This is Palestine, in Your Inbox. The only Palestine newsletter that convinces you to buy a $49 academic book about Palestine that induces stage-3 deep-sleep faster than high-grade indica. But we digress.

How Much Aid to Palestinians Ends Up in Israel?

I stumbled across a shocking statistic: 72% of aid to the Palestinians ultimately benefits Israel rather than the Palestinians.

Could it be that the people we’ve entrusted with conflict resolution in Israel-Palestine — international donors — are instead doing conflict aggravation? 

First, let’s understand how researchers have arrived at the 72% figure. They look at the impact that aid has had on the balance of payments between Israel and the Occupied Palestinian Territories. In multiple studies spanning multiple decades (1, 2, 3, 4), researchers found that, as more money flows into Palestine from the donor community, Israel’s economy strengthens and Palestine’s economy weakens. ⤵️ 

As you can see in the graph, as aid money goes up (black line), so does Palestine’s trade deficit with Israel (the other line). As one researcher put it, “last year’s aid is the best predictor of the current year’s balance of payments deficit.”

So how all this possible?

• Aid agencies are often forced to use Israeli transportation & storage companies to move goods into the Occupied Palestinian Territories due to restrictions imposed on Palestinian movement.

• Many of the goods required for aid projects, such as pharmaceuticals, are unavailable in the Palestinian market and thus must be sourced from Israeli companies. This is because of Israel’s decades-long policy to strangle Palestinian companies that compete with Israeli companies.

• Some aid funds occupation infrastructure directly, such as a 2005-8 USAID project to buy scanners for Israeli military checkpoints. The scanners slowed the pace of exports moving out of the occupied Palestinian territories, harming the Palestinian economy.

• Israel takes 3% of every transfer to the Palestinian Authority in order to cover its own administrative costs.

• Part of the aid is paid to Israel as tariffs on imported goods and services imported into occupied Palestine.

• Much of the aid is spent re-building infrastructure destroyed by Israel.

• Many international NGOs are based in Jerusalem. Their employees live in Jerusalem and spend most of their money in Israel. Thus, a large part of their incomes, which are funded by donor money, benefit the Israeli economy.

• All aid flow must first be converted into Shekels, Israel’s currency, before it can go to the Palestinians. This drives up demand for Israel’s currency, strengthening Israel’s economy and its ability to provide a strong social safety net for Israeli [not Palestinian] civilians.

What can be done about al this? 😯 

Say hello to…

The 2023 Build Palestine Summit 

It will take place October 7th and 8th, online and in person in Ramallah and Washington D.C.

Build Palestine is a community of Palestinians and friends of Palestine who are striving to build a better Palestine. They are all about impact investing, crowdfunding and aid that builds sustainable growth and aligns financial success with social and environmental impact.

The theme of this year’s Summit is to “reclaim funding.” The goal of the summit is to ask questions around the role of money in building the Palestine we all want to see.

I will be in attendance and look forward to seeing you there!

Palestine Stand-Up Comedy of the Week

Let’s wrap up this week with a clip from Palestinian stand-up comedian, Joe Abousakher.

Thanks for tuning in. Be well and take care of each other.

-Zach