Oral evidence: The UK’s Development Work in the Middle East, HC 948Tuesday 8 April 2014

Oral evidence, 8 April 2014.

Witnesses

Yossi Mekelberg, Associate Fellow, Chatham House, Tony Laurance, Chief Executive Officer, Medical Aid for Palestinians, and Nicola Cobbold, Chief Executive Officer, Portland Trust, gave evidence.

Chair

Thank you very much for coming in. I need to repeat the constraint of time we have; we will have to finish by quarter to at the very latest. We do want to hear from you, but if we can be brisk we can cover the ground. I wonder if you could just, for the record, introduce yourselves.

Tony Laurance

Tony Laurance; I am the Chief Executive of Medical Aid for Palestinians.

Nicola Cobbold

Nicola Cobbold; I am the Chief Executive of the Portland Trust.

Yossi Mekelberg

Professor Yossi Mekelberg; I am with Regent’s University, London, as Programme Director of International Relations, and Associate Fellow, Chatham House.

Chair

Thank you very much. This is a big question, but we are looking for topical short answers. As you know, we were in the region and talking to representatives on both sides just in the last couple of weeks. I do not know whether the peace process has run into the buffers but it has certainly run into a crisis, with both sides accusing the other of bringing it to a halt, effectively. What do you think at the moment can be done to try to rescue this operation and get it to any kind of space where there is progress?

Nicola Cobbold

The answer is they are working around the clock to try to keep talking. We are getting slightly more positive noises in the last 24 hours, and the important thing is that we all keep going on what we are doing in supporting their economy, aid and so on, to try to keep the stability. In terms of the actual peace process, it appears neither side want it to fail, and both would like to keep talking. What is coming out at the moment appears to be that they really are trying to keep those negotiations going.

Chair

Is that a general view?

Tony Laurance

Yes, although I do not think we would ever have been particularly optimistic about the outcome, and I think that would be the position now. There are two things I would highlight. We have concerns about what is going on while these negotiations continue in terms of continuing settlement building and activity, demolitions and so forth. We also have concerns about the situation in Gaza, which recently seems to be getting steadily worse as a result of the events in Egypt. There is a need to focus on what happens next in different scenarios.

Chair

The question I would ask is: if now is not a time, after all the effort that you have put in, to secure a peace process based on a two-state solution, what makes anybody think it is going to be better in a few years’ time?

Yossi Mekelberg

Both sides are more interested in limping along with the negotiations than finding a solution. The way they negotiate is basically to sideline all of the important issues—the core issues around this conflict—of establishing a two-state solution: borders, refugees and Jerusalem. They always deal with the sideshows: whether Israel is recognised as a Jewish state; the release of the prisoners; expansion of settlements. They are all very important issues, but they are not ones that will resolve the main task—the conflict. As long as they spend their time, such as in the last nine months, not discussing the core issues, there will not be any progress. It is now in both sides’ interest to keep the PA in place, because the alternative for Israel is not very attractive, and the PA, of course, want to stay in power, and the United States do not want to admit failure. In this situation, I am afraid they will probably try to extend the negotiations, but unless they move into dealing with the core issues, there will not be any progress. As a result, of course, conditions on the ground are getting worse and worse.

Chair

We saw that for ourselves, yes.

Fabian Hamilton

The main focus of DFID’s Palestinian Programme is the provision of funding to UNRWA and to the Palestinian Authority in roughly equal amounts. Which parts of this programme do you think have been successful, and which parts could be improved?

Tony Laurance

From my judgment, both of them have been relatively successful. Let me talk about the support to the PA. Of course there are imperfections, but I was involved in the UN process with the World Bank also, in assessing their readiness for statehood, if you like. The outcome of that assessment was pretty positive on the whole. There has been a lot of development over the years in their institutions, and I think that is a vital development in this process. Of course, one of the things that it secures is ongoing stability, and ongoing stability in the region is not to be looked at lightly. In those respects it has been positive and needs to continue. The focus on transparency and accountability also needs to continue. I would argue that DFID should also focus more on the health sector, as I would be bound to do. In terms of UNRWA, similarly, it is impossible to imagine how you can maintain stability with such a large proportion of refugees without UNRWA’s continuing efforts. They have solid frameworks. From my outside knowledge, I think DFID is an intelligent and effective donor that works well with them to improve their performance and results, and to look at areas where they can improve in what is, after all, an extremely difficult environment. In Gaza, in particular, their role is vital.

