NTF: Introduction and Methodology Section

“Touching the Void”

Public Administration & Civil Service Reform in Palestine

A Drivers-of-Change Case-study in association with The Ibrahim Abu-Lughod Institute of International Studies & The Centre for Continuing Education of Birzeit University Basem Ezbidi, Mohamed Nasr and Madji Malki November 22, 2006 Ramallah

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Table of Contents Acronyms ........................................................................................................................... 3 Glossary ............................................................................................................................. 3 Executive Summary .......................................................................................................... 3 I. Introduction ............................................................................................................... 4 1. Background ........................................................................................................... 5 2. Transitional Politics & Turbulent Times 1994-2006 ......................................... 6 II. The Political Drivers-of-Change ........................................................................... 9 1. The Rise of Hamas ................................................................................................ 9 2. Fatah’s prospects ................................................................................................ 10 3. Disputed Representation, Ambiguous Legitimacy........................................... 12 4. Political Culture .................................................................................................. 13 5. Unsettled Constitutional Arrangements and Government Performance ...... 15 A. The Presidency versus the PA ........................................................................ 15 B. The PLC .......................................................................................................... 17 C. Local Governance ........................................................................................... 18 D. Civil Society Organizations ............................................................................ 18 6. Israel’s Policies .................................................................................................... 20 A. GoI Views ......................................................................................................... 20 B. Separation Barrier and Crossing Points ....................................................... 21 C. Palestinian transport contiguity in the West Bank ...................................... 22 D. Settlements ....................................................................................................... 22 E. New policies ..................................................................................................... 23 F. Previous Agreements, Security Accountability and the West Bank .......... 23 7. Regional Factors.................................................................................................. 24 8. The International Community ........................................................................... 24 A. Reconstituting a common framework ........................................................... 25 B. External impact on the reform process ............................................................. 26 III. The Economic Drivers-of Change ...................................................................... 27 1. Economic distortions .......................................................................................... 27 2. The Public Sector ................................................................................................ 28 3. The private sector ............................................................................................... 29 4. Impact on Reform ............................................................................................... 32 IV. The Social-Cultural Drivers-of-Change............................................................. 34 1. Social and spatial fragmentation ................................................................... 34 A. Refugees .............................................................................................................. 34 B. Gaza ..................................................................................................................... 35 C. East Jerusalem.................................................................................................... 35 2. Demographic Challenges .................................................................................... 36 3. Weak Social Safety Net ....................................................................................... 36 4. Social Transformation .......................................................................................... 37 5. The Emergence of Elites and the Middle Class Role ........................................ 38 6. Family Relations and Community Solidarity ................................................... 39 7. Family and local Influence on Reform .............................................................. 39

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Elite impact on Reform ...................................................................................... 40 V. Conclusions .............................................................................................................. 41 1. Key problems to be addressed by an incoming government........................... 42 VI. Recommendations ............................................................................................... 43 Annexes......................................................................................................................... 45 A. The Historical Legacies of the PA .................................................................... 45 B. Important Phases in PA Reform ....................................................................... 45 C. PA Current Structure......................................................................................... 45 D. Settlement data and the Yesha Council proposal .............................................. 45 E. National Reform Committee Case-study .......................................................... 45

Acronyms Glossary Executive Summary

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I.

Introduction

1. The purpose of this Drivers-of-Change study is to assist national and international decision-makers and reform practitioners to understand the operating environment in the occupied Palestinian territories (oPt) and to inform the design and implementation of capacity-building programs for Public Administration and Civil Service reform (PACSR). 2. In supporting Birzeit University conduct the study, DfID aims to assist civil society create dialogue and stimulate domestic demand for implementation of the specific reforms envisaged in the design of the PA Public Management Reform Program (PMRP). The focus is on reform and policy issues that cut across the entire public administration and which are fundamental to managing the civil service: i.e., policy formulation and decision making, government service delivery, oganizational development, human resource management and public financial management. 3. The study applies DfID’s Drivers-of-Change model to analyze the political, economic and social factors (structures) prevailing in the oPt and their impact on institutions (formal and informal practices) and agents (individuals and organizations). It describes how these factors influence, positively and negatively, incentives and capacities to create a public administration and civil service system which reflects good public sector management. 4. Information for this report was gathered during September-October 2006 through field work, documentation review and in-depth interviews with Palestinian, Israeli and international stakeholders. On one hand, the timing could hardly have been more inauspicious. Post the war in Lebanon, amid the ongoing morass in Iraq and Iran’s unresolved nuclear ambitions, regional tensions are resonating loudly in the oPt. Internal tensions between Hamas and Fatah are finding violent expression and Israel’s political landscape also continues to evolve. 5. However principled: the Quartet’s policy of not providing direct budgetary support and technical assistance to the Hamas government until it recognizes Israel’s right to exist, renounces violence and accepts existing interim peace agreements with Israel - is causing further economic hardship and distorting Palestinian constitutional structures. In recognition of the above complexities there has been a flurry of calls for new policies in dealing with the conflict. On November 12, the Arab League states decided to break with the Quartet’s policy and lift the western ban on bank transfers to the PA which would allow outstanding Arab aid pledges of $100-150 million to be disbursed.1 1

Other initiatives include the September, 2006 International Crisis Group (ICG) global advocacy initiative designed "to generate new political momentum for a comprehensive settlement of the Arab-Israeli conflict." The ICG initiative includes mobilizing respected ex-officials from the United States and other countries around a statement of support and concrete actions for a comprehensive settlement, and a new process to achieve it. In October 2006 the UN’s Alliance of Civilizations High Level Group declared a

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6. Many interviewees questioned the utility of discussing reform in the above context. However, most contributed in candid fashion on the basis that at some point in the future, the PA and the international community will be able to re-engage on reform issues. The bulk of the research was conducted by Palestinian consultants working with Birzeit University’s Centre for Continuing Education. Specific thanks are due to Professors Basem Ezbidi, Mohamed Nasr and Madji Malki who led the political, economic and socio-cultural sections. 7. The team was instructed to be honest and creative; strive to say something new on the issues at hand; and to navigate between internal (Palestinian shortcomings) and external reasons (GoI and international policies) for reform successes and failures. The study was also reviewed externally. Special thanks are due to Professors Glen Robinson, Yezid Saigh and Robert Springborg, 8. While this study primarily focuses on the Palestinian Authority it also makes note of the 1.6 million Palestinian refugees provided basic services by UNRWA and who represent some 41 per cent of the combined population of the West Bank and Gaza Strip. Mention is also made of the 240,000 Palestinian residents of East Jerusalem who receive numerous benefits from the Government of Israel (GoI). In the event of a comprehensive settlement, the provision of government services to these constituencies would change in some fashion, the responsibility formally shifting to the PA in some fashion.2 1.

Background

9. The Palestinian state-building process, shaped by the Oslo Accords and subsequent Agreements with Israel began with the establishment of the PA in the West Bank and Gaza Strip in mid-1994 (see Annex A: Historical legacies of the PA). The effort to build capacity and improve the organizational performance of the PNA was a highly politicized endeavor from the outset, inseparable from the vagaries of the peace process, chiefly, relations with Israel (see Annex B: Important Phases in PA Reform).

need for a “White Paper” on the conflict and called for a multilateral conference. Spain, Italy and France are currently working on a new peace proposal having come to the conclusion that the Road Map is fatally stalled. The Iraq Study Group (the “Baker Report”) may also recommend a change in approach and Yossi Beilin has relased a new initiative also. 2 The United States is the largest single country donor to the U.N. Relief and Works Agency (UNRWA), providing food, shelter, health care and education to Palestinians in the West Bank, Gaza, and refugee facilities in Jordan, Syria and Lebanon. In 2006 the U.S. contribution to UNRWA general budget will be $84.15 million, with a proposed $51 million to be provided for UNRWA’s emergency appeal. UNRWA’s General Fund, supports the agency’s core educational, health, and social programs for refugees in UNRWA’s five fields of operation (West Bank, Gaza Strip, Jordan, Lebanon, and Syria). The 2006 Emergency Appeal, provides emergency food and health care to refugees in the West Bank and Gaza Strip. “Half of the annual U.S. contribution to UNRWA’s General Fund supports the agency’s programs in the West Bank and Gaza, which are designed to promote economic self-sufficiency and prepare the refugee population for independent statehood.” U.S. Department Of State, Office of the Spokesman, April 10, 2006.

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10. From its inception, the state-building process has suffered a lack of local ownership. For example, domestically, Security Sector Reform is seen as serving Israeli rather than Palestinian security interests. Even reforms designed to enhance the capacity of PA service delivery ministries (e.g., Health and Education), in the absence of genuine political progress, have been criticized for merely assisting Palestinians better cope with Israeli rule (and thus a form of foreign subsidy of the occupation). 11. However, even before the September 2000 Al Aqsa intifada,3 reform and good governance had strong domestic and international demand on two counts: improving service delivery to the Palestinian population and developing institutional frameworks for a prospective Palestinian state. Indeed, since 1996 there has been strong domestic demand, in particular, for Security Sector Reform and reform of the Judiciary, Public Financial Management (PFM) and Human Resource Management (HRM).4 12. In the last three years of conflict, voices calling for the PA’s dissolution have become more widely heard. Still, Palestinian advocates continue to assert the need for an effective, domestically-led effort to put the “PA’s house” in order, reduce dependency on foreign donors, and challenge the continued Israeli occupation of the West Bank and Gaza Strip. 13. Without doubt, the state-building process has been severely hindered by the debilitating social and economic effects of continued conflict and occupation. Arguably, these developments also played a large part in Hamas’ political emergence and victories in the municipal and legislative elections in 2005-06. Some have interpreted these, pending a fundamental shift in Hamas’ political platform, as a serious blow to the reform process. However, the fact that Hamas candidates in municipal and parliamentary elections stood on a platform of ‘Change and Reform’ implies that reform and the statebuilding agenda still has popular support. 2.

Transitional Politics & Turbulent Times 1994-2006

14. Since 1994, the oPt has been experiencing a continuous process of transformation and change, the outcome of which remains uncertain. The agreements signed between the Palestinians and Israelis and the various policy decisions and administrative structures were intended to serve only until 1999, the end of the interim period under the Oslo Accords. Since its foundation, the PA’s sovereignty and powers have been severely limited concerning land, resources, services, security and borders. In terms of territory, the PA was never granted safe passage between the West Bank and the Gaza Strip, nor control over East Jerusalem, nor control over areas outside of the main population centers (especially Areas B and C). Donor-dependent, the PA has found itself in an unstable environment for sustainable development and long term planning. 15. The PA Security Forces (PASF) main task throughout 1994-2000, was to confront the 3

The uprising that began in September 2000 is known as the Al-Aqsa Intifada or the second Intifada, to distinguish it from the 1987-1991 uprising that preceded the Oslo Accords. Unless otherwise specified, references in this report are to the second Intifada. 4 These priorities were reaffirmed at a focus group meeting in Ramallah on September 6, 2006.

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Islamic opposition (mainly Hamas and the Al-Jihad groups) to the peace process. The performance of the PASF was perceived by Palestinians at large as poor, to the extent that its performance was always judged as the worst in comparison to other bodies and institutions of the PA.5 Conversely, Israel’s security has always been strongly emphasized and used as a yardstick by which the PA’s overall performance was assessed and judged. 16. Between 2000-2006, dramatic annual changes have dynamically impacted core structures and institutions and have caused major political, economic and social distortions in the oPt:  The outbreak of the Intifada in September 2000;  The Israeli Defence Forces’s (IDF) Operation Defensive Shield and Determined Path in 2002 which destroyed much of the PA’s infrastructure and, in passing, that of the PASF;  The commencement of the separation barrier in the West Bank;  The formal sidelining of Chairman Arafat in 2003 via the establishment of an empowered Prime Minister’s office;  The launch (and subsequent failure) of the Quartet Roadmap;  Arafat’s death in November 2004;  The election of President Mahmoud Abbas (Abu Mazen) in January 2005;  Israel’s disengagement from the Gaza Strip;  Hamas’ victory in the January 2006 PLC elections;  Quartet conditionality on relations with the Hamas government; and  The establishment of the Transitional Implementation Mechanism (TIM) whereby welfare assistance from the international community is channeled through the (previously circumvented) President’s office. 17. In sum, the last six years have been turbulent in the extreme and the PA has been incapable of generating a national consensus on most issues. The structural and political changes in the PA, as seen with the respective offices of the Prime Minister and the President, are not insignificant. Simply put, the structures and agents of the PA have not had the luxury of evolving over time. In such circumstances it is easy to see how the institutions (the formal and informal rules constraining human choice and the basis of social cooperation) have equally not developed. It is of cold comfort to understand that globally, while the importance of institutions is demonstrable like rule of law and property rights, little is actually known about how to bring them about.6 18. Additionally, the functions of the political system were – and still are –incomplete and unsettled. This is further complicated by the overlap in the roles and functions of the PLO and the PA, and the ongoing inability to separate the national struggle for liberation from the process of state building. Consequently, the various political factions continue to 5

See public opinion polls conducted throughout since 1995 by the CPRS (Nablus), the DSP (Birzeit) and by the PSR (Ramallah). 6 Francis Fukuyama The “end of history” symposium: a response to critics August 25, 2006 Open Democracy, www.openDemocracy.net.

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dispute their interests, goals and objectives and the best methods to achieve them, both internally and in between groups. The deleterious consequences of the Intifada have led to further fragmentation of Palestinian politics and exacerbated rivalry between the various political factions and groups, to the extent that it is no longer clear who governs, when and how, and who genuinely represents who. 19. The Palestinian political system includes not only the Palestinian Authority, but also the PLO and its institutions and individuals. The PA with its various institutions and agencies was formed in 1994 with the purpose of running the internal Palestinian civil affairs during the interim phase, scheduled to last until May 1999. 20. The ambiguity in the relationship between the PLO and the PA prompted the PA to apply institutional and administrative policies that are ambiguous and distorted. For example, the relationship between the ministry of foreign affairs and the PLO’s National Department has been ambiguous in terms of authority and mandate, which impacted on the administrative arrangements and on policies regarding spending in this sector. The same applies to institutions that fall in the grey area (which means that they are not part of neither the PLO, nor the PA), such as The official News Agency Wafa, which has more employees than the Ministry of Information, most of them having been annexed to the General Personnel Council (GPC). The head of this agency reports sometimes to the head of the PLO’s Executive Committee and on other occasions to the Ministry of Information. 21. The system is also shaped by the GoI, by previous agreements signed with Israel, and it is heavily influenced by the international community. Mounting social and economic hardship and increasing international pressure in recent years has further distorted the political system to an extent where comparative examples are hard to find and external conditionality is emerging as the prime arbiter on internal structures: namely the GoI; the Quartet and the wider donor community. 22. A good example of external influences on the structure of government is the creation of an empowered Prime Minister’s Office (PMO) in January 2003, designed to circumvent Arafat’s presidential powers, albeit with strong domestic support. As many functions as possible were to be moved from the President to the PMO, the cabinet or the PLC. In 2004, the donor Task Force on Palestinian Reform noted: ”the Government’s decision to have the security services report to the National Security Council under the lead of the Prime Minister’s, and not the President’s, is a positive step” and that “the General Personnel Council (GPC) and the Palestinian Monetary Authority are now reporting to the Prime Minister’s Office instead of the President’s Office.” 7 23. The impetus now is to move powers away from the PMO and back to the President’s office; a direct reversion of the former decision. It is still not clear, beyond providing a circuit-breaker for funds to flow to the Palestinians, how much domestic buy-in there is for this. But, it does appear to contradict the guidelines stated in the local Task Force on Palestinian Reform, where it says that “donor support should be provided in a

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Local Task Force on Palestinian Reform Report to the Capitals TFPR Meeting in Oslo 6th December 2004 p.2.

