February 2005 to urge compliance with the cease-fire agreed to with Israel 

at Sharm al-Sheikh. 

The U.S. government will support Abu Mazen as he attempts to eliminate the terrorist infrastructure in accordance with Palestinian obligations under the roadmap. 

The terrorist threat comes from both domestic Palestinian groups and those funded 

and supported from outside the West Bank and the Gaza Strip. Designated a Foreign Terrorist Organization under U.S. law, Hizbollah engages in terrorist operations in Israel, the West Bank and Gaza. We have been very clear that support 

for terror must end, and that we all have responsibilities to make the most of this 

opportunity for progress. As Secretary Rice said at the March 1 London Meeting on 

Supporting the Palestinian Authority, ‘‘all nations committed to peace must now join 

together to help the Palestinians prevent terrorist, and the states that support 

them, from killing this hopeful moment.’’

Question: 

34. Can you comment on recent reports that Palestinian Authority security officials 

are fearful that Hizbullah and Iran were planning to kill Abu Mazen in order to 

thwart attempts to revive the peace process? Please elaborate. 

Response: 

While this past year has brought forth a dramatic shift in the political landscape 

of the Middle East, including the election of Abu Mazen, this moment of transformation is very fragile. There are still committed enemies of peace, particularly 

the Government of Iran, which is the world’s most active state sponsor of terrorism. 

We have repeatedly stated our concerns about Iran’s continuing efforts to use terrorism to subvert democratic governments and to impede the progress of peace efforts between Israel and the Palestinians. 

40

In the past, Iran has maintained a high-profile role in encouraging anti-Israeli activity, both rhetorically and operationally. Supreme Leader Khamenei praised Palestinian resistance operations, and President Khatami reiterated Iran’s support for 

the ‘‘wronged people of Palestine’’ and their struggles. Matching this rhetoric with 

action, Iran provided Lebanese Hizballah and Palestinian rejectionist groups—notably HAMAS, the Palestine Islamic Jihad, and the Popular Front for the Liberation 

of Palestine-General Command—with funding, safe-haven, training, and weapons in 

2003 and 2004. 

The U.S. government has made it clear that it supports Abu Mazen’s efforts to 

fight terrorism and to fulfill other Palestinian obligations under the roadmap. Secretary Rice praised Abu Mazen’s ‘‘commitment to democratic reform’’ during the 

March 1, 2005 Quartet meeting in London. She acknowledged that ‘‘there are still 

groups and individuals who will literally kill to prevent peace,’’ but underscored the 

commitment of the U.S. Government to help Abu Mazen withstand their challenge. 

She said: ‘‘I look forward to working with you and your government at this time 

of great possibility for your people and for your region’’

Question: 

35. What steps is the Administration taking to pressure or convince Abbas that the 

terrorist infrastructure must be confronted, and not negotiated with? What will be 

the price of failing to do so? How do we ensure that we will not experience a remilitarization of the West Bank and Gaza by the Palestinian Authority under the rubric 

of fighting terrorism? 

Response: 

The United States is working with Palestinians and Israelis to improve security 

on the ground. U.S. Security Coordinator General Ward has been charged with helping the Palestinians rebuild and restructure their security services so that they are 

better equipped to fight terrorism. General Ward is working with the Palestinians 

to help them fulfill all their obligations under the roadmap, especially sustained, effective operations to stop terrorism and dismantle terrorist capabilities and infrastructure. Ensuring security for Israelis and Palestinians demands an immediate, 

strong and continuous effort to combat terrorism. 

Moreover, the United States government is committed to supporting the new Palestinian leadership as it takes steps to address security, governance and economic 

reforms. By helping President Abbas strengthen Palestinian civil society, build new 

institutions, and strengthen public welfare, we are assisting him in building the 

foundation of an emerging democracy. Increased economic and social opportunity 

will help counter the appeal of terrorism and violence, and limit the appeal of terrorist organizations. We are reassured by President Abbas’ strong words of condemnation of terrorism; he strongly denounced, for example, the February 25, 2005 

terrorist attack on the Stage Club in Tel Aviv. Subsequently, in his remarks at the 

March 1 London Meeting on Supporting the Palestinian Authority, he said: ‘‘I am 

investing 100% of my efforts to bring about the cessation of violence against Israel.’’

