Evaluating the EU Cooperation with Palestine: is the Two-State Solution Still Viable?

The European Union (EU) is the largest and most reliable donor to Palestine. Yet many people lack a deep understanding of the context in which the EU’s cooperation with Palestine operates and of the cooperation itself. As the situation in Gaza recently deteriorated, this is becoming of growing relevance. 

As a result of “European money – from the member states and the European Commission - our institutions managed to survive and our ability to provide services to our people continued to be. So if I can say that there is one donor who managed to keep the [Palestinian National] Authority functioning and floating in a very very difficult period it is the European Union,” explained Mazen Jadallah, Adviser to the Prime Minister of the Palestinian National Authority. “We really appreciate that as a Palestinian people and Authority.”

The EU supports a two-state solution to the Middle East conflict between Palestine and Israel.  As such, it has invested significant resources into backing Palestinian state-building efforts. Between 2008 and 2013 the European Commission (EC) allocated around EUR 2.5 billion to aid Palestine. Almost 50% of this was committed to PEGASE*, a Direct Financial Support programme that provides financial assistance and support to the Palestinian Authority for state-building.

PEGASE social allowances help vulnerable Palestinian families

The evaluation of the EU-Palestine cooperation covered the period of 2008-2013 and took a broader look at the EU’s political aims in the region. At a first glance, the picture seems generally positive showing that the EU has been a consistent and reliable partner assisting with stability, welfare (by preventing fiscal and economic collapse), and capacity development. The EU support for refugees through UNRWA (UN Relief & Works Agency for Palestine Refugees in the Near East) also effectively contributed to the human development of refugees, and to supporting regional stability.

However, the Palestinian context is unique: “unlike almost all other programmes of cooperation, that with Palestine is not with a state with full sovereignty or full span of control over its population, its territory, its resources. The Palestinian Authority, the primary partner for the cooperation, has a very limited span of control, primarily in the West Bank,” explained Joseph Saba, the team leader of the independent evaluation team.

In order to assess the overall context, the independent evaluation team reviewed the Palestinian situation over the last 20 years since the Palestinian Authority was created. Here the picture was not as positive. While health and education have remained more or less stable, there has been an overall economic decline since 1994 as well as signs of donor dependency. Mr Saba noted that this makes the EU’s goal of “a two-state solution with an independent, democratic, viable Palestinian state living side-by-side with Israel and its other neighbours” appear less attainable today than it was 20 years ago.

Despite ardent declaratory policies and massive financial support, the EU lacked in coherent and effective actions aimed at removing the ‘binding constrains’. The most significant of these are the Israeli restrictions of occupation, which impede the achievement of more substantial co-operation outcomes. According to the independent evaluation, the EU has not successfully exercised its leadership for strategic "triangulation" with Israel and the Palestinians.

The evaluation suggests that unless the two-state solution remains an achievable goal, the current level and modalities of co-operation are unsustainable in the long-term.

Subsequently the overarching recommendation of the evaluation invites the EU to reassess the cooperation by taking a ‘Greenfield approach’. For the EU this would mean taking a step back and reviewing the entire situation, including:

• the assumptions/goals of its cooperation with Palestine,
• assessing the structural limitations of the current strategy,
• and resuming with a more results-oriented approach.

“It doesn’t mean an abrupt cut off in resources. The point is to review the entire cooperation both with respect to political objectives as well as day-to-day welfare objectives and from there move forward,” explained Mr Saba.

Christian Berger is the Director for North Africa, Middle East, Arabian Peninsula, Iran and Iraq at the European External Action Service. Mr Berger believes that the support to the Palestinians will continue: “It all hinges on the issue do we believe that the two-state solution is still a viable option. I think the political answer to that is yes. Our member states believe in this. [...] And I think there is political will to continue providing support for the implementation of the two-state solution.”

However, there are growing political and financial demands on the EU, especially within the region. The EU and its member states have mobilised over EUR 2.8 billion in response to the consequences of the Syrian crisis - both in Syria and its neighbouring countries - while further north it has pledged an EUR 11 billion package to support Ukraine, of which EUR 355 million is to be spent on state-building.

In this difficult context, the EU has been able to retain and even secure its level of support to Palestine. “While in the past Palestinians were very often getting money from budgets that had not always been spent, I think today it’s almost the other way round" however, “it’s difficult to say how this will develop,” added Mr Berger.

During a seminar discussing the evaluation results, one of the participants raised the question as to whether the evaluation had taken into account the role of member states. While the evaluation focused on the European Commission, Marcus Cornaro, Deputy Director General of EuropeAid noted that as joint programming increases joint evaluations are going to become more and more important, “allowing [us] not just to look at what the Commission did but in tandem also what the member states delivered.” He believes that Palestine would be a good prospect for this compared to other countries given the need to “leverage more forcefully and more politically the way we operate.”

Looking forward Mr Cornaro, recognised the importance of this evaluation: “[it is] one of the evaluations that will stay there as a reference point on what they can achieve. [...] The challenge for us is to make sure that this is not just an afterthought looking at the last 10 years but that we really take this as a starting base for the identification of our next multi-annual and annual programmes with Palestine.”

* PEGASE provides direct financial support to the Palestinian Authority for the payment of civil servants and pensioners’ salaries, through structural and policy reforms. It also provides benefits for poor families.

This collaborative piece was drafted with input from Federica Petrucci, Guillaume Fine and Laura Fallavollita with support from the capacity4dev.eu Coordination Team. Images courtesy of EuropeAid photo library.