Nicola Cobbold

I would echo Tony’s words, in that we should not underestimate the fact that stability has been maintained. DFID is a very smart and transparent donor, and it is deemed to be best practice and top of its kind, which is very important. You rightly mentioned that the majority goes to either the support of the PA or UNRWA. Needless to say, while you would like to see more on health, I would like to see a little bit more support for the private sector. Somebody raised the question in the earlier session about sustainability of aid. We have seen in recent years that when aid dropped, when there was the global crisis, we reached a fiscal crisis with the Palestinian Authority—an economic crisis on the ground. Our work is very much focused on seeing how you can develop a more robust economy that is more private sector led. We would very much welcome more support from DFID in trying to grow that and create a more sustainable economy. The work they are doing already, by the way, is extremely important, focused and good. The Facility for New Market Development, which is now becoming a new Palestinian development programme, is very important and very focused. It is looking at how you can encourage innovation and new investment. We would just welcome the opportunity to see more scale in this direction.

Yossi Mekelberg

I agree with my colleagues here on the panel. What DFID is doing is excellent, and the fact that it is accountable and transparent, and especially their collaboration with UNRWA, which has so much expertise and experience in dealing with the conditions on the ground, is extremely important. It is a drop in the ocean if you look at the needs on the ground. UNRWA is growing needs every second—we heard it in the previous session—so there is growing demand, but the supply remains, give or take, the same. The other thing is the political conditions vacillate. It depends on the political situation; conditions can improve or get worse very quickly. Again, as a result, if there is a collapse of the negotiations and it will lead to another round of violence, it will make the operation of UNRWA, and DFID as a result, more difficult. If there is a collapse of the negotiations, maybe it will be time for DFID to differentiate between humanitarian help and state and nation‑building—mainly state-building—meaning to make a separation between the political side and the humanitarian, and not stop the humanitarian help. Regarding the relations between the humanitarian and the political, and which leads to which, my argument would be that the political would lead for economics, and the idea some Israeli politicians try to present is, “There is an economic peace; forget about the politics and human rights and civil rights. It does not exist; it is an illusion.” As a result, we have to look at the politics first and then the humanitarian, so as not to exacerbate conditions on the ground in the daily life of Palestinians. But how DFID looks at state-building probably has to change if there is no viable peace process.

Fabian Hamilton

You have anticipated my question to an extent, and you have answered it. That is: if the peace process does fail, as looks possible, how do you think DFID should respond? I do not know if our other panel members would like to answer that.

Tony Laurance

Whether or not it fails, the obvious point at the moment is that it has not led, after all these years, to a political solution. This is a political crisis that has been going on for 60 years. The idea that we can just continue paying for it seems to me something we must begin to challenge. I do not think the taxpayers realise that this is one of the most aid‑dependent economies in the world and it has very debilitating effects, in my experience and opinion, of all kinds. One thing I would like to see happen—I do not know how it can happen—is more of the costs being borne by the occupier. Until the costs of this occupation are felt in the pockets of the great stretches of Israel that are relatively protected from this ongoing crisis, I do not see how things are going to begin to change.

Fabian Hamilton

Forgive me for interrupting. I was going to go on to ask whether you think that DFID should withdraw its aid and leave Israel to pay for the occupation. Some people argue that by supporting public services in the Occupied Palestinian Territories, donors are just “funding the occupation”—I say that in inverted commas. Should DFID withdraw? When should DFID withdraw?

Tony Laurance

I do not think that, because of the disastrous consequences it would have for the Palestinians and for stability, but I do think that there ought to be a rather more robust negotiation with Israel about sharing the burden of that cost, if I can put it that way. I do not see why that is outside the realms of possibility. In other words, you continue the programme but you, as it were, invoice others.

Fabian Hamilton

Have you anything to add to that, Nicola?

Nicola Cobbold

For anyone who does not know the Portland Trust, we are a British not‑for‑profit. We have offices in Tel Aviv and Ramallah. We are very much focused on the economic drivers of conflict resolution and how one can bring about resolution of this conflict through economic drivers and processes. We have always recognised—and we talk about this “triple helix”—that in order to bring an end to this conflict you need a political resolution and, absent that, a process, which we may or may not have; you need a viable economy; and you need security. You need all three of those at the same time and running. If the political process does now collapse, I do not think we can afford to allow the security and economy to collapse as well; therefore, it is almost more important to try to maintain some of those in order to bring back the political process. I would argue that we should look more closely at how we create a more sustainable economy and work with the individuals on the ground to do so. We should try to do our best to maintain stability. This process has not collapsed yet; there is a desire from both sides for it not to collapse. It is even more important, in a way, that we try to push these two pieces of the puzzle while the political process reforms itself.

Fabian Hamilton

Should the Palestinian Authority take over the provision of public services from UNRWA? Should it be the main provider? Could it do it better?

