Report No 12760 XO (2 Volumes) EMERGENCY ASSISTANCE TO THE OCCUPIED TERRITORIES Volume l: Investment Program The World Bank March 1994 Washington, D.C. MICROGRAPHICS FILE COPY Report No: 12760 XO Report No: 12760 XO Type: SEC Type: SEC CURRENCY EOU!VALENTS (As of March 18, 1994) Cunrency Units in use = New Israeli Shequalim (NIS) and Jordani-A Dinar (JD) US$1.00 = NIS 2.99 NIS1.00 = US$ 0.33 US$1.00 = JD 0.704 JD1.000 = US$ 1.42 JDI.000 = NIS 4.26 NIS1.00 JD 0.230 FISCAL YEAR (January 1 to December 31) ABBREVIATIONS AHLC = Ad-Hoc Liaison Commnittee CA = Civil Administration CBS = Central Bureau of Swtstics CHE = Council for Higher Education EAP = Emergency Assisa e Progrm EU = European Unior EIB = European Investment Bank GDP = Gross Domestic Product GNP = Gross National Product HV = High Voltage IDF = Israeli Defence Force IEC = Israel Electic Cooration IPC = International Fmance Corporation ILO = International Labor Organization IMP = International Monetary Fund JD = Jordanian Dinar IWU = Jersalem Water Undertaking JEDCO = Jerusalem Ditrict Elecricity Company kV = kilo volt kVA = kilo volt ampere LV = Low volage MCM = Mlllion cubic meter MW = Megawatt MVA = Million volt ampere NGO = Non-Govemmental Organization NIS = New Iseli Shequalim OT = Occupied Territores (West Bank and Gaza) PECDAR = Palesfinian Economic Council for Development and Reconstruction PEPA = Palestinian Environmental Protection Authorty PHC = Paleasnian Housing Council PLO = Palestine Liberation Organization PMO = Project Management and Monitoring Office RPIU = Road Program Implementatn Unit TA = Technical Assistance UNICEF = United Nations Children's Energency Fund UNDP = United Nations Development Program UNRWA = Unied Nations Relief and Works Agency USAID = Unied Statea Agency for International Development WFP = World Food Program contents r .E I. OveviewandSummary ....................... ........... 1 Ptogram Objectiv ad Apprch ............................ .. 1 Popm guCbnompiLa .............................. .... 4 Pufic Seorh nesemft . ............................... 4 Support tothPrivate SCtr ......................... .... 8 Stt Epat urEs .............................. ... 10 TedniS Assistoe .................................. 11 ProgramCosts .............................. 11 anndes .1.etrtatg................................... 13 lM eobmnicEPrniewok. .............. .....* .. .... ... 13 BPftio n Rindms ................................. ... 38 An.xc1.1: SacdRStotes S. nmis .........................., 21 L mmFPanwwok.............. . ......... 31 Shoeb an Reqmm# ............. ...... 32 EL Seo Strategies adPog.ams ............. .... ... 42 Transport .. ...............42 WatrSupplyandastewatr ........................... . 51 Sold WaftMMe eninm .................... ..58 Power . .................... C.64 Iunlcla RoadsandFacile ... 6......8.. ..........68 Hwing .........................7 relecommn.unic.tlons........... . ....... . .7 Bducat..n..... . .....79 Health ..................83 Non-Govemmntn¢Opnl -- -..........6.......8 PdvateSwcorDeveopznt 94... . 94 Aiculture..... .... 99 Ruvironnnt, Culua Resources and Touisn . ..................... 104 TV. Im ple .................................... 111 Stcrcazad Opaaionaof PCDAR ...................... 111 Role of mpleendgAgencies .......................... 114 P ................................... . 117 Accountag and Auditg .............................. 118 A e ............................... 120 Auahmnt I : lst of ision Ienbers ..................... ......... 124 Attaclmea m List of Palesinian CDonterpats . ......................... 126 Map IRD 24884R Preface On October 1, 1993-following the historic September 13 accord between Israel and the PLO-a donors' conference took place in Washington, D.C. to mobilize international support for economic and socil development in the Occupied Territories. Partdipants in the conference felt strongly that there was an urgent need to deliver tanile benefits to the Palestinian population to reinforce the momentum towards peace. Towards that objective, participants pledged over US$2 billion in financial assistance and asked the World Bank to provide the framework and teical underpimning needed to use such assistance effively. Responding to the sense of urgency expressed by the donors, a World Bank mission visted the Occupie Territories from October 11 to November 22, 1993, following a brief visit to Tunisia to confirm the mission's objectives with the Palestnian leaderhp. In Tunisia, it was agreed that the World Bank mission to the Occupied Tefritories would seek to: * provide a framework that would ensure effective use of donor assisutance for meeting the immediate needs of the Occupied Terrhories; - identf technical assistance needs for building the Palestnian capacity to design and manage economic development p:ograms; and * lby the groundwork for effectve use of donor assistance over the longer tem by identfyin tecbrnicsi studies related to high priority policies, progrms and projects. Representaives from Denmark, the European Commission (EC), the European Investment Bank (BIB), Japan, Norway, Switzerland, and the United States Agency for International Development (EJSAID) pardcipated in the mission. Unied Nations (JN) agencies-in particular the United Nations Relief and Works Agency (UNRWA), the United Nations Development Ptogramme (JNDP), and the United Nations Children's Emergency Fund (UNICEF)-were also actively involved in mission work. UNDP and UNRWA seconded several experienced staff members from their local offices to the mission. Representatves of other donors were also consulted regularly and were kept abreast of developments. Extensive contacts were maintained with the local and intenatdonal Non-Governmntl rganizations (NGOs) active in the Occupied Teroies. The mission also worked closely with a numiber of visiting delegations, including those from the UN, UNRWA, World Food Program WP), nternational Monetary Fund (IMP), Intrational Labor Organization (ILO), UK, and Sweden. The mission received excellent cooperation from 'It Palesdnian ad Israeli authorities. Ihe Palesnians set up a higbly professional and dedicated Coumeepart Team to work with the mission. Mission members travelled extensively in both Gaza and the West Bank, meeing a broad spectrum of Palestinians concered with issues of trmsiton and socioeconomic development. On the Israeli side, the mission had extensive contacts with the Bank of Israel, the Civil Administration in charge of the Occupied Territories, and Israeli Ministies of Finance, Foreign Affairs, and Eaviroment. This report is based on the findings of the above mission. It relies heavily on descriptions and broad sectoral strategies elaborated in the World Bank study, Dewloplng the Occaped Terriories: An brnemt In Peace (1993). The report is in two volumes. Volume I of the report describes the main issues affecting the vaious sectors of the Palesdnian economy and presents proposals for ivestments designed to address those issues. It also describes t external financing requirements of the public sector-including the start-up and tamsitional expenditures of the new Palesdnian administrtion. Volume 'i} !] i II 'l}'ii| j4 fi* collection equipment to make up for the present shortfall of about 30 percent of service. Sites for placement of now communal contines would be selected to make the existg refius collection fleet more productve. Equipment and tools for repairs would be purchased for the municipal workshop and mechanics and drivers trained. Vehicle needs for pumped septage removal are expected to be provided mainly by the private sector. A small nmber of vehicles has also been included in the water and wastewater component. 3.81 Feasibility studies conducted by separate consultants for the Civil Administraion on the Wes Bank and in Gaza have confirmed that sanitary landfill is the most cost-feve disposal option for both. Even with the prevailing high cost of land, sanitary landfill cost less per ton than incineration or compositing. Lanfill sites have been selected to be within geologic formadons and on soils that provide maimal protection for groundwater (or located over aquifers that are naturally bracdish) in areas where it is possible tO provide daily soil cover and that are the lowest cost suitable land available wihin the area. To capture economies-of-scale and minimize the need for transfer stations, there would be three 60 regional sites in Gaza and 10 regional sites on the West Ba Becae skip-loading collcio trucu cannot travel economically for more ta 10 km one way before unloadin, at least one tansfer station would be needed within most of the sanitary landfill service areas. lherefore, three transfer staons in Gaza and ten truasfer stations In West Bank are planned. 3.82 The progrm would provide refuse collecdon equipment Wluding 46 rear4oadlng compaction trucs, with 3,140 conIners C . 1 cubic meter capacity; and 59 skdp-lift trucks, with 1,196 contaIers of 6 cubic meters capaciy), tramsfer and landfill eqmet (including 13 bulozers, 13 wheel loaders, 51 arm-roil transfer trucks, and 111 roll on-roll off conines of 32 cubic meters capacity). 