EMERGENCY ASSISTANCE PROGRAM FOR THE OCCUPIED TERRITORIES ~ . k~~~~~~~~~~~~~ ,.. EMERGENCY ASSISTANCE PROGRAM FOR THE OCCUPIED TERRITORIES The World Bank Washington, D.C. ©1994 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing April 1994 Second printing October 1994 This paper has been prepared by staff of the World Bank and should not be attributed in any manner to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. 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The complete backlist of publications from the World Bank is shown in the annual Index of Publications, which contains an alphabetical title list (with full ordering information) and indexes of subjects, authors, and countries and regions. The latest edition is available free of charge from the Distribution Unit, Office of the Publisher, The World Bank, 1818 H Street, N.W., Washington, D.C. 20433, U.S.A., or from Publications, The World Bank, 66, avenue d'I6na, 75116 Paris, France. Cover design by Walton Rosenquist ISBN 0-8213-2815-8 This volume follows the presentation of a comprehensive ten-year economic plan in September 1993, which is described in the volumes below. Developing the Occupied Territories: An Investment in Peace Volume 1: Overview Volume 2: The Economy Volume 3: Private Sector Development Volume 4: Agriculture Volume 5: Infrastructure Volume 6: Human Resources and Social Policy Contents Foreword v Abbreviations vi Preface vii The Occupied Territories-A Brief Profile ix 1. Overview 1 Introduction 1 Program Objective, Approach and Focus I Program Costs and Financing 4 Benefits and Risks 5 II. Program Description 8 Transport 8 Water and Wastewater 8 Solid Waste Management 9 Power 9 Municipal Roads and Facilities 10 Housing 10 Telecommunications 11 Education 11 Health 12 Agriculture 12 Environment, Cultural Resources and Tourism 13 Public Administration 13 Support to the Private Sector 15 III. Institutional Arrangements 16 Program Implementation and Management 16 IV. Agenda for Action 19 Boxes The Occupied Territories-A Brief Profile viii 1.1 Lessons of Experience 2 1.2 Technical Assistance Trust Fund for the Territories 6 3.1 The Palestinian Economic Council for Development and Reconstruction 17 iii iv Emergency Assistanice Program for the Occuipied Territories Tables 1.1 Emergency Assistance Program Cost Summary 4 1.2 Additional Donor Pledges to the Occupied Territories 5 2.1 Public Sector Finance of the Palestinian Central Administration 14 3.1 Program Implementation Responsibilities 18 Annexes Sector Strategy Summaries 20 Technical Assistance Activities by Objectives 33 Map 37 Foreword This report outlines an action program for secur- process of social and economic development in the ing early and concrete improvements in the daily Occupied Territories-a process that in turn repre- lives of the Palestinian people and for laying the sents an essential building block for achieving a last- foundations for longer term economic growth in ing peace in the Middle East. The stakes are high, Gaza and the West Bank. It is the latest in a series of and the challenges involved in implementing the studies prepared by the World Bank on the Occupied program are substantial. Success will require not Territories as a result of its work since 1992 on the only dedication and professionalism on the part of economic underpinnings of the Middle East peace the new Palestinian administration; it will also re- process, which has intensified sharply following the quire a carefully coordinated and fully committed signature of the Declaration of Principles by Israel response from the international donor community. and the Palestinian Liberation Organization. The It is fitting that this report is appearing in the year first of these studies, "Developing the Occupied of the World Bank's 50th Anniversary. It exemplifies Territories: An Investment in Peace," was presented the intimate connection between economic develop- in September 1993, immediately before the Israeli- ment and peace among nations that was one of the Palestinian accord; the second, "Emergency inspirations of the founders of the Bretton Woods in- Assistance to the Occupied Territories," was com- stitutions. And it demonstrates the Bank's determi- pleted in March 1994. The present report draws on nation to continue to ensure that its work is firmly the broad analysis of the former document and sum- founded on the aspirations and expressed priorities marizes the detailed findings of the latter. of its clients for better lives for their people. It is my Like its predecessors, the present report has been hope that publication of the report will help sustain designed to respond to the priorities of the the momentum for implementing the assistance pro- Palestinian leadership. Its contents reflect the sub- gram it describes, as a step towards the wider goal of stantial contributions of an able and dedicated team promoting peace and prosperity in Gaza and the of Palestinian experts. It also reflects the valuable in- West Bank, and in the Middle East region as a whole. puts of representatives of multilateral and bilateral donors, and the helpful cooperation of the Israeli au- Caio Koch-Weser, thorities. Thus, while it is being presented by the Vice President, World Bank, the report represents a distillation of Middle East and North Africa Region, the collective wisdom of all parties concerned with The World Bank. respect to priority requirements for supporting the V7 vi Emnergenzcy Assistatnce Progratmi for the Occuipied Territories ABBREVIATIONS AHLC Ad Hoc Liaison Committee CA Civil Administration CBS Central Bureau of Statistics CHE Council for Higher Education EAP Emergency Assistance Program EDI Economic Development Institute ERP Emergency Rehabilitation Project GDP Gross Domestic Product GNP Gross National Product IBRD International Bank for Reconstruction and Development IFC International Finance Corporation ILO International Labor Organization IMF International Monetary Fund JEDCO Jerusalem Electricity Distribution Co. jwu Jerusalem Water Undertaking NGO Non-Governmental Organization OT Occupied Territories (West Bank and Gaza) PBS Palestinian Bureau of Statistics PCA Palestinian Central Administration PD] Palestine Development Institute PECDAR Palestinian Economic Council for Development and Reconstruction PEPA Palestinian Environmental Protection Authority PHC Palestinian Housing Council PLO Palestine Liberation Organization PMO Project Management and Monitoring Office RPIU Road Program Implementation Unit SIC Sector Implementation Consultants TA Technical Assistance TATF Technical Assistance Trust Fund for the Territories UNDP United Nations Development Programme UNICEF United Nations Children's Fund UNRWA United Nations Relief and Works Agency WFP World Food Programme Preface Following the historic September 13, 1993, accord ments. Extensive contacts were maintained with between Israel and the PLO, a donors' conference local and international nongovernmental organiza- was held in Washington, D.C. on October 1, to mo- tions (NGos) active in the Occupied Territories. The bilize international support for economic and social mission also worked closely with a number of visit- development in the Occupied Territories. Par- ing delegations, including those from the UN, ticipants in the conference felt strongly that there UNRWA, World Food Programme (WFP), Interna- was an urgent need to deliver tangible benefits to tional Monetary Fund (IMF), International Labor the Palestinian population to reinforce the momen- Organization (ILO), United Kingdom and Sweden. tum towards peace. To that end, participants The mission received excellent cooperation from pledged over US$2 billion in financial assistance the Palestinian and Israeli authorities. The Palestin- and asked the World Bank to provide the analytical ians set up a highly professional and dedicated framework and technical underpinning needed to Counterpart Team to work with the mission. Mis- use such assistance effectively. sion members travelled extensively in both Gaza Responding to the sense of urgency expressed bv and the West Bank, meeting a broad spectrum of the donors, a World Bank mission visited the Palestinians concerned with issues of transition and Occupied Territories from October 11 to November socioeconomic development. On the Israeli side, the 22, 1993, following a visit to Tunisia to confirm the mission had extensive contacts with the Bank mission's objectives with the Palestinian leadership. of Israel, the Civil Administration in charge of the In Tunisia, it was agreed that the mission would Occupied Territories, and the Israeli Ministries of seek to: Finance, Foreign Affairs, Environment, Transport, Energy and Communications. * prepare an initial investment program for The mission's findings were compiled into a two- donor financing to help meet the immediate volume document, "Emergency Assistance to the needs of the Occupied Territories; Occupied Territories." The document described the * identify priority technical assistance require- main issues affecting the various sectors of the ments for building Palestinian capacity to de- P'alestinian economy, and presented proposals for sign and manage economic development pro- investments and complementary technical assis- grams; and tance needed to address those issues. It also de- * lay the groundwork for effective use of donor scribed the external financing requirements of the assistance over the longer term by identifying public sector, including the start-up and transitional technical studies related to high priority poli- expenditures of the new Palestinian administration. cies, programs and projects. A draft of the document was discussed with the Palestinian and Israeli authorities during a follow- Representatives from Denmark, the European up mission in December, 1993, and at the first meet- Union, the European Investment Bank, Japan, Nor- ing of the Consultative Group for the Occupied way, Switzerland, and the United States Agency for Territories, also in December. The final document International Development participated in the mis- was issued in March 1994. sion. United Nations (UN) agencies-in particular This report distills the main findings and recom- the United Nations Relief and Works Agency mendations of the two-volume document to make it (UNRWA), the United Nations Development more accessible to Palestinians and donor policy- Programme (UNDP), and the United Nations makers, and to others in the Middle East and else- Children's Fund (UNICFF)-were also actively in- wlhere interested in the prospects for peace and volved in mission work. UNDP and UNRWA seconded prosperity in the Occupied Territories. The two-vol- experienced staff from their local offices to the mis- ume document is available from the World Bank, sion. Representatives of other donors were also con- Office of the Vice President, Middle East and North sulted regularly and were kept abreast of develop- Africa Region, on request. vii ziiii Enmcrgency Assistatce PrtNramn for tlhe Occupied Territories The Occupied Territories-A Brief Profile The Occupied Territories (OT) consist of the West Bank with agriculture accounting for about 30 percent of GDI' and the Gaza Strip. Together with what are now Israel in 1991, industry about 8 percent, construction about 12 and Jordan, the OT were among the areas ruled by the percent and services the remaining 50 percent. Private Ottoman Empire prior to 1917. Towards the end of sector activity dominates the economy of the OT, ac- World War 1, Britain gained control of Palestine, and in counting for about 85 percent of GDP. A striking feature 1922, the areas were entrusted to Britain by a mandate of the OT economy is its heavy dependence on the of the League of Nations. Israeli economy. Until the recent border closure with Escalating strife and unsuccessful British attempts to Israel, about one third of the OT labor force worked in mediate between Jewish and Palestinian nationalisms Israel (mostly on a daily commute basis), and earnings caused Britain to return its mandate to the UN in 1947. from these workers accounted for more than one quar- The UN suggested Palestinian and Jewish indepen- ter of the GNP of the oT. Over 90 percent of OT trade is dence on a partition basis. The Palestinians and Arabs also with Israel. Remittances from Palestinians working rejected the suggestion, and the State of Israel was pro- in the Gulf countries have been another important claimed in 1948. In the aftermath of the ensuing mili- component of OT disposable income. tary conflict, the Gaza Strip came tinder Egyptian con- All powers of government concerning the OT are cur- trol and the West Bank, under Jordanian control. rently vested in the Coordinator of Government During the 1967 Arab-Israeli war, the West Bank and Activities appointed by the Israeli authorities. The Civil Gaza were occupied by Israel. Since then, Israel has ad- Administration (CA), working on behalf of the ministered the areas as the occupying power, except Coordinator, is responsible for administering all eco- that Eastern Jerusalem has been formally annexed by nomic matters including, initer alia, granting licenses Israel and is considered part of Israel by the Israeli au- and permits, regulating trade, collecting taxes, organiz- thorities. Israel's annexation of East Jerusalem has not ing public infrastructure and services and supervising been recognized by the United Nations. the operations of local governments. Currently, the CA The West Bank and Gaza have a combined area of has about 22,000 employees, of which approximately 95 about 6,000 sq kms; a 1991 populationi of about 1.7 mil- percent are Palestinians. Most policy-making and se- lion; a GNP of about US$2.9 billion; and a GNP per capita nior administrative positions in the CA are, however, of US$1,715. The population of East Jerusalem is about staffed by the Israelis. According to the Declaration of 300,000, includinig about 150,000 Jews, mostly settled Principles, signed by Israel and the P[.o, the CA is to be there since 1967. In addition, there are about 135,000 dissolved following the inauguration of the Palestinian Israeli settlers residing in some 150 settlements that Governing Council. have been built in the OT over the past 25 years. Local-level governments in the OT consist of 29 mu- It is estimated that currenitly about 3.5 million nicipalities and 96 village councils. In addition, there Palestinians live outside of the OT. Some have main- are 27 refugee camps run by the United Nations Relief taimed residency rights in the CT and are, in principle, and Works Agency (UNRWA). Generally, local govern- free to return, while the return of others will be subject ments are responsible for operating power, water, solid to negotiation between Israel and the Palestiniians. How waste and local road services within their jurisdictions; many Palestinians might actually retLrni would also de- the CA, on the other hand, has direct responsibility for pend upon their perceptions of future econonmic oppor- delivering education, health and inter-city road ser- tunities in the OT. vices. The provision of services in the refugee camps is The economy of the OT is mainly service-oriented mostly the responsibility of UNRWA. I. Overview Introduction up the prospects for creating a more hospitable en- vironment for stimulating economic development. The economy of the Occupied Territories (OT) is External capital flows can help rebuild dilapidated under severe strain. Income levels have stagnated infrastructLre and augment the production base for over the past decade; unemployment and underem- private sector activities. Nevertheless, the OT econ- ployment levels are unacceptably high; public in- omy faces a number of constraints which leave poli- frastructure and social services are grossly over- cymakers with little room for maneuver. These con- stretched; the fragile natural resource base is straints include a limited natural resource base, threatened with serious damage; and many local weak institutional capacity, a high degree of vulner- bodies and institutions are in finanicial difficulties. ability to external shocks, and the fragility of the po- The origins of the present crisis lie mainly in struc- litical situation following years of conflict. tural imbalances in past patterns of development, Management of the economy during the next few which have seriously distorted the economy of the years will therefore be a delicate and difficult un- Occupied Territories. These imbalances are mani- dertaking. fest in heavy dependence on outside sources of em- This report outlines an Emergency Assistance ployment, an unusually low degree of industrial- Program of priority investments and techlnical assis- ization, a trade pattern heavily dominated by trade tance to the OT over the three years 1994-1996. The with Israel, a large trade deficit, and serious inade- Program is intended to provide a framework for quacies in the provision of public infrastructure and channeling donor assistance to help meet the imme- services. diate needs of the Palestinian people and launch the Notwithstanding current stresses and strains, the OT economy on a path of sustainable growth. OT economy appears capable of sustained growth provided there is peace and stability in the region, Program Objective, Approach and Focus and provided the economy is soundly managed with a mix of prudent macroeconomic policies, ex- Program Objective. The overarching objective of the panded public services, a supportive environment Emergency Assistance Program (EAP) is to provide for private sector development and an expansion of tangible benefits to the Palestinian population trade to the region and the rest of the world. The quickly, equitably, and efficiently, while laying the high and rising level of unemployment and related foundation for sustainable development over the poverty issues are likely to be the most daunting long term. economic problems facing the Palestinian authori- Program Approach. The approach used in de- ties in the immediate future. Stimulating growth in signing the EAP has been heavily influenced by four the productive sectors, and especially in services, considerations. First, the OT are inheriting very will be essential for meeting these challenges. As the weak and fragmented institutions with little capac- OT economy tries to reduce its future dependence on ity for preparing and implementing development labor flows to Israel, it also needs to improve its programs. Currently, most policy-making and se- trade position by promoting exports, developing ef- nior administrative positions in the Civil ficient import substitution and diversifying its trad- Administration (CA)-the main adm-ninistrative ing relations. Significant improvements in public in- body withini the OT-are in Israeli hands. frastructure and services are needed not only to