Nicola Cobbold

I am not an expert on either what UNRWA is providing or, frankly, what the PA is providing, but what I do know is the PA is very overstretched at the moment. I suspect there is some expertise in UNRWA. I do not know if the PA has, at the moment, the ability to do that. I am afraid I am not the right person to ask.

Yossi Mekelberg

We face the conundrum that all foreign aid faces. In many ways, by preventing humanitarian disaster, we sometimes sponsor the one that we do not want to sponsor, whether it is dictatorships in some countries or, in this case, the occupation. There is a direct sponsorship of the occupation by doing so. On the other hand, we cannot allow humanitarian disaster for innocent civilians by saying, “Just in order to put more pressure on the Israeli Government, we will make your lives more miserable, as they are miserable already.” We need to find a way to direct it towards those who need it most, but not sponsoring either the inefficient and sometimes corrupt PA—though it has improved a lot—or the occupation itself. This is not an easy task; it is a very difficult task. Another thing is to support Israeli NGOs—like B’Tselem, Machsom or Gisha—that help with the humanitarian side of the conflict.

Fabian Hamilton

That is a good point. Thank you.

Fiona Bruce

You mentioned health, Tony. Since 2008, the health sector has not been a strategic priority for DFID in their Palestinian programme. Why do you think that is?

Tony Laurance

I was not there at the time so I can only speculate, but I think they found a) they had other priorities and they wanted to narrow the focus of their work; and b) there were other players in the health sector, not least from the European Community at the time. The Italians were the shepherd and the EU had quite a big programme. Thirdly, I think they had found their work with the health sector a little frustrating in, as it were, getting effective, measurable results. Those sorts of factors played in. I just want to emphasise that some significant elements of those have changed. In particular, the Italians withdrew from the health sector at one point; so has the EU. There is no European country, as far as I am aware, now playing a major part in this area, and it is sorely needed, for the kinds of reasons I set out in our written evidence.

Fiona Bruce

Yes, thank you. In your written evidence you argue that donors should step in to provide essential drugs in Gaza. Are you confident that this would happen if donors stepped in?

Tony Laurance

I am confident that it would provide a more reliable supply of drugs and disposables to Gaza than has been the case for the last many years. Until Rafah was closed, there was an unquantifiable amount—from most of our points of view—coming through that route, but now there is not, so they are dependent upon supplies that are provided by the PA. Those supplies have been impeded, partly, earlier on, by political disagreements, but now, in more recent years, by the fiscal crisis of the PA, so there are shortages both in the West Bank and in Gaza. The shortages in Gaza are now very acute, and something has to be done about it. Everybody is talking about it, but it has to be high on the list of anybody’s humanitarian priorities. It is leading to crazy situations where people are being referred out of Gaza for very expensive cancer treatments, for example, not for want of specialists and so forth but for want of the necessary drugs to maintain the treatment regime.

Sir Peter Luff

Can I address my questions primarily to Nicola and the Portland Trust? If others want to join in, please feel free to do so. It is clear your organisation plays a valuable role in supporting the Palestinian private sector. We have heard a great deal about your report Beyond Aid, which you did with McKinsey, which has been widely praised. How could DFID best help you further?

Nicola Cobbold

We work closely with DFID and very much welcome partnership with them. You mentioned McKinsey. We did a big piece of work last year with McKinsey where we tried to identify what the potential is for the private sector and how it can help to rebalance the economy, taking some of the burden from the PA. We worked with the private sector and McKinsey to devise a programme to create 370,000 jobs between now and 2030. We focused on five sectors. Most of that can be driven by the private sector, but there are enablers in there that do certainly need help, both from the PA and from the donors. We have put forward four specific areas where we would welcome DFID engagement and involvement. One is a private-sector grant facility whereby a fund in the region of $150 million could leverage in $1 billion in private-sector investment, which could transform the economy. It would help donors work better together and could help cover some of the development costs of major programmes in order to really boost job creation in a sustainable way. We have also been looking at public-private partnerships. If you look at some of the work that needs to be done in some of the sectors in particular—water, energy and waste management—there is a real need for public-private partnerships but there is no experience on the ground, and clearly the British Government has a great deal of experience in this area.

Sir Peter Luff

So it is expertise that you are primarily looking for.

