And, are we borrowing this money and having the taxpayer pay the interest on it so we can give it away when we don't have enough money to pay our own bills? Since we don't have any money at all, and are borrowing money to run our own country, how does Ms Clinton feel we can do this?

November 10, 2010, 1:38 PM EST

By Flavia Krause-Jackson

(Updates with comment by Netanyahu in 7th paragraph, adds details on aid starting in second paragraph.)

Nov. 10 (Bloomberg) -- Secretary of State Hillary Clinton today said the U.S. gave $150 million in direct aid to help the cash-strapped the Palestinian Authority close its budget deficit, after direct peace talks with Israel stalled.

The assistance to the government led by President Mahmoud Abbas is an advance on $200 million requested in fiscal 2011 for the Economic Support Fund, the State Department said. Total aid to the Palestinians for fiscal 2010 is almost $600 million.

This “underscores the strong determination of the American people and of this administration to stand with our Palestinian friends even during difficult economic times as we have here at home,” Clinton said, during a video conference with Palestinian Prime Minister Salam Fayyad.

Clinton is scheduled to meet tomorrow in New York with Israeli Prime Minister Benjamin Netanyahu, seeking to get Israel and the Palestinians to resume U.S.-mediated peace talks intended to lead to a Palestinian state. The negotiations stalled on Sept. 26 at the end of a partial 10-month freeze on Israeli settlement construction in the West Bank.

Abbas has said he won’t continue the talks unless Israel stops settlement building.

Clinton today said the U.S. was “deeply disappointed” by the announcement of plans for new housing units in what she called “sensitive areas in east Jerusalem,” calling it “counterproductive to our efforts to resume negotiations between the parties.”

‘Broad Understandings’

Netanyahu, in a text message today after meeting with former Secretary of State Henry Kissinger, said he and Clinton will discuss “ways to reach a peace agreement based on broad understandings with the Palestinian people and maybe even with other nations in the Arab world.”

In an interview with Bloomberg Television yesterday, Netanyahu said Palestinian complaints about Israeli settlement construction were “a minor issue” that has become “way overblown.”

The U.S. has previously advanced cash to the Palestinian Authority to meet a financial emergency around the Oct. 1 start of the U.S. fiscal year. Democratic President Barack Obama agreed to front-load $75 million of assistance in November 2009, and Republican President George W. Bush gave the go-ahead for the transfer of $150 million in October 2008.

Aid Scrutiny

Palestinian aid plans by the Obama administration may come under scrutiny under a Republican-dominated House of Representatives that will control the purse strings. When Republicans take control next year after winning a House majority in this month’s elections, Florida Representative Ileana Ros-Lehtinen, a vocal supporter of Israel, is in line to lead the Foreign Affairs Committee.

New York Representative Nita Lowey, the current Democratic chairwoman of the House Appropriations subcommittee for foreign operations, put a hold on direct aid to the Palestinian Authority twice in 2007 and 2008 when Bush was in office. She had the power to request details on how the funds would be allocated and seek assurances about the recipients.

Fayyad has asked donors for about $500 million to help close his budget deficit. The Palestinian Authority needed $1.2 billion in aid in 2009 and $1.8 billion in 2008. Fayyad vowed to balance his budget by 2013.

The European Union on Nov. 4 gave 20.7 million euros ($28.5 million) toward the salaries and pensions of about 85,000 public-sector employees. In September, Saudi Arabia transferred $100 million to the Palestinian Authority and the United Arab Emirates gave $42 million.

Bilateral Aid

Total U.S. bilateral aid to Palestinians is composed of $150 million in direct budgetary assistance to the Palestinian Authority; $102 million in aid to establish rule of law and security; $244 million from the U.S. Agency for International Development; $75 million in U.S. contributions to the United Nations Relief Agency for Palestinian Refugees known as UNRWA; and $10 million allocated for schools in the territory.

Excluding the contributions to UNRWA, U.S. bilateral assistance to Palestinians is forecast to be $502.9 million this year and $550 million in 2011, according to the State Department and the Congressional Research Service.

U.S. aid to Palestinians ballooned to $980 million in 2009 to meet a humanitarian emergency in the Gaza Strip in the aftermath of a 22-day conflict between Israel and the Hamas movement, designated a terrorist group by the U.S. and Europe.

Since the death of Palestinian leader Yasser Arafat in November 2004, aid has averaged about $400 million a year. That compares with about $75 million in annual U.S. aid during the 1990s.

--With assistance from Jonathan Ferziger in New York. Editors: Bob Drummond, Brigitte Greenberg.

To contact the reporter on this story: Flavia Krause-Jackson in Washington at fjackson@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

link: http://www.businessweek.com/news/2010-11-10/u-s-gives-palestinian-a...