Reconstituting the current CA into an effective improve living conditions directly, but also to sup- Palestinian administration will be slow and compli- port private business activities and to reverse envi- cated. Moreover, the Palestinian Economic Council ronmental degradation. for Development and Reconstruction (PECDAR), re- The September 1993 Agreement on the Declara- cently created by the PLO to coordinate aid and tion of Principles and the prospect of substantial de- manage development activities, will require time to velopment assistance from the international com- develop effective systems and procedures. munity provide a window of opportunity for Municipal institutions also have limited capacity to addressing the structural ills of the OT economy. The plan, implement and manage major investment advent of self-rule by the Palestinians should open programs. UNRWA, UNDP and the NCGOs have 2 Enzergencii Assistance Program1 for the Occuipied Territories supplemented the limited implementation capacity isting imbalances in access to services, particu- of public institutions in the OT in the past; the future larly in rural areas; role and mandate of these organizations is still to be * maximize the use of local inputs, particularly decided by the Palestinian authorities. skilled labor. Where necessary, however, out- Second, there are unusually large uncertainties side expertise should be tapped selectively to about a number of issues critical to economic devel- supplement local capacity; opment in the OT. These uncertainties include: (a) * make use of all locally available capacity for the modalities and the timetables for the transfer of program implementation, including the UN sys- authority to the Palestinians; (b) future economic re- tem, NGOS, universities, and research institutes; lations with Israel, particularly in areas concerning * emphasize training and institution-building, labor flows, trade and tariffs, and financial sector de- particularly for the management of develop- velopment; and (c) the speed with which appropri- ment programs; ate institutions can be created in the OT. * initiate feasibility studies and technical analy- Third, there is a need to strike a balance between ses to provide the basis for longer-term invest- the imperatives of showinig tangible results in the ments; short-term and laying the foundation for sustainiable * postpone investments for wlhich optimal de- growtlh in the longer-term. Thus, investments in signs depend on the outcome of ongoing bilat- public infrastructure and support for private sector eral negotiations; development are essential for enhancing human * institute mechaniisms for efficient and trans- well-being and promoting longer-term growth, but parent procurement, accounting, monitoring, it will take time for their full impact to be felt in and reporting, to ensure effective use of funds; terms of improvements in employment levels and and living conditions. This points to the need for up- * ensure sufficient flexibility to permit ready in- fronit poverty alleviation and employment creation corporation of changes dictated by the unfold- programs which could be phased out as economic ing peace negotiations, actual experience with activity picks up. Lastly, after years of occupation, there is an un- derstandable desire among the Palestinians to man- Box 1.1 Lessons of Experience age their own affairs and a reluctance to rely heavily on foreign inputs. Current institutionial weaknesses The World Bank has had long experience with emer- and shortages of certain technical skills can be ad- gency lending. Between 1970 and 1990 the Bank fi- dressed by either concentrated inputs of foreign ex- nanced about 100 emergency operations, targeted at pertise or more time-consuming training to build reconstruction after disasters including earthquakes, local capacity. The EAP needs to address the practical hurricanes, volcanic eruptionts, aned civil wars. imperatives of two competing objectives: to maxi- No two emergencies are the same. Moreover, the n riize Palestiiiian inptits aiid build local implen- ei a a- situation in the OT iS unique in that there is a virtual miePaetinncapciaon iutse oand,build lo o impremotent absence of central governmental institutions and the tion capacity on the one hand, and to promote emergencv is largely political and institutionial. speedy implementation and early tangible results on Closest to the proposed assistance to the OT were op- the other. erations financed by the Bank in Chad, Mozam- The above considerations, combined with the ob- bique, Nicaragua, Sudan and Uganda, in the after- jectives of rapid and widely dispersed benefits as math of prolonged civil wars and disturbances. well as the lessons of relevant experience from other Experience witlh implementation of these operations parts of the world (Box 1.1), suggest a number of im- suggests some valuable lessons of which the most plications which have influeniced the design and im- relevant to the OT are the followinig: plementation of the proposed EAl'. Specificallv, the Program is designed to: The program design should be simple, and the simpler the better; * Program objectives and approach must be * emphasize short-gestation, rehabilitation and stroniglv supported bv the beneficiaries; maintenance activities that make better use of * An appropriate institutional framenwork for existing infrastructure; planning and implementation should be es- * support a temporary "works program" to help tablished; alleviate immediate poverty and unemplov- * Existing institutionis and procedures should be ment pressures; utilized fo the fullest extent; and * concentrate efforts on areas where living stan- * Procurement and disbursement procedures dards are especially low (as in Gaza); should be simplified and standardized. * support investments that will help correct ex- 1. Overview 3 implementation, and the results of the various sented in the initial submissions. Therefore, the feasibility studies and technical analyses. Program includes umbrella projects in a number of sectors (power, water and wastewater, agriculture, The EAP preparation process was designed to es- solid waste, transport, urban planning) in order to tablish priorities, develop strategies and build broad help correct regional and sectoral imbalances. These Palestinian ownership of the Program. First, the projects would be prepared during the early stages Bank mission and their Palestinian counterparts col- of the Program and implemented towards its end. laboratively established broad sector strategies PECDAR staff is currently in the process of expand- using the Palestinian National Plan and the Bank's ing and refining the project data base to make it into six-volume report, "Developing the Occupied an effective instrument for programming public in- Territories: An Investment in Peace," as starting vestments and for coordinating donor assistance. points. Second, investment and technical assistance This includes inter alia actively soliciting additional (TA) proposals were solicited from a broad range of project proposals from underrepresented regions institutions active in the OT. Third, a core Program and communities as well as completing documenta- was determined using agreed general and sector tion for projects in the data base to enable meaning- specific screening criteria. Finally, consultations ful screening and prioritization of the proposals. were held at various levels with the Palestinian au- Periodic updating of the data base will be essential if thorities to refine Program composition and size. it is to retain its relevance and usefulness for invest- Altogether, some 2,600 investment and technical ment programming. assistance proposals with an estimated total cost of Program Focus. The EAP comprises a set of prior- US$2.8 billion were reviewed and compiled into a ity expenditures for the next three years. The pri- project data base. In addition to considerations of re- mary focus will be on quickly removing the most gional and sectoral balance, the following general critical infrastructural bottlenecks by rehabilitating criteria were used to prioritize proposals: and upgrading public facilities and services in key sectors of the OT economy, including transport; * consistency with agreed sector strategies; water supply and wastewater; solid waste manage- ) likely technical, economic and financial feasi- ment; power; municipal roads and facilities; hous- bility; ing; telecommunications; and agriculture. To avoid * priority in the eyes of the beneficiary commu- stifling private initiative, EAP assistance to these sec- nity; tors will be limited to areas where private investors * maximum use of local inputs; and are unlikely to play a major role for some time to * positive environmental impact. come. Annex I summarizes the sector strategies and key activities supported by the EAP. Because the proposals varied in their degree of The Program's initial focus on maintenance and preparation, readiness for implementation, and ade- repair reflects the broad impact of such investments quacy of supporting documentation, a core set of ac- on both service availability and prospects for em- tivities that satisfied the above-mentioned criteria ployment growth. It also recognizes, however, that and were sufficiently ready for implementation was future economic growth and well-being in the identified. Activities with clear priority that were Occupied Territories depends significantly on the ready for immediate implementation were included development of its human resources. It therefore in- in the first year of the Program, while others were cludes a human resources development component scheduled for the second and third years. Of the designed to maintain essential services while initiat- large group of proposals not selected, many required ing institutional, policy, and structural reform. In additional preparatory work or presented questions the area of health, for example, where present ser- of appropriate timing. The fact that a proposal was vices are generally adequate, emphasis is placed on not included in the core plan does not necessarily preserving existing infrastructure while fundamen- mean that it should be excluded from financing at tal policy choices are being evaluated and chosen. In some later time. education, on the other hand, the key issue is qual- Most proposals came from agencies with some ex- ity, which is to be addressed immediately, even as perience in designing and implementing investment options for institutional change are being analyzed. programs, such as the larger municipalities, long-es- Other areas for support under the EAP include: (i) tablished NGOS, UNRWA, and the Civil Adminis- promotion of private sector investment; (ii) start-up tration. While every effort was made to ensure that and transitional expenditures for creating and main- proposals were received from all interested organi- taining administrative capacity; and (iii) technical zations, smaller municipalities and villages and assistance to prepare and implement investment ac- some groups of NGOs appeared to be under-repre- tivities and develop policies and institutions. With 4 Emergency Assistance Program for the Occiupied Territories respect to private sector investment, the EAP will help vestments under the EAP, the TA program would in- create a legal and regulatory environment support- clude training and institutional development to en- ive of private initiative. It will also stimulate private hance the Palestinians' capacity for self-government investment in sectors such as industry, tourism, and for planning, coordination, and implementation housing, telecommunications and agriculture by of development programs; policy studies and techni- channeling long-term finance to local entrepreneurs. cal analysis for priority macro and sectoral issues The start-up expenditure component would pro- confronting the OT; and feasibility studies for priority vide temporary assistance for creating the Palestin- investments. Because of the limited administrative ian Central Administration. Temporary financing and financial resources available, the initial focus is would also be provided for a public sector social on a priority subset of TA activities needed to facili- "safety net" and for maintenance of essential ser- tate the transition to self-government and to help vices provided by NGOS, many of whom have lost launch the EAP. This subset consists of some 35 activ- traditional sources of support in recent years. The ities, with an estimated cost of about US$20 million. NGO activities supported would focus on women and children, education and health care. Program Costs and Financing Technical assistance forms an integral part of the EAP and includes about 100 priority activities (Annex II). The cost of the proposed Emergency Assistance Pro- Besides immediate help with implementation of in- gram, summarized in Table 1.1, is estimated at Table 1.1 Emergency Assistance Program Cost Summary Year Area 1994 1995 1996 GAZA WB Total US$ lillionl Plublic Investments Transportation 19 28 26 27 46 73 Water and wastewater 22 39 50 44 67 111 Solid waste 13 18 26 25 32 57 Power 33 38 37 32 76 108 Municipalities 17 31 36 32 52 84 Housing 10 10 10 25 5 30 Telecommunications, 13 - - 5 8 13 Education 27 25 28 35 45 80 Health 8 7 3 6 12 18 Agriculture 5 10 11 3 23 26 Subtotal 167 206 227 234 366 600 Private Scctor Support Telecommunications 15 35 50 50 50 100 Housing 10 25 45 30 50 80 Agriculture 1 7 12 5 15 20 Industry 24 33 43 40 60 100 Subtotal 50 100 150 125 175 300 Start-Up Expendituire Support Central Administration Start-up 108 - - 50 58 108 Incremental Support to NGOs 50 40 27 50 67 117 Subtotal 158 40 27 100 125 225 Technical Assistanice Institution Building & Training 8 12 7 11 16 27 Policy Studies 2 6 3 5 6 11 Project Prep. and Implementation 7 12 11 14 15 29 Feasibility Studies 1 3 4 3 5 8 Subtotal 18 33 25 33 42 75 TOTAL 393 379 428 492 708 1200 'Assumes most investment in the telecommunications sector will be financed by the private sector. I. Overvieuw 5 new Palestinian administration during the transi- Table 1.2 Additional Donor Pledges to the Occupied tion period, the donor community will need to fi- Territories nance the proposed Emergency Program entirely US$ million with external resources. Also, because the OT'S debt Donor 1994 1995 1994-1998 service capacity will remain limited for some time to Algeria 4 3 10 come, external financing of public sector expendi- Arab Fund 30 30 tures will need to be on highly concessional terms. Australia 8 1 10 Finally, the unique circumstances of the OT and the Austria 2 2 12 inexperience of the newly created Palestinian insti- Denmark 34 6 40 tutions imply that donors will need to keep their European Union 90 60 300 procedural requirements simple and to administer European Inv. Bank - 60 300 their aid programs with more than usual flexibility. France 14 - 14 A Consultative Group (CG) meeting for the Oc- Germany 12 3 17 cupied Territories was held in Paris on 16 December Greece 3 3 15 1993. During the meeting, financial pledges were IFC 15 30 120 given or confirmed for a total of US$2.3 billion for Israel 15 15 75 the five-year transition period ending in 1998. This Italy 16 16 80 Japan 100 100 200 assistance was to finance free-standing investment Jordan 13 - 13 projects or sector programs, technical assistance Kuwait 25 - 25 (Box 1.2), and budget support. At the CG, US$578 Norwav 35 30 150 million was pledged for 1994, a figure which has Saudi Arabia 100 - 100 subsequently grown to US$720 million (Table 1.2) as Spain 12 - 12 a consequence of some donors front-loading their Sweden 7 7 40 overall pledges. Total funds pledged for 1994 and Switzerland 15 5 40 1995 (US$1,220 million) are sufficient to cover the re- Turkey 2 25 52 quirements of the three-year Program. The mix of United Arab Emirates 5 5 25 loans and grants also appears satisfactory; over 85% United States 100 100 500 of assistance is in the form of grants or loans on Wothersa 33 20 50 highly concessionary terms. The priority now is to match donor pledges to specific sectoral projects TOTAL 720 500 2279 and programs so as to ensure that the Program can 'Includes Belgium, Canada, Egypt, Finland, Iceland, India, be delivered as planned. Indonesia, Ireland, Netherlands, UNDP and UK. Source: AHILC Secretariat Benefits and Risks The main benefit of the public investment compo- US$1,200 million, of which about 41 percent would nent of the Program would be improvement in the be spent in Gaza. Public investment support would delivery of essential public services such as water, constitute 50 percent of total costs; support to the sewerage, solid waste, power and telecommunica- private sector, 25 percent; incremental and start-up tions. Almost all Gaza residents and about half of expenditure support, 19 percent; and support for the West Bank population would benefit from im- technical assistance, 6 percent. proved availability of water. Solid waste manage- The overall size of the EAP reflects the availability ment programs, drains and sewage, and wastewater of external financial resources during the three-year treatment facilities would provide Palestinians with program period, and likely overall implementation a cleaner, healthier environment in which to live and capacity. Although assessment of these factors is es- work. Streets cleared of debris and rubbish would sentially a matter of judgement at this point, a size in allow for better movement of traffic. Open burning excess of the proposed Program could create con- of refuse would be curtailed, lessening air pollution. siderable administrative bottlenecks, especially as Program-financed markets, slaughterhouses and many projects would be financed in parallel by a recreation facilities would also help improve the multitude of donors. Since much investment is de- overall quality of life. Some 80,000 Palestinians liv- pendent on engineering studies, designs and ing in rural areas would be connected to the main preparatory work to be carried out through techni- power grids and another 250,000 would gain contin- cal assistance, timely completion of such studies uous service. In addition, practically the entire pop- may be another constraint. ulation would benefit from more reliable electric Given the fragility of the public finances of the supplies, reducing the risk of damage to household 6 Emergency Assistance Programtl for the Occupied Territories Box 1.2 Technical Assistance Trust Fund for the Territories As the OT have been largely without their own govern- volume of the work to be done, mean that it will be nec- ment institutions, policies and programs for the past 27 essary to tap all available existing capacity, including years, a heavy agenda of technical assistance needs to the UN system, NGOs and universities, to carry out spe- be implemented to support