Nicola Cobbold

This is expertise. Infrastructure UK have a record—I think they have particularly worked in Vietnam—of taking and transforming and doing training and helping develop regulation and best practice, and we very much welcome the opportunity to work with DFID and Infrastructure UK in Palestine to do exactly the same in a very targeted manner and approach. This is a very mundane issue but quite an important one: human capital development is very important. We were running a programme where we were bringing in Palestinian middle management to get two weeks’ experience in companies here in the UK, and it came to a grinding halt because we could not find an appropriate visa for these people to come. Originally they were coming under business visas and then UKBA said, “Actually, we think they should be internship visas, even though they are paid by their host companies,” and it came to a halt. We would welcome a cross-Government look at this. It is a very simple, no‑cost process, but it would enable a very fast and efficient transfer of skills to Palestinians on the ground, which would be very important. The fourth area is development impact bonds. On the Israeli side of our work, we are doing a lot of work in social investment. DFID have taken a lead in the process of development impact bonds, which is a new mechanism of bringing aid. It is outcome-based. You have private and institutional investors paying up front for the delivery of services, usually by not-for-profits but it could be by for-profits, to deal with social issues—it could be recidivism; it could be homelessness. In Palestine we are looking at the reduction of type 2 diabetes, and training to enable people to work in the IT sector. Depending on the results, normally Governments but in this case potentially donors could pay out on the results, and therefore you shift the risk to the private sector, you achieve better social returns, investors receive social and financial returns, and hopefully you start to really deal with some social issues in a meaningful way. DFID have taken the lead with a working group with the World Bank, the Bill and Melinda Gates Foundation and others in looking at developing a development impact bond in Uganda for the eradication of Rhodesian sleeping sickness, and we would welcome DFID engagement in trying to develop some development impact bonds in Palestine.

Sir Peter Luff

Have you had any indication of the response to those various requests?

Nicola Cobbold

Yes. We are working closely with DFID. We are exploring the Palestinian grant leveraging facility carefully with them, and the public-private partnership as well. The development impact bond has a bit further to go; there is no expertise on the ground in the Jerusalem office there, but we are in discussion with them. On the visa, as an interim basis, the British Council have agreed to sponsor the programme and create a tier 5 sponsorship bond for us to enable the programme to go, but it remains expensive, so we would still welcome some cross-Government support in trying to resolve this issue.

Sir Peter Luff

You mentioned the Jerusalem office there. Without pre‑judging our report, we were impressed by what we saw of the team in Jerusalem. They told us a lot about the Palestinian Market Development Programme. What is your view of that programme?

Nicola Cobbold

It is a very good programme. It is very targeted and focused. They are looking at trying to help the private sector become more innovative and encouraging them to invest. My one argument might be scale: it is a very small programme, and it is a very small amount of DFID money as a percentage of the total aid being given by DFID. The Palestinian grant leveraging facility that I mentioned in essence is very similar. It is a 15% grant, as opposed to matching funding, which is what the DFID programme is, to really encourage major investment and encourage potential investors to really transform the landscape. It is a very good programme but we would welcome the opportunity to see that scaled up, perhaps through the grant leveraging facility.

Sir Peter Luff

Without going into the problems in Area C, which colleagues will turn to a little later in the questioning, I was struck by the number of problems, obstacles or irritants put in the way of Palestinian economic development by apparently petty Israeli requirements—for example, the lack of availability of 3G in the Palestinian Territories unless you buy an Israeli SIM card, when you can get it; some of the problems in the banking sector and transferring cash; and the high price for electricity because there is a monopoly supplier from Israel. Are these genuine security problems? How important are they in inhibiting the development of the Palestinian economy?

Nicola Cobbold

There are clearly a number of restrictions that exist. I am sure some are genuine security problems; I suspect some are probably not genuine security problems. What we try to do is focus on what you can do in the circumstances. What can be done? Where are the gaps? What can the private sector drive and achieve none the less? Our colleagues at the Office of the Quartet Representative are trying to address the specific issues you have raised and trying to resolve some of those.

Sir Peter Luff

But your work would be easier if some of these problems could be addressed.

Nicola Cobbold

Unquestionably. The Beyond Aid report and initiative is all about what the private sector can do and drive with some enablers and with some donors. Exactly the same analysis has been used for the Initiative for the Palestinian Economy, which is being driven by the Office of the Quartet Representative and also relies on the lifting of some of the restrictions that you have just mentioned. That would move the dial much faster; there is no question.

Sir Peter Luff

While we were in Hebron, we heard about the Dutch Government’s PSOM programme providing finance to Dutch organisations to invest in Palestinian companies. Is that an idea that the UK Government should look at?

Nicola Cobbold

I am afraid I do not know the programme at all, but yes, certainly. In the Beyond Aid report, which you probably all have a copy of, there are a number of investable projects and we would welcome investment by UK companies.

Sir Peter Luff

Anything you can do to help exports from Gaza, which is getting increasingly problematic?