3.83 In parael with imprwvement of the collection service, tihere would be a major clean-up and public education campaign ais campaig would be supported by a special fimd and conducted by municipaities and vUlages. 'here would US$2 million avwable tO e Gaza area and US$1 million to the West Bank. Each local govemment unit wishing to conduct a cleanup campaign would develop a plan and cost proposal for review by a regional solid waste advisor, appointed under the program. 3.84 T1he program also includes the development of 13 sanitary landfills and 13 tasfer stations. For the transfer fackies, about 11 hectes of land would need to be acquired wihin municipal bndaies. For the sanitary landfllh, about 98 hectares woud need tO be acquired ouide of municipal boundaies or leased for at least ten years. 3.85 Tecnimcal aistace to implement the solid waste progrm would include: Poreig solid waste advisors to be assigned for two years each to dte central and regional authorities to SUpervise Implementation activities, provide technical assistance, and give on-the-job taiint three assistan advisors hired locally. * Developing a planning data-base and master plans for Gaza and Nablus. * Assessment of the collecton, disposal and regulaboy requements for such special cases as hospital, slaughterouse, pumped septage, and hazardous wastes. * Examinton of Isittional, financial, and privatzation rangemes. * Studying market demand for recyclatles and resource6 recovered from waste. * Translation of current iformation into final designs and drawings. * Preparation of desi and drawings for remaining transfer and sanitary landfill facility sites. * Preparing environmental s me for all santy landfIl facilities and reviewing land acquisition issues. 61 Program Ip 3.86 PreparatIon. Designs are now ready for the facilities to be funded in the first phase of the program. However, their Immediat trasaon Into English and the completion of environmental reviews are essetal. For this purpose, it is recommended that the original design firm be engaged under contract immediately. Landfill sites also needs to be acquired. At only one site have steps toward acquisition been largely completed.Y 3.87 Feasibility stdies conducted by the Civil Adminishtrion and as part of project preparation are adequate for detmining the number and basic design of equipment unitS and facilities needed for solid waste improvement. But technical specifications stfll need to be prepared for procurement of collection, workshop, transfer, and saniary landfill equipment. Designs for the Jenin transfer station are underway and are ready for sanitary landfills for Ramallah, Hebron, lenin, and Qalqilya. 3.88 Procrent. To obtain competitive prices and simplify administrative arrangements, a single Itermational competitve bidding procurement package should be used to procure all collection, transfer, and landfill equipment. However, if more than one donor finances the program, a number of procurement packages would be possible. Each of these tenders should include provisions for spare parts, workshop equipment, and the trainig of drivers and mechanics. Local competitive bidding procurement is proposed for implementing all civil works related to transfer stations and sanitary 1 <4fills. 3.89 Inditutional rgemen. Regional soid waste facilities (such as landfills and transfer stations) would be operated by the largest municipalittes in their operatdg area or by the municipality in which the facility is located. Insttionally, however, municipalities are not well structured for managing the invesUment for operaing the new solid waste facilities outlined within this program. Since some flities are regional, there are economies to be made from bulk procurement of equipment. During project Implemention, technical assistance could satisfy additional orgtional and staffing needs and provide training on the operation of transfer station and sanitary landfill facilities. Fnancally, however, municipalides bave a poor revenue base to support even the recurrent expenditures required. The technical assisuce effort would also need to outline ways to imnprove the revenue base, enable full cost recovery, and ensure the susuinability of the investment programi. 3.90 Ideally all of the equipment procurement, transfer station failities, and sanitary landfills should be implemented through a single Program Implementation Unit. Thrw technical advisors and three assistant advisors would be assigned to work full time within this unit for two years each to manage technical assistance efforts, review technical specifications, monitor construction, distribute purchased equipment in accordance with need, and assist muicipalities with implementation of new collection, transfer, and disposal operations. Where more than one donor is involved in the sector, such units would also coordinate sector activities. 8/ Lnd for the Ramalla landfill was acquired thugh a oanfiscation process and all appeals were overtuned. Negotiations ar presenp y under way for lng-team leasing of the Heb landfIl site Put of the Jenin landfill site is aiready owned. Immediat land acqisition of renaining lands for the faciies is esential, and a review of the isses and costs of land acquisition for the remaining faciliti is urgely needed. Designs and envirnmntal review reports need to be prepared for individu dtes. 62 3.91 Stdies by consulting eagneers would be conducted to provide a reguatory framework for sold waste management, establish pivaizaton arrangements, create a data basdine for contio planing and rationalizaon of the system, prepare mar plans for Gaza and Nablus, assess the pteta for recycing, and examine the requirements for handling special needs. 3.92 There woud be three service regions in Gaza and ten service regions on 1he West Bank for solid waste transfer and disposd. The largest municipAy i each reion would be !esposlsble for opation and maitnc of the regional transfer fility and sanitary landfill wihin ias sevice aea. 3.93 Cost recovery. Many nipl and villages curnty chage a small fee for solid waste service. There duld be a fee cagedin all local gove ihat would fuly cover the cost of collection and disposa. This fee woud need to be between 1 to 2 percent of per capita income to enable renewal and debt sevce. As part of the techncal assisuce to be provided under this project, thre would be a survey of the ability and willingness of reside to pay on which to base a tarff strucure and cost recovery mechanisms. 3.94 icipalties should pay costs related to wastes they dicage to region transfr and santary landfill facilies they themselves opeae and maintinl In addWion, tipping fees based on equitable cost- shaing should be charged to prvate carters, camps, vilages, and setlents using he facilities. A regultoy famework at the regional level would require all govermental and private entites to use dte offici tasfer stadons or sanitry lndffls withi their regio. 3.95 Improving solid waste management would help give people livn wihin mnicip , vies, and camps an improved environment within wich to live and worlk Streets cleared of debris and rubbish would allow for better movement of traffic. Open burning of refise would be curtailed, lesening air pollution. Trasfer facflities would fiuter enable collection vehicles to operate more productively. Table 3.3 Solid Waste Ptogram Cods Estmate (US$ on) Year Area Total Agency Catq _iy 1994 1995 1996 Gaza West CategoryBM* Land acquisition _ 2.0 1.4 1.4 2.0 2.8 4.8 Municipaity Civ works 3.0 6.7 17.3 11.0 16.0 27.0 Municipality Collection eqipment 3.5 4.1 2.2 3.8 6.0 9.8 Municipality Transfer ement 3.0 4.0 3.3 4.4 5.9 10.3 Municipality Sant. landfill equipment 1.5 2.0 1.6 3.9 1.2 5.1 Mity Total t 13.0 18.2 25.8 25.1 319 1 57.0 63 Power 3.96 Wbile most of the population as access to electicity, power supplies in the Gaza Strip are limited bohi in terms of volume and quaty of service for technical and hntiutional reasons. Curent growth of eleccity demand is already estimated at some 15 percnt per year. Once m conditions return to norma, growth potenals in demand of the order of 15 to 20 pecen per year through the end of the decade could reasonably be enbaged. In Gaza, the ttal load to date (drawn by the 79,000 consume) is about 80,000 KVA. Bulk power is supplied from three taformer stations located outside the Gaza Strip. Feeders emanatin from these staton are limited In thernal cacty and are equipped with overload circuit breakrs locatd inside Gaza. hese Israel Electric Cporaton (IEC) feeders supply some 196 municIpy-owned distbution trasformers. Becuse demand exceeds trnsformer capacity, overloading at times of peak use results in the bur-out of some 15 transformers a year, an exceptionally high rate. 3.97 By the end of 1990, about 7 perce of the West Bank populon did not heve access to electricity service. Another 71 commuw (population of 221,000) received limied sevice six to twelve hours a day from small, diesel powered geneato. Bulk power is supplied from five Iuael Electric Corporaton 161-33kV transformer statons located outsde the main cities and by a 13.5 MW diesel station, runing on heavy fuel, located in the city of Nablus. At least 16 main 33 kV IEC trnmssion lines (some of which are dedicated to srli selements) and a low voltage network cover almost the complete geographical area. As in Gaza, dbution feedrs emanating from the I1C substato are imied in thermal capacity. 