effective planning and cific TA activities, under the umbrella of PECDAR (which management of development programs. Following the establishes overall TA priorities and has ultimate re- October 1, 1993 conference, fourteen donors pledged a sponsibility for implementation of the EAP). The lim- total of US$31.6 million in untied funds to establish a ited administrative and financial resources available Technical Assistance Trust Fund (TATF) to be adminis- and the transitional and uncertain nature of the present tered by the World Bank and to be used for financing political and economic situation dictate a pragmatic ap- feasibility studies for projects and supporting institL- proach to the TA program. Therefore, it is important tion-building and training in the Occupied Territories.' that the program be viewed flexibly, as a rolling plan The TA program, which is part of the overall whiclh would be subject to review and adjustment at Emergency Assistance Program (EAP) to the Occupied frequent intervals during the course of the next three Territories, consists of about 100 priority activities, years to accommodate the evolving priorities of the phased over the next three-year period, with an esti- Palestinian authorities within the context of agreed sec- mated aggregate cost of US$75 million. Only a portion tor strategies and priorities. of these activities can be financed by the TATF. Those chosen for TATF support are generally ones that would 'Donor countries and amounts pledged (in millions of U.S. help create a coherent framework of sectoral strategies dollars) are as follows: Austria (1.6); Canada (1.1); Denmark and policies and institutional development within (1.5); European Union (2.4); Finland (1.0); Israel (2.5); Italy which other TA activities (funded directly by donors) (3.0); Japan (5.0); Netherlands (1.0); Norwav (2.0); Sweden could be anchored. (1.5); Switzerland (2.0); United Kingdom (2.0); and United The need for speedy implementation, and the sheer States (5.0) appliances. In the telecommunications sector, public deteriorated and the expansion of service delivery and private investment would more than double the hlas failed to keep pace with the growth of popula- telephone lines available in the OT, reducing sub- tion. Health services improved and expanded but stantially the large backlog of unmet demand. The nonetheless the benefits of these programs failed to housing component of the Program is expected to reach remote areas, particularly in the West Bank. provide improved shelter for some 20,000 low and The investments included in the EAP would raise the middle-income families, including some 6,000 of the quality of basic education by increasing students' ac- most needy families in refugee camps. cess to modern laboratories, computer facilities and The transport component of the Program would library resources; modernizing teaching; and re- improve roads and reduce traffic congestion. About forming educational objectives. In addition, the 400 km or 20 percent of the road network would be Program would rationalize and strengthen voca- rehabilitated and saved from becoming a total loss to tional and university systems. These activities the economy. The village access road program would directly affect over half-a-million students. would upgrade about 160 km of dirt roads to all- Investments in health care would directly benefit weather roads, thereby stimulating new economic abou,t 150,000 Palestinians who presently do not activity in rural areas and improving overall quality have ready access to basic health services. These in- of life for a significant portion of the rural popula- vestments would also help to contain the cost and tion. Provision and maintenance of footpath and increase the effectiveness of health care throughout street lighting in urban areas would help those who the system. walk to work and markets. In addition, substantial An important benefit of the Program would be benefits would be generated in the form of savings in broad access for Palestinians to a wide variety of vehicle operating costs. As the OT relies primarily on skills enhancement opportunities, both as a result of road transport, the savings to be realized by the pro- the experience they would obtain from participation gram would pervade all segments of the economy. in program implementation and through specific Over time, investments in education and health program-supported training components. No less would significantly enhance the competitiveness of important would be the contribution of the TA pro- the Palestinian work force, thereby increasing eco- gram to the establishment of Palestinian institutions. nomic security and raising household incomes. TA activities would facilitate the development of During the occupation, the quality of education has Palestinian capacity for self-government and the re- 1. Overvieuw 7 habilitation and integration of other Palestinian in- such a shortfall occurring across the board ap- stitutions across much of the economy and society, pears modest, although sectoral variations including those in education and health, water sup- could be substantial and capacity constraints ply and wastewater, solid waste environment, elec- may affect individual sectors. There is also the tric power, telecommunications, and public admin- risk of over-centralization of Program manage- istration and economic management. Other TA ment, if PECDAR were not to delegate adequate activities would help improve the framework for decision-making authority to its field managers. private sector growth, addressing issues in the fi- Although every effort is being made to ensure nancial sector, the legal and regulatory environ- its proper functioning, there remains some risk ment, land use, and urban planning. of major capacity constraints developing in PEC- Implementing the EAP investments would create DAR. Insufficient flexibility on the part of the an estimated 40,000 person-years (the equivalent of donors or uncoordinated aid programs could about 13,000 full time jobs over the three-year further accentuate this risk, leading to signifi- Program period) of direct employment in construc- cant delays in Program implementation and in tion. In addition, employment opportunities would realization of its full benefits. Regular oversight be expanded substantially through EAP-supported by the Ad Hoc Liaison Committee (AHLC)-the private sector investment in agriculture, industry body set up by the donors to monitor and coor- and tourism. dinate their assistance-would be helpful in Benefits would be significant and widespread, ac- this regard. cruing to virtually all residents of the Occupied * Technical Risks. While the feasibility of some Territories but particularly to low income families in Program components has been assessed, ongo- the urban areas, camps, and villages. Women, ing and planned studies of others may reveal young people, and those whose lives have been dis- technical, financial, legal, or socioeconomic is- rupted by unsettled conditions in the territories sues that cannot be resolved within the time- would benefit most from the human resources com- span of the Program. The impact of problems ponent of the program. While considerable benefits of this kind on the overall Program is likely to would be targeted to municipalities, the agriculture, be limited, however. health, education, transport, and power programs * Programi Risks. The final category of risks con- would also benefit people in rural areas. cerns the likelihood of major deviations from Risks. Because it is to be implemented under the Program as currently proposed. Imple- highly unusual circumstances, the Program faces mentation of activities of questionable techni- considerable risks, many of which cannot be cal or financial feasibility, or involving unsus- avoided. In order of importance, these are: tainable budgetary demands, may occur, reflecting political objectives and pressures * Political Risks. The success of the Program re- and availability of external or internal funding. quires stability in the Occupied Territories, While the likelihood of some "political" pro- steady progress in bilateral and multilateral ne- jects being financed appears considerable, gotiations, and a maturation of internal politi- these risks would diminish provided PECDAR cal processes. Instability in the Occupied plays its planned role in a professional, trans- Territories would hinder implementation. In parent fashion. particular, delays in bilateral negotiations would slow activities that depend on their out- IPolitical risks in the Occupied Territories will be come. Program success in providing tangible significant and difficult to manage. Success in im- benefits to the Palestinian population could, on plementing the Program, however, would con- the other hand, reinforce the momentum for tribute to the peace process and help stabilize the peace and thereby help with implementation. political situation. Implementation risks would be * Implemnentationi Risks. Implementation will re- minimized by allocating responsibility to existing quire a well-functioning public administration institutions with known capacity and by contracting able to direct, monitor, and implement a rapidly competent, internationally-recruited consultants to expanding program. Although the Program is assist local institutions, and especially PECDAR. tailored as much as possible to reflect likely Finally, it is expected that donors would closely available institutional capabilities, any short- monitor progress on the implementation of specific fall would have immediate repercussions for components. The Program is designed to be flexible the subsector concerned, or-in the case of PEC- and would be modified from time to time in light of DAR-for the entire program. The likelihood of implementation experience. II. Program Description This chapter outlines the principal issues affecting Water and Wastewater the various sectors of the OT economy; the strategies proposed for addressing those issues; the support to Although almost all urban areas in the OT are served be provided under the EAP in that context; and pri- with piped drinking water, many villages still lack orities for immediate action. piped water and depend on cisterns or natural springs. Few West Bank municipalities or villages Transport have adequate access to water supplies; average per capita consumption is only about 50 liters a day and Road transport is the only mode available for pas- there is substantial unmet demand. Meanwhile, senger and freight movements in the Occupied overdrawal of the Gaza aquifer threatens that Territories. The key issues in the transport sector are groundwater resource and has contributed to severe insufficient highway capacity, the deterioration of water quality problems. Existing supply networks the existing network and the lack of institutional ca- are generally old; unaccounted-for-water frequently pacity for planning, implementing and maintaining exceeds 50 percent; meters are commonly inaccu- sectoral infrastructure. The short-term strategy for rate, broken, or bypassed; supplies are inadequately the sector would address the problem of physical chlorinated; intermittent supplies and low pipe deterioration by implementing a three-year road re- pressure cause reverse flow into the network and habilitation program. Traffic studies, followed by contamination; and water departments are generally investment to expand road capacity, are needed to weak and under-funded. address the problem of congestion. The focus of the Only a few municipalities have wastewater collec- interurban roads program is on the strengthening tion systems. Most sewage is discharged untreated and rehabilitation of the main road system, selective into wuadis, resulting in environmental contamina- maintenance of the road network in both the West tion. The few treatment works that have been con- Bank and the Gaza Strip, establishing a capability to structed have generally failed to operate as de- contract out routine and periodic road maintenance, signed. Septic tanks and cesspools are infrequently and providing all-weather access roads to villages. desludged, and disposal of septic waste is haphaz- Total investment costs for the program would be ard. Sectoral priorities are to improve water re- about US$73 million. source management; strengthen the institutional, fi- The most urgent task is to begin preparation of the nancial and regulatory framework; upgrade short-term road rehabilitation program. Given defi- water-supply delivery; and improve sewage collec- ciencies in existing institutions, technical assistance tion, treatment and reuse. In the short term, the is proposed in the form of outside consultants to strategy would be to focus on water resource man- jump-start the program. Technical assistance would agement in Gaza, where the situation is acute, to also be provided to establish a Road Project strengthen regulatory controls, institute effective Implementation Unit (RPIU) to manage preparation conservation practices, and develop contingency and implementation of the road maintenance and plans that would help guarantee basic potable water rehabilitation program. This Unit would also iden- supplies. The Program would focus on the rehabili- tify priorities and design the rehabilitation program, tation, extension, and construction of municipal based on an assessment of long-term transport re- water and sewerage works, rural water-supply ex- quirements. Eventually, the Unit (attached tem- pansion, and the drilling and equipping of new porarily to PECDAR) could form the nucleus of a wells for municipal water. future highway administration. Once bilateral nego- Implementation would be the responsibility of tiations with Israel reach a mutually satisfactory local municipalities and two existing utilities in the point, feasibility studies would be carried out of West Bank. Village works would be executed by PEC- major medium- to long-term transport projects con- DAR in conjunction with NGOS or UN agencies, as ap- sidered as high priority by local planners. The TA ac- propriate. At the municipal level, technical assistance tivities for the sector are expected to cost US$6.3 mil- would be provided through individual, locally-con- lion. tracted consultants. Some expansion of municipal 8 11. Program Description 9 engineering departments is also envisaged. Total in- plete preparation of the documentation needed to vestment in the domestic water supply and waste- tender for five solid waste disposal sites; design water sector is estimated at US$111 million. about eight landfills and transfer stations; provide Technical assistance would be provided to meet project management and implementation support to five broad objectives of the sector strategy: PECDAR; design a legal and regulatory framework for the sector; and conduct a resource recovery and * initiate institutional reform and develop coher- composting study. The estimated cost of these TA ac- ent water conservation policies and practices; tivities is US$4.4 million over a three-year period. * establish a unified water and sewerage utility Consultants need to be hired immediately for design for the Ramallah District as a model institu- work and to procure trucks and containers for se- tion, and develop proposals for creating com- lected municipalities in Gaza and the West Bank. parable agencies in Gaza and other regions of Land acquisition for waste transfer and disposal the West Bank; sites also needs to be initiated immediately. * review wastewater treatment and re-use tech- nologies and develop investment proposals Power consistent with local constraints and condi- tions; The OT power sector is characterized by distribution * support implementation of EAP investments network overloads and supply shortages that cause through advisory services, training and project frequent interruptions and high losses. Most house- preparation facilities; and holds have access to electricity supply provided in * design and implement a groundwater moni- bulk from the Israel Electric Corporation system. toring system for Gaza. Nevertheless, in 1990 about 7% of the West Bank population was not connected and another 71 com- A total of 12 technical assistance activities would munities (with a population of about 220,000) re- be supported with an estimated cost of US$9.7 mil- ceived limited service for only six to eight hours a lion. day from small, diesel powered stations. The orga- nization of the sector is fragmented among over one Solid Waste Management hundred electricity departments in municipalities and village councils and one utility on the West Better collection and disposal of solid wastes is es- Bank. These institutions are financially weak, owing sential for improving public health and living con- to their inability to collect electricity revenues and ditions, and for protecting sensitive groundwater the high costs of network losses and diesel genera- regimes. In the short term, it is proposed to improve tion. Core management and operational capabilities the coverage of existing collection services; increase essential for efficient and safe utility operations gen- the collection vehicle fleet; select and develop a erally do not exist in the smaller municipalities, number of cost-effective collection, transfer, and dis- making it difficult for them to implement invest- posal sites; and adopt protective design standards. ments of the size proposed in the EAP. In parallel with improvement of the collection ser- In the short term, the goal would be to increase vice, there would be a major clean-up and public ed- the efficiency and capacity of distribution networks ucation campaign supported by a special fund and and to lay the ground for institutional restructuring conducted by municipalities and villages. of the sector. Technical and non-technical system The proposed medium-term strategy would be to losses need to be reduced and villages without sup- expand or develop sanitary land-fills for use by mu- ply, or with expensive diesel generation, need to be nicipalities and villages. The program would re- connected to the integrated system. Proposed in- quire investment in collection and transfer equip- vestments consist of the rebuilding and reinforce- ment, land acquisition (leasing), civil works, and ment of low voltage and medium voltage lines; in- equipment for sanitary landfills. Transfer and dis- creases in distribution transformer capacity; posal sites would be carefully selected to avoid con- installation of static capacitors; and ancillary equip- taminating groundwater resources. Implementation ment and facilities such as vehicles, radios, billing would be carried out by a unit attached to PECDAR in equipment, tools, operating supplies and buildings. coordination with municipalities and villages, The investment program for Gaza would