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coordinated fashion that is fully consistent with the aims and objectives of the PA program.”8 24. In such circumstances it is easy to understand the difficulties in developing and executing a vision of self-government during uncertainty about final status, further defacto loss of territory and financial un-sustainability. Without a realistic vision the domestic ability and willingness to purpose-build appropriate Palestinian institutions for statehood is also undermined. Institutional reform is fundamentally a political rather than technical process. Currently, several interlocutors noted that the pro-reform forces were being weakened. II.

The Political Drivers-of-Change

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The Rise of Hamas

25. Hamas’ electoral victory in the 2006 PLC elections marks the end of almost forty years of Fatah political hegemony. The Hamas-led government is politically isolated, economically boycotted by most countries, shunned by Israel, and challenged by Fatah and others internally. 26. Whether Hamas accepts the Quartet conditions or not, it will remain a key political player and may even grow, as long as the conditions which contributed to its rise have not come to an end, namely Fatah’s ineffectiveness, perceived international and Arab hypocrisy, and chronic living conditions in the oPt. Equally, there are few incentives to accept the PLO and become part of it. Moreover, historically and comparatively speaking, political transitions of this kind rarely evolve peacefully. 27. For now, Hamas and the PA are unable to pursue the reform-and-change agenda. This context provides more questions than answers. E.g., what is Hamas’ outlook on internal policies and on initiatives towards education, legislation, budget, media, security forces, civil service and public administration? How will Hamas’ rule impact on the democratic transformation of the political system and on the effectiveness and efficiency of public institutions? How will the future relationship between Palestine and the outside world, particularly with the Arab and Islamic countries develop? What shall be the future of the secular Palestinian factions? 28. The answers to these questions can only be provided if and when a settlement between Hamas and Fatah regarding governance is reached. Even if a unity government is established, de jure; there will be some problems organizing the defacto unity of purpose for collective responsibility in government, as both sides diverge on cause and effect for the current conditions, and their remedy. Any agreement, will likely deal with the immediate challenges of insecurity and lawlessness while postponing the huge ideological and political issues that divide both sides. While Hamas perceives itself as enjoying both the legitimacy and the ability to govern, Fatah disputes such a claim and questions both Hamas’ legitimacy and ability to govern, as long as a Hamas-led government remains unable to relate to both internal and external constituencies. In Fatah’s view, Hamas’ current domestic policies are widening the gap not only between 8

Ibid; p.20.

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the people and “their” government, but also between Palestinians and the international community. It accuses Hamas of endangering Palestinian national interests and, leaving Palestinians in general much more vulnerable than ever before.9 29. Hamas will continue to dismiss this claim on the grounds that its government has not been given the opportunity to truly govern and to deliver on its campaign promises of change and reform – a view shared by the general public. Four Hamas ministers remain detained by Israel: the Minister of Finance; the Minister of Waqf & Religious Affairs, the Minister of Jerusalem Affairs and the Minister of Public Works and Housing. Several PLC members are detained including the Head of the PLC. Yet if Hamas, willingly or otherwise, is not to form the government, its majority in the PLC gives it considerable sway; whether a government of national unity or of technocrats. Thus, Hamas’ control of the legislature may impact the ability of the executive to work in a bipartisan way. 30. Another contested domain is the security sector. Hamas, having formed government, has established a new security grouping called the ‘Executive Force’ of the Ministry of Interior (MoI) concentrated in the Gaza Strip but also represented in the West Bank. Given access and movement problems between Gaza and the West Bank there may be a relocation of central government functions (e.g., Cabinet meetings) to Gaza. 31. For now, Hamas appears to be weathering domestic and international pressure. A major transformation must take place within Fatah, and a genuine change in the international community’s approach towards the Palestinian-Israeli conflict needs to be introduced, in order for Hamas to become less attractive. 2.

Fatah’s prospects

32. Fatah, has not easily adapted to being in opposition and any attempt at dissolving the government is unrealistic as any new government would still need a vote of confidence from the Hamas majority in the PLC. An emergency government can stay in office only thirty days which allows no time for improving conditions on the ground. Finally, the option of early elections for both parliament and the presidency is risky because the balance of power between Fatah and Hamas according to public opinion polls has not changed enough to ensure significantly different results.10 33. Fatah’s future and its reform prospects, after decades of autocratic leadership, years of alleged corruption and weak governance, are at the center of the debate about the Palestinian political system. In order to be competitive and to defend the “Palestinian national project” which it perceives as its own, Fatah needs to reform. Party activists think reform should address the following issues:11 9

Azzam al-Ahmad, Fatah spokesman in the PLC has repeatedly expressed such views in public gatherings and to the media. Meanwhile, he usually presents Fatah as the protector of the “national project” and Hamas as a spoiler. Such views were expressed by al-Ahmad in an interview on Aljazeera Televsion station , 3 October 2006. 10 See polls conducted by Palestinian Center for Policy and Survey Research )PCPSR), Ramallah, and by the Development Studies Program (DSP), Birzeit University since the elections till now (October 2006). 11 interview with Mr Yousuf Harb, a Fatah leader in Nablus who also serves as the head of the Ministry of Interior in Nablus, he stressed these issues and expressed optimistic views regarding Fatah reform Such views are apparently shared by the Fatah rank and file, especially the younger generation. Interview in

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The identity of the movement must be redefined to somehow accommodate whether Fatah is a national liberation organization or a ruling one, or both, and the ensuing consequences;

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The organizational and political boundaries between Fatah on the one hand, and the PA and the PLO on the other must be clearly outlined;

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The regulations and principles guiding the management of the movement’s internal affairs must be developed, replacing the system of personal patronage that has dominated the organization, particularly regarding decision-making and leadership succession;

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The association between the movement as a political body and the numerous paramilitary groups affiliated with it needs to be clarified and reassessed;

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The movement must reassess its values and hold the long promised sixth convention.

34. For reform to succeed a bottom up approach on its own is unlikely to work without the agreement of the movement’s leadership. But this suggests a higher level of internal unity and cohesion than what currently prevails. If Fatah fails to achieve this soon, then the movement could suffer further divisions and fragmentation. One important issue here is that for Fatah to regain Palestinian trust, it needs to be more cautious politically, keep a distance with external agendas and develop a mode of coexistence with Hamas and others, under a new brand of politics. 35. It is not clear if the devices at hand can achieve all of the above. For example, the 6th Fatah congress scheduled for mid-2007 may not emerge as the watershed it needs to be. A second option would be to expand the Fatah Central Committee, but how this will be done is still not settled. The “Young Guard” inside the oPt will have to be included in some way. With this issue of composition in mind the ’Revolutionary Council’ could also be made more balanced.12 Without question, new blood is needed. A three day meeting of the Fatah Revolutionary Council on Nov 13 decided: 

To establish a strategic political committee composed of members of the Central Committee, the Revolutionary Council and senior members of the movement to present a report on a united vision and the way ahead by December 15, 2006.

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Elections should be held within Fatah “from top to bottom” until the 6th Congress.

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Electoral constituencies should be reactivated and new ones established, for Jerusalem and refugees, to be completed before May 1, 2007.

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President Abbas and the Central Committee would form and assign a new field leadership in the West Bank and Gaza.13

Nablus October 6, 2006. 12 Fatah’s Revolutionary Council is the highest legislative authority in the movement and is authorized to draw up general policies, oversee implementation of recommendations from the general conference and to monitor the Central Committee. 13 ‘Fatah Central Committee calls for a united vision, a united leadership and united action’ November 13, 2006 Ma’an News Agency (http://maannews.net/en/index.php) accessed November 15, 2006.

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36. In terms of “grassroots” efforts to revitalize Fatah, the party set a deadline of Nov 30 to convene conferences and “town hall” meetings across the oPt. To date, two meetings have been held and only in Ramallah. Regional style meetings (within the oPt) are dogged by movement and access problems for Tanzim and Al Aqsa Brigade leaders. A final problem is funding. Now out of power, Fatah is unable to use the resources of office, as it has done in the past. 3. Disputed Representation, Ambiguous Legitimacy 37. While elections in general serve as a legitimizing mechanism for popular representatives, the question of who represents who in the oPt is ambiguous (despite several elections since the PA’s inception), and is adamantly contested mainly by the two main groups, Fatah and Hamas. The debate over who represents more “accurately” the populace is contested through the presidency (Mahmoud Abbas’ office) and the Prime Minister’s office (Ismael Haniyye). Furthermore, it is not clear which forces constitute the opposition and what forces govern. 38. The status of Fatah, for example, is quite confusing. On the one hand it is a governing group, since it controls the presidency, has a sizable block in the PLC and enjoys a massive influence over the security forces and within the various institutions that make up the public administration and the civil service. But it is Hamas who has won the majority of seats in the PLC and is in charge of most of the ministries in the new cabinet. This tension points to an ongoing struggle for control of the bureaucracy with organizational changes based on political/power rather than technical considerations. 39. The confusion over representation can be found even within the different groups. For example, it is generally unclear which institution represents the Fatah movement: is it the Central Committee (Old Guards) or the Revolutionary Council; is it Farouq Qaddoumi, the head of Fatah who resides in Tunis, or the presidency (Mahmoud Abbas); is it made up of the movement’s members in the PLC, or the ruling segment of Fatah in the PA, or of Fatah the opposition? Equally, it is not always clear who more “authentically” represents Hamas: the outside leadership with Khaled Mashaal or the inside leadership with Ismael Haniyye; and on the inside level, which segment of the population is more representative of Hamas: the residents of Gaza or the West Bank? 40. There are several reasons behind this condition of unclear representation but essentially it is rooted in the absence of solid and legitimate rules guiding the political conduct of the various groups, which ensures weak and shallow rules of political engagement between them. Other reasons include Fatah’s hegemonic approach to governing, Hamas’ refusal to date to join the PLO, Hamas’ sudden entry into the political system in January 2006, the vagueness of the mandates (representation) of the PA and the PLO with regard to the populace, the refugees, and residents of East Jerusalem. It is important to note that the extant informal and formal “rules” of political conduct are creations of Fatah and were devised without Hamas’ input. 41. Moreover, the entire legal framework, including the Basic Law (which serves as the Palestinian constitution), is perceived by Hamas as not entirely legitimate or acceptable,

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because it is not coded according to the Islamic share’a.14 Hamas’ “rules” regarding politics and society on the other hand are contested by many segments of Palestinian society as well. 42. The unsettled contest of who-represents-whom-and-when is currently moving into the streets, where it is causing unrest and violence. And the contest is also evident in the public administration and civil service systems, where it is weakening institutions and their ability to function properly. In this situation the leadership is forced to focus on short term administrative and managerial decisions, instead of political and long term decisions. 43. Interest in institutional planning and development is weak, especially in the area of human resources; recruitment is based on political and personal considerations, rather than on qualification and merit; and the values of professionalism, accountability and ethical conduct are frail. For example, according to Fatah sources, of the new cabinet’s 210 formal decisions recorded by September, 32 per cent relate to appointments or promotions of civil servants, 21 per cent relate to changes in organizational structures of government and 65 (18 per cent) directly reverse previous government decisions. The remaining decisions relate to various administrative matters and none of them set out policies or programs.15 44. Second, the current strike by PA employees against non-payment of civil service salaries has quickly become a serious political contest between Fatah and Hamas and their respective platforms and supporters. 4.

Political Culture

45. Palestinian political culture is often described as neo-patrimonial. Here, the political system and its institutions create the impression that a legal-rational system prevails, but the actual power rests with deeply embedded patron-client relationships. Systematic clientelism is reinforced by personal loyalty to the ruler and a carrot-and-stick strategy exercised through his power to appoint and dismiss, to hire and fire, and to forgive and reappoint. In Palestine, many of the attributes of this system seem to be firmly in place. 46. For many years, the leadership, especially under Arafat, accumulated many formal and informal positions ranging from the chairmanship of the PLO to heading the Board of the Airport Authority. In addition to the executive, administrative and judicial branches of government, a large number of national institutions and agencies, even NGOs were attached by presidential decree directly to the president’s office, which gave him the power to nominate the heads and board members. For example, Arafat had in person

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See “Contemporary Political Thought of Palestinian Islamists”, 1999 , published by the Center for Palestinian Research and Studies (CPRS), Nablus, PALESTINE. Particularly those contributions made by Jamal Mansour and Nasser al deen al Shaer. 15 These numbers were obtained from a workshop that was arranged in Ramallah in August 2006 by figures close to Fatah “Young Guards” and most of the attendees were Fatah affiliated. The main presenters were Ghassan Khatib, Nabil Kassis, Hassan Abu Libdeh (who presented these numbers), Ibrahim Krishi and Nasser Al-Kidwah.

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intervened and appointed heads and board members of important NGO’s like the Bar Association.16 47. Appointment and recruitment in general was utilized, not only to secure loyalty, but also to revive traditional ties. For example: the PLO’s executive committee was enlarged in order to accommodate, among others, members of traditional families (Al-Agha, AlKhoudari, Al-Husseini, Al-Sheka’a) The Al-Qawasmi clan and its web of relatives and friends dominated most of the high positions in the Ministry of Transportation and its various regional offices. Across all ministries there is an excess of unqualified people occupying senior appointments17. The number of public personnel expanded unchecked, with about 40% of the work force in Gaza on the public payroll.18 48. The current leadership of both Fatah and Hamas, to varying degrees, continue to employ the same neo-patrimonial logic that existed under Arafat. Although Hamas doesn’t subscribe to patrimonial logic at the cabinet level, it is perceived by segments of the population as perpetuating the same logic, rather than posing a challenge to it. 49. The transitory nature or unstable foundation of the political leadership makes the political will subject to fluctuation and change. When political will is invoked to bring about change it is motivated by who-gets-what-and-for-how-long, and in the current situation the answers to these questions are not always clear. 50. Regarding who-gets-what depends on who governs (Fatah, Hamas or others); the type of social, political and economic transactions that emerge; and the willingness of the various actors to take a course of action in favor of change and to defend it. Since such a transaction takes place in a vulnerable space, where certainty is minimal, the political will of the leadership becomes uncertain too. Accordingly, such uncertainty must be perceived not as a manifestation of a choice, but as a reminder of the absence and ambiguity of clearly defined and well articulated short term and long term interests of the various players. 51. Historically in Palestine, political “parties” generally refer to themselves as “movements” or “fronts”, reflecting a primary focus on national liberation rather than electoral politics. Past electoral experiences have been anchored in student bodies and professional associations and most recently the municipal and legislative elections between 2004 and 2006. The political parties have been able to mobilize resources and contribute to the national struggle, but their impact and influence is hampered for a number of reasons:19 

Fatah has been almost indistinguishable from the PA, whereas Hamas has stepped into government for the first time. From 1994-2006, Fatah cadres served as the

16

See Sayigh, Yezid and Khalil Shikaki (1999): Strengthening Palestinian Public Institutions, New York, Council of Foreign Relations, New York, USA. 17 See Inge Amundsen and Basem Ezbidi “Clientelist Politics: State formation and corruption in Palestine 1994-2000”, published by Chr. Michelsen Institute, Norway 2002. This document is also available at www.cmi.no/public/pub2002. 18 Ibid 19 See Nathan Brown, Evaluating Palestinian Reforms, Carnegie Endowment, Middle East Series, Nr. 59, June 2005.

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backbone of the PA, including the security service; while some Fatah organs survived only on PA financial support. 

The political parties have weak legislative and administrative skills.20 The secular, political “parties” lack internal party regulations and are held together through personal patronage rather than through ideology or principle.21 Internal democracy is usually weak and power is concentrated in the hands of the party leaders.



However, the Islamic factions (namely Hamas and Islamic Jihad) do have internal regulations dealing with decision-making, leadership succession, and party discipline.22 For example, regarding leadership succession, the killing of Hamas’ leader Ahmad Yassin did not even dent the movement and neither have all the arrests and killings Israel has carried out over the last few years.

