During the 1990s, U.S. foreign aid to the Palestinian Authority (PA) averaged about $75 million annually. From the death of Yasser Arafat in 2004 through the end of 2009, that figure climbed to approximately $400 million per year.
Paul Morro of the Congressional Research Service reports that in 2006 the European Union and its member states gave the equivalent of $815 million to the PA, while the United States gave $468 million. When other miscellaneous donors were factored into the equation, total PA receipts for the year came to approximately $1.5 billion.
On December 3, 2007, Secretary of State Condoleezza Rice launched a "U.S.-Palestinian Public Private Partnership" wherein financial heavyweights such as Sandy Weill and Lester Crown bankrolled, as Rice put it, "projects that reach young Palestinians directly, that prepare them for responsibilities of citizenship and leadership [that] can have an enormous, positive impact." Moreover, it is estimated that the European Union funneled nearly $2.5 billion to the Palestinians in 2007.
Yasser Arafat's successor as PA President, Mahmoud Abbas, announced in 2007 a goal to collect pledges of $5.8 billion in international aid for a three-year period, 2008-2010; this amounted to approximately $1,400 per capita annually, or about what an Egyptian full-time worker earned on a yearly basis at that time. Ultimately, the total pledges of international aid to the PA far exceeded even Abbas's most optimistic expectations, totaling $7.6 billion over the three-year period.
In December 2009, the U.S. Congress approved an aid package of $500 million for the PA in fiscal year 2010. The State Department justified such lavish spending on grounds that it "supports a critical and immediate need to support a new Palestinian Authority (PA) government that both the U.S. and Israel view as a true ally for peace."
But Steven Stotsky, a research analyst for the Committee for Accuracy in Middle East Reporting in America (CAMERA), has found that an influx of foreign cash to the Palestinians has had counterproductive effects historically. Relying on statistics furnished by the World Bank and the International Monetary Fund, Stotsky found a correlation between the foreign aid provided and the number of homicides committed annually by Palestinian perpetrators (in the context of criminal and terrorist activities alike). According to Stotsky, "These statistics do not mean that foreign aid causes violence, but they do raise questions about the effectiveness of using foreign donations to promote moderation and combat terrorism."
In 2006, researchers Jean-Paul Azam and Alexandra Delacroix found, similarly, "a pretty robust empirical result showing that the supply of terrorist activity by any country is positively correlated with the amount of foreign aid received by that country."
Adapted from "Fund the Palestinians? Bad Idea," by Daniel Pipes
(December 18, 2007).