3.98 Distibudon uetwo. In Gaza, a quarter to a half of the exisdng 400 kn of low voltage lines is in poor condion from lack of m ce, overloag, and ai. Many are 20 or more years old and must now be rebuit Static capacis should be installed on the 22 kV lines to maximize the power-fator correction and provide voltage support System technical losses due to aie use of long, low- voltage lines and to overloading of transformers are in the range of 17 to 20 percet. (Such os levels re aboutthree times the norm for comparable, well-run systems.) In additon, nontechnical losses from theft of electcity may be as high as 35 percent of input elecrcity in some areas. Ihe abnormally high level of ilegal connections is a result of weak magal capacity to collect electcity bills and the unwillingness of some consumers to pay. Appropriately staffed and trained commercial departments need to be established urgentiy to improve consmer bing, accounting, and collection performance. 3.99 On the West Bank, at least 380 km of the existg 2300 km of low-voltage lines are in poor condWon due to lack of mintenance, overloading, and aging. Many are twenty or more yeas old and must now be rebuilt. Some 100 km of obsolescent 6.6 kV distution circuits also need to be upgraded. 3.100 Lal imon capacity. There are 17 mnicIpalities and undertakings in Gaza who purche electriy from IEC. COnumr numbers vary from 400 (in the case of Abasan Saghira) to 33,000 for Gaza City. Similarly, a ly 97 municipales and un dak in the West Bank purchase electricity from IEC. 3.101 The municipalities and undertakings generly have only small electric utility ditribution departments, whose staff lack practical experience,-partcarly in operadons and maitenance practices. Stffg varies from oniy a few people (in the case of the smaller municipal and village councils) to more tin 40 (m the case of Gaza city). Overall, 205 electricity employees are working in the Gaza 64 strip-resulting in the umnsually high ratio of 385 consumers per employee. Tils ratio compares to 224 consumers per employee for the Jerusalem District Electric Company (EDCO), a distutionutlity with an organizational str e of reasonable depth for its size. In the Palestinian municipal electricity systems, decision-making generaly comes from the top, master plans are out-of-date, growth of ifrasructure is ad hoc, and ther is only limited capability to design and construct new services. 3.102 Shortage of revenues combined with a lack of opeation and m ta skills has led to dt decline of infastructure invesm . Elecrcity dominae te financial affairs of many municipalities-up to 75 percent of current budgets in some cases-yet due to low tariffs and poor collecdon practices, net revnues collected can be insufficient to meet even the costs to purchase electicity, let alone the addtional costs needed for operations and maintenance. Data collecdon, record systems, financial reportng, related policies and management practices are inquae for proper operations, maitenance, and effective billing of consumers. Municipal power operatons have not been run on a commercial basis. 3.103 Core management and operational capabilities essenal for efficient and safe utility operations generaly do not exist in small municipalities, making it icult for them to implement the relatively large power program proposed under this Emergency Assisa Program. 3.104 The IEC bulk power supplies that are fully dedicated to the Occupied Territories-including Israeli settlementsW-amount to about 420 MVA. The 1993 coincident peak for the area, including supply to Isradi setlements, was 290 MW. EEC's near-tem (1993-1998) plans to meet the approximately 50 percent forecasted growth in demand in the area during this period foresees an investment of about US$140 million. (Ibis sum excludes investment at the generation level but covers programmed expansion of high-voltage dtansission, step-down transformer capacity, and the 33 kV subtransmission network.) 3.105 Israd Electric Corporation's investment program for the Occupied Terriories is currentiy on hold pending resolution of future electricity supply arrgements for the Occupied Territories. The Emergency Assistance Program involves relatively long lead-time construction and covers siting and environmental issues. 3.106 Without a reoriented investment program in bulk unsmission in the near fiture, supplies to the Occupied Territories may become constrained and unreliable near the end of the decade. Bilateral talk need to start as soon as possible to address the issue of how to sece ertical future power needs. In addition, fuure talks are needed on interconnections with Jordan and Egypt. Ise and Stateg 3.107 Ihe overall objecve of the investment part of the power sector program is to ensure better power supply to customers and to initiate steps to improve the efficiency and sustainability of fuure power supplies in the Occupied Teritories. The short-term strategy is to make immediate corrections to facilities in the power sector that will improve both the amount and quality of the electricity supply. 2/ Ot0r, not fAlly dediad trsmsio fcilict are locat wt lasael. 65 3.108 Making these corrections can only be fMlly effective and susinable, however, if parel steps are also taken to improve the insutional framework-management, staff, opeational, and financial systems of various electricity undaW gtroughout Gaza and the West Bank-and to start comoldating the Occupied Territories' electric utilities. Pret institutional arrangements are fiagmeted, unsafe to employees and the public, and highy inefficlent. Consolidating ectric operations should reduce management overheads, encourage more professional mnagement, and avoid inefficient and uneconomic replication of individualized billing and revenue collecton divisions, warehous, inventories, etc. During the curren transition period, however, only init steps to a more centralized operation appear feasible. Given the staggered transition from Civil A stration control to Palestinian. authority, it will be some dme before the concept of regional electric utilities for Gaza and the norhera and southa regions of the West Bank can be fully Implemented, in addition to JEDCO which would continue to serve the central region of the West Bank. 3.109 The strategy of the Emergency Program wodd be to appach udlities rehabilitation and operations improvement as a singe operation, centrally managed and orgmizd, in close cooperaion with the municipaliti and with JEDCO. Two electric utility consolidation actions would be started on the West Bank-one in the southern area, centered arund Hebron and one jD '- northern area, centered around Nablus. (Presendy, udlities are fgented into approximately 187 11 municipal systems.) 3.110 Assuming a single donor would finance the utilities program, the first step of tis sta woud be to proceed immediately with the retention of an experienced engineeng firm to complete program preparation and bidding documents for the procurement of economically-sized packages to repair, replace, and upgrade the current distribution system If more than one donor finances the power program, it would still be desirable to employ a single consultant fimL Municipalides Cm coordination with the conslnts) may also decide to have local distribution systems mainined and upgraded according to existing plans and fuded by different donors. 3.111 Assuming a single donor is involved in the sector, an implementation contractor would also be retained to help rehabilitate and reconstruct of the HV and LV system across Gaza, with support from exing municipal electric deprme. An importat aspect of this effort would be to effect technology ransfer quickly to Palestinian counterparts. 3.112 A central site with a headquarts building would be required for the contractors implementing the sector program. It would serve as a staging area to receive, store, assemble, and maintain equipment; house specialized tools; fuel and maintain vehicles; and provide for centralized communications. Headquarrs would help ensure that work proceeds efficiendy during the emergency period of disbursement and could also be the embryo of a future regional electric distribution udlity in Gaza. 3.113 A similar approach is proposed for the West Bank, but with two central sites to coordinate activities. Many of the systems that the contractors would have to put in place to implement the Emergency Program (such as a computerized stores control system) would then be available for transfer to a future Palestinian central power utility. 66 Program D rpton 3.114 In Gaza, the Emergency Program would include the rebuilding of at least 100 km of low voltage lines; reinforcing the 22kV system by adding at least 20 km of 22kV lines; adding at least 40 MVA of distribution transformer capacity; instling S MVAr of reacdve capacity; providing vehicles, radios, biBling equipment, tools, and operating supplies (such as tansformer oil); repairing and improving existing buildings (mcluding new frnishings) and support facilities. It wil also include the construction, by turkey contract, of a prefabricated building on land that is already available to serve as the program implemenion headquares. 