52. Palestinian disappointment with the Fatah dominated PA, expressed in the 2006 PLC elections, covers the gamut of domestic affairs, negotiations with Israel, and relations with the outside world. Most people see that the old did not achieve what it set out to do. Corruption and inefficiency have increased unchecked and indeed a political culture of corruption and lawlessness has emerged. Trust in the PA, its institutions and policies, is fairly low and does not exceed 20 per cent.23 There is a lack of institutional channels accessible to the wider population. 5.

Unsettled Constitutional Arrangements and Government Performance

53. While the Basic Law was approved in 2002, and amended in 2003 to establish the Prime Minister’s office (granted authority over the budget, and assigned the task of maintaining order and enforcing the law), the boundaries and the offices of the presidency and the prime minister remain ambiguous and vulnerable to political pressures. This tension was apparent in the relationship between the presidency and all governments that existed so far, including the ones formed by Fatah earlier and certainly with the current Hamas-led government. A.

The Presidency versus the PA

54. Currently, the presidency enjoys wide powers over resources, security, law enforcement, and public institutions (including the institutions that run investments). Additionally, the president is head of the PLO’s Executive Committee, the PLO’s highest decision making body. By dealing with the office of the Presidency rather than the Prime Minster’s Office and Cabinet and indeed not relating to the PA at large, the international community is further 20

Interview with Tayseer Khaled,Member of the PLO’s Executive Committee, Nablus, October 7, 2006. Tayseer Khaled believed that Fatah and Yaser Arafat epitomized this, implying that other groups were not so bad. This view is arguable of course. 22 An interview with an elected Hamas PLC member shaikh Khalid Sulayman, conducted with him by the author in May 9 2006. 23 See polls conducted by Palestinian Center for Policy and Survey Research )PCPSR), Ramallah, and by the Development Studies Program (DSP), Birzeit University since the elections till now (October 2006) 21

15

distorting the PA’s constitutional structures. By channeling financial assistance to the President’s Office via the Temporary International Mechanism (TIM) and not to the Ministry of Finance's Central Treasury Account there is a real risk of dissipating one of the major reform gains of previous years. 55. Donors involved in building capacity in the President’s office note the enormous risks involved. The office was never meant to be the government. In effect a shadow government is being created around the office as many of the senior members of the previous government, staff and ministers have become advisors and representatives to the President Office.24 This has created an overlap between the mandate and functions of the President Office and the Prime Minister’s Office and the rest of the bureaucracy. For example, both the President’s office and the Minister of Finance handle the public service payroll. 56. Many donors have also started providing direct financial support to recipients (i.e. in Health and Education) without dealing with the government or the Presidency. At least five countries are dealing directly with the PA at the director-general level, and have not cancelled contracts with the PA. Several have increased their assistance to unprecedented levels. Aid management has all but collapsed. 57. Reporting lines between key PA agencies and the Prime Minister and Cabinet have shifted to the President’s Office; i.e., the Palestinian Investment Fund and the Palestinian Broadcasting Corporation (including TV, Radio and the WAFA News Agency). Also, by law, the Police, Preventive security, and Civil Defence are supposed to report to the Minister of Interior, but in practice, they don’t. Abu Mazen has created two new senior security posts for the West Bank and the Gaza Strip who report to the President. Also, the responsibility for border control has moved from the MoI to the President (i.e., Rafah and Karni border crossings). To this end, the international community has provided $5m to pay salaries and fund increases of up to 6,000 personnel for the Presidential Guard. 58. The Hamas Cabinet in turn has placed Civil Aviation under the Ministry of Transport while the Bureau of Fatwa & Legislation was moved back to Ministry of Justice. Other changes include:  A reduction in the number of ministries from 23 to 22 (see Annex C: Current structure of the PA).  The Civil Affairs Ministry is now annexed to the Ministry of Interior and National Security, even though the two ministries retain separate locations and structures.  The Minister of State for the Wall and Settlements, has been replaced by the Minister of Refugee Affairs. 59. The Hamas Cabinet has exceeded the 2006 budget allocation of 4,284 new civil service posts. Notwithstanding the lack of formal reporting and the conflicting numbers emerging from the MoF and General Personnel Council, it appears that some 10,000 new posts have been approved: 24

There are already some 700 personnel employed in the office spread between Ramallah, Bethlehem and Gaza.

16

   

B.

3,500 security posts were allocated to the Minister of Interior; Between 76-90 senior posts (first category: deputies, assistant-deputies, advisors, and director generals) were added to the PA; 110 staff were recruited into the second category (managers); and 5,700 personnel were recruited to the newly established Executive Forces in the Gaza Strip and 1,500 security personnel were recruited in the West Bank. The PLC

60. Unlike any other PA institution the PLC had no clear antecedent on which to base its work and “had to define itself out of nothing.”25 As the elected embodiment of Palestinian national aspirations (though denied oversight on foreign policy issues by the Oslo Accords) it quickly became “an arena within which demands for reform were articulated, and a vehicle through which those demands were pursued.”26 61. For example, when the Head of the General Control Office (GCO) issued the first annual report in 1996 the PLC formed a special committee, from both the Budget and Financial Affairs Committee and the Public Monitoring Committee, which published a lengthy review that cited various examples of PA high-ranking officials using their position to benefit relatives and special groups. The report argued that lack of transparency, absence of competition, off-budget fiscal activities, and weak technical decisions had led to suspicions, distrust and criticism by donor countries. 62. As the reform process gained momentum in 1999, the PLC Economic and Budget Committees became more active and by 2002 the PLC (with external assistance) was able to compel Arafat to finally sign the Basic Law that the PLC had passed in 1997. In September 2002, it became “the first Arab parliament ever to refuse to endorse a cabinet formed by the Chief Executive (Arafat).”27 While the PLC ultimately backed down on that occasion, it also played a key role in early 2003 in establishing the Prime Minister’s office to reduce the powers of the president: “when a consensus emerged within the West Bank and Gaza that the Presidency and the cabinet no longer served the interests of the Palestinian people, it was through the PLC that the reform movement ... focused on ways of bringing the cabinet to some form of accountability.”28 63. The fact that Hamas participated in the 2006 PLC elections also points to a degree of legitimacy gained by the institution since 1996. It has been one of the few PA institutions least degraded by the current crisis: PLC meetings have taken place regularly, with 76 percent attendance on average in August; several permanent committees have been formed according to by-laws; PLC members are obliged to disclose bank accounts and PLC sessions are open to the public.29 There are a number of important issues that it 25

Nathan J. Brown Palestinian Politics After the Oslo Accords (University of California Press, Berkeley 2003) p.96. 26 Guilain Denoeux and Robert Springborg The Palestinian Legislative Council and USAID Assistance (1996-2004): An Evaluation p.13. 27 Ibid; p.13. 28 Ibid; p.13. 29 Coping with Crisis: Palestinian Authority Institutional Performance World Bank Report, October 2006. p.5.

17

could also consider, such as: the conflict over mandate and authority of the President and Prime Minister’s offices, the functions of the Ministry of Justice, the Supreme Judicial Council and public prosecutors, the Council of Ministers, and its own operation. The PLC could also play a role in the judicial review and the performance of the Diwan at fatwa. It also needs further resources and experience to play a leading role in financial accountability. While these issues may have to wait until the current Hamas-Fatah crisis is resolved, the PLC is one of the main drivers-of-change for PA reform in every aspect and needs to be actively supported. C. Local Governance 64. Since the PA’s foundation the number of local government units has increased to some five hundred. In theory, they play a crucial role in providing services to citizens with the power to independently devise policies and programs. But at this level the neopatrimonial logic prevails as well through mayors and council chiefs. Moreover, the Ministry of Local Government (central government) applies a rigid and unresponsive approach to regional needs; and there is rivalry and tension between the elected mayors and the (Fatah appointed) governors, especially in the cities. 65. Local governments face numerous challenges. Legally they are too centralized, tribalism and nepotism impact their selection, political factions interfere in their work, staff members are not always qualified, being hired for their social status as heads of families, rather than based on ability and merit; the ties to the citizens are weak; the implementation of law and order meets heavy resistance; financial and fiscal shortage limits efficiency and there is only weak coordination between these units and the ministry of local governments on the one hand and other institutions and ministries on the other.30 D.

Civil Society Organizations

66. Palestinian Civil Society Organizations (CSO) including NGOs first started playing an important role in the late 1970s providing services in education, health, micro-credit, agriculture, media, human rights, women, research centers and vocational development training. Charitable societies (established during the British mandate) and Zakat committees (established by the Jordanian Waqf in the early 1960s) provide social-welfare assistance. 67. After the PA’s establishment, some CSOs, like unions, drew down their operations. Others developed a competitive relationship with the PA, over roles and funding. A separate cooperative trend also emerged; through sector partnerships between the PA and the larger NGOs, mainly in the health and agriculture sectors.31 These sectors also need to consolidate their own cooperative arrangements, to facilitate cooperation with the PA and form a basis for reform and change. 30

See The Relationship between Local Government Units and the Ministry of Local Governance: Mandates and the Problematic Relationship, Ibrahim Abu Lughod Institute of International Studies, Birzeit University, 2004. 31 Yasser Shalabi, 2001. The global and local effects on the Palestinian NGOs vision and role, unpublished MA thesis.

18

68. When the PA was created, there was no regulatory framework to govern its relationship with NGOs, the majority having been established before the PA. The Law for Charitable Associations and Non-Governmental Organizations was passed in 2000 but it still requires further regulations to avoid potential misinterpretation by decision makers.32 69. The CSOs played an important role in the legislative process, presenting a draft law in parallel to the PA and sought broad participation in suggesting amendments. Critically, they were assisted by external pressure on the PLC and the executive authority in order to successfully change the law.33 70. In 2000, there were 926 NGOs, twenty-five per cent in the Gaza Strip and the rest in the West Bank.34 This has doubled in the last five years based on registration applications with the MoI. Historically, many CSOs were associated with the political left or Islamist charities, Fatah was under-represented. However, two weeks after the 2006 PLC elections some 1,700 new NGO registrations were filed (presumably by Fatah), prompting the MoI to cease receiving applications. 71. By and large, their activities, working philosophy, goals and the scale of services and their future is dependent on external aid and is often tied to specific programs and limited timeframes. This necessarily places a question mark over their sustainability.35 72. CSOs provide all pre-school services. Moreover, all Palestinian universities are nongovernmental institutions except for Al–Aqsa University and Al Quds Open University. CSOs are an integral part of the health sector and have some 177 clinics and hospitals. Al Zakat committees support some 18,000 orphans with monthly aid.36 73. CSO leaders believe their organizations have a fundamental role in the reform process by pressuring the formal sector to achieve change. However, this role has not been achieved for a number of reasons: CSOs and the formal sector often share the same interests and some CSOs also need reform. A general observation is that their advocacy skills are weak. The legal framework concerning the CSOs needs to safeguard their independence.

32

Yasser Shalabi, 2001. The global and local effects on the Palestinian NGOs vision and role, unpublished MA thesis. 33 Yasser Shalabi, 2001. The global and local effects on the Palestinian NGOs vision and role, unpublished MA thesis. 34 Yasser Shalabi, 2000. MAS:Ramallah, Palestine. 35 The current situation and its development in the Palestinian Territories indicating that after Hamas wining the electoral elections and forming the new government that all the social aid programs are conditional to the continuity of the external aid as well as donors are not hiding the fact that these programs are conditioned and related to political projects 36 Palestine Economic Policy Research Institute (MAS), Social Monitor, May 2005, issue number 8. MAS:Ramallah, Palestine.

19

74. CSO leaders recognize that they cannot replace the public sector. They also feel that donor support has decreased in parallel with restrictions on financial support to the Hamas government – and that more international organizations are implementing their programs by themselves, without local partners; for political reasons. 6.

Israel’s Policies

75. After declaring the PA a terrorist supporting entity in December 2001 and launching Operation Defensive Shield and Determined Path in the following April, the GoI commenced construction of the separation wall in 2002, taking into account Israel’s demographic and future needs. Separation is seen as essential to “preserve the Jewish character of the state, and ensure a solid Jewish majority in the state of Israel.”37 Subsequently, after the failure of the Quartet Road Map implementation in 2003 Prime Minister Sharon began planning the unilateral disengagement from Gaza and four small settlements in the north West Bank, successfully completed in 2005.38 76. Following in Sharon’s footsteps, Prime Minister, Ehud Olmert, leader of the Kadima party, announced the “Convergence” plan to unilaterally settle the borders vis-àvis the Palestinian Territories and annex all of Jerusalem. Put on hold in the aftermath of the war between Israel and Hizbollah, Olmert has recently reaffirmed his plan to unilaterally settle the borders by 2008, if by the end of 2006 the Palestinians have not shown willingness to negotiate a final peace deal. Finding Hamas “unacceptable” and the PLO “weakened,” the GoI again claims to be without a credible “partner” in the peace process, with the tacit approval of the US and with the silence of most Western countries. 77. There is increasing doubt internationally, even within Israel, that this strategy will enable the emergence of a viable “two-state solution.” While the perpetuation of factional rivalry may prevent Palestinians from pursuing a goal of independence and sovereignty for some time, GoI policies, in the aggregate, will radicalise Palestinians even further. A.

GoI Views

78. GoI interlocutors are sceptical that Fatah can reform anytime soon, “the old guard are irrelevant.” They see the Hamas – Fatah rivalry as a clash between two national movements with a “young and fresh” Hamas in the ascendancy. Hamas’ proposals for a hudna or tahidya, receive no recognition for now but the GoI is closely watching the “internal political language” inside the PA for any changes. Internal policy recommendations had been to strengthen Abu Mazen but these were not taken up. GoI interlocutors claim that the current stance is one of non-interference. 79. GoI interlocutors thought that pushing Hamas into total opposition was “probably counter-productive.” Conducting dual elections again (Presidential and PLC) was “not smart,” as no-one could afford Abu Mazen losing. It was better to postpone any referendums to give Fatah time to “rejuvenate and compete.” 37

Akiva Eldar ‘Peretz doesn’t know – or doesn’t care’ Quoting Ehud Olmert, Haaretz November 21, 2006. Dov Weissglass suggested that Disengagement would make it possible for Israel to “park conveniently in an interim situation that distances Israel as far as possible from political pressure.” As quoted in Haaretz October 8, 2004. 38

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80. The GoI see a prolonged battle between both Hamas and Fatah in the Gaza Strip, it was not clear who would prevail. The West Bank was easier to control. At least one interlocutor felt that the GoI would be more pragmatic than the US when a government of national unity emerged, depending on its configuration. At the same time the GoI was divided over to how to deal with Hamas, whether to allow them space to breathe via a hudna or tahidya and be pragmatic, or to “stop them now,” as some security chiefs are advocating. 81. Now was not the time for new grand strategies, both sides needed to work through small actions which built confidence and gave a “demonstrative effect.” Palestinian performance had to improve.” The Rafah crossing and Karni had to somehow be immunized from security threats. Notwithstanding this view Israel also recognized that it had to keep engaged on moving the process with the Palestinians forward otherwise it would have a process foisted on it over which it has less control. 82. To this end, Israel recognized that its unilateral policy had failed because of “Palestinian incapacity and irresponsibility.” It was now considering bilateral and multilateral approaches. On the bilateral side it was not clear that Abu Mazen could deliver, nor whether Fatah could indeed remerge. It would be hard for the GoI to sell a working relationship with Hamas. That left multilateral approaches; of which there were two elements. 83. Reviving Jordanian and Egyptian involvement in the West Bank and Gaza Strip (a non-starter from the Palestinian perspective) which might include the Badr Brigade, or some kind of limited NATO force to take security responsibility from areas in the West Bank from which Israel withdrew. The “cartography” of all of these options was being looked at, “they were all on the table and a decision had to be taken.” The least desirable option was for the IDF to retain security responsibility in areas from which settlers had been withdrawn. B.