Nicola Cobbold

Gaza is not an area we have really successfully operated in. As you rightly acknowledge, we work with the private sector, and clearly it is very difficult for the private sector to operate. I suspect my colleagues may be better able to answer those questions. Again, it is an area of expertise for organisations like the Quartet Representative.

Yossi Mekelberg

Let me say something that refers to both health and the economy. As long as there is no freedom of movement, as long as there is some arbitrary decision or “irritant”, as you call it—irritants are not policies, meaning here and there someone decides, sometimes on a very local level and sometimes on a much higher level—it is very difficult to deal with all of these humanitarian issues and develop the economy. For instance, health is, as you know, not only about getting to medical help; it is about sanitation; it is about access to water. In Area C there are places where Palestinians have access to only 20% of the water that settlers have. If you do not have access to water, there is no freedom of movement and it takes, for instance, much longer to get to hospital or any medical treatment; the effect is political. With Gaza specifically, at times it looks like they are not really security issues. Israel has legitimate security concerns, but sometimes you wonder if it is more political than security.

Sir Peter Luff

Or economic?

Yossi Mekelberg

More political than economic.

Sir Peter Luff

Than security.

Yossi Mekelberg

Let me rephrase. The reasons for doing that are political—to weaken Hamas—rather than real security. That is what I meant; sorry if I misunderstood.

Sir Peter Luff

It is okay. Thank you.

Chair

If it weakens Hamas in favour of Islamic Jihad, it does not even benefit Israel, does it?

Yossi Mekelberg

Of course; then it radicalises the others and it gives more fuel to the one that resists the occupation—but within the idea that Hamas is the big enemy. Sometimes, putting this economic pressure on Gaza is supposed not to deal with security: when they say, “We will not let people and goods move out of Gaza,” it has more to do with the relationship with Hamas than with security. For instance, there is the issue—you mentioned the Netherlands—of the scanner. I tried to find out if, for instance, they prevent the use of it for security reasons or because there are not enough—because there are capacity issues. It is very difficult to get a straightforward answer about if the scanner is there or if there is a need for more of them. For the Palestinians, the movement of people and commodities to the West Bank and Israel is paramount, and it affects what happens economically. Israel allows the export of goods, which means some of these commodities move through Israel to the ports in Ashdod and in other places, but will not let them go through the West Bank. They do not like people from the West Bank and Gaza to meet. This is more political, it seems to me, than pure security. This affects all this kind of development if you do not have a certain level of activity that derives from people moving from one place to another and they cannot use cellular phones or technology generally. Even the Defence Minister, Ya’alon, said at one point or another it is very important to have some economic activity in Gaza, because otherwise there will be disaster, but the military, which he is in charge of, does exactly the opposite. Just a small anecdote: there is a marathon athlete who wants to compete in the West Bank and is from Gaza. They say it is not a humanitarian issue and he is not allowed to compete in the West Bank. I hear about 53 kids who want to compete in a musical competition in Jerusalem, and still there is a debate between the security forces and others about whether they are allowed to participate in the competition. This is mundane. It cannot be seen as a real security issue. You really wonder whether it is some more punishment of some sort for having Hamas in Gaza or it is a real security issue.

Chair

They refer to Gaza as a terrorist entity, which seems to justify anything.

Yossi Mekelberg

If you define it as a terrorist entity. The fact that the Government of Gaza, or Hamas, is regarded—this is also something that needs to be addressed at one point or another—as a terrorist entity does not mean that all the people that live in Gaza are terrorists and have to be punished for it. That is a different issue.

Chair

We were not able to visit Gaza. Hamas were quite happy to let us in but the Israeli authorities were not. We got to the Erez crossing, which is a huge deserted building with hardly anybody going in or out of it—in fact, movement is non‑existent apart from a few limited specialist categories. What can the UK Government usefully do in that context? It was suggested to us that the Israeli authorities were putting a straitjacket on Gaza right up to the point of not having a humanitarian disaster, but anything that fell short of a humanitarian disaster Israel regarded as justified. As you say, is it security or is it collective punishment? What we were told was support for Hamas has withered away, but it has not gone to Fatah; it is going to Islamic Jihad. Is there any sort of rationale whereby you can persuade Israel that what they are doing is intensifying the problem?