3.115 In the West Bank, the Emergency Program would include the rebuilding of about 480 km of low voltage lines; reinforcing the 33kV systems by adding and reinforcing about 80 km of 33kV lines and about 125 Ikm of 1 lkV lines; adding 180 MVA of distribution transformer and 15 MVA of 33kV-1 1kV capacity; instaling 10 MVAr of static capacitors; providing vehicles, radios, billing equipment, tools, and operaing supplies; repairng and improving existng buildings (ncluding new fnisin) and support facilities; and constructing, by turkey contract, wo operational centers as the project implementation headquarts for the Emegency Program on land that is already available in the northern and southern regions. 3.116 Plans also exist for a rural electrification program on the West Bnlk involving he supply to 115 villages in the northern and southern regions, some of which could be included in the Emergency Program. Estimated cost for the 33kV-1 1kV tansmission (including the low voltage distrution lines, twansformers, and consumer hook-ups) is approximately US$10.0 million. Further proposals exist for power stations, including a 10 MW diesel plant in Jericho for which donor funding may have been committed. As a general principle, however, any future generation would be decided upon only after the power generation and regional power interconnection study has been completed. TechnIca Assistance 3.117 Technical assistance to support the investment program is detailed in tke Technical Assistance Program report. h includes support for the design and construction program and for a distribution planning study, design of a program to reduce nontechnical losses, a study to assess fitre power generation and interconnections between regional grids, and management and staff training activities. 3.118 Future development options for the sector would be examined during the Emergency Program. in addition to regional distnbution of utilities, feasible institutional arrangements are privatization of the Gaza distribution system, establishment of a single utility for all of the Occupied Territories; a regional, autonomous, publicly-owned utility company for Gaza; or municipal cooperatives. The power utility's final institutional structure would not be compromised by the physical infrastructure improvemens proposed. 3.119 Establishing viable institutional arrangements, particularly for the regulation of private or public monopolies in the power sector is essential. Instittional issues and optons are similar fr the telecommunications sector (see paras 3.153-3.161) and the proposed institutional studies would consider jointly the power and telecommunications sectors, as well as possible the water and wastewater sector. Common regulatory arrangements should be put in place for all public utilities, i.e. a single regulation 67 for pricing and simiar public utility issues. The program would be procured in several packges as shown in Table 3.4. Table 3A Power Program Costs Estmate (US$ milio) Year Area Total Category 1994 1995 1996 Gaza Wet Bank Civil works 3.4 3.4 1.0 5.8 6.8 Prefab bwldimp 8.0 4.0 4.0 8.0 12.0 Elecity eipment 12.3 18.0 24.3 14.3 40.3 54.6 ReHiitaton 3.0 6.0 11.0 8.0 12.0 20.0 -ComuncatIons 2.0 1.5 1.0 2.5 3.5 Vehicles 3.0 3.0 1.0 2.0 5.0 7.0 Computers 1.5 1.4 0.8 1.2 2.5 3.7 Total 33.2 37.3 37.1 31.5 75.8 1 Muniipal tRoads and Facities 3.120 Ih6 isituonal capacity of Palestinan municWities has become weaker during twenty-five years of occupation, and particularly so since the start of the bImfda. Becase of difficulties in collect taxes, fees, and user charges during the fada, local authitie have had to manage with inadequate funding. Despite this, local govemmen has managed to provide a basic level of services in many municipalties, although roads and other facilities are often in poor condton. While the Civil Administradon has supported current municipal budgets and is the main source of municipal development budget, the shortage of finds and occasional inability to recover budget deficits from the Civil Adminisration, or through bofrowing, has kept municipalities lean and avoided over-staffing. luis and Stategy 3.121 Insufficient municipal financial resources, often caused by poor repayment rates of electricity customers, is the fundamental cause of poor municipal infrtructe and maitnance, which in turn has resulted in high urban transport costs, low levels of traffic safety, a high incidence of flooding, and destruction of existing infrastru e. Municipal assets (such as slaughterhouses), furthermore, are often of poor quality and need to be improved or expanded. Finally, the municipal capacity to plan, manage, finance, and maintain urban services is weak and needs strengthening. 3.122 Because of this combination of institonal and financial constaints, the sector strategy should focus On: 68 * Rehabilitation of asse-notably urban roads-and expansion of capacity of selected roads. * Rehabilitation and improvement of existing municipal buildings and other facilittes. * Strengthening ithe ability of municipalities and vilages through tchnical assistance and budget support to improve institutional arrangements, systems, and practices. 3.123 Although regional and city land-use plans have already been prepared by the Civil Adminition, municipalities, and Paestinian professionals, there is as yet no widely a long-term spatial planning framework by which to assess proposals for land development or for investment in major Infrasructure facilities. This is most acute in the Gaza strip, where &,veral municipalities and refiugee camps run by UNRWA share common borders and facilities, and there are issues concerning e future disposition of state land. In addition, land markets are severely distorted in the Occupied Territories, with consequent pressure on municipal boundaries. To provide a spatial basis for decision-making, technical assistance is needed to prepare regional investment, institional, and structure plans for the Gaza strip and later for regions of the West Bank. Techical assistance would also be needed for the preparation of municipal structure plans. 3.124 Severely deteriorated roads and drains increase urban travel dmes and lower the efficiency and safety of cities. Acmulated storm water mixes with sewage and solid waste and is also a health hazard. The short-term strategy would be to undertake a coordinated program-inialy in Gaza and selected West Bank municipalities-to rehabilitate existng main and secondary roads and drains, and to remove major traffic bottlenecks by means of better traffic planning, signalling, annelli, road markings, and signs. 3.125 Other municipal facilities (such as buildings, markets, s huses, recreation facilities, etc.) have also suffered from lack of maieance and investment. Staring in selected municipalities and focussing initially on Gaza, feasibility studies would be carried out on building of new facilities. Selective investments would also be made in the rehabilitation and expansion of eistng facilWes. Program Desiption 3.126 To reactivate municipal services and harness the poteta of aeisting municipal management and service units, a planned program of rehabilitation and maintenance of infrastructure is propod, that includes insfitutional supporL The Program would provide assured funding for planned municipa projects (roads) over the 36-month program period; improve staff and systems tbrough consultant suport, funding for additional staff, equipment, and training; and-through PECDAR-provIde extemal monitoring, quality control, advisory support, and training services. 3.127 Munkipal roads. All twenty-nine municipalities have Ientified projects for carrying out defxred mantenance and rehabilation works on roads, streets, and footpaths (mcluding paving, curbing, street fiure and markings, street lighting, drainage, etc.). In some cases, necessay replacement of underground sevices (such as water and sewer mains) and some new road construction is also included. The objective is to improve traffic movements (both vehicular and pedestrian), preven further deterioration of roads, and build up regular anmnal mintenance progams. 69 3.128 The roads program is subdivided among thirty municipalities: four in Gaza, ten in the West Bank Northern area, ten in the West Bank Central area inch. ling Jericho, and six in the West Bank Southern area. A small but essental program of road and access improvement works in the refugee camps (proposed to be implemented by UNRWA as part of a six-year program) is included. The 1994 programs will address the worst-affected areas of each town, based on presendy available data, and will be followed in 1995 by a fully-developed program. 