Separation Barrier and Crossing Points

84. The separation barrier in the West Bank will be finished in early 2007 but the working system (the thirty-four crossing points, border procedures, permits, new technology etc) will take a further seven months to consolidate. The GoI is currently waiting for US approval before finalising the wall’s alignment around Ariel, the E-1 corridor, Gush Etzion, Qalqilyah and Jerusalem (particularly difficult). The main issue at stake was how much land Israel would claim and the corresponding impact on affected Palestinian communities. GoI would also seek EU approval but the US was key. Additionally, there were a number of legal issues concerning the wall before Israel’s Supreme Court, “both technical and in principle.” These would take several months to be dealt with; “alignments were to decrease and must move to the west.” 85. Opening the passages was a strategic issue. A clear concept on customs, immigration and security had to be developed. The GoI sought to work with the international community on developing a prototype along the (less controversial) greenline. This issue has been raised more or less continuously since 2004 but, for those countries which accept the ICJ’s advisory opinion on the wall, it is not an option as

21

assistance to arrangements on the green-line, inadvertently free up funds for crossing points on Palestinian lands.39 86. A position paper on the quasi-customs union (from the 1994 Paris Protocol) had been delivered to government in April 2006, recommending that Israel withdraw from this – for the Gaza Strip. The Palestinians could manage their own customs revenues for Gaza, perhaps with assistance from the international community. It was not clear what would happen in the West Bank as some 200,000 settlers would be on the Palestinian side of the fence, for the foreseeable future. C.

Palestinian transport contiguity in the West Bank

87. The GoI plan to construct roads which would enable Palestinian transport contiguity throughout the West Bank is proceeding slowly as the WB roads are managed by at least four different authorities: the IDF, COGAT, the settler municipal councils and the Ministry of Infrastructure, and there is no central budget for new road construction. 88. The major increase in checkpoints and general obstacles to movement within the West Bank was explained as a reaction to sharp increases in security threats, rather than an attempt to place pressure on the population – and therefore the Hamas government. These would be dealt with in due course (they are part of the unimplemented November 15, 2004 Access and Movement Agreement). Obstacles to movement in the West Bank have increased by forty per cent in the last 12 months.40 D.

Settlements

89. The GoI via the Ministry of Defence has just finished amassing its most comprehensive database on settlements to date. “We cannot afford to avoid it anymore, and have to confront the problem. Maintaining the status quo with the 107 [settlement] outposts is not an option.” The data is stored in a professional database compiled over the last 2 ½ years. “Now it is up to the government to decide – it’s in their hands.” 90. The data was also used as the basis for a report on illegal outposts prepared by attorney Talya Sasson in March 2005. In any case “the really big picture is the older settlements, the 'legal' ones. The construction there has been ongoing for years, in blatant violation of the law and the regulations of proper governance."41 91. Israel promised the US in 2003 that all new construction in the older settlements would take place near existing neighborhoods. “In practice, the data shows that Israel 39

The ICJ July 9, 2004 Advisory Opinion on 'Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory', rejected the argument that the Wall was for self-protection and rejected it being established on Palestine territory. It argued that Israel must demolish the Wall and pay compensations for damages inflicted. The Palestine territory is 'occupied' and not 'contested', as Israel advanced. The settlements constitute a violation of international law. This denies Israel the legal grounds to negotiate the annexations of the occupied territories, East Jerusalem included. The ICJ confirmed that the international treaties on universal human rights as well as conventions on humanitarian law apply. 40

See UN OCHA Update, October 12, 2006. As of 20 September, the West Bank closure system comprised 528 checkpoints and physical obstacles - an increase of almost 2 per cent on the 518 obstacles reported in June, an 11 per cent rise since the start of 2006, and almost 40 per cent since August 2005 when the total was 376. 41 See Amos Harel ‘Settlements growing, despite vow to US’ Haaretz October 24, 2006.

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failed to meet its commitments ... The data also shows that in many cases the construction was carried out on Private Palestinian land. In the master-plans, more often than not, Palestinian properties were included in the construction planned for the future. These included Palestinian properties to which the state had promised access.” 92. In early 2006, the Israeli Settler’s peak body, the Yesha Council published a map of the West Bank which it described as the best solution for Palestinian autonomy in thirty per cent of the West Bank (see map at Annex D).42 E.

New policies

93. Since 2006, access to the oPt by Palestinians holding foreign passports, including businessmen, academics, students and professionals, have, in ever larger numbers, been denied visas which would permit them to remain in their homes, visit spouses or families, or engage in business or other productive activities. Since the PA’s inception, foreign passport holders have been accessing the oPt via Israel on tourist visas, where people living in the territories for years have to leave the area every three months to renew their visas.43 Estimates of the number of Palestinian returnees to the oPt in the last decade, especially in 1995 and 1996, vary between 40,000-100,000.44 Currently, public opinion polls also show that a high percentage of youth wish to leave the country in order to achieve economic and social security.45 F.

Previous Agreements, Security Accountability and the West Bank

94. The Hamas government has been asked by the Quartet to recognize previous agreements signed with Israel. The reality is that neither side has fulfilled their commitments, indeed, even extant, i.e., remaining elements of the Oslo Accords have been stripped away over time. One of the most significant changes occurred in February 2003 when the GoI did away with the formal security cooperation structures established under Oslo. 95. The IDF reallocated these positions to a new CoGAT structure which assigned “one stop” units to each of the seven Palestinian cities in the West Bank, staffed with predominantly Arabic speaking Druze personnel. These units manage movement and access issues. in and out, of each city for medical cases, normal travel and business (goods and services transactions).

42

According to one expert the map was professionally produced and GIS referenced. The Palestinian Ministry of Interior should have the right to issue these Palestinian residents of the territories identity cards and Palestinian passports. Israel has unilaterally controlled the civil register of the Palestinian population since 1967 and it controls work permits for foreigners in the oPt. 44 See Ward Sayre and Jennifer Olmsted "Economics of Palestinian Return Migration." Michele Chabin, "An Uneasy Homecoming" Jerusalem Post, July 21, 1998, p. 11, notes official estimates of legal returnees from 40,000 to 50,000, with unofficial returnees estimated at no more than 50,000. Abbas Shiblak of the Palestinian Diaspora and Refugee Centre (Shaml) estimates 60,000 in the preface to Reintegration of the Palestinian Returnees, Monograph #6, (Bethlehem: Shaml Publication, 1997). In the same publication, Jill Tansley in "Adaptation in the West Bank and Gaza Strip" cites a figure of 52,000 as of 1997. 45 See polls conducted by Palestinian Center for Policy and Survey Research (PCPSR), Ramallah, and by the Development Studies Program (DSP), Birzeit University (October 2006). 43

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96. Two extra units were added to this structure in January 2005 and January 2006 and were assigned to ‘Jerusalem’ and ‘Greater Jerusalem’ to manage the increasingly complex tangle of moving Palestinians in and out of Jerusalem and the West Bank – caused by the separation wall, the E-1 corridor and growth in other settlements. 97. This often overlooked development has several serious ramifications. Firstly, in ending formal security cooperation with the PASF a fundamental pillar of the Oslo Accords has been removed. Secondly, it means that the IDF exercises security responsibility across the West Bank, through tactical boundaries drawn up by the IDF’s Central Command. The previous division of the West Bank into Areas A. B and C has therefore become meaningless as IDF units enter each at will. Third, without basic security cooperation between both sides, attempts to re-negotiate movements and access obstacles will fail. Fourth; Palestinian attempts at reclaiming security control of their increasingly limited areas will fail over time: domestic support is hard to sustain and PASF members are reluctant to perform their tasks diligently and indeed are themselves at risk from undeclared IDF operations in their areas. In effect, Israel has reoccupied the West Bank. 98. This major change was presented to the donor community by the then CoGAT chief, Amos Gilad. As he explained it, the policy was designed in part to inculcate distinct political, economic and security idiosyncrasies in each of the West Bank towns. By any measure the policy has been a stunning success and further undermined prospects for Ramallah (let alone Jerusalem) to exercise any meaningful national responsibilities, in any sphere. 7.

Regional Factors

99. A number of Regional factors are influencing the situation in Palestine to an increasing degree. Hamas and the Islamic Jihad are directly impacted by the developments in Syria and Lebanon, since their top leadership resides in these countries. Syria, Lebanon and Iran are increasingly forming a triangle of resistance against the West and particularly American influences in the region. Fatah’s leadership is directly impacted by the positions of Egypt, Saudi Arabia and Jordan, politically and economically. 100. The perceived victory of Hizbollah provides some sections of Palestinian society with the hopes for an alternative solution to the conflict by resuming the armed struggle instead of negotiated peace talks. This segment of society is likely to become more radicalized if political and economic pressure is continuously increased on the West Bank and Gaza. 8.

The International Community

101. There are any number of entry points for looking at the influence of the international community on the development of the PA and in the context of public administration and civil service reform. For this study the focus is on two issues; the size and cost of the civil service (a perennial concern since the PA’s inception). Allied to this is the issue of aid and development coordination, which has worked best in the past when

24

all three parts of the cog are working within a common political framework, toward mutually defined goals. Arguably, diplomatic efforts through 2000-2006 have been deployed in trying to reinstate such a framework, be it the Mitchell Report, the Tenet Work Plan and Zinni Missions, the Quartet Roadmap, US Envoy Ambassador John Wolf’s mission, Quartet envoy James Wolfenson, the various donor conferences in between but particularly the December, 2004 Ad-Hoc Liaison Committee meeting in Oslo. A.

Reconstituting a common framework

102. One of the first trilateral meetings between the donor community, the nascent PA and the GoI was in April, 1995 when all three negotiated the ‘Tripartite Action Plan’ (TAP), which committed the PA to improve revenue collection, reduce civil service hiring and clarify the division of responsibilities between its institutions. In turn, the GoI committed to lifting closures and to allow safe passage between the West Bank and Gaza and between these areas and the outside world. Less than a year later, a second TAP was hammered out in January 1996, with identical objectives.46 103. Fast-track to December 2004 and the same issues were again presented by the World Bank, in stark, dispassionate terms. The Bank argued the limitations of development financing in a “negative policy environment” and cited 2002 data which showed that a doubling of donor assistance from 1 to 2 billion/annum would only reduce poverty levels by 7 % over four years, from 60% to 53%.47 The AHLC asked the World Bank to define a set of indicators which would be used to monitor the actions needed to be taken by the PA and Israel, to revive the Palestinian economy. Dejure: this meant tackling Israel’s access and closure policies head on; the leitmotif of this being the continuous operation of the Karni crossing in Gaza. 104. This framework was quickly overtaken by the disengagement process, a “money-noobject-do-whatever-it-takes” attitude to make it a success. PA security sector and civil service recruitment rose dramatically as did salary and pension entitlements, in part to assist Fatah’s election prospects through the 2005-2006 election cycle (presidential, municipal and PLC), but also to deal with the growing security threat posed by armed unemployed young men, unrepresented in the PA public sector and unable to find employment in a parlous economy.48 In passing, this compromised PA commitments to contain its wage bill, freeze new hiring and amend unsustainable pension laws; forcing the Bank to suspend payment of a final tranche from the Reform Trust Fund in December 2005.

46

Sari Hanafi and Linda Tabar ‘Donor assistance, rent-seeking and elite formation’ in Mushtaq Husain Khan State Formation in Palestine (RoutledgeCourzon London 2005) p. 221. 47 See Nigel Roberts ‘Hard Lessons from Oslo’ in Michael Keating, Anne Le More and Robert Lowe Aid, Diplomacy and Facts on the Ground (Chatham House London 2005) p. 25. 48 See discussion of this in Nicole Ball, Peter Bartu and Adrian Verheul Squaring the Circle: Security Sector Reform and Transformation and Fiscal Stabilisation in Palestine Report prepared for the UK Department for International development January 16, 2006.

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105. Together, the above conundrum represents the two strands of donor strategy. On one hand, the impression was conveyed to the PA that money did not matter, on the other, the Bank was trying to impose conditionality on PA policies. It was not just a case of the international community’s “inability to set standards of clear accountability in clear objective terms and to speak out when these are not met,” but an illustration of competing frameworks at play.49 106. A year on, and the same dynamics prevail. The Palestinian economy is in worse state, access and movement is as bad as ever, PA civil service numbers have again increased, and Palestinian insecurity is reaching existential heights. Putting aside the Hamas government for a moment, the fact remains that there is not a common framework being employed by the international community and the core issues, identified in 1995, are no nearer resolution today, arguably, the opposite. 107. This is seen in new plans to fund an increase in the Presidential Guard and provide further training and equipment for them to provide security at the Karni and Rafah terminals and to stop Qassem rockets out of Gaza. While opening these crossing points is economically critical, the risk is it may further stoke Hamas-Fatah rivalries for control of the public sector and distort the extant security structures. It also illustrates how the exigencies of the moment (similar to disengagement), create a need for more (fiscally unsustainable security personnel), at a time when everyday Palestinians are feeling even more vulnerable. Remarkably, the sustainability of such security assistance is also questionable where, after 12 years of active engagement on security issues there is still no central repair facility for received equipment and no central logistics facility. 108. While it is beyond the scope of this report to describe what a new donor framework should look like, it would do well to accommodate the issues identified in 1995, 1996 and 2004. This will have to encompass new efforts to engage donors, the PA and the GoI in an agreed way forward. This will not be easy given the disunity evident among all three stakeholders, however, a good start would be for the international community to agree a common position, if possible. B.

External impact on the reform process

109. The Palestinian perception is that reform interventions have essentially failed to have a real impact on the ground, notwithstanding certain achievements: such as creating a single treasury account for all government revenues. The key external factors from the Palestinian perspective include:  

49

There has not been a consistent understanding of reform among donors, within the PNA, between the Donors and the PNA; between the PNA and CSOs and between the PNA and the private sector. There has been a lack of coordination among the donor community.

Nigel Roberts, op cit; p.23.

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  

Reform interventions have not been designed taking into account Palestine’s unique circumstances. Priorities have been set by donors and foreign experts and not by Palestinians. Different experts often offer contradictory advice. Many Palestinian interlocutors felt that reform was a political tool; raised only when negotiations broke down with Israel; and in the absence of a peace process.

III.

The Economic Drivers-of Change

1.

Economic distortions

110. The most serious distortions in the Palestinian economy are related to reliance on Israel in most areas, including labor, foreign trade and public finance. This makes the PA vulnerable as can be seen in the public budget during the last few years. For example, fiscal revenue decreased from $940m in 2000 to less than $300m in 2002 before it increased to $1164m in 2005, while public expenditure increased from $1386m in 2000 to $1620m in 2005, which resulted in larger deficits during these periods.50 111. After the Intifada, the PA was encouraged (for political and domestic reasons) to absorb some of the rapid increase in unemployment that resulted from:  The loss of more than 100,000 jobs in the Israeli market;  The loss of 80 thousand jobs in the private sector;  The closing of some 14,600 small business firms in the border area of the West Bank (along the green line);  In Nablus alone, over 700 firms moved to Ramallah or to Jordan during the first four years of the Intifada (2000-2004);51 and 

An increase of around 40,000 new entrants to the labor market every year, who cannot be absorbed by the private sector. 52

112. The PA, while trying to protect wages, has been obliged to cut other non-wage operating costs, which include essential pro-poor expenditures. Similarly, withholding Palestinian money (by Israel) does not allow the budget to cover many government operations, or even to cover salaries, as has been the case after the Hamas victory in the PLC elections. Furthermore, it makes it very difficult for the cabinet to plan, to predict revenue or to execute programs. In fact, the fiscal revenues have fluctuated remarkably in line with the political climate. Donor financial assistance has also fluctuated and is unpredictable. This also makes it very difficult for the PA to predict revenues and to plan or implement reform-oriented programs and projects. 50

IMF, Macroeconomic Developments and Outlook in the West Bank and Gaza, London, Dec. 14, 2005. See conference proceedings: The Economic Conditions in Nablus: The Necessity of Intervention before Its Too Late The Center for Private Sector Development (CPSD), Nablus, September 2006. 51

52

The Palestinian labor force increased from 513,000 people in 1995 to 667,000 in 1999, a growth of around 7% annually. By 2005 the Palestinian labor force had increased to 827,000. See PCBS, Labor Force Survey Annual Report: 2005.