Yossi Mekelberg

Israel has legitimate security concerns, whether it is the rockets that are launched at Israel or whether it is letting suicide bombers cross. Those are all legitimate security concerns that Israel has the right to highlight. Between this and the policies that Israel takes there is a huge gap. That is why I think the international community should help Israel with the security issues but, at the same time, just keeping it above a humanitarian disaster is not good enough. People in Gaza deserve just to live, not to suffer from—

Chair

The information we got in terms of what they are doing was that it is heading for humanitarian disaster. The aquifer is becoming increasingly polluted and saline and not usable; the power plant is not functioning and yet a connection that could easily be provided from Israel is not being mooted; there are indications that the gas programme might be disrupted, which could be helpful; and the power plant is dependent on cash from Qatar, for all the wrong reasons from Israel’s point of view. Is there not a realistic possibility that Gaza could become, as one group said to us, uninhabitable within the space of about 18 months?

Yossi Mekelberg

We are on the verge of it. Another round of violence might make it even worse. The message from the international community should be very clear: to differentiate between the legitimate security concerns of Israel and the infliction of all this misery on the Palestinians. Sometimes there are 12 or 14 hours of power cuts there, which affects, again, health and hospitals. You mentioned sanitation—all of this. We need, with donors’ money, to ensure that they are functioning but, whatever happens, they are not then destroyed or harmed by any military operation.

Chair

We had a Skype exchange with three young businessmen in Gaza—that is the best we could do—who were saying first of all you had to adjust your working practices to when the power was on, so you had to work 16 hours when it was on through the night and then catch up on your sleep during the day, or whatever. When they did any international business it was very difficult to do it, because they could not get out of Gaza to meet clients; it could only be done through the internet, and they could not then get the payment through, because Israel controlled the supply of money. You could do a deal and then you would not get your money in. There are a whole variety of things that seem to undermine day-to-day practicalities.

Yossi Mekelberg

Yes, but for them the most important thing is to trade with Israel and the West Bank, more than exporting beyond Israel.

Chair

That is what they want to do, yes.

Yossi Mekelberg

Trading within Israel, the West Bank and Gaza is the shortest route for so-called export.

Mr McCann

We have touched on Area C already, and it took a lot of our focus when we visited the Occupied Palestinian Territories just a few weeks ago. The World Bank estimates that if the Palestinian Authority was responsible for Area C it could generate $3.4 billion for the economy, which would in turn mean that we would not have to give the Palestinian Authority any aid. But Israeli settlements expand and Israeli settlements get preferential access to resources like water at, we understand, cheaper prices, and the Palestinians have huge difficulty in securing construction permits. I have visited Sderot. We were talking about Gaza a few minutes ago. I have seen the rockets that are fired and I know that the people there have got 17 seconds to take cover. But on the issue of security, is there any justification for the refusal of construction permits to Palestinians on the grounds of security in Area C? Yossi, it would be good to hear from you first.

Yossi Mekelberg

First of all, yes, the people of Sderot deserve to live without the threat of Qassam or any other rockets, and the Iron Dome, all in all, does the job. But as for construction, of course it interferes with the economy if there is no construction. In Gaza alone, there is a shortage of 71,000 housing units.

Mr McCann

But I am differentiating between Gaza and Area C in terms of construction here.

Yossi Mekelberg

A lot of people refer to Areas A, B and C like they are the same area. Area C is 61% of the West Bank, so it is the majority of the West Bank. It is not confined to one area; it engulfs all the other areas, which means that Israel is in complete control of the West Bank and, as you mentioned, the resources. In Area C specifically, people are subject to house demolition and do not have access to construction material, and so on and so forth. There is a new report. We used to think there were around 180,000 people living there; it seems, according to a new UN OCHA report, there are 300,000 Palestinians living in Area C, so it is more populated by Palestinians than people used to believe, which means they are all isolated and disconnected from economic activity and from access to resources while they do not, as such, pose any threat.

Tony Laurance

I do not see how the demolition of Bedouin structures—of cisterns, tanks, tents and so on—can be regarded as a security issue under any sort of assessment. That is just a minor example of what is going on quite frequently and systematically in Area C. As soon as any structure is built, it is liable to be demolished because you cannot get planning permissions and now, quite often, the replacement structures that are provided by the humanitarian community are also demolished. We recognise there are security concerns, but security tends to be used as a blanket justification for a policy that clearly has other aims.

Mr McCann

Tony, can I interrupt you there? I really want to get into the heart of this point. We went to E1. We stood with a Bedouin community that had been demolished; they were living in plywood structures with plastic over the top. On the hills on either side there were Israeli settlements where I think the Planning Minister—

Sir Peter Luff

The Housing Minister.

Mr McCann

The Housing Minister—there is an irony. The Housing Minister lived in one of those settlements. I can understand why the people of Sderot feel that they have a security threat from Gaza, because I have seen the hardware that has been fired in there, and I know and can understand the fear of those people who live there. I cannot understand the security fear of people in Israel worrying that they are going to be attacked by a Bedouin community that has some goats at the bottom of a hillside. I am just trying to get a handle on what the security threat is from the Israelis’ perspective from that area.

