Working closely with other donors, and maintaining flexibility, are key ways in which we seek to maintain effectiveness in the current volatile political, social and economic environment. Lately the international development effort has moved towards shorter-term support for the immediate needs of the Palestinian people. According to World Bank analysis, direct budget support has proved to be the most effective aid instrument in the current circumstances, allowing the Palestinian Authority to maintain basic service delivery, while providing significant macro-economic benefits. The welfare impact of this support has been significant: as poverty and unemployment levels have risen, the extended coverage of public sector salaries has provided an essential safety net for many families and communities. Our support for service delivery through UNRWA and NGOs has also been important in mitigating the effects of the worsening humanitarian situation.
There are, however, limits to what development assistance can achieve. Poverty reduction can only be addressed significantly in the context of a just peace settlement and the creation of a viable Palestinian state, What is most needed to reduce poverty is relaxation of Israeli curfews, closures and checkpoints, and eventual withdrawal, so the economy can grow again.