27

2.

The Public Sector

113. PA budgets of the last decade show the low share of capital expenditure to total expenditures and the random unplanned development of current public expenditures since the establishment of the PA; namely increasing security expenditures and declining social, educational and health expenditures. For example, between 1995-1999 capital expenditure financed by the PA budget averaged $18 million per year. Security expenditure averaged $251 million (some 32% of total recurrent expenditure) while education, health and social affairs combined averaged $280 million (or 36% of total recurrent expenditures).53 114. However, by 1999 the PA balanced the budget due to increases in local tax revenues and the regular transfer of clearance revenues from Israel. Despite the start of the Intifada in September 2000, fiscal revenue of PA reached $940m but then dropped to $273m in 2001 and $287m in 2002.54 This sharp decline in revenue resulted mainly from two factors, the deteriorating political and security situation which led to a significant drop in tax collection and the stopping of clearance transfers by Israel after December 2000. 115. Due to the sharp decline in revenue, PA had to reduce its expenditure. Cuts focused on less essential areas to protect the wage bill. But employment in the PA civil service and in the security forces in 2001 increased by some 4,000 and 3,000, respectively, and the wage bill grew by some 13 per cent. The expansion of PA employment was somewhat better controlled in 2002 which contributed to a somewhat slower growth in the wage bill of 9 per cent.55 Subsequently, there was a rapid increase in the wage bill for the PA due to an increase in the size of the labor force, and a rise in salaries. Overall, the wage bill grew from from $620m in 2000 to $743m in 2003 to $1017m in 2005.56 116. GDP, although it increased by 6% in 2004 and by 5% in 2005, to reach $4.5bn, it is still around 9% lower that what it was in 1999. The growth in 2004 and 2005 can be attributed to the expansionary fiscal policy by the PNA, increased banking credit to the private sector, a relaxation of closures, and increased Israeli demand for Palestinian exports.57 Taking into consideration population growth, per capita GDP is around 22% lower than 1999.58 117. The economic slowdown in the second half of 2005 has continued during the first half of 2006, and may even worsen if current conditions prevail; namely: restrictions on 53

See M. Nasr Enhancing the Capacity of the Palestinian Economy PEPR Institute (MA) June 2003. IMF, West Bank and Gaza, Economic Performance and Reform under Conflict Conditions, September 15, 2003 55 ibid. 56 IMF, Macroeconomic Developments and Outlook in the West Bank and Gaza, London, Dec. 14, 2005 57 See West Bank and Gaza - Economic Update and potential outlook - World Bank report (15 March 2006). 58 Source: PCBS, www.pcbs.gov.ps, Time Series Statistics- see table. 54

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movement between Gaza and the West Bank; suspensions in the transfer of clearance revenues by Israel; reductions in the number of Palestinian workers granted work permits for work inside Israel; and reductions in donor assistance to the Palestinian Authority. 118. According to the World Bank, if such conditions continue, economic performance of the Palestinian economy in 2006 is expected to fall at rates similar to those witnessed during the early years of the Intifada, particularly in the Gaza Strip.59 Real GDP per capita would decline by 27 per cent in 2006 (from $1152 to $802), and personal incomes (real GDI per capita) would decline by 30 per cent (from 1657 to $1199). Further declines in the next two years bring unemployment to 47 per cent and poverty to 74 per cent by 2008. By 2008 the cumulative decline in real GDP since 1999 would reach 55 per cent.60 119. Human resource losses,61 negative growth, soaring unemployment and sharp declines in household income have seen the proportion of the Palestinian population living in absolute poverty increase significantly.62 3.

The private sector

120. While the PA espoused a free market, private sector-led approach to economic growth and development, in practice, its early economic and trade policies saw it engage in different forms of commercial activities including the creation of unregulated and unaccountable public import monopolies and quasi-monopolies. It also established partnerships with many private enterprises through the Palestinian Commercial Services Co (PCSC), which is fully owned by the PA, and granted monopoly concessions to privileged private actors on the basis of personal contacts and favoritism. This was done without ratifying the necessary laws and rules to control the monopolistic behavior of the franchised firms.63 121. There were also accusations of undisclosed commercial dealings by public servants. These activities have weakened the investment environment in the oPt, crowded out private investments, and resulted in a competitive relationship between the PA and the private sector. The PA pledged to privatize government monopolies and commercial activities, and in January 2000 established the Palestinian Investment Fund (PIF) to

59 World Bank, West Bank and Gaza: Economic Update and Potential Outlook, March 2006 60

ibid. Between 28 September 2000 - 30 November 2005, 4,214 Palestinians have been killed and 45,891 have been wounded, including 791 children. More than 9,200 Palestinians are in Israeli jails, 580 of them imprisoned before the Intifada (http://www.ipc.gov.ps/ipc_new/english). 62 According to the official definition of poverty adopted in 1997 under the auspices of the national poverty alleviation team, the poverty line for a model family (a family comprised of six members: two adults and four children) in the Palestinian Territory is NIS 2,143 in 2005 (equivalent to US$477) whereas the extreme poverty line for the same model family is NIS 1,732 (equivalent to US$385). See MAS Economic and Social Monitor, Volume 6, August 2006. 63 See Mohamed Nasr, "Monopolies and the PNA", in M. Khan, G. Giacaman and I. Amundsen. (eds.), State Formation in Palestine, Viability and Governance during a Social Transformation, RoutledgeCurzon, London, 2004. 61

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manage all PA assets and commercial activities, in the West Bank and Gaza as well as abroad, and to execute the PA's privatization strategy once finalized. 122. In 1994 the private sector was weak and lacked experience and the main institutions, at that time, were the chambers of commerce.64 However, since the late 1990s private sector institutions started to play an increasing role in the reform process; these being Paltrade, PITA, the Palestinian Federation of Industries (PFI), the Businessmen Association, Banks Association, Insurance Companies Association, and the Union of Chambers of Commerce. Collectively, they lobby the PA, protect the interests of their members and monitor the performance of the PA. The Private Sector Coordination Council (PSCC) is the peak coordinating body for the sector. 123. Private sector demand for reforms increased in 1999 and accelerated during 20022004 with a focus, according to private sector leaders, to reduce business transaction costs, attract foreign direct investment (FDI) and enhance the competitiveness of Palestinian products.65 Private sector institutions also participated in drafting economic legislation such as the Encouragement of Investment Law, the Trade Unions Law and the Labor Law, and helped negotiate a Free Trade Agreement with Turkey. 124. Much of this work emerged from the National Trade Dialogue Conference (NTDC) organized by Paltrade in May 2000 when the private sector demanded consultation on a range of issues: economic laws and national development plans; economic aspects of final status negotiations; and participation in formal trade missions abroad. 125. It also asked the PA to make lines of authority clear, eliminate administrative intervention, recruit qualified personnel for the public sector and improve the performance of the courts. Broad appeals for greater transparency in government were made and opposition was expressed to the emergence of monopolies, private or public, without general economic or national justification. In such cases; the regulatory framework was to be completed to: prevent monopolistic privileges (i.e., pricing) and to prevent those monopolies from extending their power to other activities.66

64

There are 14 chambers of commerce in the Palestinian territories, including Jerusalem, Nablus, Ramallah and Berih, Bethlehem, Gaza, Hebron, Jenin, Tulkarm, Qalqilya, Jericho, Salfeet and Tubas. The Federation of Palestinian Chambers of Commerce, Industry and Agriculture is a national organization founded in Jerusalem in 1989 to represent the West Bank and Gaza Strip’s chambers of commerce and industry. The Federation’s membership base includes all the 14 chambers; 4 in Gaza and 10 in the West Bank. Membership of these chambers increased from 5900 at the end of 1991 to 32,000 at the end of 1999. (Source: http://www.pal-chambers.org/federation/page1.html) 65 According to Maher Masri, Ex-Minister of National Economy and Chairman, Palestine Capital Market Authority. The private sector has benefited very much from the reforms. It has a better environment to work within, and has had a voice in the legislations, agreements and many government decisions that could affect the private sector. (Interview 11 October, 2006). 66 A summary of the reforms demanded by the private sector can be found in Palestine Trade Center (Paltrade), Conference Conclusions and Private Sector Recommendations, National Economic Dialogue Conference, Ramallah 30/5/2000. 30

126. They also demanded a law of "open declaration" for personnel employed in positions of authority in the public sector (civil and security) administrations, and also sought to prevent such individuals from establishing companies or having partnership with the public sector during the period of their work for the PNA.67 127. The PA was particularly receptive to developing a strong private sector after 2002 however, it cannot currently generate enough jobs to absorb large number of new graduates and/or those released from the public sector or from the Israeli labor market and, hence pressure on public sector employment remains. Additionally, there are major limits on private sector influence on reform: 



 



The bulk of the private sector consists of small scale, family business firms. Around ninety-one per cent of the firms in the Palestinian Territories employ four people or less.68 Although these firms are represented in the chambers of commerce and the Palestinian Federation of Industries, they are still fragmented, powerless and cannot influence the reform process.69 Political uncertainty, the high cost of infrastructure and other transaction costs, and the inadequacy of the regulatory framework decrease the competitiveness of the Palestinian economy and reduce the capacity of the private sector to absorb local employment. Private sector institutions lack clear mandates and the legal framework is not complete. Some institutions are not elected and genuinely representative such as the chambers of commerce and the Businessmen Association. Most of these institutions are captured by large interests through artificial barriers to entry, such as high subscription fees. Thus, efforts to expand the representation base of the private sector have not succeeded, the base has become narrower, and fewer people are benefiting from their activities. The private sector is also politicized and not above rent seeking including from financial assistance provided by donors. There has been no control over this money .70

67

ibid Out of 97,279 establishment operating in the Palestinian Territories in 2004, around 88,500 establishments employ 4 people or less, and around 6000 establishments employ 5-9 people. See PCBS, Establishment Census, 2004: Main Findings, July 2005 69 The Palestinian Federation of Industries (PFI), Founded in 1999, is an umbrella that includes more than a dozen of specialized industrial private sector associations in Palestine. Specialized industrial associations were established during 1996 in the West Bank and Gaza Strip. These associations represent all major producers in sub-sectors such as textile, garment, food, chemical, pharmaceutical, stone and marble, information technology, leather and shoes, carton and paper, metal work, handicrafts, media, etc. The associations involve more than 4,000 members. They have developed by-laws and elected board of directors. Some have permanent offices and staff members responsible for their daily operations. The degree of organization and the level of activities for the members vary among the respective associations. 70 Interview with Samir Hulileh, CEO, The Portland Trust (9 October 2006) and Interview with Maher Masri, Ex-Minister of National Economy and Chairman, Palestine Capital Market Authority (11 October 2006). 68

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 

A distortion also arises when private sector representatives are appointed by government (such as members of PIF and PMA). In exchange, they usually support almost all government decisions. Some sectors in the economy are monopolized by private firms without proper regulation, which enables them to extend their monopoly to other sectors. For example, in the past two years Paltel has acquired almost all small Internet service providers (ISPs). Voices opposed to this in the previous cabinet were stymied by the lack of competition and antitrust regulations. Now, Paltel is trying to acquire other businesses such as ATS and PICTI. Finally, a distinction must be made between business people who were inside the West Bank and Gaza Strip (WBGS) before the PA was established and those who came from abroad afterwards. The latter group is more powerful, has good connections with foreign parties, and tries to influence the economics and politics of the Palestinian Territories. This group, generally, does not support reforms.71



128. Reform has generally succeeded because there are reform-minded ranking officials in influential positions in the government, such as the Ministry of National Economy, the Ministry of Finance and the Palestinian Investment Fund. In these cases the public sector worked with the private sector to establish private sector institutions (e.g. Paltrade, PFI and the PSCC), and introduce a legislative framework (e.g. the Agency Law, the Income Tax Law and the Law of Investment Promotion). Without donor support many of the private sector institutions would not have survived, or would have been less active. Donor support to reform legislation was also critical. 129. A key drawback in the reform agenda has been the weak relationship between the executive, legislative and judicial branches of the government; i.e. the institutional vacuum (both formal and informal practices) that exists. This relationship is generally weak, especially in defining priorities, strategies and the national agenda. Another problem that retarded the perform process is what can be described as the "mentality of transition" that dominates the public and private sector and the economy. For example, many conditions in the 1994 Paris Protocol were accepted on the basis that it was a temporary situation until negotiations on permanent status began.72 130. Even the private sector did not operate on the basis of an independent economy and this was reflected in investment decisions. For example, most of the investments were short term and concentrated on services. Few long term productive investments were made. Thus the investment mentality reflected the transitory thinking. 4.

Impact on Reform

131. Some overlap and duplication in PA ministries before 2000 were reduced by merging the ministries of Supply, Industry, and Economy and Trade. On the other hand,

71

72

Interview with Samir Hulileh, CEO, The Portland Trust (9 October 2006) Interview with Ibrahim Barham, Owner-manager of the Safad Engineering & Electronics (8 October 2006)

32

after the split of the Ministry of Planning and International Cooperation, there remains some overlap and duplication in these ministries. 132. One key economic concern is the coordination between the MoP and MoF regarding the fiscal budget. Until recently, The MoF used to prepare the public budget without coordination with the MoP. At the same time, the MoP used to prepare various medium development plans without coordination with other ministries. The plans looked like shopping lists and included projects that reflect the influence of individual ministries (and agencies) rather than national priorities. This improved in 2005 when the MoP had a larger role in preparing the proposed budget with the MoF. 133. On the other hand, the separation of the West Bank from Gaza has resulted in overlapping and duplication of economic functions within ministries and constrained cooperation among ministries. This separation has also restricted movement of business people, government officials and donors' representatives from one side to the other. 134. A competitive Palestinian private sector could be an important driver of change. Unfortunately, the private sector suffers from many negative distortions including the small size of the market, narrow base of resources, large dependence on Israel, high transaction and transportation costs, weak infrastructure and an unfavorable investment climate. 135. Before the establishment of the PIF, the PA made few privatization transactions, mostly in the form of license agreements with the private sector, especially in infrastructure, such as telecommunications, electricity and the stock market. These transactions, however, lacked transparency, a regulatory framework and included unfair, unjustifiable conditions. After the establishment of PIF, all investment assets and commercial holdings of the PA were transferred to, and consolidated under the management of the PIF, all PA revenues were paid into a single Central Treasury Account, and the PIF published a comprehensive public record of all assets and investments held by the PA. 136. However, the PIF is not monitored by the PLC, although it runs public assets. Furthermore, there were sales of some PNA's assets to local and foreign investors, such as sale of its shares in Orascom, the Peace Technology Fund and Jawwal that lacked transparency, were done absent a proper legal framework, and occasionally contradicted its own privatization philosophy. This raised suspicions of favoritism and rent seeking behavior by influential groups in the private sector and government officials. After Israel’s withdrawal from Gaza, there were many calls for privatization, from within and without government. 137. Also, there are genuine fears that privatization could lead to a series of monopolistic firms with low efficiency, especially in the absence of an adequate legal framework. The failure to develop necessary competition policies and regulatory agencies to prevent market abuse may result in favoritism, corruption and control of public interest by self interested groups.