Tony Laurance

I do not believe there is a security threat from that area. In so far as there are any security threats, they are concerned about securing the border with Jordan and they are concerned, if there ever were a Palestinian state, about whether it might take on the shape or form of Gaza, if I can put it that bluntly. Really, what is going on in Area C is a desire to take over, for the settlers and others, the land and the resources and so on. That is what is happening. You cannot be there and watch it going on without coming to any other explanation of it.

Yossi Mekelberg

It is a secondary—as the Israelis would put it—security threat vis‑à‑vis the settlers. Israel created the problem of the settlers and the settlements, which they themselves do not know what to do with. If you read the news today, the settlers attacked Israeli policemen just this morning. As a result, it is more defending Israel proper. There might be, as I assume, local security issues with certain cells in Area C, as in other places. However, there is no strategic threat coming from Area C to Israel proper. It might be more localised. As a result, if the consequence of this is to punish the entire population, no one can justify it, and they should not justify it.

Mr McCann

One of the issues that we heard a lot about was that much of the land is unregistered and therefore it is designated “state land”. In other programmes DFID helps governance arrangements by helping the Governments of countries—Ethiopia is one we went to in recent times—in the registration of land.

Chair

And in Rwanda.

Mr McCann

In Rwanda as well, yes. Do you think that DFID should provide that tangible support for the registration of land in the Occupied Palestinian Territories? I am seeing a big nod from Nicola.

Nicola Cobbold

Absolutely. Land registration is a major issue in order for development to continue. Quite aside from the Area C issues, it is very difficult for private developers to develop on unregistered land, because you cannot get the title. That is a critical area. In fact, one of the enablers we identify in our Beyond Aid report is land registration. If DFID are able to work with the PA on focusing on dealing with this issue, that would be tremendous.

Mr McCann

Can I ask two final questions? The first is on the expansion of settlements—it has been suggested that their expansion will mean that there are more settlers in the West Bank than there are Palestinians—and the impact that would have on the negotiations, in whatever state they are today, in the future. Do you think that is a real threat?

Tony Laurance

They are some way off that total at the moment. There are about 500,000 settlers compared with 2.4 million Palestinians. One does get the sense sometimes that there is a demographic race going on, which is not desirable for either side. The settler enterprise is illegal and deeply counterproductive to any possibility of a just and fair solution, which is what we are all looking for. It is very sad, to put it mildly, that settlement activity goes on even as the negotiation process continues.

Yossi Mekelberg

One of the main obstacles for the peace agreement is settlements. Without the settlements—they are half a million people; you mentioned E1, and there are isolated settlements—any peace agreement would have been easier to reach than the conditions right now on the ground. Practically you need to differentiate between the settlements that are designated to be part of Israel in any peace agreement and those that will be within the Palestinian state, because there will be some swap of lands, as anyone would expect. But there is an element of provocation in expanding settlements while you negotiate peace. In many ways, for the Palestinians it is a symbol of the occupation every time they see the cranes, the new roofs, the swimming pools and what have you. There is an element of provocation—of symbolism—in telling the Palestinians and John Kerry, as the Housing Minister, Uri Ariel, did only last week, recycling something that had already been declared at least once, “We will keep expanding settlements.” Physically, if we are looking for a viable Palestinian state, the more settlers, the more difficult it is to have a viable Palestinian state. This is a very small piece of land between the Jordan River and the Mediterranean Sea. If both sides believe that the way forward is a two-state solution—if the Israeli Government believes in a two‑state solution, which I doubt—then the expansion of settlements is counterproductive. As Tony says, it is illegal. Politically, it is a constant hurdle, or barrier, to achieving any peace agreement.

Mr McCann

You will forgive me; some of these questions might seem fairly obvious, but it is still useful to get the evidence placed on the record. My final question is about Area C. We have already heard from the Chairman about the aquifer that runs under Gaza, but we heard from the Palestinian Authority that the water from the aquifer that is under the West Bank gets extracted by the Israelis and then sold back to the Palestinians at a higher price. We were told that higher quantities of water were available to the settlers at a cheaper price, and about the impact that that would have on the future of those resources for the Palestinian Authority. How worried are you about the extraction of the natural resources and what appears to be the lack of any structural work to ensure that those resources will remain there? Is it true to say that the Palestinians are having to pay more for those resources despite the fact that those resources are under their own land?

