RAMALLAH // The US has suspended West Bank development projects worth tens of millions of dollars after Congress froze funding to dissuade the Palestinians from seeking UN recognition of an independent state.
It was the first sign of repercussions for the Palestinians' decision to defy Washington on the issue.
Hassan Abu Libdeh, the Palestinian Authority economics minister, said he was informed on Monday by officials of USAid, the US government's foreign aid agency, that two projects, worth US$55 million (Dh201.9m) and $26m respectively, were being put on hold for lack of funding.
One supported the development of the Palestinian private sector and the other aimed to improve the investment environment, Mr Libdeh said, adding that 50 people were laid off last week and 200 others would follow by November. Other ministries also reported USAid projects were in jeopardy, including an $85 million five-year plan to improve Palestinian health services.
USAid officials confirmed some programmes were affected by the Congressional hold, but would not give details. "Ongoing programmes will continue until funds are exhausted," said one official said.
Palestinian officials denounced the move as counterproductive to Middle East peace efforts and said this would not deter them from seeking full UN membership for a state of Palestine in the West Bank, Gaza and east Jerusalem, lands Israel captured in 1967.
Two Republican-led committees in the US House of Representatives, the Foreign Affairs and the Appropriations subcommittee on the State Department and Foreign Operations, put a hold on $200 million in economic assistance in late August, as the Palestinians were gearing up for their UN move.
Mahmoud Abbas, the Palestinian Authority president, proceeded, presenting his case for recognition in a speech to the UN and formally submitting a request to the Security Council.
The administration of Barack Obama, the US president, finds itself caught in the middle: opposing both the Palestinians' UN gambit and the Republican moves to punish them for it.
The state department spokeswoman, Victoria Nuland, said on Monday that keeping the aid flowing "is not only in the interest of the Palestinians, it's in the US interest and it's also in the Israeli interest, and we would like to see it go forward."
The US has argued that a Palestinian state can only arise through negotiations with Israel and said it would veto the Palestinian membership application in the Security Council if the measure gains enough support. The US, along with other world mediators, has called for a quick resumption of the long-stalled Israeli-Palestinian negotiations, but the Palestinians say Israel must first halt all settlement building on occupied land.
Mr Libdeh said: "We feel very sorry about this decision by the American Congress, which we think came to sabotage our ability to establish a Palestinian state. This is a political measure that reflects a blind bias against the Palestinian interests and will not help the efforts of the US administration to resume negotiations. The decision is affecting all aspects of American support for the Palestinian people."
Donor countries have given billions of dollars to the Palestinians over the years, in an attempt to prop up the Abbas government and an economy battered by conflict with Israel and continued Israeli restrictions on trade and movement.
The Palestinians have received about $500 million a year from the US alone in recent years, including tens of millions of dollars for training the Palestinian security services. The partial suspension of aid by Congress mainly affects development and infrastructure programs being supervised by USAid but not the support for the security services.
Israeli government officials declined to comment on the partial suspension of US aid. However, the Israeli prime minister, Benjamin Netanyahu, while staunchly opposed to Mr Abbas's decision to seek UN recognition, has not rushed to retaliate.
Despite the increasingly heated rhetoric, the two sides continue to cooperate on a practical level.
Palestinian security forces work with their Israeli counterparts in keeping Islamic militants in the West Bank in check, while Israel every month transfers to the Palestinians tens of millions of dollars it collects on their behalf in taxes and other payments.