33

138. Finally, the current high levels of unemployment and poverty, together with the low capacity of the private sector to absorb local employment make it difficult for the PA to reduce the size of the civil service now. IV.

The Social-Cultural Drivers-of-Change

139. There are a number of socio-cultural factors that exert direct and indirect influence on public administration and civil service reform. They coexist in a complex political and economic environment and can only be disaggregated for academic purposes. 1.

Social and spatial fragmentation

140. Continuity in Palestinian society was severely challenged by the 1948 war, which severed the Gaza Strip from the West Bank, and the June 1967 war, which split the West Bank from the surrounding Arab States especially Jordan.73 141. It is quite possible that the consequences of the Al Aqsa Intifada (2000-2006) have been of comparable magnitude; reinforcing the divide between the West Bank and the Gaza Strip and the isolation of the Palestinian cities in the West Bank. These developments have reinforced a localized culture of solidarity and community and traditional institutions and regional allegiances. They have also limited the possibility of anchoring a Palestinian "social contract" and generating domestic support for a national policy and development strategy. A. Refugees 142. In broad terms and within the oPt Palestinian society comprises three groups; rural and urban localities and refugees. The refugees and their camps, in particular, exhibit strong relationships and a separate political identity to rural or urban localities. This political identity is forged around collective local views of the “other;” is deep rooted and powerful; constitutes a foundation for separate political and social views and behaviour; and increased after Oslo – to the extent that further special or sub-political identities may have been formed. 143. Key to this was President Yasser Arafat’s deliberate policy to allow the refugee camps to organize economically and politically, independent from local municipalities and governorates. In effect, the camps constituted independent islands, were quarantined from the PA and, many of them were recruited into the security apparatuses. Already administratively separate, via UNRWA, refugees did not politically participate in local elections and only haphazardly in PLC and Presidential elections.

73

See: Salim Tamari, the transformation of the Palestinian society: The fragmentation and the occupation, in Group of social researcher, The Palestinian society in Gaza and the WB and Jerusalem (Beirut: Institute of Palestinian Studies, 1994), pp 17-25 (in Arabic).

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144. Palestinian refugees are in caught in a limbo; between leaving the camps for a better life if possible, on the one hand and staying there on the other - as a symbol of the right of return. UNRWA provides basic health and education services to the camps in coordination with the refugees' affairs department of the PLO. However, there is some overlap between UNRWA and PA services. For example, refugees employed with the PA are covered by government health insurance. Also, the PA is obliged to provide education services if the refugee camp inhabitants agree. Most refugees residing outside the camps use PA schools. In 1998/1999 some 20% of refugee primary students attended PA schools.74 B. Gaza 145. The separation of the West Bank, Gaza Strip, and East Jerusalem and their different administrative and political systems, has contributed to the creation of significant social disparities between them. Compared to the Gaza Strip the West Bank has a more stable social formation and less population density. Today, the population density in the Gaza Strip is the highest in the world at 1,400/ square kilometer whereas in the West Bank it doesn’t exceed 135/ square kilometer. The refugee population of Gaza Strip is 60% of the total population compared to only 20% in the West Bank. Most Gazans relied on paid labor in Israel, an option now all but closed. In the West Bank, on the other hand, the majority of the population is divided in 11 mid-size urban centers and 430 villages. Most West Bank population relies on different income sources including paid labor, agriculture and the service sector. C. East Jerusalem 146. The Palestinian population in East Jerusalem of 250,000 is now completely isolated from the West Bank by settlements and the wall which have divided the governorate into isolated cantons. Investment in public infrastructure has been limited and Palestinians employed in tourist and trade activities have been completely marginalized. There is a severe shortage in social care centers in east Jerusalem as well as cultural, sports, youth, and entertainment centers. Therefore, Palestinian NGOs attempt to bridge the gaps in these areas. The shortage in services has given rise high unemployment rates among the youth, addiction to illegal narcotics, violence at schools, and domestic violence. 147. Palestinian inhabitants of East Jerusalem carry 2nd class Israeli ID cards; however, they may obtain full Israeli citizenship.75 They can participate in the Jerusalem municipal elections and the PLC elections as representatives of East Jerusalem. The ballot boxes are held at Israeli post offices.76 Palestinian residents of East Jerusalem must keep their 74

www.badil.org/arabic-Web/Statistics/Education/6-04.pdf The Palestinian inhabitants of East Jerusalem are not considered 1 st class Israeli citizens; therefore, they cannot run for the Knesset or serve in the Israeli army. They are not holders of Israeli citizenship. They hold identity cards and travel documents. They do however, have the option of becoming full Israeli citizens, which would end the demand that there are Palestinian residents of Jerusalem. 76 deh isn GI G ehT that Palestinians must vote in the PLC elections at post offices as if they were citizens voting outside their country. 75

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Israeli ID cards to continue living there. PA service delivery to East Jerusalem is limited to the hospital network and the school system in Palestinian suburbs. Orient House was closed by Ariel Sharon in 2001 after the death of its director, the late Faisal al Husseini. 77 Subsequently, the PA established “shadow Jerusalem Affairs” units at each ministry, including the cabinet secretariat, however, this appears to have been largely symbolic. 148. Across the board, the deteriorating conditions for all Palestinians since 2000 have elevated the importance of family and local relationships, for providing security and basic individual and household needs. In the absence of a functioning PA, the family or locality and its social institutions is the sphere through which individuals mediate the external world. A palpable public frustration towards national institutions has reinforced people's withdrawal to local families and societies and produced a number of negative and irresponsible stands towards public issues such as institutional building, fighting corruption and broader democratic and civic participation.78 2.

Demographic Challenges

149. Transforming Palestinian demographic trends into a positive force is a strategic challenge. The population of the Palestinian territories in mid-2006 was estimated at 3.888 million people. The figure is expected to rise to 4.4 million in 2010 at a growth rate of 3.4%. This growth rate is among the highest in the world. 66 per cent of the population is below 25 years of age. Approximately half a million people will reach working age within five years.79 Pressure will increase on basic services; education, health, natural resources and infrastructure. 3.

Weak Social Safety Net

150. The unemployment and poverty crisis since 2000 has been tackled through informal support activities; chiefly filial support. It is estimated that this accounted for some 24 per cent of aid distributions in the oPt. Official support provided by the Ministry of Social Affairs represents some 12 per cent and the Zakat committees contributed approximately 4 per cent. Other emergency relief and aid programs provided by NGOs and Islamic charities represented 8 per cent.80 Thus, the weakness of the official social protection network has also forced self-reliance. 151. PA spending in real terms in the past four years gave the Ministry of Education and Higher Education (MoEHE), the Ministry of Health, the Social Affairs Ministry, and the Labor Ministry, less than the Ministry of Interior (MoI) in 2005 (see table below).

77

The PLO and the labor party agreed to ignore the Orient House issue until final status talks. 2 Majdi Malki et al, Towards a Sociology of Civil Resistance: Palestinian Society During the Second Intifada (Ramallah: MUWATIN-The Palestinian Institute for the Study of Democracy, 2004) PP.260-262 (in Arabic) Palestinian Economic Policy Research Institute-MAS, Social Monitor, No.8, 2005, p.12-14. 3 Palestinian Economic Policy Research Institute-MAS, Social Monitor, No.8, , p.10. 5

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Security sector (MoI) increases have been offset by decreases in the service ministries, reinforcing the role of unofficial safety net providers. PA Expenditure by Key Ministries 2002-2005 Ministry 2002 2003 2004 Ministry of 1.27% 3.35% 10.6% Interior MoEHE 19.23% 20.31% 18.66% MoH 8.77% 8.99% 10.14% Ministry of 5.28% 4.83% 5.41% Social Affairs

2005 26.37% 17.89% 9.69% 7.92%

4. Social Transformation 152. Social values constitute the main foundation of social relations and the Palestinian values system reflects changes in its social structures. It is a dynamic process affected by the change in class formation, which became more obvious with the creation of the PA. Other environmental elements; instability, economic and political circumstances, public frustration at the failure of the peace process, lack of a national policy and development strategy and regression in the institutional building process - are also influential. 153. Supporting family and local affiliations have weakened notions of citizenship and influenced negatively institutional professionalism and the possibility of building effective public institutions. Citizenship is not a legitmising mechanism of social and internal control which can place loyalty, and respect for the wider community over smaller societal formations; i.e., the family and clan. Family and clan values have reinforced community solidarity cultures and in turn these values have spread to social and government institutions.81 154. Class movement and transformation of aspects of Palestinian society is evident in the widening gap between classes and an emergence of a new social, political, and economic elite that has captured political power and economic wealth. The middle class has increased due to the expansion of the public sector and CSO/NGOs. These have altered the dominant consumption patterns in the aftermath of creating the PA. They also produced a culture that accepts dependence, mendicancy and fast profit-making, all centralized around family and local support. Collectively, this negatively impacts employees' conduct in PA structures and contradicts the values and spirit of professionalism. 155. This coincided with weak educational and media institutions that might otherwise have supported a “citizenship culture.” The MoEHE allocated only one hour/week for civic education. Moreover, there are ongoing debates at MoEHE that civil education is not necessary.82 This has continued under the Hamas government. In a recent cabinet Interview with the general director of Ibda'a center. 8

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decision it was decided that all schools K1-12 would increase religious instruction from 3-4 hours, the extra hour taken from civic education. Apart from enhancing religious studies the policy may enable employment for several thousand additional religious studies teachers, predominantly from Hamas. 156. There are no major differences between Hamas and Fatah with respect to public administration and civil service reform. Both are influenced by narrow party views and in any case, the social, political, and economic environment prevent political parties effecting radical core change. 5. The Emergence of Elites and the Middle Class Role 157. The PA’s establishment created, for the first time, political, economic, and social elites. Proximity or distance from these elites determined ranks and the distribution of social wealth. New political elites monopolized the senior political and administrative positions of the PA, often drawing political legitimacy from their senior positions in Palestinian parties, and leadership positions in the PLO. 83 These elites are the Palestinian political system. They head organizations, commissions and parties that lead, interact, and organize the political domain. They also control the PA executive; i.e., the president's office, the cabinet, the PLO executive committee, the presidency of the national council, the president's advisors, the PLC, and those in charge of the security apparatus.84 158. The political elite influence the direction of the Palestinian economy by occupying senior positions (ministers, deputies, and directors general) related to economic activities such as the ministries of economy, trade, industry, agriculture, supplies, agriculture, supplies, planning, finance, and other government economic institutions. 159. These responsibilities entail signing agreements, supervising projects, registering companies, issuing licenses, and collecting customs and taxes. An elite core (appointed by Arafat) was also established by securing revenues for the PA outside tax and customs fees and donor assistance. These include directors of the public sector companies, which are registered as private companies (i.e., the Palestinian trade services company), the directors of the government regulatory bodies in oil and tobacco and others.85 The political elite used their senior administrative positions to establish a wide network of local, Israeli, and international relations, which reinforced their dominance in managing the national economy. Their positions also enabled them to establish their own economic projects; often blurring the divisions between public and private sector. 160. A relationship was also established between the security apparatuses and the monopoly elite of the public sector and the private sector. The security apparatuses Khader, The Emirgence and Evolution of the Palestinian Elite , p. 28. 9 10 Jamil Hilal, The Formation of the Palestinian Elite: From the Palestinian National Movement to the Rise of the Palestinian Authority (Ramallah and Amman: MUWATIN-The Palestinian Institute for the Study of Democracy and The New Jordanian Study Center, 2002), p. 87. Ibid., p.78. 11

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provided “services” in return for “fees” or “revenue.” This was often justified by the fact that the financial requirements of the security apparatuses could not be covered by the public budget.86 161. Through 2000-2006 the Palestinian middle class became marginalized politically and economically, as did its role in economic planning, parties, unions, NGOs, media, and cultural and ideological production. As prospects for a Palestinian state have receded so too has interest waned in mobilizing the political capital to establish modern institutions, develop a comprehensive development plan, empower reform, and otherwise spread the values and culture of democracy, and adherence to citizenship rights.87 6.

Family Relations and Community Solidarity

162. The family informal networks of support include direct individual aid, interestfree loans, assistance in establishing economic activities, or providing job opportunities. Other forms of informal support include family funds, assisting family members in education, treating some cases of illness, and exerting pressure on those in charge of public institutions to provide jobs for their children. Well-off families could institutionalize support activities and use these to reinforce individual family positions and empower the economic, political, and social roles of the extended family or clan. 163. Local groups (villagers, refugees at refugee camps, and city neighborhoods) managed to develop a support culture based on the feeling of belonging to the local community and exclusion from “others.” This support culture called for collective action to cope with security and economic threats. These exerted pressure on the PA and national institutions and foreign donors in order to obtain support for grassroots organizations and initiatives, which have played a major role in providing people's basic needs. 7.

Family and local Influence on Reform

164. While the empowerment and activation of filial relations has assisted social welfare there has also been a negative impact on reform. Family and local community lobby all levels of the executive (the president's office, ministries, and other government institutions) for jobs so that family affiliation and belonging to a certain circle-ofinfluence became the basis for employment over professional requirements, it has also undermined employment regulations; 165. The political, economic, and security circumstances of the Intifada weakened the regular judicial institutions. Individual conflicts were immediately turned into family conflicts. Consequently, use of clannish arbitration and committees of reconciliation have increased especially in the southern parts of the West Bank and Gaza Strip. Moreover, the

Ibid., p.90. 11 13 Jamil Hilal, The Palestinian Middle Class: A Research into the Confusion of Identity, Authority and Culture(Ramallah: MUWATIN-The Palestinian Institute for the Study of Democracy, 2006), pp. 281-185.

39

PA felt compelled to rely on local reconciliation committees to protect public order, thus sidelining the operation of and respect for the regular judiciary. 166. Families, localities, and circles-of-influence established councils and representative societies in the oPt thus enforcing their role in the public political and economic life. These societies constitute social lobbying forces of major influence that exceed other lobbying groups such as women movements and student and union movements. 167. The pressures of family and circle of influence considerations on public institutions reinforced discrimination against women and created a state of non-equal opportunities in employing men and women as traditional and patriarchal institutions give priority to males over females in employment and in obtaining financial and service support. 168. As economic and political hardships increased and people in authority became more responsive to them, the commitment to recruitment rules and regulations and office hours as well as productivity and promotions was compromised. Violations of work rules and regulations grew in a culture of excuses and non-enforcement of disciplinary actions. This has weakened professional commitment and negatively affected the performance assessment procedures. 169. According to a director-general at the MoEHE: "The administrative reforms at the ministry did not succeed because: they focused on technical issues; they were not implemented because of a lack of qualified people; the people in charge hindered change; the civil service law does not allow firing employees; the societal culture does not allow it; and a blind eye is turned on administrative violations. This is a culture that is against the process of institutional building and change." Some director-generals noted that recruitment to the PA had a welfare dimension. Other considerations included jobs for political prisoners as a reward. Both cases compromise professional commitment. 8.

Elite impact on Reform

170. Some of the new political elite can influence legislation, economic policies and oppose reform. However, the elite is not monolithic and its internal rivalries has led to conflicts, which had negative influences on the institutions they run: 

Interest groups have emerged at public institutions that hinder reform, accurate administrative planning and proper development of human resources as well as transparency and accountability. A director- general at the Ministry of Interior in Gaza noted: "This phenomenon occurs at certain ministries and within the security apparatus, especially in Gaza. Leaders use their institutional positions and economic power to create networks of loyalist employees in order to protect their authority. In return the loyalists get promotions and loose office hours, training opportunities abroad, cars, mobile phones, fuel coupons…etc."