Secretary Rice, speaking in London in early February 2005, reiterated her support 

for the new Palestinian leadership, pointing to ‘‘the Palestinian Authority’s commitment to democratic reform.’’

Question: 

36. Can you comment on reports that Russia is considering resuming sales of military equipment to the Palestinian Authority? Have the Russians indicated what sort 

of weaponry or equipment Russia was considering? What has been the Israeli response? Please elaborate. 

Response: 

Russia, as a member of the Quartet, has a vital role—to help Israelis and Palestinians make progress toward implementation of their obligations under the Roadmap. The Quartet continues to support the progress made by both the Israelis and 

the Palestinians and condemns terrorist tactics in the strongest possible terms. The 

Quartet is working with other members of the international community to help contribute to efforts to achieve peace. 

Russia—as well as our other Quartet partners, the European Union and the 

United Nations—has offered support to the mission of U. S. Security Coordinator 

General Ward. Ward’s mandate is to help restructure and reform the Palestinian 

security services and to coordinate international efforts to assist in Palestinian security reform. In doing so he will work closely with the individual Quartet members 

to ensure appropriate support for effective PA security forces that are empowered 

to fight terror. 

41

Question: 

37. Have we indicated to the Palestinian Authority that the Tanzim and al-Aqsa 

Martyrs Brigades—organizations that are part of Fatah organization—must be shut 

down? Will the revolving doors on PA prisons be locked? 

Response: 

Designated a foreign terrorist organization (FTO) under U.S. law, the Al-Aqsa 

Martyrs Brigades has carried out shootings and suicide operations against Israeli 

civilians and military personnel in Israel, the West Bank, and Gaza, rocket and 

mortar attacks against Israel and Israeli settlements from the Gaza Strip, and the 

killing of Palestinians suspected of collaborating with Israel. Al-Aqsa has killed a 

number of US citizens, the majority of them dual US-Israeli citizens, in its attacks. 

The Tanzim are a similar Fatah terrorist group, although they are not designated 

a FTO. 

The United States is working with Palestinians and Israelis to improve security 

on the ground. U.S. Security Coordinator General Ward will work with the Palestinians to help them fulfill their obligations under the roadmap, especially sustained, 

effective operations to stop terrorism and dismantle terrorist capabilities and infrastructure. As President Bush recently said, ‘‘Building true security for Israelis and 

Palestinians demands an immediate, strong and sustained effort to combat terrorism in all its forms.’’ General Ward will also work with the Palestinian Authority 

to enhance the security of civil institutions in the West Bank and Gaza such as prisons. 

The new PA and PLO leadership have stated that restoring law and order in the 

West Bank and Gaza is their top policy priority. President Abbas has taken some 

concrete steps towards reform of the Palestinian security services, including replacing senior officials, passing a security pension law, decreeing the consolidation of the 

security forces under the authority of the Minister of Interior and cooperating fully 

with U.S. Security Coordinator Ward. 

RESPONSES FROM THE HONORABLE JAMES KUNDER, ASSISTANT ADMINISTRATOR FOR

ASIA AND THE NEAR EAST, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT, TO

QUESTIONS SUBMITTED FOR THE RECORD BY THE HONORABLE ILEANA ROSLEHTINEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, AND

CHAIR, SUBCOMMITTEE ON THE MIDDLE EAST AND CENTRAL ASIA

Question: 

1. What is the policy direction being given by State to USAID in selecting programs, contractors, and grantees? What criteria and screening process is in place to 

assess the eligibility of principal contractors, sub-contractors, and grantees? 

Response: 

• To West Bank/Gaza Mission Office of Acquisition and Assistance’s knowledge, 

State has not provided any specific policy guidance in making the contractor/

grantee selections. Criteria for selection of contractors and grantees are therefore 

governed by the Federal Acquisition Regulations (FAR) and AID Acquisition Regulations.

• The criteria as to those organizations which are eligible to participate in each procurement action are established in the solicitation document. In particular, these 

categories may include, as appropriate for each requirement: qualified U.S. and 

non-U.S./international non-profit organizations (501(3)(c) registered), for-profit organizations (with the caveat that neither profit nor fee may be provided under Assistance awards), institutions of higher education, or private voluntary organizations registered with USAID. Please also note that specific requirements may also 

be directed toward Public International Organizations.