cost about which in turn would operate new equipment and fa- US$32 million and that for the West Bank US$76 cilities. Equipment and works would be procured in million. Given the nature of the works, implementa- bulk. Total investment in solid waste management is tion would be most effective under a few turn-key estimated at US$57 million. contracts, e.g. one in Gaza and three on the West Technical assistance would be provided to com- Bank. Central depots would be established that 10 Emergenicy Assistance Program for thle Occupied Territories would later facilitate the reorganization of the sector ture maintenance and rehabilitation. Technical assis- into a number of regional distribution utilities or tance would also help improve the processes used to perhaps a single utility for the Occupied Territories, plan, budget, and implement both works and ser- or other options including a possible role for the pri- vices. The investment program would cover munic- vate sector. ipal road repair and construction, selective replace- Technical assistance, designed to strengthen the ment of storm-water drains, and improvement in sector over the longer-term, would be implemented roads and access works. Finally, the Program would to: (i) improve the capacity of Palestinians to man- provide municipalities and villages with budget age and maintain the distribution network; (ii) re- support to increase their technical staffs. Imple- duce losses; (iii) develop an institutional and regula- mentation would be by local municipalities, which tory framework; and (iv) study future supply would receive technical assistance from a panel of options and plan longer-term investments. Institu- prequalified consultants under PECDAR coordination. tional issues and options are similar for the telecom- Works would be generally procured in small lots munications sector (see page 11), and the proposed and would total US$84 million over three years. institutional studies would jointly consider the Local consultants should be selected immediately power and telecommunications sectors, and possi- for the PECDAR consultant panel in order to help mu- bly also the water and wastewater sector. TA nicipalities in preparing procurement documents for amounting to US$4.1 million is also proposed to maintenance works. help manage implementation of physical invest- The municipalities need a combination of short- ments in the sector. The total TA cost would amount and long-term assistance to cope with the sudden to US$7.4 million over the next three years. burst of contracts they must manage. In the short Bilateral talks, supported by studies, will need to term, training cannot replace the shortage of skilled address future bulk power supplies to avoid short- technical staff capable of preparing and implement- ages and unreliability towards the end of the ing the volume of works envisioned. To bridge this decade. In particular, future talks and studies are gap during the next three years, and to complement needed on interconnections with Jordan and Egypt. the work of the RPIU mentioned on page 8, funds As a general principle, any future power generation would be provided to municipalities to engage plans would be decided upon only after the genera- short-term consultants to help them review, plan tion and regional power interconnection study has and design maintenance and rehabilitation projects been completed. proposed by the 29 municipalities in the OT. Technical assistance would also be made available Municipal Roads and Facilities to carry out traffic management studies for the five most congested urban centers in the OT. Further, Insufficient funding and poor maintenance of mu- consultants are expected to initiate an urban devel- nicipal roads and facilities, have led to high urban opment, planning and management program on a transport costs, poor safety, a high incidence of pilot basis in two communities, one each in the West flooding, and deterioration of existing assets. Bank and Gaza. The TA activities in the sector are ex- Severely deteriorated roads and drains increase pected to cost US$5.4 million. urban travel times and threaten traffic efficiency and safety in cities. Accumulated storm water mixes Housing with sewage and solid waste and is also a health hazard. Other municipal facilities (such as build- The sector is characterized by housing of relatively ings, markets, slaughterhouses and recreation facili- high quality in urban areas and low quality in ties) have also suffered from lack of maintenance refugee camps and rural areas. Conditions are and investment. While many municipal facilities crowded, especially in the camps. Key sector issues need improvement, planning and implementation relate to property rights and registration, the high capacity is modest and funding is sporadic. The EAP cost of and restricted access to serviced land, land provides an opportunity to reactivate municipal ser- use and planning laws and regulations, and the lim- vices and harness the potential of existing municipal ited autonomy of local municipalities over housing management and service units to undertake a and real estate taxes. Other housing issues include planned program of maintenance and rehabilitation the virtual absence of credit for financing real estate; of urban infrastructure. Therefore, the sector strat- the questionable sustainability of the housing pro- egy is to strengthen the ability of municipalities and gram envisaged by the Palestinian Housing Council villages to plan and implement both maintenance (PHC); the weak policy and institutional environ- and new construction of roads and other facilities, ment; and the future of the refugee camps. supported by a program of investment in infrastruc- The short term strategy would be to assist the on- I. Program Description 11 going UNRWA program for improving housing in the a regulatory framework and the transfer of author- camps; to support expansion of housing for low and ity over utilities from the Israelis to the Palestinians. moderate income households being undertaken by The public sector investment program would be the PHC (suitably modified to minimize and ade- limited to about US$13 million. Should additional quately target subsidies); and to facilitate the provi- public sector support be needed, however, long- sion of credit to finance completion of private term funding could be obtained through the finan- houses. The key objective would be to create an in- cial sector. Immediate steps are needed to procure stitutional, regulatory, and policy framework that is management consultant services to manage tele- supportive of private development. Many of these communications equipment operations after the activities are related to bilateral negotiations, or in- transition, train local staff, study the organization of volve the creation of new policies or the upgrading the telecommunications sector, and prepare specifi- of existing institutions. All of this will take time, as cations for the equipment to be procured and lines will the resolution of the land problem. to be added. To the extent possible, the UNRWA program would The immediate concern is to ensure that the sector be based on self-help and implemented with UNRWA continues to be operated and maintained without staff. The total cost of the UNRWA program would be interruption and that the transition to Palestinian about US$30 million, mostly to be invested in Gaza. control occurs smoothly. The TA program provides In addition, the EAP includes US$80 million to sup- emergency training in switching and transmission port private sector housing through the financial for Palestinian engineers so that they can operate system. Immediate steps should be taken to refur- and maintain the existing network in Gaza and bish housing in the camps. Jericho, as well as a management contract with an Technical assistance in the housing sector is de- international operator to ensure continuity of ser- signed to address the complex of issues related to vice quality, longer-term training for Palestinian land development, property rights and registration; staff and the preparation of a new investment pro- land use and planning laws and regulations; the lim- gram to double existing system capacity. TA is also ited autonomy of local municipalities over housing provided to establish an institutional and regulatory and real estate taxes; housing policy, including is- structure for the future development of telecommu- sues related to returnees and improvements of nications, electric power and postal services. The refugee camp housing; and the lack of credit for fi- technical assistance activities required during the nancing real estate. The estimated cost of the TA next three years are expected to cost US$3.2 million. package for the housing sector is US$2.4 million. Education Telecommunications Education is provided by the Civil Administration The telecommunications sector is particularly af- (which serves 60 percent of pupils), UNRWA (25 per- fected by uncertainties created by the transition. The cent), and private schools. Important elements of the key issues are the limited Palestinian capacity to current system, such as private pre-schools and the manage existing telecommunications equipment in universities, have been severely constrained by de- Gaza and Jericho after the transition, and the large cining foreign contributions. The quality of educa- unmet demand for telephone services. Other issues tion is generally unsatisfactory; education infrastruc- include: arrangements for transfer of existing assets, ture is wearing out; and pupils have been adversely the future relationship between the Palestinian and affected by interruptions related to closures, curfews Israeli networks, and the nature of the telecommu- and strikes. In addition, inadequate attention has nications utility (private/public), and future regula- been given to advanced vocational training. In the tory requirements. long term, the core educational issues are quality and The short term strategy in the telecommunica- relevance. The Program would focus on sustaining tions sector would be to establish a management the current system until fundamental institutional contract for Gaza and Jericho, train Palestinian and operational changes could be made. It would workers, define-with the help of technical assis- also help prepare for the transfer of authority, and tance-the institutional structure and basic policy improve the financial basis of the sector. Finallv, it options for the sector, install a new digital exchange would strengthen vocational education and improve system and additional lines in Jericho, and expand links between schools and communities. the Jericho and the West Bank network to accom- The Program would improve the teaching and modate 10,000 new subscribers. Initial investment learning environment by upgrading laboratory and would be small, and most future investment should library facilities, physical plant and equipment. The be private. Technical assistance would help prepare total costs of the improvements would be US$80 12 Emergency Assistance Program for the Occuipied Territories million. The Palestinian administration, UNRWA and assistance from foreign sources) should have high NGOS would implement the Program. The upgrad- priority in the short term. Accordingly, support for ing of school infrastructure would begin immedi- recurrent costs of these organizations is the main ately, with support from a panel of local consultants component of the Program. To rectify past neglect in to be selected by PECDAR. Funding would also be maintenance of existing facilities, the Program would provided for universities, and for pre-schools oper- also support the maintenance of facilities operated by ated by NGOS. both voluntary and public sector organizations. Technical assistance would support completion of Primary health care in some rural areas is seri- a school mapping study to plan investments in new ously deficient, and thus would be selectively rein- schools and begin the planning and design of long- forced. This will require upgrading about 65 pri- term curricular and pedagogic reforms. It includes mary health care facilities. Support would also be analysis and training to improve the financial man- provided for equipment in about 50 health facilities, agement of educational institutions and the financial to be implemented by UNRWA, the Palestinian ad- sustainabilitv of the educational system as a whole. ministration, and NGOS. Total cost of the investment Finally, it would strengthen vocational and technical program is estimated at US$18 million. The Program education through support to a vocational educa- would also provide emergency financial assistance tion task force. TA activities in the sector are expected to qualifying private, voluntary hospitals and health to cost US$4.6 million over the next three years. This clinics. includes project preparation assistance for EAP in- Program technical assistance activities would help vestments. the incoming Palestinian authorities design policies that focus on increasing the internal efficiency of the Health health sector and controlling the overall costs of health care, particularly at the hospital level. Health care in Gaza and the West Bank is provided Support would also be provided for harmonizing by the Civil Administration, UNRWA, NGOS, and pri- the CA and UNRWA health systems and for the design vate clinics. Each has a sharply different approach, of a national health insurance plan. The TA program with UNRWA focussing on primary care and the Civil includes three activities with an estimated cost of Administration on more sophisticated procedures at US$3 million over the next three years. much higher cost. NGOs, depending on their outlook, do both. The proliferation of service providers has Agriculture resulted in an unsustainable proportion of GDP being committed to health care. In addition, the voluntary The combination of expanding agricultural produc- sector has been seriously affected by the collapse of tion and declining external markets within a highly foreign financial support, resulting in staff reduc- constrained regulatory and natural-resource frame- tions and deterioration of equipment and facilities. work is clearly unsustainable. The agricultural sec- The Palestinian authorities will need to create an tor produces more than it can sell and in Gaza uses effective, affordable health care system out of the unsustainable amounts of water. Other sector prob- current fragmented one. In the short term, the most lems include restrictions on internal transport, the appropriate strategy would be to focus on limiting modest pace of technological improvement, the expansion of facilities while maintaining essential need to improve the regulatory framework, and nat- services, supporting emergency repairs, initiating ural resource management. Trade, regulatory and policy studies to prepare for alternative institutional natural resource management issues are directly re- arrangements, and assessing the feasibility of health lated to ongoing bilateral negotiations. As in other insurance. Future policies would focus on control- sectors, general policy and the future shape and role Iiig health care costs and improving internal effi- of public institutions and NGOs need to be clarified. ciency rather than expanding the system, particu- Finally, inadequate funding for public services pro- larly at the hospital level. vided by the Civil Administration and NGOS iS cur- Responding to the needs and demands of the rently a problem. Palestinian people for health care will require great Sectoral priorities are to prepare for the transfer of discipline if the program is to be economically sus- authority, to initiate steps for the adjustment of pro- tainable. It will mean emphasizing primary health duction patterns in the future, to maintain essential care and limiting the use of expensive, high technol- sector support services, and to improve existing in- ogy procedures. Preserving the substantial invest- frastructure. Program financing includes US$26.5 ment made in the more efficient parts of the system million to support public infrastructure rehabilita- (notably by providing Program financing for those tion and institutional development. In addition, NGOS that had previously relied heavily on financial US$25 million would be directed to NGOS and the 11. Programn Descriptiotn 13 private sector to maintain existing support services essary. A significant amount of this work would be and to promote on-farm investments. undertaken by Palestinian institutions and ex- Technical assistance would focus on developing perts-notably the Palestinian Environmental Pro- options and implementation plans for sectoral pol- tection Authority (PEPA)-in collaboration with for- icy and institutional restructuring, measures to eign specialists as required. The estimated cost of boost trade in agricultural products, and steps to ex- the environmental TA activities is US$6.5 million pand production of olives and fish protein. This over the next three years. would involve strengthening essential agricultural In the tourism sector, the strategy would be to en- support services while maintaining the advantages courage public-private partnerships to expand the of the plurality of existing services. TA activities are sector. Technical assistance would help the recently estimated to cost US$1.3 million over the three-year formed Higher Council for the Arab Tourist Program period. Several activities of interest to agri- Industry to promote development of the tourism culture would be carried out in other sectors. These sector in Gaza and the West Bank, and would sup- include feasibility studies on water reuse and well port the establishment, if appropriate, of a Tourism rehabilitation (water sector); a fishing port at Gaza Authority to set standards and monitor service qual- (transport sector); and the collection and analysis of ity in the sector. This body would promote the agricultural statistics as part of the broader develop- growth of tourism in a manner sensitive to environ- ment of Palestinian statistical capacity (public ad- mental conditions, cultural heritage and local social ministration). and religious attitudes. Technical assistance would also support an assessment of the constraints that Environment, Cultural Resources and Tourism have hindered past Palestinian investment in the sector and preparation of a plan to resolve those Serious environmental problems exist in the agricul- constraints. Finally, TA would assist with the prepa- ture, water, wastewater, and solid waste sectors; en- ration of a cultural resources inventory and help de- vironmental conditions in Gaza appear to be among sign institutions and programs to conserve and ex- the worst in the Middle East. Successful economic ploit the cultural heritage