Yossi Mekelberg

I am not an expert on water, but, according to the interim agreement of 1995, there is an agreement about water and the division of water through which Israel sells the water to the Palestinians. The reality is that if the economy grows, it means that there is more pressure on the resources—that is what happens—which means they need to produce new sources of water. The technology is there. It costs quite a bit of money but not as much as it used to, and Israel is quite advanced; the technology is there if they would like it. Fighting over the same resources will not be useful; more and more projects should be about creating new sources—more desalination and sanitisation—of water.

Tony Laurance

Meanwhile, there is no question that control over resources is a key part of the negotiation process. Water is a scarce resource. What you say about control over it currently and its disproportionate supply to settlers and Israel as compared with the Palestinians is definitely correct. I am not too sure about the pricing side of it, but certainly I have heard those statements before.

Chair

That was with commercial settlements, but we were looking at rural settlements. In one particular settlement we visited, the Palestinian we were talking to was able to point at land that belonged to him, as far as he was concerned—it had been farmed by his family—but that he was denied access to. To add insult to injury, on that land was his water supply, which had been piped to a nearby settlement across his land, which he did not have access to, for which he got no payment. At the same time, on the other side of the road, in front of us, the Committee, standing on the road, saw a JCB digging up crops that had been planted by the Palestinians, supervised by the Israeli Defense Forces, right in front of our eyes. We filmed it. It is difficult, really, to see what the security issues are when you look at that. In fact, anybody who goes to Hebron itself, where we are talking about 400 or so settlers and 180,000 Palestinians, and walks down the street will see two things. First, in the part of the settlement that the Palestinians are prevented from getting access to, there are banners posted on the wall saying, “Palestine never existed and never will”—a message to the 180,000 Palestinians from the 400 settlers. When we asked the Israeli authorities why these were allowed, they said, “People have the right to free expression.” One would have thought they might have been taken down. Then you go into the sort of synthetic market, to be honest, that has been created in the old city, which is all very attractive, but it is too far away for most people to be a very viable commercial market, and the netting where the settlers are tossing missiles down.

Sir Peter Luff

Missiles? Objects.

Chair

Well, a brick, a bottle—whatever you would call it in that sense.

Tony Laurance

I do not think it is too far away to be a viable market; it is because of the settler presence that it is no longer viable as a market.

Chair

Yes, but this brick had been thrown down on to the marketplace by a settler standing beside an Israeli defence post, who watched.

Yossi Mekelberg

Did you ask the Israelis if the Palestinians have the same right of expression as the settlers?

Chair

I just described what we saw, and that is what we were supposed to see and hear, I guess, from both sides. The point is: what can organisations like DFID and donors do to try to address this? The Israeli authorities say, “We do not approve of the settlers,” but they do not do anything about them.

Tony Laurance

At the end of the day, what can one say except “ratchet up the political pressure”? I do feel that it is making a difference. There have been some notable events over the past 12 months that have really hurt Israel. One was Trading Away Peace and the other was the decision about scientific grants and so on. When Europe takes a stand on some of these settlement issues, it matters. Israel cares. They care about being part of the Western, developed, democratic world.

Mr McCann

Forgive me for interrupting, Chair, but the point that you made earlier was extremely important for me. When people are walking about in Tel Aviv and they have got no concept or clue what is going on miles away from where they are, then how is it possibly going to change the Israeli mindset?

Tony Laurance

Exactly. It is a while since I read them, but there are some quite surprising and encouraging polls about what the silent majority of Israel wants to see, but they are disconnected from all of that. The economy is doing fine; the wall and the security apparatus around Palestine have “maintained the peace” so far as they are concerned. Their sons and daughters have to serve in the army and they do not like that one little bit, but that is the equation that has got to change. Opinion here and in Europe and elsewhere is shifting, and the Government can do its bit to continue that shift and to continue to point out that Israel’s policies are not acceptable.

Chair

We do understand the genuine security issues, the right of Israel to survive and the right of Israel to defend and protect itself, and I am sure our report will make that abundantly clear, but quite a lot of these issues are not about security and they do not seem to be about trying to achieve peace. When it appears that either side is not serious about peace, there have to be consequences, because, as you pointed out, Tony, we are all paying for it. We have paid for it for decades; for how many more decades can we do it if there is not a serious degree of progress? That is the dilemma for our Committee to solve. I said we would have to finish at 11.45 and I am afraid we really do, because we are going to lose our quorum, but I want to thank you very much indeed for coming in. It was a really helpful exchange of views and evidence. Also, as I say to everybody, if there are any further thoughts you have on the basis of the discussion we have had and you want to feed them back to us, please feel free to do so; we would be happy to take them on board. Thank you very much indeed. Please excuse me if I just rush off. Oral evidence: The UK Development’s Work in the Middle East, HC 948 21