Middle East Policy, Volume VII, Number 4, October 2000

Book Review

A Very Political Economy: Peacebuilding and Foreign Aid in the West Bank and Gaza, by Rex Brynen. Washington, DC: United States Institute of Peace Press, 2000. xxiv + 287 pages, with notes and index. $19.95, paperback.

Guilain Denoeux
Associate professor of government, Colby College

In this book, Brynen examines the mechanics and the impact of foreign aid to the West Bank and Gaza from the signing of the Oslo Agreement in September 1993 to the election of Ehud Barak in May 1999. Building on a careful review of the evidence, extensive interviews of donors and Palestinian officials, as well as surveys of attitudes among the Palestinian public, Brynen aims to identify what went right and what went wrong in the international community's effort to use financial and technical assistance to promote peace and development in Palestine. Separate chapters analyze the distinct phases of the assistance effort: mobilization (i.e., the process by which donors pledge funds); coordination (within donor agencies as well as among donors); delivery (the conversion of pledges into programs on the ground); and allocation (to determine whether the projects supported by foreign aid have matched local needs and contributed to peace building and sustainable development).

Regarding assistance mobilization, Brynen concludes that, throughout the period under review, the pledging of funds by the international community was more than adequate. Standing at about 12 percent of Palestinian GNP, "donor assistance to the West Bank and Gaza . . . has pushed the upper margins of what is generally considered the ‘absorptive capacity' of aid-recipient economies" (p. 117). In fact, Brynen notes, "annual Palestinian per capita aid receipts were the highest in the world in 1996, representing more than twice per capita official development assistance (ODA) to post-genocide Rwanda, and around ten times average per capita ODA for the least developed countries" (p. 78). The author adds that donor generosity toward Palestine has even elicited complaints by some aid officials, who have felt that the territories have received "a disproportionate share of declining ODA resources, despite social conditions and income levels that place [them] in the top one-third of developing countries" (p. 79).

The issue of burden sharing among donors has been equally controversial. Though the United States was the second largest donor in aggregate terms 1993-98 (contributing about $500 million), it lagged significantly behind the European Union (EU), which disburses funds both as an entity and through its constituent members. Moreover, when donor generosity is measured as a percentage of donor GNP, the United States looks far more stingy (the Nordic countries emerge as the most generous contributors). In this context, Brynen observes, one understands why European officials have repeatedly complained about U.S. insistence on retaining its preeminent position in the "peace process" and about what they see as its attempt to minimize the EU's ability to affect the nature and direction of negotiations.

Turning to the issue of assistance coordination, Brynen underscores the enormous complexity of a process that has involved more than 40 countries, over two dozen U.N. agencies, the World Bank, several Palestinian ministries and hundreds of Palestinian and international NGOs. He is effective at describing the confusing array of coordinating structures and mechanisms that were progressively put in place after 1993 and concludes that, for all its shortcomings, coordination was "much better than is the pattern in many other cases of transitional assistance" (p. 106). Still, he identifies several factors that hampered assistance coordination. Most important were the conflicting political interests and agendas of donors. In the abstract, it makes sense to talk about the need for donors to cooperate so as to avoid duplication of efforts and maximize overall impact. In practice, however, foreign assistance is an inherently political process: donors seek to use it to enhance their respective political profiles and advance their economic and geostrategic interests. Besides, donors often disagree in their assessment of the situation on the ground and, consequently, about the kinds of activities and projects that are most needed.

In the case of the West Bank and Gaza, donor coordination was further complicated by personal and institutional rivalries in the Palestinian Authority (PA) bureaucracy. In 1994, the PA established the Palestinian Economic Council for Development and Reconstruction (PECDAR) to serve as its main interlocutor with the donor community. Subsequently, however, the Ministry of Planning and International Cooperation (MOPIC) came to play that role, while PECDAR's responsibilities were progressively limited to the implementation of donor-funded projects. Turf wars between PECDAR and MOPIC were compounded by longstanding animosities between their respective leaders -- Nabil Shaath (of MOPIC) and Ahmad Qurai (Abu Alaa, of PECDAR) -- both of whom were also key players in the new Palestinian political elite.