3.129 Other municipal facilities. Many municipalities have concept plans, and even detailed designs, for needed parks and playgrounds, fire-protection services, markets, municipal workshops, etc. Before they can be accepted for funding, however, it is necessary for each of these proposals to be subjected to a feasibility study and review. Technical assistance for this purpose is included in the Program A few of these projects are partly completed (such as the El Birch municipal building), and funds are needed to complete them and put them to use. The municipal subcomponent would provide funding for such projects on a case by case basis, and only after clear justificadon. 3.130 Vehiles and equipment. The municipal road improvement program will be supported by small but essental purchases of vehicles and equipment, including inspection vehicles, trucks, road maitenane equipment, etc. Program Ip 3.131 The main responsibiliy for implement the program of municipal actvities Les with the municipal authorities themselves. Overal direction, preseny provided by te Cental Administraion, would be taken over by PECDAR undl pemanent arangements were in place. The Municipal Road Improvement Program and its subprojects would be idendfied by each municipal technical department in accordance with available master plans and basic needs. Each city engineer would be responsible to ensure that the proposed program works incorporate all underground services planned or allow reservadons for such works. Wherever possible, all works planned for a road should be consolidated into one contract. The program would avoid works requiring land acquisition and compensation. The program of works envisage4 by each municipality would be detailed either in-house (as capacity permits) or through consultants. After approval by the mayor, they would be submitted to the appropriate Program Management and Monitoring Office in PECDAR to be evaluated for Emergency Program unding. * To assist the municipalities in the preparation of detaied design and tender documents and the supervision of construction, a panel of local consultants and consultancy firms would be identified by PECDAR. In addition, municipalities and villages could request temporary financial support to expand their egineng staff to accommodate the increased work load. Funds for such expansion have been included in the Program (US$10 million). * Municipal facilities proposed for funding would first be subject to a detaUed feasibility study and review under approved terms of reference bore being submitted to PECDAR for possible funding. Technical assistance for this work would be funded as part of desig costs. 70 * All activities would be screened by the PECDAR environmental specialist. 3.132 The municipal engineer and his staff would be responsible for the signing of contracts; for maintainin contract files, measurement books, etc.; and for quality control and the certfication of work for paymet at appropriate stages. Particularly for wea municipalities during the early stages of the Program, assistance from sector-implementation consultants would be essenal. As detailed in Chapr 1V, PECDAR would be responsible for monitoring progress. Accounts would be mainained in each municipality and consolidated by the municipalities for regular use by PECDAR. Each muncipality would submit qur ly progress reports to PECDAR on that part of its project portfolio funded under the Program. 3.133 Components would be supported through the panel of locd consultns by technical assistance for subproject review, planning and design, project supevision, and feasibiity studies. To implement major studies and address complicated issues, technical assistce fu nds would support transport consults recruited to assist with the nommunicipal road program as wel as with municipalities. These consultants woul also help identfy large new projects, define pwr emet procedu*es sad documen, provide quality control, monitor progress, and provide specialized training. 3.134 Prorement. It is proposed that PECDAR acquire vehicles and equipment estmated to cost US$11 million in three packages through inernational compedtive bidding. The municipaliies presently carrny out their own procurement of works and small amoun of goods (after approval by the Civil Administraon) ithrough lo:al compedtive bidding procedures under local law (Egyptian law in Gaza, and Jordanian law in the West Bank). These procedures wi generaly continue to apply under the Progam, a detaied in Chapter IV. RUM 3.135 The main risk to the municipal works program is imperfct coordination of activities to be executed under several sectoral programs (power, wat, sewage and solid waste) wihin the municipal works program, causing costly scheduling errors between below surface and surface works. Coordinadon would need to take place at the level of indual municipalities, and-to be effective-would require municipal enginees to keep close track of individual sectoral programs. The use of the transport consultants and a local consultant' panel is expected to assist municipalities in keeping track of aU works under their jurisdiction. The second risk concerns coordination of the program with PECDAR, and the potentia for delays in approval and payment to contractors. The Project Management and Monitoring Office in PECDAR would be expected to pay particular attention to the municipal program. Next Steps 3.136 The acdons needed to start the municipal works program are PECDAR's recuitment of the consultants' panel, establishment of the Project Management and Monitoring Office within PECDAR, and establishmet of working arrangements between PECDAR and each municipality for approving works, providing clearances for bidding rrangements, and making payments. 71 Table 3.5 Munidpal Works Program Costs Esimate (US$ Bdaron) Year Area Told Agency Category 199 199 1996 2za Wst _oas_ 9.0 20.0 31.0 25.0 35.0 60.0 Municipalit Vehicles 5.0 6.0 0.0 4.0 7.0 11.0 municipality Other faiities 2.5 S.0 5.0 2.5 10.0 12.5 Muidcfpaity Total 16.5 31.0 36.0 31.5 52.0 _ 83.5 hosing 3.137 The population growth rate in the Occupied Territories is high by intaonal sandards,a and household formationn-rod at 5.4 percen over the lat five years-is also proceedi at a rapid pace. lThese t.o factors alone would be suficient to place stress on the housing supply. However, any assess_ent of the stte of the sector must also contend with another, highly uncetain, fiutor: retmues. It is esimated some 3.5 mfflion Palesdnians live outside the Occupied Territories, and may have acknowledged righb of return A consierable number, however, could now return only with te consent of Israeli authorities-a subject of the on-going negodations. But even were only a small percentge to retun, it could place a considerable strain on the fiuctioning of the housing sector. _!!S and Strtg 3.138 Key ss in the housing seor are quality, price, producto policy ad institutions, finance, and land. While average housing quality in the Occupied Territories appears te be relatively good in redation to pet capita income levels, the incidence of overcrowding-averagn more than 2.3 person per room-is high given the income level. Also, about 10 percent of the population on the West Bank and 50 percent of the poplaton of Gaza stil live in refugee camps, where conditions are far worse. The camps present specal problems: they appear to provide shelter disprp ely to the urban poor, including some nonrefugees; struct are generaly in poor condition; tenure is inswcure; and serices are indequate, leading to generally poor environmental conditions. Nevertheess, the camps are not the dereict squatter settlements typical of low-income countries. In most cases, road reservaons are reaonable, badsc services (though weak) exist, a rental market appeas to be operating if not flourishing, and some households have erected quite substanti housing strucues. Il/ Tbe mt mct Worldh Bk Ads Xdes t atly eig out of he 200 coutic coved roted a 72 3.139 By comparable intanational standards, the price of new housing In the Occpied Teritories b high. Median new house prices are about US$75,000, or about seven times median income.1m Contbuting to this high price are high building standards, large homs and lot szes, and high land prices. Forately, there is also a fuctoning rental market. About 11 pecent of households rent f&om someone other than a relative or UNRWA-a share that reaches 23 percent in the more urban West Bank towns. Rent conols exist in both Gaza and the West Bank but are routinely circumented or Ignored. These controls, nevertheless, dourage investment in rental housing and hence contribute to increased crowding. 3.140 Ihese problems are partly due to th fac that the housing sector is technically, instutinaly, and financially underdeveloped. The only significan attempt to tackle housing problems on a larger scale was undertaken by the Palesinin Housing Council (PHC), an NGO that sees itself as the core of a Housing Deparnt in a futre Palesdnian administrao The efforts of the PHC to develop multi- family housing targeted at middle-income famiLes and to fomulate sector policy have been supported by a gant from the EC. Becuse of the level of per-unit ubsity contemplated, however, it is not clear that these efforts are sustinable. Housing in the camps is under the judsdiction of UNRWA, which is upgrading the worst units as resources permit. 