and natural resources of recovery will require effective integration of envi- the OT. The cost of this TA is provisionally estimated ronmental, cultural and tourism resources into the at US$1.2 million. development process. The Program strategy for the next three years is to focus technical assistance Public Administration efforts on environmental and cultural resource man- agement, and to establish administrative frame- Organizing and guiding reconstruction and eco- works and prepare practical plans for the manage- nomic development in the OT, and managing the as- ment of physical and cultural resources. The sistance pledged by the international community, three-year Program includes technical assistance for: will be a complex undertaking. The Palestinians plan to create a new Central Administration to take * development of an environmental planning over the functions currently performed by the Israeli and management framework, and for environ- Civil Administration. In order to minimize disrup- mental capacity building; tions, the nucleus of the new Palestinian administra- • preparation of environmental laws and regula- tion is likely to be the over 20,000 Palestinian em- tions, including procedures for environmental ployees of the present Civil Administration. But the assessment; key positions in the Civil Administration are now * environmental education and public aware- held by Israelis, especially in the area of public fi- ness programs; and nance. Hence, the immediate task facing the * development of a management framework, in- Palestinian authorities is to replace Israeli employ- ventory, and applied-training program for cul- ees by qualified Palestinian ones. Over time, a pub- tural resources management. lic administration structure would have to be adopted that would take account of possible rede- This TA would complement other financial and fined roles for United Nations agencies and non- technical assistance designed to address major envi- governmental organizations which currently per- ronmental threats to public health such as water pol- form a number of quasi-governmental functions. As lution, solid waste disposal, and the use of pesti- an interim step towards the management of external cides. All activities under the EAP will be subject to assistance and the formulation of economic policy, careful environmental review during the design and the Palestinian Council for Economic Development site selection process and, environmental mitigation and Reconstruction (PECDAR) was created on October measures will be included in project design, as nec- 31, 1993 to manage economic assistance and imple- 14 Emergenicy Assistance Program for the Occupied Territories ment the investment program (see Chapter IlI for details on institutional arrangements). Table 2.1 Public Sector Finances of the Palestinian In addition to the establishment of f'ECDAR, the Central Administration, new Palestinian authorities need urgent assistance (inl LIS$ million) in a number of areas where existing capabilities are 1994 1995 limited or arrangements related to economic and fi- . , ~~Total revenue 317 510 nancial management are weak or incoherent. Of Revenue 147 310 special importance in this connection is the develop- Borrowing from deduction fund' 35 0 ment of local capacity to formulate economic poli- Revenue clearance with Israel 135 200 cies and provide economic advice to the new self- Total current Expenditure 268 415 governing authorities at the national and sectoral Base Current Expenditure:d 154 264 level. Specifically, local policy formulation and advi- New current expenditures 114 151 sory capacity is urgently needed in three critical Start-up and Transitional Expenses 157 95 areas-trade policy, tax policy, and banking and Support for families of detainees, 8 0 currency policy. Other areas needing urgent atten- Transfer to municipalities 12 0 tion include civil service issues, the legal and regu- Equipment for police 45 60 latory framework for private sector activities, and fi- Equipment for Civil Administration' 15 5 nancial management, budgeting and accounting Relief Works Programg 25 20 nacial managemen,budgetngandacountinRehabilitation of detainees 20 10 systems at the national and local level. Other' 32 0 Technical Assistance. The EAI strategy in the area Total Expenditure 425 508 of public administration includes technical assis- Financing gap of public sector -158 -40 tance for (i) the establishment and early operation of Financing gap, central admin. -108 0 PECDAR; (ii) a series of macro-economic studies to as- Other public sector deficits' -50 -40 sess the costs and benefits of policy options facing Excludes development expenditure. Also excludes revenues and the new self-governing authority; (iii) the establish- expenditures of the Israeli CA before transfer of authority. The ment of the Palestinian Development Institute (P91) budget reflects revenues and expenditures based on a continua- to carry out policy analysis on a permanent basis; tion of labor mobility to Israel at levels prevailing at the end of (iv) the establishment of the Palestinian Bureau of 1993. Should the current labor cutoff continue, revenues will de- Statistics (PBS) and the transfer of data and data-col- crease substantially, and social expenditures may need to in- lection mechanisms from the Israeli Central Bureau 'Funds borrowed will be used in 1994 as a budget financing item. of Statistics; (v) study groups on civil service, legal, Figures are highly indicative. and public administration; (vi) development of uni- 'Excludes expenses associated with police after authority is trans- form budgeting, accounting, reporting and auditing ferred to the Palestinians but includes expenses associated with procedures for the Central Administration and for replacing CA headquarters with a new Palestinian Administration the municipalities; and (vii) appropriately targeted headquarters. training, as permitted by absorptive capacity and di- [Investments in equipment to accommodate 2,000 new central ad- rected by Palestinian priorities, in all of the above ministration employees, and for other furniture and equipment of areas. The total cost of these technical assistance ac- a nonrecurrent nature. tivities is estimated at about US$18 million for the initially a continuation of the old public works program, to be transformed quickly into more local, community-based invest- three-year period 1994-96. Practical necessity and ments. strategic priorities argue for concentrating most ef- 'Comprises installation and moving expenses, early hiring, and forts in the initial phase on PECDAR. preparations for elections. Also, pensions and supplementary Start-up Expenditures. In addition to technical as- salaries related to Jordanian disengagement. sistance, the Program would provide support for Current deficits of NGCOS in the sectors of health, education, youth and women's programs and agriculture. Central Administration start-up expenditures and for the incremental recurrent expenditures of NGOS. A Palestinian budget for 1994-95 was prepared in Priority current expenditures of selected NGOS late December 1993 and presented to a special also need to be financed from new commitments Donor meeting on Transitional and Start-up Costs in (i.e. over and above on-going programs). During the January 1994; a budget gap requiring external fi- past 25 years, Palestinian society has developed a nancing was estimated at US$158 million, of which spectrum of institutions and organizations which US$108 million was for the Palestinian Central supplement the services provided by the public sec- Administration, ranging from installation and mov- tor and which are an important part of the social ing expenditures to investments for the police force safety net in the OT. Over 1,000 NGOS exist at present. (see Table 2.1). Support for the central administra- Many have been affected by reduced budgetary tion is only expected to be needed in 1994. support, and accountability and transparency of I. Program Description 15 funding have sometimes been lacking. However, must laws to protect the private sector from capri- given its important role, the NGO sector is an im- cious acts, or seizure on the part of the state. An ad- mensely valuable resource, particularly during the equate legal system and regulatory framework is transitional period while new institutions are still therefore essential to business. In the case of the OT, being developed. the occupation has imposed special difficulties that The Program would provide support for essential need to be addressed immediately by the Palestinian activities of NGOs (in education, health and agricul- self-governing authority to foster development of ture), and for general welfare activities, under con- the private sector. ditions that enforce accountability, transparency The Program strategy would be to support the and minimum professional standards. The Program development of the financial system, including the would encourage continuation of the traditional strengthening of banks and credit institutions. It channel of direct funding to the NGOS, while apply- would also include donor support for private sector ing new criteria for selection of activities, monitor- activities. Such support is expected to be provided ing of implementation, and enforcement of account- through an apex bank facility which would channel ability. The EAP would also support youth and funds to local credit institutions for on-lending to women's programs, to allow the pursuit of normal support private investment. Such on-lending would activities after years of conflict. The additional assis- support the development of various sectors includ- tance to the NGOs (above the 1993 level of US$75 mil- ing agriculture, housing, telecommunications, in- lion a year) is estimated at US$117 million during dustry and tourism. In some of these sectors, exist- 1994-96, starting at US$50 million in the first year ing credit institutions (e.g., in agriculture) would and tapering to US$27 million in the third. need to be strengthened; in other sectors, key policy issues (e.g., zoning laws in housing) would remain Support to the Private Sector to be addressed before lending could take place on any significant scale. Consequently, progress in on- Stimulating private sector investment and growth in lending funds for private investment would be ex- the productive sectors and services is essential for pected to build up in the later years of the Program. sustainable development in the OT, and especially Financing is included for US$300 million, starting for generating employment opportunities. In view from US$50 million in the first year and rising to of the uncertainty that currently characterizes the in- US$150 million in the third. vestment and general business climate, investor Technical assistance would include helping to confidence is low and interest in term investment prepare a unified legal and regulatory framework (with the exception of investment in real estate) is for the financial sector and to establish a Palestinian subdued. Private sector investment is limited pri- institution to deal with monetary and banking is- marily to equity flows, with some investors able to sues. This institution is expected initially to focus on obtain loans under bilaterally-supported credit pro- the supervision of banks operating in the OT. grams channelled through a small number of new Assistance would also support steps toward the cre- and relatively inexperienced credit institutions. The ation of a development or investment bank as a challenge of increasing private sector investment, source of long-term credit. Finally, technical assis- starting from this low base, is significant and must tance is planned to begin a process of legal reform rely initer alia on the development of the financial through clarification, harmonization and modern- system and related expansion of credit and other fi- ization of the disparate legal systems in the West nancial services, as well as external donor support in Bank and Gaza. The total cost of these activities is es- the initial stages. timated at US$1.6 million. Further activities are ex- Private sector development also requires a legal pected to be added in the coming years as the eco- framework, property rights that are respected, con- nomic policies of the self-governing authority takes tracts that are enforced, rules that are transparent, shape and as the private sector begins to respond to and an impartial arbitrator for contract disputes. changing opportunities. Bankruptcy procedures and rules must be clear, as III. Institutional Arrangements The task of planning and implementing the Emer- training policies and other functions of economic gency Assistance Program is interwoven with the self-government, it will transfer these functions and challenge of the move to self-government, which en- staff to other independent self-governing institu- tails both: (i) making immediate arrangements for tions as and when they are created. Once a full self- handling critical institutional and administrative governing administration is in place, PECDAR's activ- functions; and (ii) setting the framework for creating ities will be reduced to the management of external sustainable institutions of self-government over the assistance; as in most other countries, this function longer term. In addressing these issues, the Pales- would subsequently be transferred to a regular self- tinians have adopted a general principle, which the government department, and PECDAR would cease to donor community fully shares, of ensuring that the exist as a separate entity. At this time, PECDAR'S pe- initial organizational arrangements are not only effi- riod of operations is envisaged to be three years. The cient in terms of meeting immediate needs, but also Palestinian authorities and the donor community conducive to the building of accountable institutions are aware of the need to closely monitor the pro- for self-government over time. gressive shift from PECDAR to regular self-govern- While substantial internal discussion of longer- ment entities, and to avoid any risk that the Council term institutional arrangements has taken place, might hinder rather than facilitate the growth of definite decisions have not yet been made, reflect- public sector capacity in the West Bank and Gaza. ing the inevitable uncertainties during the current For PECDAR'S aid coordination function to be suc- period of transition. However, the Palestinian au- cessful, two key conditions need to be fulfilled. First, thorities are strongly committed to ensuring that the donors themselves need to recognize the desta- these decisions would be taken in the light of the bilizing effects of uncoordinated and uncontrolled key criteria of administrative efficiency, account- aid activities. The formation of the AHLC Secretariat ability and transparency, and in the light of thor- to promote cooperation among donors reflects ough study and internal deliberation, based on best recognition of this need. Second, PECDAR should be practice in other countries, long-term economic and the sole agency responsible for official aid coordina- social objectives, and the special circumstances of tion, and should be capable of operating in a speedy, the OT. Pending those decisions, existing systems efficient manner and on the basis of clear economic and procedures will generally be maintained, so as and sectoral priorities. PECDAR will also be responsi- to provide continuity and promote rapid assump- ble for management of the investments supported tion of initial authority. by the EAP. For this investment management func- Meanwhile, short-term arrangements need to be tion to be successful, program and project imple- made to ensure effective deployment of the assis- mentation will need to involve a judicious combina- tance pledged by the international community. This tion of exercise of authority by PECDAR itself, will depend on the Palestinians rapidly organizing a delegation of authority to other agencies with exist- capacity to allocate, coordinate and use donor re- ing capacity, and appropriate utilization of external sources efficiently. In addition, implementation of expertise. The arrangements described below are in- the activities financed by those resources will de- tended to achieve this combination. pend on a capacity to supervise and monitor the ex- ecution of projects, and of the investment program Program Implementation and Management as a whole. For these purposes, the Palestinian lead- ership established, on October 31, 1993, the While PECDAR would be responsible for overall pro- Palestinian Economic Council for Development and gram administration, project implementation would Reconstruction (Box 3.1) be carried out mainly by the municipalities, the As noted above, institutional arrangements set up Palestinian Central Administration (PCA), NGOS (both during the period of transition must also be con- local and foreign), and a variety of UN agencies (in- ducive to the development of other public institu- cluding UNRWA, UNDP and UNICEF). PECDAR would rely tions needed for the longer term. Thus, while PECDAR as far as possible on existing agencies to execute the will initially provide the nucleus for economic pol- Program. PECDAR itself would only implement pro- icy formulation, overall expenditure programming, jects directly where no other appropriate agency is 16 111. Instituttional Arrangements 17 Box 3.1 The Palestinian Economic Council for Development and Reconstruction PECDAR, created by a decree of the PNA on October 31, viewing training needs, screening proposals and 1993 is the central institution for managing the process disseminating information. The Office would of reconstruction and development in the OT during the work in close collaboration with Palestinian uni- transition period. versities and other institutions; PECDAR'S governing body is the 14-member Board of * NGOs and Special Programs, provisionally Governors. The Board appoints the Managing Director charged with developing framework agreements and the Office Directors, provides overall policy guid- for dealing with NGOs and the UN agencies. This ance for PECDAR activities, sets general program priori- office could also be responsible for directing spe- ties, establishes personnel and administrative policy cial programs and activities (such as the program (including procedures for procurement, accounting, for the rehabilitation of detainees), and for for- and auditing), and approves PECDAR's budget as well as mulating policies to encourage private sector individual EAP projects. development; and The Managing Director formulates proposals, sub- * Program Management and Monitoring, with mits l'ECDAR's budget to the Board, presents individual overall responsibility for investment program projects to the Board, and is