• The criteria as to determining the eligibility for award include: for Acquisitions 

(contracts), ‘‘responsibility’’ determinations as required by FAR Par 9; for Assistance (grants and CA’s), equally ‘‘responsibility’’ (or, as more often referred to, 

‘‘grant worthiness’’) determinations as required by Automated Directives System 

303 and 22 CFR 226. Integral to this process is the determination of whether a 

partner is included on the Lists of Parties Excluded from Federal Procurement 

and Nonprocurement Programs (Lists), which identifies those parties excluded 

throughout the U.S. Government from receiving Federal contracts or certain subcontracts and from certain types of Federal financial and nonfinancial assistance 

and benefits.

42

• Furthering item (c), contractors/recipients are tasked with establishing the ‘‘responsibility’’ of proposed sub-awardees (i.e., subcontractors/subgrantees).

• In addition, the Mission conducts a ‘vettting’ of proposed local recipients of awards 

and sub-awardees as provided under section (c) of the Terrorism Prohibition special provision. This searches U.S.G. databases for any affiliation with terrorist activities, and applies to all prinicipal officers of the recipient organization. In addition, all grantees are required to sign the ‘Anti-terrorism Certification. 

Question: 

2. In a January 4, 2005 Congressional Notification, the Administration announced 

that it was providing $20 million in economic support funds (ESF) for budgetary assistance to the PA. In addition, it announced that USAID was providing $14 million 

of ‘‘technical assistance, training and commodities’’ to support the Palestinian elections. What specific NGOs and organizations were the recipients of this assistance? 

Can you certify that it does not reach the so-called ‘‘political’’ branches of Palestinian 

terrorist organizations? Are these nonprofit organizations still audited under OMB’s 

A–133 audit process? If so, how often? Please elaborate on the process. 

Response: 

• USAID ultimately committed $10.8m from existing funds to support Palestinian 

elections. Of this figure, funds were distributed as follows:

1. Election observation. Implementer: National Democratic Institute. $1.2m 

(Presidential elections); $1.7m (local elections); $1.2m (planned), parliamentary elections

2. Central Election Commission commodity and technical assistance. Implementer: IFES (formerly International Foundation for Electoral Systems). 

Program consisted of technical aid and commodity purchases by IFES for the 

Central Elections Commission for Presidential and Parliamentary elections 

($3.7m).

3. Parliamentary and local elections. $2m (planned) Implementer: International 

Republican Institute. Training and technical assistance to support women’s 

participation, political polling and leadership development.

4. Presidential, parliamentary, and local elections. $1m (planned). Implementer: Chemonics (Tamkeen project). Subgrants and technical assistance to 

Palestinian Non-Governmental Organizations (NGOs) for voter mobilization, 

education, and information programs.

• With the sole exception of Chemonics/Tamkeen subgrants (see below), all USAID 

assistance in this context is either training, technical assistance, or commodity 

purchase on behalf of other organizations. Thus, USAID can certify that no funds 

are being provided to political branches of Palestinian terrorist organizations.

• All USAID partners are subject to audits under the Mission’s Congressionally 

mandated 100% audit plan. Additionally, Palestinian NGO sub-grantees under 

the Chemonics/Tamkeen project are subjected to institutional audits and financial 

control by Chemonics. Additionally, all sign the USAID Anti-Terrorism certification. 

Question: 

3. In Congressional Notification #40 that was submitted to Congress on February 

3rd, USAID stated that it was using $8.9 million to ‘‘create jobs and build a community infrastructure (with a focus on schools and youth centers).’’ What mechanisms 

does AID have in place to ensure that these facilities are not used by terrorist organizations for recruiting? How does AID also ensure that incendiary propaganda is not 

being disseminated or produced at these locations? 

Response: 

• The activities will be implemented by American Private and Voluntary Organization’s (PVOs) and will be closely monitored by the Mission. All our partners have 

signed Memoranda Of Understandings (MOUs) with the concerned Palestinian 

Authority (PA) ministries such as the Ministry of Education and the Ministry of 

Local Government to manage these activities. Among other things, the facilities 

may not be named after individuals who supported or committed acts of terrorism. 