3.141 Finance is a major constraint New construcdon is usually organized by indvidu, spread over several years, and almost wholly dependent on the avaiability of cuent uvings. he only credit available is for new luxury flats and is limited to loans averaging three to five years. The under- development of the financial sector has many causes (detailed in Deveoping die Occzqpd Tenoles: An .nestnent In Peace [19931 Volume 3). For the housing sector, traditional Musim customs concrning the charging of interest and the unwllingness of the ban to accept housing as colar have been par constraints. There is also an inppropdia legal fmewok and lack of genera acceptance Of foredosure. 3.142 Becase of this lack of access to credit, at least 10,000 units (about 5 percent of the housing stock) are unfinished and unoccupied at any given time. Furmore, in the absence of appoprate opporunities for investment in secure financ assets, household-particularly those with funds eamed abroad-invest diproportionately in housing. There i8 evidenc that these investments are economicaly infflcienL Despite the relatively modest number of new unlit being completed annualy, for example, it i8 es_mated Ihat investment in constuction (mostly housing wih a small element of commercial buiding) is 20.3 percent of GDP, as compared to 7.4 percent of GDP for comparators.0 3.143 Finally, and very importaty, land is a major constraib Th development of the housing sector is signficantly affected by a combination of incomplete land registrs, absn rights, and other legal resricons on land and land developm that-until recendy-were stricdy enfrced by the Civil Administra . These include restricdons on the expasion of nmuicipal boundaries, the Imposton of village boundaries; designation of large areas outside and Inside of municipaliies as 'green areas, which V Th rais for existing houe to icome am 3.4 and 5.5 for dh West Bak nd Owan, respectively. Te averg for comparts is 5.0. Thus while to tga for exist units seeamrsndle, tht for new housing is significany out of line V One plausible explani for this is that some of tiese funds we unpeductey locked up in -complded housing units3 73 serve as securiy buffers for Israeli setements; restrictions on transferring land when ownes are outside the Occupied Terrories or when land Is incorrecty registered; and restrictions on the resources available to municipalities to finance inrastucture for land development. One result has been to raise the price for developable land near tunk inastructure. adton 30 percent of all land in Gaza is owned by the state and has not been available to Palestnians for development; only about 50 percent of land in the cities have clear tides; and Palestinians hold land to store wealth and as a hedge against inlation, keeping a significant share of the developable land off the market and driving up land prices. 3.144 The Emergency Program should not concentrte on the constuction of houses but rather on the creation of the insttional and regulatory framework most supportive of private development It should, therefore, seek to expand the supply of developable, serviced land in the urban areas and to ease credit to the private sector as a significant part of the overall development of the financial sector. At least in the short term, it will also involve supporting UNRWA's ongoing program for Improving housing in the camps, facilitating the provision of credit for a program to complete exstng private houses, and supportng the PHC in developing appropriate and sustainable policies and expanding housing constuction for low and moderate imcome households. Over time, as resources permit, a subsidy system that is wel-targeted, transparent, and sustinable should be developed to assist the poor. 3.145 Technical assistance is proposed for: * Resolving title and registration problems fDr land. hReforming urban planning law and procedues. 3 JUpgrading fiscal resources and cost recovery for infratucture installaon. 3 Developing a coherent strategy for the sector. 3.146 Additional technical assisnce-and some capitl assisnce-my be needed to introduce a capacity for houig credit Into the financial sector. Such a capacity would normaUy develop over time, but there is an advtage to accelerating the process in order to expedite the completion of the large stock of unfinished houses, and create a housing delivery system with access to credit as needed, which would herefbre be more capable of rapid response to shifts in demand. Program Dacdpton 3.147 Immediae capital assiutceforhousingwouldbedirectedtough UNRWAtoupgradetheworst camp housing. mhe time horizon for resolving the fate of the camps is long enough (five to ten years) that such upgrading could have significant impact on the welfre and prospects of the poorest of the camp residents. The UNRWA-implemented reconstructons and repairs program in refugee camps would amount to an incrmemel tol of US$30 million over a the-year period. 3.148 Ihe program would also include the development of a credit line Ihrough private financial stiutions to pwvie mortages on a commercid basis, notably to finish existi, uncompleted houses. lbis credit would amount to about US$20 million in start-up capital and would be preceded by technical asistace and detficadtion of financial institutions willing and capale of adminiFlering the progran. 74 3.149 The program also involves support of about US$60 mUlion to complete funding for the PHC and to other private developers to expand the program for low and moderate income families on a sustainable basis. Such funding would also be provided through the line of credit. Finally, a number of technical assistance studies would tackle the key issues of accessibility of land, development of a relevant policy framework for housing, and development of a fina iastructure for real estate financing. These studies must, however, await the solution of outsing issues conceMing land to be reached in the bilateral negotiations. Riam 3.150 The main rilsk to the housing program is delay in the creation of an appropriate institutional and regulatory housing authority framework While technical assistance could conduct studies and outline program options, implementation could well be affected by the pa^e of negotiations affecting housing policy and by political decision-making by Palestinian authorities. Risks associated with the camp housing upgrade program are modest-these houses will be of use regardless of political developments. Sustinabiity of the present PHC program, however, is of concern. Current levels of subsidy and the target population require review, which should be part of the sector strategy study. Next Steps 3.151 TTNRWAwilneedto expandthecapacityofitsongoingcamp housingprogram. Oncetheprivate sector credit program has been established, instttional capacty for mortgage lending should be developed as soon as possible. Table 3.6 Houing Program Costs E _tmat __________ ~~(US$ mWlor) __ ____________ ~Year A___rea Category 1994 1995 1996 Gaza West Bank Total Agenc Camps 10.0 10.0 10.0 25.0 5.0 30.0 UNRWA Mortgage program 0.0 5.0 15.0 10.0 10.0 20.0 Dev. Bank PHC program 10.0 20.0 30.0 20.0 40.0 60.0 PHC TOTAL 20.0 35.0 55.0 55.0 55.0 110.0 Teleonunications 3.152 Ihe situation of the telecommunications secor inside the Occupied Territories-and the Gaza and Jericho networks in particular-is mnxed. In some places, very modern switching equipment is being operated, but the coverage (penetration) of telephones in the Occupied Territories is only about 2.9 per 75 100 inhabitas (overall compared to between 3 and 15 per 100 for the region In 1991).W 'here is a clear correlation between GNP and the number of telephone lines per inhaitalnt. The Palestinian GNP per capita of US$1,715, however, coincides elsewhere with a telephone coverage of about 4.0 per 100 ihitants, as compared with the acu 2.9. Iasues and Strategy 3.153 The telec ations sector in the Occupied Territories is tly dependent on the Isaeli Inrastrcture. There is large suppressed demand, with a bacldog for new conmections on the West Bank (about onethW the nmnber of lines currently in use) and of over 40,000 in the Gaza Strip. Of the 400 villages on the West Bank, only 80 had telephone sevice as of the end of 1991. Ihe lack of adequate telecommunications capabilities has had a particularly deleterious impact on the service idustry. 3.154 Within the framework of the Emergency Asanc Program, the organization and expansion of telecommuniions are considered crucial for the revtlization of the economy of the Occupied Teritories. Te teleoommunications sector is In need of utional and physical rehabilitain and expansion. While the network (ocal switches) serving the Occupied Terrtoies now contains mainly modern digita technology, the nunber of lines Installed is grossly Insufficient. The likely populaion growth rate, frthrmore, idicaes that the systems planned expansion of capacity will hardly be sufficient to keep up. Even now, while the Civil Administration plans to add some 9,000 new lines In the Gaza Strip in 1994, the waiting4ist is over 40,000. Mobile services (mobile telephone, paging) have recetly beta made more readiy availale to Palestins on the West Bank through lsraeli systems. Authority over frequency assignment is prenly under negotatio: ' the bilateral talks. 