Palestinian Aid Cuts

The Palestinian Liberation Organization is widely expected to submit a petition to the U.N. Security Council for full member-state status at the next general assembly meeting which opens today. Some expect that the U.S. might cut off aid in response.  But what exactly would that mean for the budget?

The Answer: It depends. When viewed in relation to other recipients of U.S. bilateral assistance the West Bank and Gaza rank 12^th out of 144 countries.  Although funding to the Palestinians is significant, it’s not as high as others in the region. The President’s request for Egypt is 3 times the amount for the Palestinian Authority or $1.6 billion, Israel’s is 6 times the amount, or $3.1 billion, and Jordan just a little more than Palestine at $676 million.

According to the State Department, the President requested $513.4 million in FY12 for bilateral assistance to the Palestinians.  $400 million of it is in Economic Support Funds – half of which is slated for outright budget support for the Palestinian Authority (PA). The other half of ESF would go to humanitarian assistance ($47.5 million), economic development ($53.2 million), social services ($79.7 million), and government institutions ($20 million). Another $113 million of International Narcotics and Crime Law Enforcement (INCLE) aid would be meant to help train and equip the PA security forces, as well as build up the Palestinian criminal justice system.

As we have said before, when asked, Americans typically over-estimate the amount of money allocated to foreign aid programs partly because of the media attention foreign aid stories receive. The budgetary impact of cutting funds to the Palestinians would be significant when looking only at foreign aid - $513.4 million or 1.4% out of a $37.5 billion aid budget, but negligible when looking at all discretionary spending - 0.04% of a total of $1.2 trillion budget.