There is weak coordination between departments within ministries and weak coordination between the ministries offices in the West Bank and Gaza Strip. This has

40

led to overlapping tasks, duplication of projects, and weak planning. Some departments of the same ministry in Gaza do not know what their West Bank counterparts do or plan. Some ministries prepare comprehensive development plans without coordinating with relevant ministries. For instance the ministry of public works announced its comprehensive development plan in Autumn 2005 at a time when the ministry of planning was preparing the mid-term development plan in cooperation with donors. Such a plan was supposed to be endorsed by the cabinet and the donors. 171. The social landscape described above reflects the interaction of: traditional social norms; the political and economic circumstances and the institutional building process. The PA is now the largest employer and source of assistance at a time of complex political and economic circumstances and it relies on traditional social relations and values. This has made the objectives of good administrative and civil service reform more difficult to achieve. Failure to take these social factors into consideration in reform of the public administration and civil service will make the whole process a technical and administrative process that is incapable of success and application. Therefore, it is necessary to deal with these factors through long and medium -term societal policies and programs that would reinforce the relations and values of citizenship and bring confidence back to people in their public institutions. 172. The change in the political and economic circumstances, adoption of policies of social welfare, reduction of poverty and unemployment, and support of basic needs of the population in a frame of policies that are based on citizenship rights, will have major impact on reducing dependence on family and local support groups and contribute to improving social circumstances and create an environment that is more suitable for change in public administration and civil service. V.

Conclusions

173. After some good progress in PACS reform, primarily in the area of public financial management reform (PFM), momentum was lost in the two years prior to the PLC elections in 2006. There are many underlying drivers of this lack of progress (listed below) but the overarching themes are: an absence of political will and/or ability on the Palestinian side to push through a challenging reform agenda; and, poor performance on the international community side relative to the core principles of the Paris Declaration on Aid Effectiveness.  

The absence of a meaningful political process with Israel left Palestinian leaders with little political capital to push through a challenging reform agenda and limited Palestinian enthusiasm for painful change without clear, tangible benefits in sight A lack of assertive Palestinian leadership and institutional arrangements for implementing reform – there were many, many reform plans published but no detailed, coherent programme of activities/projects and no empowered body to drive implementation; the leadership viewed the political cost of reform (e.g., loss of

41



  







1.

political control of the PNA and attendant rents) as too great given the high risk of failure of the MEPP The reform agenda was overly-ambitious and based on a normative, text-book good governance model without significant tailoring to the Palestinian political, economic and social context and careful thought about realistic timelines and proper sequencing of reforms The reform agenda was perceived as internationally-imposed and therefore viewed with deep mistrust – the many meetings to develop and monitor the reform agenda held in foreign capitals (e.g., London, Oslo, Rome) did little to ameliorate this Donor assistance was driven by individual countries’ own political concerns and institutional practices (e.g., foreign policy agendas, individual aid agency strategies, policies and procedures) and as a result was incoherent and poorly coordinated Capacity building & reform efforts were numerous, diffused and uncoordinated with donors tending to “play favourites” in supporting individuals they identified as “change agents” (often members of the Ramallah-based elite who became increasingly detached from ordinary people) rather than on a restricted number of carefully-selected, key organizations (this often left key domestic players feeling disenfranchised and, ultimately, leaving the identified “change agents” isolated and/or discredited); assistance was also project-driven, encouraging competition rather than collaboration between individuals/organizations Weak or absent mechanisms for holding the Palestinian leadership and donors accountable for implementation of reform led to a situation where key actors were able to keep assistance (and rents) flowing merely by paying “lip-service” to reform to pacify the international community; donors focused on supporting the political elite and, through failing to insist on greater involvement of civil society and the Legislature in the reform effort, sheltered the Executive branch from rigorous domestic oversight and criticism International community focus on public financial management (PFM) reform yielded positive, short-term results but broader PACS reform issues (e.g., institutional & organizational development, human resources management and service delivery improvement in the broader public sector) were neglected – gains from PFM reform are restricted, and can ultimately be undermined if this broader agenda is not tackled International community focus on fiscal responsibility (pressuring the PNA to manage its expenditures within an overall resource envelope that is highly unpredictable and subject to extreme downwards pressure) whilst failing, through foreign policy actions, to make any progress towards alleviating economic recession sent a message that the primary concern was reducing aid costs in the short-term rather than supporting state-building in the long-term Key problems to be addressed by an incoming government

174. It is important to understand that a new, fragile coalition government in implementing a PACS reform agenda will be even more challenged than the previous, FATAH-dominated governments. Cooperation and unity of purpose in the Presidency, the PLC and Cabinet is likely to be even more elusive than ever; friction between the highly politicized PA bureaucracy and certain non-FATAH Cabinet members is likely to

42

persist; and, energizing public servants to engage once again with reform after the travails of recent months will be extremely problematic. The main immediate problems to be addressed by the new government will be as follows:  

 



VI.

Lack of broad Palestinian ownership, and participation in the development, of a single reform agenda (i.e., Presidency, Cabinet, Legislature, Judiciary, Civil Service & Civil Society) and lack of unity of purpose and leadership in implementing such an agenda Political capture of the PNA bureaucracy – ongoing party-political battles for control; leading to job appointments, organizational restructuring, legislative/procedural change that based on political rather than technical considerations A fiscally unsustainable, inefficient and ineffective public sector staffed at the senior levels by ageing, poorly qualified people and consisting of an excessive quantity of ministries/agencies with overlapping/conflicting mandates Central government is not “close to the people”, is dominated by a wealthy Ramallahbased elite, is not delivering quality services and is perceived as corrupt and untrustworthy; local government is generally weak (and, arguably, deliberately kept weak by central government) Damage done to PNA institutions by the boycott on needs to be reversed – in particular the creation of parallel administrative institutions (e.g., the TIM, potentially unconstitutional expansion of the remit of the Presidency) and poor morale in the public sector. Recommendations

175. In moving forward, it is essential that the domestic leadership and the international community stay focused on a long-term path to state building which is realistic and tailored to the Palestinian context. Government accountability and sustainable socioeconomic development citizens can only be achieved through the development of sustainable Palestinian government institutions and organizations; the temptation to seek out “quick wins” (e.g., rapid publication of a reform agenda or an MTDP, near-term enhancements to service delivery achieved through unsustainable donor-funded projects) must be resisted. The international community will, therefore, need to take into account the greater than ever challenges faced by a new government and have more modest expectations regarding the nature, extent and timeframes of PACS reform. Short-term actions (first 3 months)  

Establish effective mechanisms for open and honest communication with civil servants and the general public regarding reform plans and progress and the implications for individual citizens Provide adequate space, and support, for civil society to engage more effectively in the process of developing a national development/reform vision in the near-term and monitoring government performance and service delivery against that vision in the medium-term

43







Establish national consensus on a development/reform vision (a national agenda to establish a firm foundation for five-year strategic plans for key sectors & the MTDP) and a comprehensive, coherent programme of reform implementation projects and activities at the national and sub-national levels of government Establish functioning institutional arrangements for implementing reform under the dedicated leadership of an empowered (i.e., Ministerial or Deputy Prime Ministerial rank) and credible individual – these arrangements must be embedded in existing PNA structures and not a donor-funded “programme management unit” Establish a multilateral fund to support PACS reform (including PFM reform) with clear, realistic technical conditions and achievable benchmarks that take proper account of the political, economic and social context and are sensitive to changes in the context (e.g., scenario-based conditionality and benchmarks)

Medium-term actions (months 3 – 24)  

  



Interim upgrading of the budget process (pending a longer-term move towards fullyintegrated planning & budgeting) to enhance transparency and oversight and to address other key weaknesses (e.g., archaic, incremental line item budgeting) Merge the Ministries of Finance & Planning to centralize resource allocation processes and reinforce linkages between operating and development expenditure (this is an important precursor to the implementation of integrated planning & budgeting) Enhance PLC participation in, and oversight of, government – this will required dedicated technical assistance as engagement of the PLC in relevant capacity building initiatives directed at the Executive branch (e.g., budget process reform) Enhance mechanisms for independent oversight (audit and supervision) of the Executive branch – external audit function, civil service appointments & appeals commission, service delivery performance monitoring & evaluation function Conduct thorough review and revision of the core legal framework (i.e., basic law, civil service law, public finance law, local government law) to preserve the structural and procedural integrity of the public administration and civil service, provide appropriate constitutional/legislative protection for key government processes and checks & balances, and clarify the mandates of, and relationships between, the Office of the President and the remainder of the Executive branch Conduct a civil service size, pay & grading review and develop a medium-term plan for increasing the cost effectiveness of the civil service (including retirement & redundancy schemes, salary/allowance structure modifications, pension reforms and organizational streamlining & outsourcing/privatization)

Long-term actions (6 – 48 months) 

Civil service training & capacity building should focus first on core processes (at both the national and sub-national levels of government) such as policy formulation, planning, budgeting, M&E and HR management processes in key organizations - e.g., Prime Minister’s Office, Cabinet Secretariat, MoF (merged with MoP), local government, PLC, external audit body, GPC; these capacity building efforts led by

44



steering committees with representation from all organizations (not by individuals who the international community has identified as “reformers”) Establish an initiative, coordinated by the Ministry of Telecommunications and Information Technology, to automate and decentralize of core government administrative systems and processes – focusing initially on HRM systems & PFM systems

Annexes A. B. C. D. E.

The Historical Legacies of the PA Important Phases in PA Reform PA Current Structure Settlement data and the Yesha Council proposal National Reform Committee Case-study

45

Annex A: The Historical Legacies of the PA The Palestinian territories occupied by Israel in 1967 (the non-contiguous West Bank and Gaza Strip WBGS) had been previously ruled by the Ottoman empire (1517-1917), the British mandate (1917-1948) Jordan in the West Bank (1948-1967) and Egypt in the Gaza Strip (1948-1967). Between 1967 and 1994 the Palestinian Areas were administered by the Israeli Military’s Office of the Coordinator of Government Activities in the Territories (COGAT), still in existence today. Consequently, in 2006, the extant legal system uses a combination of Jordanian law (WB); Egyptian law (GS); Ottoman law, British mandate military orders and more than 1,600 Israeli military orders. As a result, the rules and regulations of the public administration and civil service in the WB and GS are different and the two regions have different legal and education systems. In 1994 the newly established PA inherited these complexities and found different rules and regulations for public sector recruitment, local government departments, real estate ownership, investment, and the business sector. Till now, the PA has not completed the task of enacting unified legislation for the oPt nor has it unified the rules and regulations of the public administration and civil service. Unification of the legislative framework is an essential step in getting reform on track. The military orders of Israel’s administration of the WBGS had three consequences. First: different rules and procedures prevailed in the WB and GS. Second: these differences remain today. Third: subsequent agreements between the PA and Israel have imposed new arrangements which were accepted by the PA/PLO as interim arrangements and were meant to conclude after final status talks. The WB, since 1967, has been subject to the military orders of Israel Defence Force’s (IDF) Central Command, Gaza - Southern Command. While predominantly driven by security concerns the military orders also regulate areas as diverse as: the economy (exports, prices, financial affairs, and banks), customs and taxes, land use, water, electricity, telephones, postal services, tourism, transportation, insurance and licensing professions and professionals, recruitment of civil servants, publications, textbooks, formation of appeal committees, authorization of judicial mandates, local councils, and municipalities. This has increased the administrative division between the two areas.      

Case-study - Public health service delivery to the WB and GS WB recruitment is based on formal interviews and examinations; the GS does not use such a system. The personal files of ministry staff in the West Bank are held with the ministry and the General Personnel Council (GPC). In the GS files are held only at the GPC. Conditions of service for medics differ. The health insurance system is different concerning exceptions, exemptions and patients' contributions to treatment costs. Internal control and audit systems on inventories differ. Transfers for medical treatment abroad are handled differently.

46

In 1994 the PA inherited the IDF civil administration systems for health, education, transport, properties, taxes, social affairs, labor, agriculture, social statuses, imports and exports. The PA found itself forced to create a civil administration system that was a mirror image of its Israeli counterparts with all its shortcomings. Moreover, the PA had to use the services of the former Palestinian employees of the Israeli civil administration (except the police officers) who lacked administrative, organizational, and planning skills and expertise. The Israeli civil administration was limited to running affairs, not developing them. Incoming PLO and Fatah functionaries were recruited on the basis of loyalty, not expertise. In 1993 and before the establishment of the PA the GoI established a permit system for entry into Israel for WB and GS inhabitants and for movement between the GS and WB. This system became more formalised over time and in 1996, movement between the West Bank and Gaza Strip became highly restricted and limited to business people and senior officials.88 The PA then began to establish a counterpart system for its institutions in the West Bank and Gaza Strip, This system deepened after the intifada in 2000, as the West Bank and Gaza Strip were completely severed from each other. This had catastrophic consequences on the public administration and civil service institutions. The number of employees increased and the administrative divisions were reinforced. 

  

The CoGAT approves all documents such as vehicle registration, birth certificates, identity cards, passports There are two records, one at the PA departments , the second at the CoGAT which has direct acess to the main source of information through the main computer at PA's departments Imports and exports are subject to GoI standards and measures, which has deprived Palestinian consumers of cheaper goods more in line with their purchasing power. The structural planning of towns and villages including roads, electricity networks, and other vital facilities are subjected to CoGAT/GoI approval. The West Bank continues to be divided into areas A, B, and C. The Palestinian inhabitants of these areas are subjected to different procedures. The PA has administrative and organizational mandates in areas A and B but has no control whatsoever over area C, which constitutes the largest area of the West Bank.

88

Israel used different kinds of permits including VIP cards whose holders receive special treatment at border crossings and military roadblocks. The cards had three levels (1, 2, and 3); the holder of a card of level 1 gets exceptional services other than the holders of cards 2 and 3.

47

Important phases in Public Administration and Civil Service Reform in the Palestinian Authority Phase one: Founding and building 1993-1996 No. 1

Date September 13, 1993

Main developments Declaration of Principles and establishment on Interim Self-Government Arrangements (Washington D.C)., signed by the PLO and the GoI. The provisions of the Declaration determine the political, administrative and security arrangements for the establishment of the PA.

2

April 28, 1994 April94Jume96

3

May 4, 1994

Protocol on Economic Relations between the GoI and the PLO (Paris) 1st Cabinet (18 Ministries) By September 1994 (5 functional Ministries: Health, Education, Social affairs, Industry and Trade) Agreement on the Gaza Strip and Jericho Area.(Cairo) Jericho and parts of the GS are handed over to the PLO which commences administrative and security functions.

4

April 1995

Tripartite Action Plan (TAP) negotiated between the donors, the PA and GoI.  The PA commits to improve revenue collection, reduce civil service hiring and clarify the division of responsibilities between institutions.  GoI commits to lift closures and to allow safe passage between the WBGS and between the WBGS and the outside world.

5

September 28, 1995

Israeli-Palestinian Interim Agreement on the West Bank and Gaza Strip (Washington D.C.).  The WBGS is divided into Areas A, B & C.  First governing council is appointed (later referred to as the 1st Cabinet) it consists of eighteen ministers led by Chairman Arafat.

6

January, 1996

Second Tripartite Action Plan negotiated between donors, the PA and the donors – similar to the first94.

Observations  limited PA sovereignty;  GoI control of borders and crossing points;  more intrusive administrative and security control of Palestinian movement and the application of different administrative, organizational, and security procedures for Palestinian inhabitants of areas A, B, and C.89  The West Bank and Gaza Strip remained subject to the customs and tax provisions and the provisions of the Israeli standards and measures department.  The exceptions90, which the Paris economic agreement stipulated were ignored on security grounds by Israel.  In accordance with the agreements it had signed; the PA lacked control over land, water, regional continuity, legal and administrative control over its people and free access to external markets.  In 1996, Israel implemented total closure on movement between the WB and GS to Israel.91. Demand for jobs in the public administration rose dramatically and many people called for a reassessment of the PA's performance. In response the General Control Bureau produced it's "yearly report" which titled after that the "Corruption Report” in 1996 and presented it to the PLC in 1997. However, Arafat stopped the report’s publication.