3.155 Listinians also lack local workers e cd and knowledgeable in the operation and mainta of a complete telecomications entity. Mnages, plamers, and advanced teicians are urently needed to replace Israeli persel when they are wihdrawn. In gen, the creation of a Palesdnian teleconications network after t withdrawal of the Civil Administration mus deal with the following issues: * What and how existng assets will be transferred. * Te technical and operational relationship among proposed Palesdnian networks. * Who will own and operate this sector (ivate, public, or a mix). * How fast the sector can be developed. * How to fulfill and finame unmet demand for telephon connection. * bstiutional requirements. Il 11e p _netm level in Weaek womties is betwee 40 and 70 per 100 ihabitants. in Bpt it is 3.2, in Syria 4.1, inTunis 3.75, in Kuwait 15.8, inSaudi At" 9.3. and ilnahad 34. 76 3.156 In the short and medium term (1994-1996), the development objectives for the telecommunications sector are: To satisfy the demand for new services, improve exist services, and expand service for the commerci and household sectors within Gaza and Jericho and possibly the West Bank. It is assumed a exisig authorities could address these short-term needs of the West Bank eentily as planned, although this could chage under early empowerment (allowed by the Declaration of Principles) from bilat negotiatio n addition, the recendy agreed upon enlarged area of Jericho suggests the need for expansion of the network and switching capacity. * To accelerate development of telephone network services by i lng switching aacity for a minimum of 57,500 new lines (50,000 for Gaza and 7,500 for Jeicho oy 1996). In addition, a tentative telecoms program for the West Bank (yet to be defined in detal) is suggested. Most US$80 million is expected to be financed from private sources. 3.157 Long-term telecommunications sector objectives ae: * To establish a sound and efficient eorkL -- To increase automated switching to improve service qualiy and reduce costs. * To extend coverage of basic telephone services to ural areas and reach a level of penetration of at least 15 per 100 inhabitants by the year 2000. (this would meal 400,000 lines, assuming a population of 2.7 millions). 3.158 To ensure adequaetelecomu ons services for the economic development of the Gaza Strip and the West Bank, a multitrack approach would be pursued. In the short term, the progrm would support efforts to esurea the secwor would Continue to be well-operated and maitned, provide consistent service during the tansition to Palestinian control, create the insutiona basis for future development, and streng the infrastructure of the network so that subscribs in the network could be icreased by a m ;inim of 57,500 by 1996. 3.159 To accomplish tis would require staff training, a manewent contact, and limitd investment to maintai serices in the short term. A private company could be engaged to develop, finance, and opeate the system in the longer teram The fiuture telem i sector in tie Occupied Territories could be organized to include a telecommunications company (private or public), an independent regulatory body, and an authority responsible for e is governmnmt control over tele con. The urrent monopoly (private or pulibc) over the main urban fixed-wire network, anmison d swithing inrastmcture, and probably also basic services that encurage infrastcture, development (such as telephone services) should be maitined. Thu ifrastrucure could also be used to foster competion among services in the area of termnl hardware, provision of termi equipmet (telephone sets, etc.), data services, leased lines, cellular services, paging systems, and other non-basic services. A legal and regulatory famework must be established as soon as possible to allow private companies to set up telecomminications services aticuarly value-added services). 77 3.160 In an emvironment of partW or total monopoly, the role of an independen regulatory body b essential. The ragulator should be independent and have a clear mandate. Its tasus would include: evaluating applications from enterprises wishing to offer monopoly or competng services; setting the conditions for and issuing service permis; seting user charges and approving rates for monopoly services; defining service quality and availability; monitoring the performn=ce of serviceproviding companies; establishing conditions and standards for connectig tamina hardware; planning the use of radio-electric frequency specums for immediate and future needs; receiving, analyzing, and meeting out applications for frequency assigpment; and supervisig and controlling spectrum use. Authorit of the regulator concerning frequency assigments should await the outcome of ongoing bilateral talks. 3.161 Ihe authority responsible for exercising public control over he telecom sector would evenay set goals with regard to provision of public services, production, coverage, quality of service and financial profitability; ensure that corporate taxes, duties, and safety and personnel rplatio allow telecommunications operators to meet those goals; and establish rules governing the relationships betwen he auhorities responsible for telecom, operators, and those administer the £tls. Program Dcription 3.162 Over the next three years, at least 57,000 new lines would I-' Instal-ed. The projected automatic network capacity in the Gaza strip and Jericho area would grow fora 23,000 to 65,000 lines. Overal investment in the telecommunications sector for 1994-1996 is estiatd to cost ound US$100 million. Assuming that-for the development of most of the telecom sector-private funding would be available, only US$13.2 millionhas been earmarked forpublic fundingunder theEmergency Program. There would be clear operational and financial advantages to having the private sector play a dominant role in funding telecoxnmunicatlons. 3.163 Because it would be needed to provide telecommunicaions services to the Palesti interim self- governmet, there is immediae need to install a TMX100 echange (or equivalent) in Jericho and build a subs r network to bandle 1000 new Jericho subscribers. Ihe estimated costs are US$3.2 million. In addition, a modest US$10 million program would give immediate support to Gaza and the West Bank, whose needs have yet to b., Jefined by the authorities (with the assistance of management consulants). Action on the West Bank, however, also depends on progress in bilateal talks. Since there is a strong possibility of private sector involvement in the telecommunications sector, it would be premature to allocate further public resources to telecommunications Investments. 3.164 A program of technical assistance would be implemented to help train existg Palesdnian egineers in Gaza, prepare sector policy and structure, and take over a management contract to maintain operations in Gaza and Jerkho after the withdrawal of the Civil Administration. 3.165 lhe proposed new modern digi exchange in Jericho and the expansion of the network would benefit the Palestinian political and administradve leadership opeting from Jeridho and assit sbscrbe in Gaza and the West Bank. 78 Education 3.166 The success of the Palesdnian economy in achieving prosperity for its people will depend primarily on its ability to compete in a fast-paced world economy. The Palesdnian domestic market will always be too small to allow it to exploit economies of scae in most manufcturiw and service industies, and the area's modest endowment of natual resources will not allow it to rely significantly on the export of low-cost, primary commodities. The Palestinin eoommy must, therefore, produce goods and services that meet the requirements of an increngly demanding eten markeL .In order to build on the competitive advantages provided by the relatively low wages of the Occupied Territories and its proximity to major international markets, the Palestnian economy wil have to develop a very high quality, exceptionally flexible labor force prepared to repond rapidly to new needs. 1i implies stressing, within the fonnal education system, preparedness for acquiring new skills as well as mastery of a craft or profession. Rather than simply trausfedring knowledge to young people, tie educatonal system will need to develop their capacity for lifelong learning-including self-instruction and rapid mastery of the skills required for new technologies and new products. These aims require an education system that stresses not only a thorough grasp of the basic principles of science and mathematics and excellent skills in verbal and written communications but also a persistent curiosity and relentless drive to improve products and methads. 3.167 Education is currentiy provided to Palestinians by the Civil Administration, UNRWA, and the private. ctor. Primary and secondary education is dominated by the Civil A n about 61 percent of all students. UNRWA educates about 31 percent of al students at these levels. The remaining 3 percent of students attend private schools. Nearly all chfildrn aftend primary scool but only about 40 percent of the age-relevant cohort attends secondary schoola. About 2.6 percent of the relevant age group are being trained in secondary-level vocational schools. 