Extra Aid for Palestinians Comes With Strings

WASHINGTON – A U.S. cash infusion meant to show confidence in Palestinian self-government will come with strings attached, including a requirement that the Palestinians keep it in a separate bank account to make tracking easier, lawmakers and diplomats said Tuesday.

President Bush announced the $50 million cash payment to the Palestinian Authority (search), but not the conditions, when Palestinian President Mahmoud Abbas (search) visited the White House in May. The oversight requirements for the money go beyond controls placed on two previous U.S. cash payments to the Palestinians.

Details of the agreement are contained in a July 22 letter to Bush from the chairman of the House Appropriations Committee's foreign operations panel. The letter was provided to The Associated Press.

Separately, Secretary of State Condoleezza Rice (search) is considering whether to recommend an additional, quick payment to the Palestinians ahead of next month's planned pullout of Israeli troops and settlers from the Gaza Strip, according to congressional aides who spoke on condition of anonymity because the decision is still pending. That money would come from a pot of about $37 million in unused funds intended to promote Mideast peace.

The overwhelming majority of previous U.S. aid to the Palestinians has been funneled through third parties because of concern that the money would be used to fund terrorism or would be lost to corruption.

The $50 million payment, which is only now making its way out of Congress, will go to pay for housing and other projects to improve the lives of Palestinians in Gaza. Israel will begin pulling out in mid-August and will eventually turn over the territory it has held for 38 years to Palestinian control.

The United States is the largest single donor to the Palestinians, with $275 million to be spent this year. The U.S. is also the largest donor to Israel, which receives more than $2 billion a year in U.S. aid.

An agreement among Congress, the State Department and the Palestinian Authority requires that the money go into a separate bank account and that the money go only to projects vetted by the United States. The Palestinians must make quarterly reports on spending, and the U.S. Agency for International Development will report to Congress every two weeks on the progress of projects funded with the cash.

Chairman Jim Kolbe, R-Ariz., revealed the agreement during a hearing Tuesday on U.S. support for the historic Gaza pullout.

The agreement requires "repayment if discrepancies are found," the letter to Bush said. "The Palestinian Authority will repay any funds which are used in any way not mutually agreed by the United States and the Authority."

A burst of violence in Gaza quieted just before Rice visited the region last week, but both sides are nervous that the pullout will be marred by further attacks from militant Palestinians or violent confrontations with Israeli settlers who refuse to leave.

"The recent upsurge in violence demonstrates that circumstances can change rapidly in this region of this world," Kolbe said at Tuesday's hearing. "It is our responsibility to take every step to ensure that our funds do not, even indirectly, help support any activity that could undermine the nascent peace process."

State Department Assistant Secretary David Welch assured the committee of his department's commitment "that U.S. taxpayer dollars are channeled into the right hands."

"We want to make sure that disengagement leads to revival of the Palestinian economy, to greater security for both Palestinians and Israelis and to renewed confidence between the parties," Welch said. "There is room for optimism about fulfilling these goals, though there are ups and downs every single day as we work on this."

Welch just returned from Israel and the Palestinian areas of the West Bank, and will return shortly to monitor progress toward the withdrawal.