The first attempt to reform the PA [1997 – 1999] was initiated by the corruption report of the state comptroller for 1996 (issued in

89

For example, a person from area B or C who wishes to build a house would go to the Israeli authorities for a building license. The Israeli authorities had different conditions from those of the PA in area A. Palestinians who obtained building licenses from the PA to build in area C lost their homes to the Israeli bulldozers. 90 The Paris economic agreement allowed exceptions to materials imported from Egypt and Jordan through the Jordanian and Egyptian borders (known as preferred materials), which were supposed to make up for the damage caused by the Israeli custom and tax system 91 The closure was in response to a Hamas attack in Israel . 94 Sari Hanafi and Linda Tabar ‘Donor assistance, rent-seeking and elite formation’ in Mushtaq Husain Khan State Formation in Palestine (RoutledgeCourzon London 2005) p. 221)

48



7

1996

The first PLC (88 seats) and presidential elections held and 2nd Cabinet formed of twenty-seven ministers led by late president Arafat. .

1997). This attempt focused mainly on Public Administration. The Government initiated a Core Group on Public Administration (CGPA) which had the Sector Working Group (SWG) on Institution Building92 until August 1998 as counterpart. The overall Aid Coordination Structure was revised in 1999 to better align it with the Palestinian National Development Plan (Palestinian Development Plan 1999 – 2003). Four SWG (similar to the current Strategy Groups) were established among them the SWG on Institution Building93 with the subordinated Sub SWG on Rule of Law, Public Administration, Local Government, Police and Finance.

Phase two: Stumbling 1996-2000 No. 1 2

Date January 15, 1997 March 97

Main developments Protocol Concerning the Redeployment in Hebron In the framework of the restructuring of the SWG on Institution Building the PA formed a Core Group on Public Administration (CGPA) as counterpart for the Sector Working Group on Public Administration. MOPIC’s “National Centre for Public Administration” (NCPA) functioned as permanent secretary until Aug. 1998 Output: In August 1997 Input to the Palestinian Development Plan (PDP) 1998 – 2002, several institutional Development Plans in August 1998 (GPC, MoP,) and a Public Administration Matrix in 1999

3

July27, 97

The PLC Commission of Inquiry on Government Performance issues its report recommending the 92

Observations  The General Control Bureau report (GCB) report, after review by the PLC interimcommittee, demands PACSR reforms from Arafat including the formation of a technocratic government.



The second attempt [1999-2000] was externally initiated with the issuance of the Council on Foreign Relations (CFR) commissioned report of the Independent Task Force (ITF) on “Strengthening the Palestinian Public Institutions” (June 1999) in the framework of an anticipated final agreement (Oslo-framework). The PA formed a Higher National Committee for Institutional Development (HNCID) to follow-up and implement key recommendations of the report. However,

The SWG had since March 1997 the following sub-groups: Rule of Law, Public Administration and Local Government. 93 The other SWG were: Infrastructure, productive sector and social sector

49

dismissal of the entire PNA cabinet on suspicion of corruption and the formation of a new government consisting of technocrats and qualified professionals 4

1998

this initiative crumbled with the outbreak of the 2nd Intifada.

The PLC gives Arafat’s cabinet two weeks to respond to its queries concerning budgetary and administrative reforms or risk a no-confidence vote for the first time. June 24: Pres. Arafat accepts the resignation of all cabinet members. 2nd Cabinet resigns.

5

June 98

Establishment of a Public Sector Reform Committee (PSRC) at the ministerial level in charge of reviewing government institutions’ organizational structures, mission statements and objectives, and staffing patterns. The CGPA was responsible to this committee. The PSRC was never functional.

6

Aug. 6, 1998

3rd Palestinian government (30 ministers) is formed and establishes the inaugural committee to monitor PACSR reforms.

7

Aug 98

Public Administration Development Unit (PADU) with in the Cabinet’s Secretary became the permanent secretary of the CGPA and the PSRC.

8 9

10

October 23, 1998 1999

June 28, 1999

11

1999

12

Aug 11,1999

13 14

September 4, 1999 October 17, 2000

The PADU failed to achieve its mandate as executive arm of the CGPA and in implementing the agreed strategies The Wye River Memorandum (Washington D.C.). The ROCAR Committee assesses PA institutional building efforts and describes major defects, GoI policies notwithstanding Council on Foreign Relations (CFR) commissioned report of the Independent Task Force (ITF) on “Strengthening the Palestinian Public Institutions” - First comprehensive diagnostic and in depth analysis of the political and operational status of public institutions under the Palestinian Authority (PA). Protocol Concerning Safe Passage between the West Bank and Gaza Strip Establishment of the Higher National Committee for Institutional Development (HNCID) HNCID has set up six committees to respond directly to key issues within the public sector: (Judiciary and the Rule of Law, Fiscal, Administrative reform, Health, Early retirement and pensions, Education) The Sharm el-Sheikh Memorandum Agreement reached in Sharm El-Sheikh Summit

Phase Three: Perennial Crises 2000-2004 No.

Date

Main developments

Observations

50

1

Feb 2000

Administrative Improvement Unit (AIU)95 was established as the executive arm of HNCID with three key roles: to manage the co-ordination and integration of the activities initiated by HNCID, to provide policy analysis and technical assistance in support of the Public Sector Improvement Programme (PSIP) and to co-ordinate international donor assistance in support of the PSIP

2

July 2000

3

September 30, 2000 2001

4 5 6

December 2001 April 2002

7

April 2002

8

2002

Trilateral Statement on the Middle East Peace Summit at Camp David. Failed in July. Al Aqsa Intifada commences



Around 132000 Palestinian workers could not work in Israel 96

Mitchell Commission, Tenet Mission and General Anthony Zinni’s three missions fail to revive the peace process. Following Karine-A affair the PA is declared a terroristsupporting entity. Saudi Initiative IDF Operation Defensive Shield (followed by Determined Path) causes $728 millions of dollars of damage to PA assets and infrastructure97. June2002-Oct2002: The 4th government is formed . June: 100-day reform plan is presented. July: Basic law promulgated. July: Donor Task Force on Palestinian Reform (TFPR) is established with focus on Public Financial Management (PFM), local government, market economy, public administration and civil service, judiciary, elections, and civil society . Met in London on July 10th to determine the reform structure based upon the 100 day plan. Met in Paris on Aug 22-23 to evaluate the reform progress. The PA forms a Ministerial Reform Committee to work with the Quartet’s Task Force on Palestinian Reform (TFPR). The 5th government is formed. Results achieved in PFM

95

The AIU was supported by the UK/DFID funded “Public Administration Institutional Development” (PAID) project. The AIU was intended to be a politically strong and technically competent body to lead public sector reform. The Director of the AIU ought to be granted a ministerial rank. “Public Administration Network of Knowledge” (PANK) [http://www.pna-aiu-pank.org/] was established through a grant from the Danish Trust Fund to the World Bank to function as a management tool for the AIU. However, the PAID project faced serious obstacles which led to its freeze by the End of 2000 and subsequent suspension. The related PANK (web-page) was up-date the last time in September 2000 and finally taken offline some time in 2004. Blocking factors were i.a. the extensive share of fees and expenses for foreign experts, the lack of political will (reforms were not height ranking on the overall political agenda, perceived as external driven and not internalized) and a director of the AIU was never nominated by the president due to internal power struggles. 96 97

www.sis.gov.ps/arabic/royu/10/page5.htm 1003 World Bank, 27 months of Intifada, closure and crisis .

51

including a consolidated treasury account for all government revenues. 9 10 11 12

August 2002 Oct2002April 2003 December 2002 January 2003

GoI starts constructing separation wall in West bank. 5th Cabinet (19 ministers) Quartet Roadmap is finalised. March: The Basic Law is amended to include the post of a prime minister. April: 6th government is formed with Mahmoud Abbas as prime minister. September: Abbas’ new reform plan is not agreed by Arafat forcing Abbas to resign. November: The 8th Cabinet (emergency) is formed with Ahmad Qure'a as prime minister.

13

April 2003

Bush and Blair release Quartet Roadmap. PA accepts it unconditionally. GoI accepts it but with 14 reservations.

14

27th June 2003

60 Days Reform Plan (in the context of road map support)

15

5 Oct – 12. Nov. 2003

7th emergency Cabinet (Interim PM Ahmed Qurya [Abu Ala] PA and 8 Ministers)

16

12. Nov. 2003 8th Cabinet (2nd PM Achmed Qurya [Abu Ala], 25 - 24 Feb. Ministers) 2005

17

Nov 15th 2003 6 months Reform Plan (in the context of road map support)

18

Nov 10, 2004

November: President Arafat died December :Prime Minister Sharon announces disengagement plan from the Gaza Strip

Phase four: New Presidential and legislative elections 2004-2006 No. 1

Date January 9, 2005

Main developments Jan: The second Palestinian presidential elections won by Mahmoud Abbas.

Observations

Dec.2004: Local government elections held in Dec. 2004 and continued at 2005. GoI succesfully disengages from the Gaza Strip 2

1st March 2005

London Meeting on Supporting the Palestinian Authority Palestinian Authority’s

3

14. April 2005

Appointment of James D. Wolfensohn, outgoing President of the World Bank as the Quartet’s Special Envoy for Gaza Disengagement. The assignment last

52

for seven month starting on June 1 and ending on December 31, 2005. Prolonged until April 30, 2006. 4

21st July 2005

Summary of Palestinan Reform Accomplishments, July 2005, presented by Prime Minister Ahmed Qurei’a to Local Task Force on Palestinian Reform

5

14th December 2005

AHLC Meeting in London TFPR issues are included in the AHLC agenda. New donor coordination structure approved. The TFPR at its capital level is adsorbed by the AHLC and at its local level be the LDF (successor of the LACC) and the Governance Strategy Group (GSG) which is cochaired by the Prime Minister’s Office and the EC. The GSG is one of four Strategy Groups (the others are: Economic Policy, Infrastructure and Social Development and Humanitarian Affairs) focusing on practical policy formulation and programmatic coordination. The active and relevant RSGs (Elections, Judiciary and Rule of Law, Public Administration and Civil Service as Public Management) would be subsumed und the GSG as related Sector Working Groups. A SWG on AntiCorruption is envisaged. Other more flexible ad-hoc groups on specific issues might be also established.

6

January 25, 2006

Hamas wins the PLC elections and takes over the 10th government. .

 





  

7

29th March 2006

As a result of the elections, the PNA has entered into external and internal crisis The government is headed by Hamas and the Presidency is headed by Fatah loyalists, and is led by Fatah Central Committee member President Mahmoud Abbas who is also the chairman of the PLO’s executive committee. The Palestinian political system is brought to a standstill. The Hamas government faces opposition from the rest of the executive arm. The Quartet ceases financial assistance to the PA unless Hamas accepts the three conditions of the Quartet: accept the right for Israel to exist; accept all signed agreements with the PNA/PLO and Israel; and renounce violence. Various efforts to resolve the impasse fail (as af November 2006) The economy is on the verge of collapse. In September 2006. public sector employees go on strike. Armed confrontations increase between the Hamas and Fatah security forces.

10th Cabinet (3rd PM Isameel Hanieh, 24 Ministers)

53

8

June 2, 2006

9

17th June 2006

The Government Strategy Group (GSG), in the absence of a government partner agrees to review past experiences on donor support to the Governance agenda98 taking into account lessons learned and best international practice.99 The intention is to provide guidelines for “good” donor engagement in the governance area in the oPt under different scenarios. Quartet endorsement of a Temporary International Mechanism (TIM). The mechanism facilitates needs-based assistance directly to the Palestinian people, including essential equipment, supplies, and support for health services, support for the uninterrupted supply of fuel and utilities, and basic needs (social) allowances to poor Palestinians.

98

See support to the Independent Task Forces “Strengthening Public Institutions” (Rocard/Siegman) Report [1998-2000] and the immediate predecessor of the GSG the Task Force on Palestinian Reform (TFPR) [2002-2005]. 99 See: OECD/DAC Paris Declaration on Aid Effectiveness (March 2, 2005) and Principles for Good International Engagement in Fragile States (April 2005), URL: http://www.oecd.org/dataoecd/59/55/34700989.pdf

54

Annex 3: Current PNA Structure

Executive Authority

Judicial Authority

Head of the Executive Authority -PresidencyPrime Minister Cabinet

Cabinet Secretariat

M of Women Affairs

M of Justice

M of Transport

M of M of M of Tourism & Agriculture Planning Antiquities

M of National Economy

M of Interior M of Finance & National Security

M of Civil Affairs

M of Detainees

M of Social M of Affairs Education

M of Youth M of Awqaf M of Communication & & IT & Sports Religious Affairs

M of M of Housing & Culture Public Works

Remark: Minister of Refugee Affairs is establishing a Ministery and as originaly was appointed as Minister of State.

55

M of Foreig Affair

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Settlements

Population in Israel and West Bank Settlements*, 1995-2005 From: September - October 2006 Settlement Report Population:Settler Population:Population Growth:Population Growth: Israel West Bank Israel (%) West Bank (%) 2005 6,987,000 246,100 1.8 5.1 2004 6,869,500 235,100 1.79 4.86 2003 6,748,400 224,200 1.77 4.41 2002 6,631,100 214,722 1.88 8.15 2001 6,508,800 198,535 2.19 2.88 2000 6,369,300 192,976 2.58 8.77 1999 6,209,100 177,411 2.78 8.64 1998 6,041,400 163,300 2.4 5.76 1997 5,900,000 154,400 2.47 8.2 1996 5,757,900 142,700 2.59 10.45 1995 5,612,300 129,200 N/A N/A

Year

*Excluding East Jerusalem Source: Central Bureau of Statistics, Israel "Localities and Populations, by District, Sub-district, Religion and Population Growth" Statistical Abstract of Israel, 2005, table 2.7. "The Population of Israel, by Selected Years, Religion and Population Group."100

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Foundation for Middle East Peace Settlement Report | Vol. 16 No. 5 | September - October 2006.

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Annex E The National Reform Committee Case Study In June 2003, Prime Minister Abu Mazen established the PA’s National Reform Committee (NRC). The committee was chaired by the Minister of Cabinet Affairs, and its twenty-four members comprised fifty per cent PLC members and ministers with the remainder drawn from civil society, the private sector and academia. Nineteen members attended the inaugural meeting in Gaza in July. In November 2003, the committee was restructured and led by the new Prime Minister Ahmed Qureia. An additional six members were recruited and the committee included nine ministers including the PM, the Cabinet Secretary General, the Reform Coordination Support Unit (RCSU) Director, five PLC members and fourteen members representing the private sector and CSO. The NRC met five times, but in 2005 five members of the committee (two PLC members and three representatives from CSOs) resigned in protest over NRC inefficiencies and the lack of government commitment to reform. Identified shortcomings include:         

There was no vision or clear program and no legal framework for its operations The political parties were not represented While most committee decisions were considered by the Cabinet, some NGO members thought it more cosmetic rather than substantive. Meetings were poorly organized, secretarial support to the NRC by the RCSU was not sufficient and there was little follow-up. Narrow political discussions dominated the meetings. The government and CSOs had an antagonistic relationship. There was a lack of reform expertise on the committee. The government developed the national reform agenda without the NRC. A mentality of " hiding information" undermined the NRC.

Recommendations    

The NRC’s role should have been specified in law. It should have reported to the President with a main focus on monitoring the reform process. Sectoral structures with specialized committees (with appropriate technical expertise) could have been more effective than the NRC. The CSOs should have partnered with the PLC in monitoring government performance.

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