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1 [i] (October 20, 2014)

handle is hein.crs/crsmthaaaqg0001 and id is 1 raw text is: CRS Insights Palestinian Authority: U.S. Payments to Creditors as Alternative to Direct Budgetary Assistance? Jim Zanotti, Specialist in Middle Eastern Affairs (jzanQtti@crsQc.g.Qv, 7-1441) Ctoe 20, 2014 (I111) A September 24, 2014, congressional notification (CN) from the U.S. Agency for International Development (USAID) reflects a new executive branch approach in assisting the Palestinian Authority (PA) to pay off some of the debts it incurs in providing various benefits and services to West Bank and Gaza residents. The CN indicates that USAID plans to obligate a total of $100 million in FY2014 bilateral economic assistance for the Palestinians toward direct U.S. payments to PA creditors, as follows: While not provided directly to the PA, $75 million in requested funds will be used to make payments directly to two Israeli fuel companies to pay a portion of the debt owed by the PA, and to make payments to the Bank of Jordan to reimburse the Bank for payments that the Bank has made on behalf of the PA for debt incurred for fuel purchased for the West Bank and Gaza.... An additional $25 million will be applied to a line of credit at the Bank of Jordan to reimburse the bank for debt payments made by the Bank on behalf of the PA to six non-governmental hospitals in East Jerusalem. The previous U.S. approach had provided budgetary assistance directly to a PA account, subject to a number of oversight requirements intended to ensure that the PA used the assistance to pay creditors. Since FY2008, the Bush and Obama Administrations have provided more than $1 billion in budgetary assistance to the PA, alongside other types of economic and nonlethal security assistance for the West Bank and Gaza, as described in CRS Report RS22967, U.S. Foign A tiin, by Jim Zanotti. According to information provided in October 2014 by USAID to CRS, other examples of bilateral assistance programs in which USAID may directly pay host government creditors include past or existing arrangements with Pakistan, Kenya, and Haiti. While scrutinizing the general desirability and timing of the assistance proposed in the CN and this apparently new approach to addressing PA debts, Congress may also consider what implications this approach might have for existing legal conditions on U.S. aid to the PA. It is unclear whether this approach might apply only to the specific payments that were notified, or might also be adopted for subsequent U.S. aid disbursements to the Palestinians. Potential Implications for Existing Legal Conditions In the event one or more of the following situations occur, among others, current U.S. law constrains or prohibits budgetary support to the PA, and in the event may require an executive branch certification or national security waiver for the provision of such support: * Hamas Agreement Regarding PA Governing Arrangement. If a PA government is formed via agreement with Hamas over which Hamas exercises undue influence (§7040(f)(1) of Division K of R.L. 113-7fi, Consolidated Appropriations Act, 2014, as extended by P.A 113-164, Continuing Appropriations Resolution, 2015). In June 2014, PA President Mahmoud Abbas appointed a new PA government with nominal control over the West Bank and Gaza. Hamas agreed to the government's formation, but it does not include any Hamas ministers. After the creation of this new PA government, the Obama Administration stated its intent to continue to assist the PA financially and to carefully monitor the new aovernment'5 composition and actions. The House Appropriations Committee proposed legislation (§7040(f) of i.R. 5013, Department of State, Foreign Operations and Related Programs Appropriations Act, 2015) that could change the conditions on aid to such a government. The Senate Appropriations Committee has proposed legislation (§7040(f) of S. 2499) that apparently would not change existing conditions. * Palestinian Membership in the United Nations or Related Organizations, or Subjection

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