The MOUs clearly state that it is the responsibility of the PA ministries (mainly 

the Ministry of Education since most of these facilities are classrooms) to ensure 

that these facilities are well used. The Mission also recently signed an MOU with 

the Ministry of Education regarding the management and utilization of USAIDfunded educational facilities. The MOU’s usually include the following articles:

43

1. Any property financed by USAID shall be used effectively for the assistance 

purpose described.

2. The Ministry of Education accepts responsibility for school utilization.

3. The Ministry of Education accepts responsibility to furnish and equip the 

constructed facilities to ensure that they are fully functional.

4. The Ministry of Education accepts responsibility for maintenance of the constructed facilities to ensure maximum benefit.

• Our partners maintain regular oversight over the implementation of these activities. Our partners also have follow-up plans where they monitor the facilities for 

a long period after their completion to make sure that they are being used effectively. USAID Cognizant Technical Officers’s and field engineers maintain regular 

oversight over the activities. 

Question: 

4. In Congressional Notification #40 that was submitted to Congress on February 3rd, USAID stated that it was using $7.3 million ‘‘to fund university scholarships, 

and updating/modernization of institutions of higher education in the West Bank 

and Gaza.’’ What are the criteria for selecting scholarship recipients? How do we ensure that these students are not, and do not become affiliated with terrorist organizations?

• The criteria for selecting scholarship recipients are:

GPA equivalent of at least a ‘‘B’’

30 hours community service each semester

Students studying in specific fields of vocational/technical education

Students who are financially challenged, as documented by the Universities

Students who can pass U.S. government vetting documenting that they have 

not previously been involved with groups advocating violence.

• Following selection, if a recipient’s activities while in school, including any legal 

actions taken against him/her, are tracked. If there are any questions about these 

activities, the recipient is vetted again. As part of follow-on, once awardees graduate the granting agency, the Academy for Educational Development encourages 

students to remain in contact for assistance in looking for jobs. They assist them 

with resume writing and offer computer work stations so they can find employment. 

Question: 

5. In Congressional Notification #37 that was submitted on February 3rd, there is 

a planned allocation of FY 05 funds for Private Sector Development. It references two 

new activities that will be implemented—the Palestinian Agribusiness Partnership 

Activity and the Palestinian Enterprise Development program and the Palestinian 

Enterprise Development program. Please elaborate on the purpose and specific results 

we expect to achieve from these programs. What will be the specific funding breakdown for these? Who is your target? 

Response: 

• The Palestinian Agribusiness Partnership Activity:

The Palestinian Agribusiness Partnership Activity (PAPA) is designed to have 

rapid impact in creating jobs and export earnings for the Palestinian territories. 

PAPA is not a conventional agricultural or development program. It relies on 

mutually beneficial Israeli-Palestinian agribusiness partnerships to quickly 

transfer efficient production and processing technologies to Palestinian producers and link Palestinian products to high-value markets in the Middle-East 

and Europe. PAPA is also designed to facilitate the transfer of existing agribusinesses in the Gush Katif area of Gaza and promote additional agribusiness 

development in Gaza following Israeli withdrawal. The project will provide fixed 

capital investments and technical assistance for Palestinian firms that collaborate with Israeli firms in meeting program objectives of job creation and export 

growth. 

PAPA consists of three related components, the total of which would, if fully funded, amount to $83 million. The first component, the Palestinian Agricultural and Agribusiness Rehabilitation (PAAR), is a three year program to foster 

partnerships between Israeli and Palestinian agribusiness that will expand 

commercial growth, exports, and employment in the West Bank and Gaza. The 

estimated value of the PAAR component is between $11 and $12 million. The 

second and largest component, the Gaza Disengagement Program (GDP), will 

facilitate the security, transfer and operation of commercial Israeli settlement 

44

greenhouses and related complexes to a Palestinian management caretaker entity—to be chosen in consultation with Palestinian and Israeli stakeholders—

that will operate and manage the greenhouses so they can be expeditiously 

privatized. The program will also develop 200 additional hectares for greenhouse horticulture. The proposed budget for this component, which is contingent 

upon supplemental funding, is $59 million. The third component, the Palestinian Agricultural Training & Extension (PATE ́ ), will provide training and extension services to Palestinian agricultural producers and processors to upgrade 

food quality and the hygienic and sanitary conditions of processing and postharvest handling facilities, to facilitate agricultural exports. The estimated 

budget for PATE ́ , which is contingent upon supplemental funding, is $12 million. 

