Palestinian families facing a $1bn debt burden, since aid embargo started, says Oxfam

Published: 12 June 2007

New research from international aid agency Oxfam has today revealed that Palestinian households owe over  $870m, with over half of all households reporting that their debts have increased since the aid boycott on Palestine began a year ago.

In Gaza one family in 15 owes more than $25,000 – a massive amount in a society where a school headmaster only earns $9,000 a year.

Oxfam’s survey of 2,500 households in Gaza and the West Bank showed that the average household debt is $1,750, with a third owing more than $2,500.

Most households owe money to their electricity supplier, grocer and water supplier. Over 40% of  Palestinian families have sold off personal assets, including jewellery, furniture and personal items, in order to survive.

In the West Bank 53% of families say their debt has increased in the past year, rising to 68% of families in Gaza. In April 2006, the Quartet – the EU, US, UN and Russia – suspended direct aid to the Palestinian Authority after Hamas’ victory in parliamentary elections. Israel had already stopped transferring the tax and customs revenues it collects on behalf of the Palestinian Authority.

The Palestinian Authority’s income has dropped by two thirds, leaving it attempting to run the West Bank and Gaza on just $500m a year instead of $1.5bn. Israel has by now withheld $700m of revenues.

Instead of giving aid to the Palestinian Authority (PA), the EU has used the Temporary International Mechanism to pay allowances in lieu of salaries directly to individual Palestinians, bypassing Palestinian institutions. Over one million Palestinians are dependent upon salaries paid to the 161,000 Palestinian Authority employees. Although the EU is providing funds, its policy of direct payments has seen these employees and their families falling deep into debt and poverty. Payments have been late, or have been suspended altogether for some police and security workers.

The poorest Palestinians have been hit hardest as funds for hospitals and schools have run short. Hospitals are running out of drugs and the managers of essential services have cut down their care due to budget cuts. The PA operates over 1,600 schools and over 400 health centers and hospitals.

Western donors wanted to change some of the policies of the Hamas-led government but in reality they have punished the Palestinian people. As this survey reveals, the majority of ordinary Palestinians have been forced into personal debt while at the same time essential services, such as hospitals and schools, have been cut due to insufficient funding.

Oxfam International Executive Director Jeremy Hobbs said: “International aid should be given on the basis of need, not used as a political tool. The boycott of the Palestinian government has led to the impoverishment of ordinary Palestinians.

“It has led to cuts in health and education and by stopping funding to police and security services, the boycott has increased insecurity and lawlessness.

“Oxfam opposes violence against civilians and supports Israel’s right to exist alongside a viable and independent Palestinian state. But the aid boycott is not an effective way of changing Hamas’ policies. Instead it has punished ordinary Palestinian families, many of whom will take years to recover from the effects of the boycott.”

EU foreign ministers will meet in Brussels to discuss the situation in Palestine on June 18th. Mr. Hobbs called upon them to resume direct funding of the Palestinian Authority.

“The EU has welcomed the National Unity Government,” he said. Now it has to restore aid payments to the Palestinian Authority and ensure individual ministries receive funds. This is the only way that security can be restored and Palestinian institutions can work again. If the EU restores aid Oxfam believes this will add pressure on Israel to return the he PA’s tax and customs revenues, which it has been withholding and which it must give back.

“These are necessary steps towards improving the humanitarian situation and to focus on building a lasting peace based on international law.”

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