generally responsible for implementation and monitoring, described in de- the management of PECDAR. An internal auditor, legal tail in the text. advisor, and procurement advisor will be attached to the office of the Managing Director. PECDAR has an of- Headquartered in the West Bank, PECDAR would fice for administration, and five functional offices: have a branch office in Gaza to monitor Gaza opera- tions. By mid-summer 1994, PECDAR is expected to have Economic Policy Formulation and Project a total staff of about 100 (including support personnel), Review, charged with economic analysis and and an annual operating budget of about US$3 million. macroeconomic forecasting, formulation of eco- The basic regulations of PECDAR are contained in by- nomic policy options, and sector strategies, pub- laws approved by the Board of Governors on January lic expenditure programming, anrd project evalu- 11, 1994, and now awaiting ratification by the ation and review prior to approval. The Palestinian leadership. The bylaws were developed Economic Office would act in close collaboration witlh the assistance of international donors. A full set of with the Palestinian Development Institute and accounting, procurement, auditing and other regula- the Palestinian Bureau of Statistics; tions has been drafted, in accordance with those by- * Aid Coordination and Facilitation, the focal laws, and awaits approval by the Board of Governors. point for relations with donors regarding the Key staff have been appointed, and offices and other fa- programming and monitoring of official aid, ex- cilities are being organized. cept that given directly to NGOS; To ensure that PECDAR is functioning effectively, a * Technical Assistance and Training, responsible thorough review of its organization and operations is for managing non-project technical assistance, re- expected to be carried out before the end of 1994. available, or where projects are large or cover more ing critical tasks: overall programming and budget- than one municipal jurisdiction. With circumstances ing; development of operating procedures and sys- in the Occupied Territories changing rapidly, PEC- tems; project screening; contract preparation; pro- DAR's relations with other implementing agencies curement of works, goods and services; monitoring will require periodic review. Municipalities carrying of contracts, projects, and programs; payment certi- out projects would be assisted and closely monitored fication; data processing and accounting; ensuring by PECDAR, particularly with regard to procurement compliance with financial, auditing, and other pro- and disbursements. In some infrastructure sectors, ject covenants; and reporting on individual projects PECDAR would have interim implementation author- and the Program as a whole. ity until permanent sector institutions could be es- Because some municipalities need assistance with tablished. UN agencies and NGOS operating within project preparation and supervision, technical sup- their mandates would have considerable autonomy port would be provided through PECDAR under the in preparing and implementing projects within the Program. PECDAR would select a panel of experi- overall framework established by PECDAR. enced, reputable, local engineering and architectural Within PECDAR, the main responsibility for imple- firms. These firms would be available to assist mu- mentation and monitoring would be with the nicipalities in identifying, preparing, contracting, Program Management and Monitoring Office (PMo). and supervising infrastructure rehabilitation and Management and procurement consultants re- improvement projects suitable for financing under cruited internationally would assist with the follow- the Program. 18 Emergency Assistanice Program for the Occupied Territories Implementation responsibilities are summarized The role of the local contracting and consulting in- in Table 3.1. It is expected that municipalities would dustry will be important. Local firms can mobilize focus mainly on the rehabilitation of local roads, quickly and employ local labor. While current ca- drainage, water supplies and sanitation. In sectors pacities are somewhat limited, they are likely to ex- such as power and intercity roads where the inter- pand rapidly once demand for EAP-funded services ventions required are inter-jurisdictional or techni- begins to grow. Skilled and unskilled labor in the cally complex, PECDAR itself would be responsible Occupied Territories is plentiful and could be used and would recruit competent sector implementation for a number of maintenance, construction, and de- consultants (sics) to assist with project preparation sign activities. Palestinian firms from abroad and and implementation. UNRWA would be responsible joint ventures between local and foreign interests for implementing the health, education and housing may also develop rapidly, and construction and de- components within the camps, while the PCA and sign capacity has the potential of expanding with NGOS would bear the main responsibility for health, demand. Accordingly, it is likely that EAP imple- education and welfare projects outside the camps. mentation would provide significant opportunities Housing outside the refugee camps would be imple- for local contractors and consultants. mented mainly through the Palestine Housing Accounting, Auditing and Reporting. Developed Council. Finally, the private sector would be ex- with the assistance of internationally recognized pected to play an important role in implementing the consultants, PECDAR's accounting system would agriculture and telecommunications components. record all lending and borrowing transactions, to- gether with grants and aid received from interna- tional donors, based on internationally accepted Table 3.1 Program Implementation Responsibilities principles and practices. Recorded transactions Sector Primary Responisibility would therefore give the complete picture of PEC- DAR'S financial position, operating results, and the fi- Transprtatio [' ..A wit asitnefoI nancial performance of all PECDAR-managed pro- Water & Wastewater Municipalities/PEcDAR with assistance from local consultants grams and projects. Proper records would also Solid Waste rEcDAR/Municipalities facilitate PECDAR'S financial control over all its trans- Power PECDAR/Municipalities with actions and activities. For each fiscal year, PECDAR assistance from sIc would prepare two semi-annual financial reports, Municipal Roads Municipalities/PECDAR with which would be available to the public. To ensure assistance from local consultants satisfactory maintenance and timely completion of Housing Palestine Housing Council/uNRwA accounts, PECDAR would be staffed with suitably (camps)/Banking Institutions qualified accountants supported by appropriate Telecommunications Private Sector with support from technical assistance. PECDAR's Board of Governors PECDAR would appoint a qualified firm of chartered accoun- Education PCA/UNRWA (camps)/NcOs tants-acceptable to the principal donors-as exter- Health PCA/UNRWA (camps)/NCos nal auditors. Audited accounts would be submitted Agriculture_____PCA___Private___Sector ____NGOS _ to donors annually no later than six months after the end of each PECDAR financial year. PECIDAR would also provide, on a quarterly basis, consolidated reports (comprising, inter alia, the re- Procurement. Goods, works, and services re- ports of the management and procurement consul- quired for the EAP would be financed by the donors tant and PECDAR'S comments thereon) on program and would be procured in accordance with the pro- implementation progress, covering: (i) projections curement procedures of the respective donor. To for project financing and implementation; (ii) the avoid a proliferation of procurement practices, bid- status of project finances, procurement of consulting ding documents, and evaluation procedures- services, goods and works; (iii) training; (iv) incre- which would substantially increase administrative mental operating expenses; (v) statements of income demands on local institutions-it is suggested that and expenditure for the current and previous quar- all donors involved in financing the Emergency ters; and (vi) monthly cash flow projections for the Assistance Program work closely with l'MO in estab- next two quarters. Any major variances from the lishing efficient procurement procedures designed budget would be explained and corrective measures to ensure transparency and cost-effectiveness. To proposed. These reports would be submitted to this end, donors and PMO would be assisted by the donors within one month of the end of the relevant services of the management and procurement con- quarter, and would provide the basis for monitoring sultant employed by PECDAR. the progress of the Program. IV Agenda for Action In order to maintain and strengthen the momentum * Recruit and train senior staff for the new Palestinian towards peace, the benefits of the external assistance Administration to replace the Israeli employees of pledged to the OT must be delivered to the Pales- the CA, especially in the area of public finance; and tinian population as quickly as possible. This chap- * Finalize framework agreements as soon as possible ter summarizes an agenda for action on the part of with the UN agencies and NGOS on the future role the Palestinians, Israelis and donors to this end. and responsibilities of these organizations in EAP Because some issues related to the implementation implementation. of the EAP are the subject of ongoing bilateral negoti- On the part of the Israelis: ations between Israel and the PLO, the agenda cannot be complete. Nevertheless, it serves to highlight the * Ensure speedy approval of permits, clearances and critical actions needed. approvals to facilitate the work of newly-created The key actions for the respective parties are as Palestinian institutions, such as PECDAR, SO that they follows: can perform their functions efficiently; and * Facilitate donor investments and aid flows in the OT On the part of the Palestinians: by granting, where appropriate, visas, immunities and tax exemptions according to international prac- tice. * Take steps to make PECDAR fully operational imme- diately. This requires initer alia formalization of PEC- On the part of the donor community: DAR's bylaws, internal regulations and operating procedures as well as appointment of key staff on a * Work closely with PECDAR to transform aid pledges regular basis; into firm commitments against specific programs, * Launch without delay implementation of already projects and activities; prepared projects and programs, such as the World * Strengthen donor coordination and discipline to Bank-supported Emergency Rehabilitation Project match pledges with agreed sectoral investment and activities under the Johan Jorgen Holst Peace needs and priorities; and Trust Fund and the Technical Assistance Trust Fund; * Standardize and simplify as far as possible proce- * Complete and refine the project data base and use it dures relating to procurement, disbursement, audit- proactively to support agreed sectoral and geo- ing and progress reporting, while insisting on the graphical priorities; agreed criteria of efficiency, accountability and * Initiate the process of institution building to handle transparency in the use of aid monev. critical administrative and developmental functions; :19 ANNEX 1: Sector Strategies Matrices Table 1: Transport _ Issue | Short-Tern Strate| Loug-Tenr Stategy EAP Actions Pastt of existing intercity Develop and begin implementation of a Develop institutions to nanage an adequately TA: Set up program implementation unit that would be road infrastructure are road rehabilitation program using local funded road maintenance system. nucleus of transport authority. Develop multiyear everely deteriorated, contactors and consultanta to provide program for road expenditures. urgently needed road maintenance. Investmet: Finace road maintenance and reconstruction, and equipment for road safety and analysis. U Significant section of road Undertake traffic studies in mmot areas Prepare transport system development srategy. TA: Help develop long-ferm trnsport strategy. system is congested. and develop relief strategies. O_ Some villages lack all- Upgrade connection of villages to road Extend Village Access-Road Program. Develop TA: Help design and supervise Village Access-Roads weather acce"s to highway network, rural roads progam. Program. system. lIveamaet: Fmance first stage of Village Acoess-Road N Program. Lack of institutions for Set up road maintenance organization and Establish institutions for scwtoral policy and TA: Help establish program inplimentation unit and rategic planning and determine sr,ucture for planning, planning. Decide on whether or not to implement carry out studies to define organizational and finance sector management. mnaging, and regulating transport major projects. Develop the road maintenance ucture of the road octor and long-term tansport (and subsectors. Begin preparation of transport orguianization into s Highway Authority, regional) development stategy. Conduct feasibility system development strategies and studies of major roads, airstrips, and Gaza port (to be evaluate major projects. completed in 1995). Investmet: Purchase equipment for program implementation unit. Lack of financing Prepare a financing plan for the five-year Develop arrangements to provide uninterrupted TA: Conduct long4erm study to review planning and arrangement for the program consisting of a combination of funding for the road sector through a system of financing of maintenance and investment in the road trnsport sector, gants, loans, and recurrent funds. road-user charges (fuel tax) and establisument of a ector. dedicated Road Fund. Invesimiet: Provide preliminary finacing for the road nd trnsport progrm over three years and mahal further support from donors. LAck of financing for Encourage competitive development of None at this time. TA: Conduct studies on the development of the banking private sector transport the banking system. system (see Table 13). opeators. ANNEX 1: Sector Strategies Matrices Table 2: Water Supply and Wastewater Jam Short-Tam Sftrty Lo.ng-Term Statg EAP Actlon Poor water mnoucr Foct on ar.. Saegthe regulatory ontbrs ovcr Develop coherent watcr resar magcm t policies TA: Help define wat rearse policy. managan. hsYmit aqtuifer. Ingute effective casvation pracice. to for OT as a whole, inchding wuat wle"r rise policy Develop water cservaio poliies and pactice. Suppt danger of peymanent' ruduce Isses and manage daad. Develop for Oaza. Develop regionl watcr reuoe manngamect nprved O&M practices. daming die Gan cntingency pla to guurantee basic potable suppLies. policy wilh Jordan amd Isrel. aufer. Weak water supply In Oan and scected Wet Bank munieipalities, Bxted and consolidat progran of priority network Investmeatz Rehabliatio and selective extes of delivery miplenat program Of priority netwodc rehabilitation. Epand piped water coverage to all municipal ad villge wer networks (im Gaza, Rafab, rebilttdio. Expand piped water coverage to viages. Develop new wells in dke conext of an oveal lHebm, Raabh Qabatia, BePtnia, and Jenin, g slected villages water rcaccn manement srategy Consider othen, and in selcted villages). Castuct new wells in desaization if eonoacy feasible, selctod municipalities and villWes where resmce, mnbima, amd political cedtos permit. Provide urgently neded tools and euiment to upport mnproved 0&M. Weak i ial, In and sctd West Bak maicpaltis, lay Cra regoa utilities by rabionag nd coslding TA: Develop plai and regulatosy framework, and initiae| famei and guatoy basis for onag-erm instiba reform. Undetake individa city uility depuua . Establah effectivc intinal rfosm at cene. Esablish unified watetr and frmework for myrovfg review of instoa and finail problems sad coacovery polici asd system. Esablsh regulatory wawge utliy ie Ramalla district Develop proposab for water, ewage, ad options. framewodk. crting smilar g e for Gaza and elewhere in West waste wAtr Iviee. Bnk Investment: FPince program of JWU-RsnUah as a model __girn lutility. Weak sewer In Gan and slcted Wet Bank muncipalities, Dvdeop and impleet log-term, OT-wide progrmn of TA: Review waste-watr t nimt and reuse ecbnologic eollction, tmeet ad implneast program of priority network aed improvement for networb, treatment plans, mad waste sd develop proo canritt with local cvirmntal, disosl. Weak w1 trcatmeat-plant rehabfiltio. Review tchn and wter coiectim and rcuie fimcial, and social omstrainbt. Wate mangan. finaia reasois for poor operin of cxistg watge water trcaut planb end develop waft water Investment: Rehbiltae and extend existg sewage reus cty networsh nd treatment pla to Nabus, Saf, Dir Drbwan, | Qal, N. Oaz, Biet Hanoum, Al Bireh, Tulkarn, and Anm", mng others. ANNEX 1: Sector Strategies Matrices >, :i Table 3: Solid Waste Management Issue Short-Tena Strategy Long-Term Strategy EAP Actions Poor public health and Increase pubic awarcnec and Same as short-term but with widened coverage. TA: Support the employment of local and formign communtty Eving participation through public education Increase focus on recycling, advisors for Gaza and the West Bank, Develop and conditions. Clandestine programs. Irprove coverage of existing implement effective public education and awareness dumping, collection services. Select transfer and program. Conduct studies to assess the collection, disposal sites. Adopt appropriate and disposal, and regulatory requirements for hazardous environmentally efficient coliection and waste. Evaluate market demand for recycleables and disposal techniques. Explore potential for recovered resourmcs from waste. recycling. InystmeiaL In selected municipalities and villages in Gaza and the West Bank, upplcment the exidsting vehicle -| fleet with new collection and disposal veicles. Provide containers for existing trucks. - InAdequate collection Increase collection vehicle fleet and Same as shont-term but with increased focus on TA Develop a planning data-base. Develop mater plaas coverage and efficiency. improve fleet management. Select nd cost-recovery, privatization, and commercialization for Gaza and Nablus. Conduct studies to improve Poor disposal of waste develop several cost-effective collection, of service. Incrase scope of recycling efforts, institutional capacity, cost recovery, determnine the transfer, and disposal sites. Exploit the Explore feasibility of incincration, feasibility of privatization and commercialization, and potential for economics of scale by evaluate market demand for recycleables and recovered encouraging municipalities and villages to resources from wate. share srvices, facilities, and disposal sites. Minimize traunport costs by Inveshnent: In selected mnunicipalities in Gaza and West selecting transfer