If fully funded, PAPA is designed to create over 15,000 new jobs and stimulate over $25 million in new export revenue, mostly in perishable, high-value 

fruits and vegetables for European and regional markets. The funding sources 

include; FY04 carryover; FY05 NOA; No Year funds; supplemental funding and 

FY06 and FY07 NOA. Beyond the economic benefits, PAPA will encourage positive relations between leading Palestinian and Israeli agribusiness firms that 

could favorably influence political processes.

• The Palestinian Enterprise Development Activity:

The overall objective of the Palestinian Enterprise Development (PED) project 

is to improve the business operating environment by offering business development services (BDS), strengthening business associations and improving the 

legal and regulatory environment and policy advocacy capabilities of the private 

sector. PED also aims to support the growth of competitive industry clusters. 

A key goal of the PED Program is to expand export growth through trade promotion and capacity building to enable Palestinian businesses to gain access to 

international markets. This component will focus on improving the competitiveness of enterprises in selected industry clusters, particularly those with favorable export prospects 

The following are the anticipated results under PED:

• Increased employment, income, and investment within targeted clusters

• An increase in the market share of WBG products locally and abroad

• Adoption of improved technologies

• New high-value products developed for export

• Improved quality of products or services

• An increased number of companies using modern business practices

• Increased advocacy by professional associations in targeted sectors for reform

• Increase in the financial and managerial sustainability of business associations;

• An increase in the number of businesses and business associations incorporating transparent business practices and ethical norms

The recipients under PED include small and medium size enterprises, private 

sector associations and organizations, and key public sector agencies and departments. 

PED is estimated to cost $ 16.2 million. It will be funded as follows: 

FY ’04 Carry-over $1,681,656

FY 05 New Obligating Authority $2,220,916

Supplemental $5,000,000

FY 06 $5,000,000

FY 07 $1,300,000

FY 08 $1,000,000

Question: 

6. I would like to point to Congressional Notification #37 that was submitted on 

February 3, because the question is illustrative of broader Congressional concerns. 

In this notification, under ‘‘performance and results’’, USAID refers to more than 

60,000 loans worth over $24 million provided to Palestinian women entrepreneurs. 

What has been done with these loans? What are the tangible results? What specific 

accomplishments can you point to regarding U.S. support of PalTrade, for example, 

that would merit continued funding of such efforts under the broad category of ‘‘private sector development?’’

45

Response: 

• ‘FATEN’ has made nearly 64,000 loans to the poorest and most marginalized Palestinian women since it emerged from a micro-finance program launched in the 

West Bank and Gaza by Save the Children (US) in 1995. Its loans have totaled 

more than $27 million, with the average loan size $427.

• The largest micro-finance institution in the West Bank and Gaza, FATEN currently has 3,319 active clients, 99% of them women, with outstanding loans totaling $2.4 million.

• FATEN has financed women who want to open a corner grocery store or beauty 

parlor. It also gives credit to rural women, like the lady who took out a loan to 

buy a cow and now has nine and a lucrative milk supply business.

• FATEN supports women to sustain businesses vital to the livelihood of their families. FATEN has financed activities in trade (40%), the service sector (25%), production (17%), agriculture (14%), with other activities comprising the remaining 

4%. While repayment rates suffered during the early years of the Intifada, 

FATEN reported a 97.23% repayment rate in 2004.

FATEN offers a range of products to its borrowers. These include:

• Group Guaranteed Lending and Savings loans support a wide variety of existing 

businesses including selling clothes, small grocery stores, selling vegetables, raising animals, knitting, sewing and hairdressing.

• Individual Loan serve existing clients whose businesses have grown to require larger loans. The first loan size ranges between $1,500—$3,000. Repeated loans 

can increase gradually to $10,000 for working capital and/or fixed assets. Loans 

support a wide variety of businesses including selling clothes, small grocery 

stores, selling vegetables, raising animals, knitting, sewing and hairdressing.

• FAST Loan: It is offered to groups of at least three active clients who have been 

with FATEN for more than one year. Initially it was called the seasonal loan 

since it was given to those active clients whose projects required more money during a certain season like the Ramadan Feast, Al-Adha Feast, and the beginning 

of the school year. Recently, FATEN began to give it to its clients at any time 

during the year. 