In the chapter that examines the barriers to the rapid and effective delivery of assistance, Brynen differentiates between those impediments that can be traced back to, respectively, Israel, the PA and donors. He concludes that Israeli policies -- particularly the repeated closures of the territories -- were the single greatest obstacle to aid delivery, as well as the main factor behind the poor performance of the Palestinian economy. In his opinion, all foreign assistance combined probably barely made up for the devastating economic impact of Israeli closures (which were driven more by pressure from the Israeli public than by their capacity to enhance Israeli security). In addition to closures, slow port clearance, permit delays and other bureaucratic or politically motivated factors on the Israeli side also thwarted aid delivery. As Brynen observes, "at no point did donors develop any coherent strategy for addressing such policies and actions other than through bilateral representations and occasional (carefully worded) joint statements. If there is a striking failure in peacebuilding in Palestine, this is it. It is a failure, moreover, rooted in a lack of political will, as well as in the lack of leverage by all donors over Israeli policy" (p. 219). PA-related factors also hindered the delivery of assistance. Palestinian agencies that started from scratch were slow to develop their internal capacity on matters of project planning and implementation. The PA's bureaucracy-in-the-making -- still in the process of acquiring office space and equipment, having to delineate lines of authority, and suffering from a shortage of senior management skills and technical expertise -- had to respond to tremendous pressures and operate in an uncertain and highly volatile political environment. As for donor agencies, they often failed to delegate sufficient responsibility to their field personnel and were handicapped by "many established procedures and institutions . . . ill suited to the time-sensitive imperatives of peacebuilding" (p. 160).

As he turns to an analysis of how assistance was allocated, Brynen highlights those sectors that were more successful than others in attracting external support: social services (especially health and education) as well as infrastructure. Donor emphasis on infrastructure (primarily roads, telecommunications, water and electrical distribution) was largely a response to the tremendous needs of a sector that had been thoroughly neglected during the Israeli occupation, though it also stemmed from the significant economic benefits that corporations based in the donor countries stood to gain from large investments in infrastructure-related projects. Meanwhile, the relatively well-developed institutional capacity of the PA's health and education ministries created additional incentives for donors to focus on those sectors. Indeed, Brynen underscores one of the unanticipated, negative consequences of assistance, which was that at times it seemed to compound existing imbalances in institutional strength within the Palestinian bureaucracy. As he notes, "in many sectors, a vicious circle of sorts developed, where the most efficient ministries secured outside aid, while those most in need of assistance were least able to get it" (p. 203). Also well-funded were "trendy" themes among donors, such as democracy, human rights and gender issues. By contrast, there was little direct support for the productive sectors of the economy, from agriculture to industrial development. Donors were particularly slow to recognize the importance of private-sector strengthening.

Still, Brynen makes it clear that, in his eyes, international assistance to Palestine has been quite successful. Without it, he notes, economic conditions in the territories would have deteriorated far more than they did. Aid was particularly critical to offsetting the devastating economic impact of Israeli closures, and it may have helped avert many a political explosion at times of crises between Israelis and Palestinians. Indeed, the author argues, the PA might not have survived without external support. In addition to maintaining stability and sustaining the momentum for "peace negotiations," assistance helped social services keep pace with population growth while building institutional capacity within the PA. Furthermore, it produced tangible improvements in infrastructure. These achievements are all the more noteworthy in light of the particularly adverse conditions confronting the aid effort in Palestine, including its utter vulnerability to Israeli decisions and the uncertainties of a peace process which, through the various interim agreements it produced, constantly redefined the area under the control of the PA as well as the scope of the latter's authority. Thus, while Brynen does acknowledge the extremely negative impact of widespread mismanagement, corruption, patronage, waste and rent-seeking behavior within the PA, his reasoned analysis serves as a useful counterweight to hasty descriptions of Palestine as a "foreign-aid sinkhole." Such sweeping statements, he notes, "wildly overstate the situation. War-to-peace transitions are invariably difficult -- especially when aspects of the ‘war' continue and full ‘peace' remains elusive. Maladministration is commonplace, indeed almost ubiquitous, under such conditions. On balance, the record in Palestine was, given the context, better than many" (p. 229).