and dispoal sites Bank, supplement the existing vehicle fleet with new rtegically. collection nd disposal vehicles and equipment. Provide containers for exiating trucks. Tbreat to groundwater Select transfer and disposal sites with Same as short-term but with increased focus on Invtesnemt Develop only those disposal sites that pose resoures, attention to eavironmental impact. Adopt regional cooperation for environmentally minial threat to water resources particularly in Gaza). protective design sandards. Explore the conscientious site-selection. potential for regionAl coordination and cooperation in the selection and operation of disposal sites. ANNEX 1: Sector Strategies Matrices Table 4: Power [Issne Short-Term Strategy Lg-Tena Strategy EAP Actions Sector organization is Study institutional options with a view to Consolidate distribution. Establish institutional TA: Study institutional and regulatory options for public fragmented into many consolidation into two to four regional capability for managing transmnission (bulk power utilities with particular potential for private ector municipal departments of distribution companies. Begin by purchases) and generation. Promote private sector participation. Help define options and prepare uneconomic aize. centralizing management of network investment in generation and distribution where implmentation program. Coverage of core rehabilitation at regional level-one feasible. management and operating center in Gaza and three on the InvesmenLt Finance etablishment of cental depots for operational functions is West Bank. managing network rehabilitation, to serve a nuclei of inadequate. regional distribution companies. Distribution networks are RehabiCitate distribution networks. Inplement a program of least-cost regional sub- TA: Provide consulting services for design and overloaded, leading to Increase transformrer capacity and reduce transmission and distribution reinforcement that is supervision of distribution investment progrms and for high power losss and inefficient reactive power flows, responsive to local demands and provides utility- distribution-planning tudy, including the training of burnout of transformers. Strengthen capacity for distribution, grade ervice quality, local staff. Low voltages damage planning, and management of networks. consumer appliances. Investmit: Finance network rehabilitation, Frequent supply outages. replenishment of stores, communications equipment, SCADA system, vehicles and computers. High technical losses, Implement progrm to reduce both Complete reorganization of sector and ensure that TA: Conduct sector reorganization study, theft of electricity, technical and nontechnical loses. Begin it enables power utilities to operate on a loss-reduction study, and help with mnanagement and staff uncoUected revenues, and sector reorganization and management commercial basis. training. management condrints training. cause inadequate financial Investmiet: Finance disribution network rehabilitation performance and computers for cusomer and network managemnent. Sector bulk-power Prepare least-cost bulk-power expansion Participate in regional bulk-power pool that TA: Undertake power generation and power supplies depend on single program with regional interconnections. provides reliable supplies at least cost, interconnections study that complements the ongoing supplier. Multilateral Working Group Regional Power Interconnection Study. NJ ANNEX 1: Sector Strategies Matrices Table 5: Municipal Roads and Facilities | Issues Short-Tun Strategy LgTerm Strategy I High urban transport Begin coordinated program to Same as short-term but TA: Support project preparation. Help inventory and chasify roads and drains and costs and travel tirmes rehabilitate, inmprove, and maintalin involving more muniicipalitiea improve traffic circulation. Undedake short s"deg to improve trafric flow, and - Safety problems. existing main and secondary roads and and widened system implement tudy recomrnendationst High incidence of drains in selected municipalities. coverag6e. flooding. Destction Remove rsjor traffic botenecks Invesahnmet In selected municipalities (initially in Gaza but later in main West Bank of existing through better traffic planning, signals, towns and vilages) undertake repairs atd rehabilita of main and secondary roads infrastructure achannelization, road marking, and and drains. services ignage.n. Improve municipal Focus initially on selected Gaza Same as shor-term but TA: Assistance with project preparation. facilities (marketa, municipalities. Begin coordinated involving more municipalities slaughter houses, program to rehabilitate, improve, and and widened coverage. InvesbnLext: In selected municipalities and village, initaly in Gaza but later in office, recreation maintain existing municipal buildings main West Bank towns and villages, rehabilitate treet lighting, markets, abattoirs, facils. , et.). and facilities. ad other key nwnicipd building. Preserve exidting municipal assets. Strengthen municipal Audit existing institutional Same as short-term but TA: Conduct management audit of elected pilot municipalite. Prepare capacity to plan, arrangements, systems, and practices in involving more municipalities investment, institutional, and development plans for seleted pilot cities. Prepare finance, manage and four or five pilot municipalities, initially and widened coverage, regiond investment, institutionl, and tuctur plans for Gaza. maintain urban concentrated in Gaza. Prepare and drawing on the lessons services and facilities, implement municipal invedment and learned from pilot cities. development plans. Involve important Implement regional community groups in determining invedment, insitutional, and municipal priorities and investment and structural pln for Gaaz. development plans. Prepare regiond Prepare regional, intitutional investment, institutional, and stucture and structure plan for West plans for Gaza. Bank. ANNEX 1: Setor Strategies Matrices Table 6: Housing ile Short Twm State Long-Tcrn Strg EAP Atieos Low qua of bhsig. Support UNWRA eonstructin and Reviw tenurc twaon of camp resdns. TA: Study opto for mprovig camp h ig ad intgring cp into Overrowding in rfue rchabilitatio efforts. Develop progrms Upgradc setluncats and, whtem feable, exiing municipalitiea. cam and to encouage upgrading of low quality inegrat thn io lw eommuity. mi paJ I, urbon hosiog and to rtlieve I stnmat: FuDd UNRWA's houe rchabilittioa progrm in the camps and for patclarly in Gaz. ovcrotwding. constructo of housa for low and moderate-moome. houseolds. Taret and ena] overcrowding. minimiz ubsidies and involve privte seetor as much as possible. Low quaity of vtilage Devebp sutainable vilbg-housig Implemt utainbl villac honw TA: Study opxs for proving qua ad availability of villg housing usg hou,sig. improvancut program. ip program, private initiive as much as possible. High coa and costrind Review conbaints an effective qoeatin Improve tie and land regstion and TA: Anltyz impact of rgulatory and fiscal camsts an Isd-nstet access to developable, of land mAket. Investigae use of tale conveyacing syatan. Reform urban opeabi and devcpmet m selected mu ales. Asist muicipaities to srviced urban lad. Poor lad in a0 for hmsing development. planing kws ad development reguli. revis land-us plms aid develop feasible optim and incctives for inreaing records on land regisaion Review opt for npovig record md Clarify rol of cdl goveruenat wfit the availability of land. Identify priority ara ad optvon for regulatory rtfoam. and weak conveymnug oveicg systems. ect o housing- related infrasucte. syskem. Encreae eal aihrty ovcr charges and tu=. Lack of credit for housng Stpport developmnt of the consition Same as shorterm but with iceuaed TA: Study the feusibilit of a program to finc addiions nd cmanpleki to conatncti_ and for finane mkt as part of overall financial focus on log-em motgage flame and exiting housing. Hlp design tchnical ausice program to familiarize fiacil montgsg fiace. syasm development. Review optima for o integtig housmg finc into stey satutKm and deciimmaker with issues elatd to housing fmce sysm d inprwing aecce to mortgae financ and for te overall fincial system. inp osce of integraing it into oveall sector develoent. 1sah pilt schm using the privde sector to thc extent pouible. Invement: Develop and latinch pilot mortgagfi c prom for hmnm iniprovement. Finace PHC program, improve its s uabt. Lack of an adequt Eaine option ad defime rolus of key Establish an insituion with rsposblit TM Provide assance and traig to key inutms ad Aor ad help dcfine istiutiona framvwork for 5dm, inchadg eetml and locl for policy development. Reform egal snd and prioize policy and isutial optma for reform at central and loeal vel. hesig polky govemnt and the privat sector. regultry framework. Contme spport for development Develp conseu on approprt privat sctor developcent of lad ad poliies, with emphasis on crating an bhaing mukeb. envhUaM2t conducive to pivte sctor involv'eolent. Shotage of hosing for Dcvelp program to facilitae the hnplmet and refine program TA: Conduct study on reItunces' likey demand for housing ad policy optma rtdunes. coans ctio of houiog for returnees for responding to this demand. usig the private ector as much as possble. I't. ANNEX 1: Sector Strategies Matrices Table 7: Telecommunications Issle J Short-Tenm Strtegy Long-Term Strategy EAP Acions Little Palesinian capacity Establish a management contract for Gaza Etablish permanent institutional arrangements with TA: Help with management and saff trmining and to mange telecoms after and Jericho and train Paleauinian gaff in either private or government-run public utilities to atudy public utilities' organization. withdrawal of the Israeli digital switching. Define permnnent implement the policies of the governing authority. Civil dministration. institutional atDcture for the ector, including the role of the private ector. LArge unmet demand for Imtplenent new digital exchange in New company would insall 50,000 additional lines Inveshneit: Expand Jericho telephone exchange. telephone service. Jericho and expand connectiona in West for Gaza and 7,500 for Jericho by 1996. Increase Bank. service coverage to at least 15 per 100 by the year 2000 as compared with the present 2.9 per 100. ANNEX 1: Sector Strategies Matrices Table 8: Education Issue Short-Term Strategy J Long-Term Strategy EAP Actions l Financial crises in private Provide funding assistance to Introduce cost-cutting measures. TA: Develop financial plans, strengthen education preschool and university universities and preschools. Increase student fee. Diversify institutions' capacity for financial management. systems following sharp funding sources. Investment Help fund recurrent budgets of the drop in foreign university and preschool system on a temporary assistance. basis. Unsatisfactory quality of Provide books, library materials, Revise curriculum. Prepare or TA: Provide funding to create an institute for the formal education. laboratory equipment, sports facilities. purchase new texts and teaching review of educational objectives. Help prepare a Improve student exit examinations. materials. Revise and upgrade curricular framework, develop teaching materials, Increase preschool teacher training. teacher training. Updatc upgrade preschool teacher training, and revise exit students' exit examinations. examinations. InvestmenL Purchase books, laboratory equipment, computers, and teaching aids. Deteriorated education Institute emergency school Replace obsolete and inadequate TA: Prepare a school-mapping study to support infrastructure. maintenance program. schools. development of education infrastructure master plan. Investment Rehabilitate and improve existing school buildings and facilities. Add new classrooms where essential. Assumption by the Analyze the operational policies for Establish Palestinian institutions TA: Conduct a study of institutional options and help Palestinian authority of the CA's education system. Define to manage, make policy for, and develop Palestinian capacity to collect and analyze responsibility for the options for teacher qualification, develop the sector. Merge the education statistics. government education personnel practices, and compensation educational systems now system. policies. operating under CA and UNRWA control. Underinvestment in Help develop a program for the Develop a mariet-responsive TA:Conduct a tracer study of graduates of vocational vocational education routine assessment of employment vocational and higher education schools and universities. Create task forces to assist leading to scarcity of history of graduates of vocational system by establishing closer in the selection and development of vocational selected technical skills. training programs. Review the links between employers and training programs and the training of instructors. offerings of vocational schools. schools. Establish mechanisms Identify skill shortages. Develop new for design and rapid introduction vocational curricula and train of new training activities. instructors. Education interrupted by Assess the magnitude of the learning Develop a remedial education TA: Study the magnitude of the problem and help the political unrest. deficit and its distribution among program for those who have identify and cvaluate options for rectifying leaniing groups of children. suffered significant deficits. deficits. ANNEX 1: Sector Strategies Matrices Table 9: Health Issue | Shoxt-Term Strtegy Long-Tena Strtegy |EAP Acl Unsustainably high levels Limit expansion of health care facilities to Develop national policies on the assessment of Investment Limit investments to the renovation of of spending on health essential basic services, medical technology, financing of health care existing facilities and the repair and upgrading of care. through user charges, and develop a national equipment. health insurance schemen. Fiancial crisis in the Provide limited upport for esential Develop a national health insurance scheme. Investnmut: Provide emergency financial assistanee to voluntary health care ervices and to maintain specialist ervices Reduce the operating costs of the health care qualifying private, voluntary hospitals an health clinics. ector following and facilities until new financing system and control the adoption of new withdrawal of foreign mechanisms and cost controls can be technologies. contributions, introduced. _ Rapid deterioration of the Provide emergency asistance for the Create a viable health insurance and health Investmet.: Provide funding for the renovation of health care infrastructure repair, renovation, and maintenance of financing sysem. Control expansion of the health seriously deteriorating basic health care facilities. facilities falling into disrepair. infrastructure. Reduce operating costs throughout the system by identifying and adopting cost- effective procedures. Following self- Carry out a prefeasibility studies of the Either conduct prefeasibility study, make TA: Finwane and supervise prefeasiblity study. government, sharply need for, and economic feasibility of invesment decision, and construct facilities-or reduced access to Israeli constructing, a burns unit, cancer care make agreernts with other suppliers of services referral facilities. facility, and reference laboratory. in the region (depending on the outcome of the feasibility tudy). Need to develop Analyze operating policies of the Civil Introduce common cenical procedures, health TA: Fmance and supervise studies of existing programs operational policies and Administration and UNRWA. Plan for policies, peraonal systems, equipment lsts, and provide expert conutant services in health care, assume responsibility for a Palestinian assumption of responsibility for maintenance schedules, etc., in a unified organizational design and management. government health the Civil Administration program and Paledsinian health care system. service. eventual integration of the Civil Administration and UNRWA programs. Need to create a national Define options for creaing a unified and Develop a regulatory regime and health care TA: Fnance and engage local ald international health care system from a disciplined health care system from the fiancing sysem that facilitates more cost- consultancies to help design institutions and draft laws, complex, highly pluralistic existing institutions. effective provision of health care. rules, and regulations governing the health care sytem. existing sytem. ANNEX 1: Sector Strategies Matrices Table 10: Agriculture Isse Short-Term Stratey Long-Term Strategy EAP Acion Current regulatory framework is Develop new regulatory policy Develop trong regulatory and policy TA: Study options regarding future ector policy unsuitable for sustainable development; framnework; improve external market analysis, focuuing on market access, and agricultural trade. external market acces and regulations for access, internal transport and natural natural resources managenent and intemal transport need improvement; resource access trough negotiations. structural adjustments in production acceu to and management of natural Strengthen water resource management in systems. resources is distorted. Gaza. Weak performance of public ector Design new institutional structure; Esablish core public ector function TA: Study future structure and functioning of public institutions; NGOs have taken over many maintain current NGO functions until through new Department of Agriculture; sector in agriculture, and role of NGOs. public ector roles, but these activities are new structure has been established. train staff; farm-out implementation of uncoordinated and duplicative. Policies Strengthen water management, starting in public ector functions to the maximum Investment: Support establishment and development and institutions regulating access to Gaza. Study land resource management. extent through NGOs and private of Deparment of Agriculture, including staff natural resources, food afety and animal Strengthen control over pesticide ue nd sector, define and negotiate new training. Support ongoing agricultural extension and heath services sm ineffective, food safety; strengthen animal health supplementary role for NGOs, avoiding animal health activities of NGOs, and pesticide services. overlapping functions regulation of PEPA. Adjustment of narket and natural resource lmprove access of farmers to new Provide access to new techsologics by TA: Support development of alternative technologies acces wiU necessitate change of current technologies through education and developing strong education system, for olives and fish. agricultural production patterns, which are training. Focus new training particularly with major emphasis on vocational unsutainable. on women. Hold back major new training, applied research, and extension Invesmnt Support