Testimonials: 

Nawal Shoushi, Bethlehem Branch: I’m thirty-eight years old, a mother of five 

kids. My husband turns to be a handicap after an accident. I found myself bearing 

big responsibilities, so I decided to start my own business, it was supplying gas jars 

to the houses in my village ‘‘Hosan’’, but this was of low income. I heard about 

FATEN and I took successive loans of 200, 300 and 500 JDs (One Jordanian Dinar 

= US$ 2) in the Group Guarantee Lending Program, with those loans I bought more 

jars, and start to supply the whole village with gas. Then I took an individual loan 

of $1,500 to improve and expand my business, I began selling stoves and ovens, and 

I employed my brother also. Lately I start running a grocery contains some foodstuff 

like sugar, rice . . . etc. With this grocery my sales increased and so my profits, 

now I’m planning to apply for another individual loan of $2,000 to buy more grocery 

goods. FATEN’’ loans were really helpful, I respect my self because I’m totally independent and I can offer my kids what they need in spite of the recent political situation and siege. 

Nawal Amir, Hebron Branch: I’m a mother of seven children; I only finished the 

elementary classes, but always want to be distinct. Five years ago I started a small 

business of zootechnics ‘‘chicken breeding’’, at that time my husband was a taxi driver, but now he is unemployed because of the political situation. I joined FATEN 

since four years, I took successive loans of 150, 200, 300, 500 JDs, so I bought more 

chicken and other types of birds, and I expand my business with selling chicken forage. I also took seasonal loans for apiculture ‘‘beekeeping’’. Then FATEN gave me 

the privilege of taking an individual loan of $2,000. Lately I applied for a loan of 

$3,000. I have a great feeling of satisfaction, my enterprise improved a lot; now I 

have 5000 bird, my husband helps me in my business, and my sons and daughters 

give a hand at home. I always encourage my friends and relatives to start their own 

business and to apply for FATEN loans. FATEN helped me to be the distinct women 

that I always want to be. 

Labiba Murad Gaza Branch: I live in Al-Shate’ refuge camp in Gaza, I’m a married women with eight sons; four of them are married. My husband is a fisherman, 

lately my husband and sons turn to be unemployed because of the political situation. I started my own business six years ago when I borrowed money and get to 

Egypt to bring clothes and sells them in Gaza. My friends talled me about FATEN, 

and I took successive loans from the Group Guarantee Lending Program, they were 

46

200,250, 500,600,800JDs, with those loans I was able to improve my business in 

terms of quality and quantity. During the Intifada, and because of the siege on 

Gaza, traveling turn to be difficult or even say impossible. So I decided to depend 

on the local market, and I was able to do it, because of my reputation and the trust 

between me and my clients. I always try to provide them with what they need. My 

business was able to survive even under this harsh situation. I always thank 

FATEN and its employees for their support and advice. 

Question: 

7. In Congressional Notification #39, dated February 3rd, over $1 million is Economic Support Funds is allocated to ‘‘Support Family Planning Programs’’ including 

the ‘‘promotion of healthy reproductive behavior.’’ Please elaborate on what U.S. government funds are ‘‘promoting’’ and is this in keeping with the clearly articulated 

policies of the President and the majority of the U.S. Congress? 

Response: 

• ‘‘The promotion of healthy reproductive behavior’’ refers to counseling provided to 

Palestinian couples on child spacing. International public health experts advise 

that births spaced 3–5 years apart is recommended as one of the best ways to 

assure the health of the mother and the children. This is also keeping with Ministry of Health policies and guidelines. The population funding is provided in the 

context of a greater portion of funding for maternal and child health and provided 

as part of a comprehensive health program. The USAID program does not promote or fund abortions; it is in compliance with the Administration’s policies regarding reproductive health.’’

Question: 

8. Mr. Kunder, in your testimony you stated that ‘‘By supporting the above activities the USG will strengthen political moderates as well as the institutions of statehood, will provide an alternative source of public services to those offered by Hamas, 

and will provide tangible, immediate benefits to Palestinians.’’ Please elaborate on 

this statement. 