The book contains several other lessons for aid practitioners. One is that, as a rule, all good things do not go together. Specifically, donors must think more carefully and systematically than they do about the trade-offs involved between, say, peace and democracy, political stability and economic development, or state-building and civil-society strengthening. For instance, donors have sought to further the PA's institution-building process, while proclaiming a commitment to Palestinian civil society. But, in practice, Palestinian NGOs (PNGOs) have been significantly harmed by a post-Oslo redirection of donor funding away from voluntary associations and toward the PA. Moreover, as the PA became stronger, so did its ability to limit the political space available to PNGOs. The consolidation of the PA's authority -- seen by donors as critical to the peace process -- thus imposed costs on political pluralism within the emerging Palestinian entity. Similarly, donors (especially the United States) have repeatedly urged the PA to adopt strict "counterterrorism" measures, while also taking it to task for its human-rights violations. This represents a somewhat ambivalent or even inconsistent position, since, as Brynen notes, "although not all security measures involve human-rights abuses, it was almost inevitable that any crackdown against radicals by the PA would involve a substantial number of excesses" (p. 178). And yet, Brynen adds, donors apparently did not think through the potential contradictions inherent in these conflicting messages. Moreover, he adds,the inconsistent signals from donors were exacerbated by fragmentation among the donor institutions involved: aid agencies tended to press for human-rights issues, and foreign ministries and security agencies tended to be more concerned with political stability. Substantial differences also existed among donors, with the United States pushing hardest for the security-oriented agenda. Although meaningful consensus was difficult (and probably impossible) to achieve around such a sensitive and morally ambiguous set of issues, donors could have shown greater understanding of the complexities and trade-offs involved (p. 178).

Another lesson relates to the importance of flexibility. While donors must have clear long-term objectives, they also must be both willing and able to adjust their priorities to take account of changing political and economic circumstances. Here, Brynen highlights the "cultural clash between the realpolitik of foreign-ministry officials and the commitment of their aid counterparts to careful and sustained development," noting that "in the case of the U.S. assistance program, State Department officials often complained about the slowness and inappropriateness of USAID programs in the territories, while many USAID officials complained that they were being diverted from real, sustainable development" (p. 152). In this debate, Brynen appears to be siding with those who emphasize the need to be sensitive to the political context. He implicitly criticizes aid practitioners who insist that assistance must be devoted exclusively to projects that contribute to sustainable development, and who object to some of it being used for programs such as short-term budget support or emergency employment-generation schemes. This reviewer could not agree more; after all, unless the pressing political and economic issues of the day are managed successfully, there will be no long term, and, consequently, sustainable development will be a non-issue. Some flexibility therefore must be built into long-term assistance programs, so that unanticipated economic shocks and political challenges can be overcome.

Finally, this book offers conclusive evidence that the caliber of the individuals who manage aid efforts count at least as much as the mechanisms and structures within which they operate or the amount of assistance delivered. In short, there is no substitute for good human resources within donor agencies. From Brynen's account, one can infer the profile of the successful aid practitioner in the field: he/she must display a combination of pragmatism and creativity, realism and imagination. He/she also must also have good political instincts and judgment and be sensitive to the political context. Equally important, he/she must have a capacity for calculated risk taking. Donor agencies must endeavor not only to recruit and promote such individuals but also provide them with more autonomy and a greater ability to shape programs than is usually the case.

Occasionally repetitive, A Very Political Economy sometimes provides a level of detail that most readers do not need and that, in fact, tends to detract from its main points. Furthermore, it makes for rather dry reading, though this is largely a reflection of the technical nature of its subject. Overall, however, this well-organized book offers empirically grounded, reasoned and balanced analyses that significantly enhance our understanding of the mechanics and difficulties of foreign assistance to Palestine. The result is a must-read for all those involved in the process of planning and implementing aid projects aimed at the Palestinian entity. Beyond this primary audience, the book will also be of great interest to practitioners active in other parts of the world where the international community is seeking to promote reconciliation and reconstruction through assistance.