vocational training and women investments until new policy framework services, notably for women and smaUl related programs of NGOs. in place. farmers. lnadequate access to financial resources Support establishment of Development Support development of strong private TA: Study financial needs of smal farmers and need for the private sector in the face of Bank and improve financial regulatory sector financial system, geared towards for pecial credit arrangements. inreasing demand for capital in framework. Study need for special large and smal farmers. agriculture. channels, or improve exidsing channels to Invebuset: Support drilinft of private wells in the provide finance to mall-sale farmers. West Bank, and other private sector investment through Development Bank (See Table 13). Poor infrastrcture to transpor, market Support investment in rural Organize ustainable support for Investment Construction of rural roads and and export agricultural products; water infrastructure. Repair exising public maintenanee of rural roads, management refurbishment of public water well systems. related infrastcture run down and in wels in West Bank. Support and expansion of municipal markets and Implementation of environmental investments, like need of refurbishment; the environment environmental rehabilitation laughterhouses. Improve infrastructure water infiltration schemes, erosion control and has substantially deteriorated. (reforestation, surface water harvest), for agricultural exports. Strengthen reforestion. management of mral environment. ANNEX 1: Sector Strategies Matrices Table 11: Enviromment, Cultural Resources and Tourism Issue Short-Term Strategy Long-Term Strategy EAP Actions Lack of Palestuian government Make PEPA operational. Develop Help recruit and train authorities TA: Support development of organizations to oversee environment, frameworks for organization, until they can undertake full range of management framework for cultum resources, and tourism. legislation, and procedures. Train responsibilities. Increase number of environment, cultural resources, and managers in planning and local offices and operations. Use tourism sectors. Help prepare administration. economic incentives to promote legislation, institutional structure, responsible management of administrative structure, and financial environment. Coordinate public and management systems. private sector investments in tourism. Inclusion of environmental, culural, and Institute procedures for environmental Implement recommendations of plan- TA: Help prepare for environmental tourism concerns in the economic assessment. Develop procedures for ning studies and integrate them into assessment procedures and cultural development process. review of cultural resources including economic and land-use planning. resources review. Develop long-term chance finds. Protect sites of interest Establish bilateral agreements with planning studies: Environmental to tourists from improper development. Egypt, Israel, and Jordan to promote Action Plan, Cultural Resources, common interests. Management Plan and Inventory, and Tourism Master Plan. Weak management and monitoring Develop and implement a basic water- Expand number of areas with TA: Help design environmental programs for the protection of water quality monitoring system. Support the management plans and expand the monitoring system and special quality and reuse of treated wastewater. development of a groundwater scope of monitoring system. groundwater management and management plan and monitoring Establish monitoring program for monitoring system for Gaza. system for Gaza. wastewater reuse. Investment: Provide equipment for water-quality monitoring systems. Lack of a pesticide regulatory system. Develop a regulatory system for the Implement regulatory system. TA: Support development of a Poor pesticide management practices in registration, importation, application, Upgrade and expand agricultural pesticide regulatory system using both Gaza and the West Bank. and disposal of pesticides. Pilot extension system. Initiate integrated environmental management agricultural outreach programs on safe pest management for selected crops. framework. use of pesticides. ANNEX 1: Sector Strategies Matrices Table 12: Public Administration Isse _ Short-Tenm StrategY LongTerm Strategy [EAP Actions l Developing institutions to Focus on ensuring smooth transfer of Adopt public administration structures that fits TA and Start-Up ExpeYdtur e Trust Funds: Provide take-over govenunental authority by utilizing to the maximum Palestinian needs and goals in the light of adopted financial support for replacement of Israei employees of functions from Civil extent possble existing systems and sector strategies. CA in public finance area by Palestinians. Support Administration. stuctures. Limit creation of new creation of PECDAR, Palestinian Bureau of Statistics, institutions to a few selected ones with and Palestine Development Institute. Undertake studies well-defined functions. on public administration and civil service structures. Support trengthening of accounting and auditing capacity. Management of external Institute system within PECDAR for Expand Palestinian governmental implementation TA and Start-Up Expeaditur Trust Fuids: Support aid and strengthening of coordinating and facilitating the flow of capacity to prepare for a possible greater the development of PECDAR to enable it to carry fully Palestinian implementation external assistance as well as mnanagement responsibility in the light of re-defined roles for the and efficiently its responsibilities as decreed by the capacity. and monitoring of investment and TA UN agencies and NGOs. Palestinian National Authotity. acdvities financed thuugh such asistance. Rely to the maximum extent posible on existing implementation capacity. Macroeconomic Adopt prudent fiscal policy, outward- Same as in the short-term but adapt policies in the TA: Support training of experts in area of pubfic management of elf- oriented trade trtategy as well as policies light of experience with the interim trade, fiscal finance. Undertake studies in the fiscal, monetary and governing entity. to encourage private sctor development, and monetary arrsngements arrived at as a result of trade policy areas. Undertake various studies on ways to the bilateral agreements with Israel, Jordan and promote private ector activity. other countries. I. ANNEX 1: Sector Strategies Matrices > Table 13: Private Sector Issne |Sort-TeOm Strategy ILg-Term Satr EAP Actions Antiquated legal systems Compile and clarify the body of laws in Modernize and unify business and commercial laws TA: Complete and publish legal inventory of with different laws for use in the OT. in the OT. businesa/commercial laws covering, inter ais, contracts, Gaza and the West Bank. real estate, banking, securities, customs, tax, labor and companies law. Inactive and Encourage competitive development of Encourage development of leasing, investment TA: Adapt or adopt a unified banking law for Gaza and unsophisticated financial banking system. banking and development banking on a sound the West Bank. Establsh a Bank Supervision Office and sector, economic basis, train bank supervisors. Design an institution-building program for the financial ector, keyed to political - agreements, and leading to a Monetary and Banking Authority. Conduct a study on the design of a Development Bank, based on successful international practice. Lack of insitutions and Simplify procedures for business entry Establish institutions and policies based on TA: Design simplified procedures for business formation support services for small- and operations, economic policies of the Palestinian self-governing nd registration. Staff and equip a business medium-scale businesses, authority. Focus on providing high quality, low licensing/registration office. cost economic and social infrastructure. Lack of Study institutons and policies for short- Establish institutions and policies which enhance TA: Conduct a study to recommend policy and indtutions/policiea to term impact on export and investment the role of markets and do not distort the link institutional alternatives for trade development and promote exports and promotion. between performance and profitability. promotion, trade finance, product innovation and new investaent market development, and sandards and intellectual property rights. Conduct study to recommend policy, regulatory, legal and institudonal measures to attract ocal and foreign investmens. Annex 2: Technical Assistance Program by Type of Activity Table 1: Institution Building and Training Activities No. Priority Sector Description Date US * mn Implementing Agency 1 * Agriculture Institutional and Sectoral Policy Study 7/94 - 12/94 0.50 TBD 2 Education Creation of a Pedagogic Institute & Curricular Framework 1/95 - 12/98 2.25 TBD 3 Education Task Force for Vocational Education 1/95- 6/96 0.75 HCE 4 * Education Organizational Options For A Palestinian Education Authority 5/94 - 12/94 0.20 HCE 5 Power Management/Staff Training Gaza and West Bank 1995 - 1996 1.00 TBD 6 Env.. Cult. & Tour. Environmental Management Framework - Parts A+B 9/94 - 12/96 0.50 PEPA 7 * Env., Cult. & Tour. Environmental Assessment Procedures 4/94 - 12/94 0.10 PEPA 8 * Env., Cult. & Tour. Design Gaza Ground Water Monitoring System 1/94 - 1/95 0.30 UNDP 9 Env., Cult. & Tour. Design of Environmental Standards and Monitoring System 9/94 - 6/95 0.30 PEPA 10 Env., Cult. & Tour. Environmental Action Plan - West Bank 7/94 - 6/95 0.70 PEPA 11 Env., Cult. & Tour. Environmental Information Center 12 mos. 0.50 PEPA 12 Env., Cult. & Tour. Cultural Resources Management Framework and Inventory 7/94 - 12/96 0.50 Comm.Arch. 13 * Env., Cult. & Tour. Tourism Development Authority & Development Plan 6/94 - 12/95 0.50 HCATI 14 Env., Cult. & Tour. Parks and Protected Area Management Plan 1/95 - 12/95 0.20 PEPA 15 Health Design and Implementation of A Health Insurance Scheme 7/94 - 7/95 1.25 PHC 16 Health Institutional & Regulatory Framework for the Sector 1/95 - 12/95 0.75 PHC 17 Housing Seminars on Housina Policy 1995 0.40 EDI/PECDAR 18 * Public Admin. Aid Management Information System 5/94 - 7/94 0.19 UNDP/PECDAR 19 Public Admin. Establish PECDAR Accounting System And Disbursement Procedures 1/94 - 5/94 0.05 PECDAR 201 Public Admin. Budget, Tax, Treasury, Public Investment, Aid Coordination Advisors 7/94 - 6/96 2.40 PECDAR/IMF 21 * Public Adrnin. Trainina in Budget, Tax, Treasury 1994 0.18 PEeDARnMF 22 Public Admin. National Income Accounts 1994 0.40 PBS 23 Public Admin. Trainina In International Procurement 1/94 - 5/94 0.08 IBRD/ALO 24 * Public Admin. Palestinian Bureau of Statistics - Organizational Support 1994 0.25 PBSAJNDP 25 Public Admin. Training For Palestinian Managers In Civil Administration 1995 - 1996 1.50 PECDAR 26 Public Admin. Training in Project Analysis and Project Management 6/94 - 12/94 0.20 EDI/PECDAR 27 * Public Admin. Palestine Development Institute - Organizational Support 1994 0.20 PDI 28 * Public Admin. PECDAR - First Year Organizational Support 1994 3.00 PECDAR 29 Public Admin. Train Public Sector In Financial Management 1/95 - 12/96 0.88 PECDAR 30 Public Admin. Train Government Auditors 7/94 - 12/94 0.50 PECDAR 31 Public Admin. Upgrede Private Sector Auditina & Accountina Profession 9/94 - 12/94 0.13 PECDAR 32 * Public Admin. Uniform Accounting System for Municipalities & Financial Situation at 12/93 7/94 - 10/94 0.25 UNDP 33 Private Sector Creation of Unified Legal and Regulatory Framework for Financial Sector 6/94 - 12/94 0.25 TBD 34 * Private Sector Design & Establish Palestinian Monetary & Banking Authority and Trainina 6/94 - 12/94 0.25 TBD 35 * Private Sector Legal Inventory and Publication 1994 0.70 TBD 36 Private Sector Support Systems amd Institutions for Business and Exports 1994 0.15 TBD 37 Solid Waste Study of Institutional, Financial & Privatization Arrangements 1995 0.51 TBD 38 * Telecoms Trainina for Telecommnunications Operations and Maintenance 5/94 - 7/94 0.33 TBD 39 Telecoms Joint Institutional & Regulatory Study with Electric Power and Post 7/94 - 12/94 0.85 TBD 40 Transport Road Maintenance and Rehabilitation Study Includino Institutional Framework 7/94 - 12/94 0.80 PECDAR/RPIU 41 Transport Training For Contractors/Enaineers And Consultants 7/94 - 12/95 0.35 RPIU 42 v Water Institutional Development Specialist 4/94 0.02 PECDAR/Bank 43 Water Operations and Maintenance Support - Gaza, Nablus and Hebron 7/94 - 6/96 1.20 UNDP 44 Water Instit./Organiz. Study for the Creation of Gaza Water & Sewerage Utility 7/94 - 11/94 0.20 PECDAR 45 Water Needs Analysis and Training Program Implementation 1/95- 12/96 1.64 PECDAR _ TOTAL 28.20 i Highest Priority Technical Assistance Activities 1-i1 Annex 2: Technical Assistance Program by Type of Activity Table 2: Project Preparation and Implementation Activities No. Priority Sector Description Date US mn Implementing Agency | 1 Education Project Preparation Consultants 1994 - 1995 1.20 PECDAR 2 * Power Gaza And West Bank Project Preparation 7/94 - 12/94 1.30 JEDCO 3 Power Project Management Implementation Unit 7/94- 10/98 4.10 PECDAR/PIU 4 Env., Cult. & Tour. Environmental Education and Awareness Program 1/95 - 12/98 0.50 PEPA 5 Env., Cult. & Tour. Implement Gaza Ground Water Management Plan and Monitoring Program 1/95 - 12/98 2.00 UNDP 8 Env., Cult. & Tour. Implement Monitoring, Labs & Data Program 4/95 - 12/96 2.00 PECDAR 7 I Mun. Rds. & Fac. Short-term Specialist Consultants for Municipalities 7/94 - 8/96 0.70 Municipalities 8 * Mun. Rds. & Fac. Design and Implementation Consultants 7/94 - 8/96 0.80 Municipalities 9 Mun. Rds. & Fac. Municipal Roads Implementation Supervision 1994- 1995 2.10 PECDAR 10 Public Admin. Public Information Strategy 1995 0.25 PECDAR Z 11 Public Admin. Census Implementation 1995 - 1996 4.70 PBS 12 Private Sector Creation of Palestinian Development Bank 1994 0.10 TBD 13 Solid Waste Translation & Environmental Reports for 5 Designed Landfill & Transfer Stations 7/94 - 9/94 0.09 TBD 14 Solid Waste Project Management Implementation Support 7/94 - 8/96 1.50 PECDAR/PIU 15 * Telecoms Prepare Bidding Document for Jericho Exchange 5/94 - 6/94 0.02 Consultant 16 Telecoms Management Contract 7/94 - 6/96 2.00 PECDAR 17 Transport Road Program Implementation Unit (RPIU; 7/94 - 8/9e 2.05 PECDAR/RPIU 18 * Transport Preparation of Immediate Road Rehabilitation Program 4/94 - 8/94 0.60 PECDAR 19 Transport Design of Villace Roads Program 1/95 - 6/95 0.30 RPIU 20 _ Water Project Preparation Facility Including Well Rehabilitation 4/94 - 9/94 1.11 PECDAR 21 Water Water And Urban Roads Project Management Implementation Unit 7/94 - 3/98 2.30 PECDAR/RPIU I_I TOTAL 29.71 Highest Priority Tochnical Assistance Activities Annex 2: Technical Assistance Program by Type of Activity Table 3: Policy Studies No. Priority Sector Desoription Date US $ mn Implementing Agency 1 Agriculture Agricultural Trade Study 1/95 - 3/95 0.20 TBD 2 . Education School Mapping Study 7/94 - 12/94 0.18 UNESCO/UNDP 3 Env., Cult. & Tour. Natural Resources Management Study 1/96 - 6/96 0.40 TBD 4 Env., Cult. & Tour. Coastal Zone Management Plan/Oil Spill Contingency Plan TBD 0.40 PEPA 5 . Health Harmonize UNRWA and Civil Administration Public Health Services 7/94 - e/95 1.00 UNRWA/PHC 6 . Housing Land Use Regulations 6/94 - 3/95 0.28 PECDAR 7 Housing Housing Policy and Institutional Development 7/94 - 6/95 1.00 PECDAR 8 Housing Housing Finance Study and Training 7/94 - 12/94 0.75 PECDAR 9 . Mun. Rds. & Fac. Urban Development, Planning & Management 1994 0.80 TBD 10 * Public Admin. Public Administration Task Force 1994 0.40 PECDAR 11 Public Admin. Civil Service Task Force 1994 0.20 PECDAR 12 ' Public Admin. Macroeconomic Studies: Palestine Development Institute 1994 - 1996 0.60 PDI 13 Public Admin. Socio-Economic Survey: Living Standards Measurement Survey 1995 - 1996 0.70 PBS 14 Public Admin. Design Model Structure of Central Accounting, Controls, and Standard 7/94 - 12/94 0.40 PECDAR 15 Solid Waste Develop Planning Baseline, Conduct One City Master Plan 7/94 - 6/95 0.69 TBD 16 Transport Long Term Transport Plan 1/95 - 12/95 1.00 TBD 17 Water Water Resources Management Study 2/94 - 6/95 0.68 UNDP 18 Water Water and Sewerage Utilities Study - West Bank 7/95 - 12/95 0.26 GTZ/PECDAR TOTAL _ 9.941 Highest Priority Technical Assistance Activities (JJ Annex 2: Technical Assistance Program by Type of Activity Table 4: Feasibility Studies No. Priority Sector Description Date US $ mn Implementing Agency 1 Agriculture Olive Production/Processing 1/95 - 12/95 0.20 TBD 2 Agriculture Feasibility of Fish Culture, Followed by Pilot Study 1/95 - 6/96 0.40 PARC 3 . Education Pre-feasibility Study For Remedial Education For Children 7/94 - 12/94 0.06 UNESCO/UNICEF/HCE 4 Electric Power Power System Expansion Study 1/96 - 6/96 1.00 PECDAR 6 Mun. Rds. & Fac. Municipal Traffic Management Studies: Bethlehem, Gaza, Nablus, Ramallah 1/95 - 12/95 1.00 RPIU 6 Public Admin. Census Preparation 1994 0.30 PBS 7 Private Sector Procedures for Business Entry 1994 0.10 TBD 8 Solid Waste Siting, Design & Env. Reports for Remaining 8 Landfills & Transfer Stations 1996 1.00 TBD 9 Solid Waste Recycling, Resource and Composting Study 1996 0.22 TBD 10 Solid Waste Special Waste Study 1996 0.39 TBD 11 Transport Gaza Port Pre-feasibility Study 3/95 - 12/96 0.30 PECDAR 12 Transport Civil Aviation Feasibility Study of Qalandia Airport TBD 0.50 PECDAR 13 Transport Jordan River Bridge Feasibility Study TBD 0.10 PECDAR 14 Transport Measures to Improve Movement Between The West Bank & Gaza TBD 0.30 PECDAR 165 Water Waste Water Treatment & Reuse Strategy-Study (A) & Implementation (B) 6/94 - 4/95 0.41 PECDAR/Bank 16 Water Ramallah Sewerage Master Plan 7/94 - 11/94 0.29 JWU/UNDP 17 Water Study of Viability of Dirt Dams in Jericho Area 1/96 - 6/96 0.20 TBD 18 Water Sewerage & Drainage Studies - Refugee Camps and Urban Areas - WB & G TBD 1.30 UNRWA/UNDP TOTAL 8.050 Highest Priority Technical Assistance Activities , "' I I 171. 35- ZY ' I OCCUPIED TERRITORIES WEST BANK AND GAZA STRIP 7-- AIRPORTS AIRFIELDS 'J. Yo'bod MAJOR HIGHWAYS TWO OR MORE LANES, HARD SURFACED ROADS t PAILROADS Tvb6s IJ BUILT-UP AREAS Ikorm UNRWA REFUGEE CAMPS Tammun ISRAELI SETTLEMENTS Nablus ARMISTICE DEMARCATION LINES, 1949 NO-MAN'S LAND AREAS, ARMISTICE DEMARCATION LINE, 1949 JERUSALEM CITY LIMIT, UNILATERALLY EXPANDED BY ISRAEL JUNE 1967; THEN ANNEXED JULY 30 1980 INTERNATIONAL BOUNDARIES ,'AL W E T EL N B A1,'N K o otf -n V' MFOITERFZANEAN SEA 74 1). .,RarTiclllcj JORDAN Al Bi,ah E Jerico IANK b r JER GAZA ISRAEL STRIP A fw- MEDITERRANEAN D D SEA 5 1. 'S H6,onl G/A T P ISRAEL /'2ohar YUUS (A M 3: Th. d.-.i-#,-, -d-d Ph. b-d.,i-h- r T f co W-ld 11-1 G,,p, -y -pt- f,- `0 -1., !~ ~~~~ 11 Il II !1 l i~~~~~. I i| ~~ ,,~ il~~~~~~ - iv4 ~~~~~~~~~~~~~~~~~~~~ I . r7 -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~