Response: 

• USAID programs are also designed to support US counterterrorism interests. By 

curtailing the political and economic space available for terrorist organizations, 

USAID is helping to reduce their credibility and their appeal within the West 

Bank and Gaza. This is because the Palestinian Authority’s own capacity to deliver tangible public services, whilst improving the essential infrastructure and institutions that are required to advance the economy, and the West Bank and 

Gaza’s nascent democracy, still remains severely constrained. In 2004, for example, 85 percent of the PA’s budgetary resources were required to pay salaries, pensions, and other welfare transfers. This left only $160 million in discretionary operating resources for the PA, to support a year’s worth of public service delivery, 

including the development of essential institutions and infrastructure. USAID 

funded programs which improve the institutions of governance, economic freedom 

and reform, while delivering water and other essential infrastructure, therefore 

contribute significantly to the prospects for greater stability in the region—not 

least by reducing the political, social and economic operating space available for 

radical Islamic groups. 

Question: 

9. Mr. Kunder, you stated in your testimony that we have ‘‘funded programs to . . . 

restructure the Ministry of National Economy.’’ On February 24, 2005, the Palestinian Legislative Council (PLC) approved the new cabinet proposed by Prime Minister Ahmed Qurei, which, while often described as technocratic and progressive, included Mazen Sunuqrut, who has close, longstanding ties to Hamas, as Minister of 

the Economy. Would you agree that placing a man with close ties to Hamas in charge 

of the Palestinian economy does not bode well for the prospects of increased financial 

transparency and reform in the PA? How can a ministry charged with overseeing the 

economy and headed by a Hamas supporter be trusted to emulate the tradition of 

transparency and accountability established by PA Minister of Finance Salam 

Fayyed? How will this impact our programs aimed at ‘‘restructuring’’ the Ministry? 

Response: 

• The Mission has been aware of Mr. Sonnoqrot’s work for the past five years in 

different private sector representative bodies including Palestinian Food Industries Association, Palestinian Businessmen Association, Palestinian Free Zones & 

Industrial Zones Association, Private Sector coordinating Council, National ReVerDate Mar 21 2002 09:56 Dec 05, 2005 Jkt 000000 PO 00000 Frm 00050 Fmt 6601 Sfmt 6621 F:\WORK\MECA\030905\99823.000 HINTREL1 PsN: SHIRL
47

form Committee, and lately as the chairman of the Palestinian Federation of Industry. During this period, Mazen has proven to be a supporter of the free market 

economy and among the private sector leaders calling for reform within the PA. 

He has been a leader in building and supporting the private sector institutions 

in the West Bank and Gaza. His advice and opinions regarding building the Palestinian economy has almost always coincided with USAID’s approach. In addition, he appreciates American assistance to the Palestinian people, and is a public 

activist in combating financial mismanagement and actions by the PA that hinder 

the development of the private sector as an engine of growth.

• Minister Sinnoqrot is also a very prominent Palestinian businessman who provides a rare opportunity to influence the Palestinian government and economy. If 

he proceeds with the reform and transparency agenda he has started, it will significantly improve prospects for Palestinian economic development and international integration. More important, it will serve the broader interests of the US 

government in that Palestinian economic institutions will be more easily tracked 

and capable of generating income and job expansion.

• We consider Mr. Sonnoqrot’s emphasis on good economic governance, particularly 

transparency, promising for the emerging Palestinian government. We are keenly 

mindful of any association with Hamas, or any other organization with terrorist 

links that run counter to US interests, and will be alert to any changes in his 

agenda. If Mr. Sonnoqrot does indeed proceed with the reform and transparency 

agenda he has suggested, it will significantly improve prospects for Palestinian 

economic development and international integration. More important, it will serve 

the broader interests of the US government in that Palestinian economic institutions will be more easily tracked and capable of generating income and job expansion.

• No US government resources will fall under the authority of Mr. Sonnoqrot’s ministry. Furthermore, we will scrutinize very closely the progress of his ministry in 

achieving the laudable goals he espouses. Building transparency and institutions 

of good governance is easily monitored. Mr. Sonnoqrot is a successful Palestinian 

businessman, one of few who is capable of delivering substantive achievements 

that lead to a peaceful Israeli neighbor.

• Note that he was interviewed by the Treasury department. This was reported in 

cable traffic: Jerusalem 01127. 

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