3.168 Most preschools and unieities are ope by prt, volunty oganiza , and 20 to 30 percent of the relevant age group is enrolled. The higher education system condsi of eight universities (two in Gaza and six on the West Bank) with a total enrollment of 20,484 studes. In addion, 20 community and technical colleges (four in Gaza and siten on the West Bank) together have 7,364 students. About 61 percent of primary and seconday schools suen are enroled in schools opeaed by the Civil Administron and 31 percent are enrolled in UNRWA schools. The remaining 8 percent of students are being educated by private institons. Issues and Strat 3.169 The major problem conftoning the Palestian educational and taning systm is quality. The system has been designed to transmit knowledge rather ta to develop capacities for criial thinkin or skills in solving complex problems. In addition, the system has failed to overcome tadona cltura constraints to the enrollment of female students, particularly at the secondary level. The quality problem is traceable primariy to an outmoded curriculum, uncative teachting methods, and a scarcity of moden educational inputs (particularly library books, laboratory equipment, and computer facilities). Efforts to improve teaching are sometimes frustrted by over-crowded classrooms, pariculy in ths UNRWA schools situated in converted rented houses rather tham in buildiW designed to be used as schools. In addition, the frequent and prolonged interupton of inatuc dig the htdado denied a generation of students a sound education. (One of the priorites for the Palesnian pgvenl authi will be to correct the conseWent deficit in leaning.) 79 3.170 Formal educadon has also imparted few marketable techncal and profsional skills. Gene academic educaion has bee over-expanded relative to vocational instucdon. For example, about 62 percent of university students are enrolled in programs in the humaniies, the social sciences (odte ta economics), and education. Labor market data suggest under-investment in high quality vocational and techical training in paricular occupations. Underlying all of these problems is the absence of system- wide policies and institutions. 3.171 Over the long term, the education sector must address the core issues of quality and relevance A serious reviw of the content and instuctional strategies being used by the basic education system must be carried out and a set of reforms devised and implemented. 'ibe central objecdve of tbese reoms must be to strengthen students' skills in critical analysis of issues, appicatio of a broad range of specific tbols to the solution of complex problems, and creative and imaginative approaches to ufmilia tasus. 3.172 Achieving these aims will require the development of a detaied plan for the presentation of specific topics and the development of specific sklls-i.e. a acwcdarfrawm rk. New teahng materis will then need to be either purchased or developed. Teachers must be trained In the use of these materials, and assessmenst intuments must be developed both to evaluate succes in achieving rricular goals and to direct the efforts of teachers and administao. In addtiion, the offerig of elective programs and courses will need to be modified to direct students noo areas of study with signiicant job potential. Ihis process will require at least five to seven years to complete. In th meanime. stress should be placed on maintaining eL;cadon resources aul enhancing the quaity of instuction within the present curicular frameworL 3.173 The Emergency Program for education would have four key objectives: e Sustaiing the current system In the short run. Resources will be committd to meeting the immwdiae, recurrent expenses of the preschool and university sectors. * Beginning a multipronged attanc on quaRty In all parts of the system. The attack will focus on improving the curriculum, redefining and raisig thes a for fit examinations, inasing teachers' knowledge of content and performac standavds, strengtheg the link between vocational trainig and employment (through such mechanism as tracer-studies of gaduas), and upgrading the physical plant and equipment. * fPepain for the transfer of authority over education fhm the Civl AI to a Palsinian Authority. This task enils creation of the ins iona f work required to develop education policy and integrate operational ystems and procedus (includig miniMum teacher qualifications, salary administraion, and fringe beneft). * l dRevsIng the mrrent Imbalance between university education and vocanl balning. The strategy wil be to redirect resources to the vocation and tchnia education system while slowing the rate of expansion in the university system and to shft universiy enrollments from the humanities to fields with beWer job prospects. 80 Progm Desipon 3.174 The following three emergency investmen have been identfied: * Supportng recurret expese of preschools and univeies. his hem will require approximately US$25 million a yea initaly, in order to replace grants obtained in the past (primarily from Gulf cou ). Appro ly US$21 mfllion will be needed to close the deficit in the recuet budgets of the universities. A furtier US$4 million will be reqired to support and expand pdesciool educaon. This acdvity must be accompanied by tecnica asstace aimed at achieng much greater fndal viability in the longer run ftrough enhanced cost control and cost recovery. * Improving the teaching and learn enrm t by addng library, eomputing and lbortory facties and construct study areas, eacher's room, and sports eds. This component will beneit studts in more thn 17,000 classrooms. About 3,50 of e classrooms are located in the Gaza strip. The toost of hse items esdmated to be appro y US$40 million. Nearly half of the total amount wil be used to uprade loraty and library facilities In secondary schoo. * aUpgrding the physical pbnt to reduwe overcrowding and Up coivet tripb shift schoob to double shft ope"i. (Coversion of doe shft school to sine shift opaon should not be pursued immed y.) Th cost of hee efforts is estimatd to be about US$3S million Abo 60 percen of th progm would be located on the West BanL About eighty schools overall would beneft Of the schl that will benefit from ftis component, threbart are operatd at prese by UNRWA. Techbial Asist 3.175 The Techlica Assistance Program to support the Emenq Astance Pogam woud cosst of five actvies: * School mapping. An inventory of all exiting shool fcilities would be prepared; maps would be drawn showing the locations of schools, poplaton densities, he locaon of importat community faciities and the residentia cathment area of each school and areas would be idenfied in which ational educadional filities are needed. * Idetbiing organinal options for a PaletnIan oduton au 4t . his tecnical assistance project would asi educationatrti in prearing for the assumpdon of responsibt for the sector. * Prefeabllty study for a remedial educaton program for chilr. Thi sdy would assess the magniude of laring deficits resulting fom InterruptionS of acoolg during the hJa, enfy those who were most affectd, detene whi knowled and skills were sacrificed most, and identfy cost-efctive optio for rect hes 81 losses-both for those sdll in primary or secondary school and for those who have left school. Creating a pedagogic institute. Te school cur'culums of the Gaza Strip and West Bank have been borrowed from neighboring Egypt and Jordan, respectively. This technical assistance project seeks to establish, develop, and sustain an instidon that wil design an updated and unified curricular frmework, insuments for assessing leaning under the revised curriculum, eamination credentials for teachers, and an inservice training program for teachers, administrs, and school inspectors. * Task force for vocational education. This package of technical assistance would support the development of a task force to derelop a curriculum for vocational educatio instructors. IMpact and Benefits 3.176 The activities proposed above would help to afrest the deteriorization of earlier investments in the education system, remove constwaints to its eff;ctive operation, facilitate the transition to Palestinian operation of the system, and improve Its quality. They would directly benefit about 450,000 students immediately through the supply of library maeials and supplementay educational materials. They would also improve the leaning environment for about 50,000 students enrolled in schools slated for renovation or expansion. By conuibutng to the establishment of a responsive, high-quality education system, the Program would also enhance the educatonal opprtu s of fiture generations of students, while the Technical Assistance Prgram would help bring about a more rational location of schools and vocadonally relevant tmaining programs. costs 3.177 The total cost of the Emergency Assistance Program for the education sector is esmated to be about US$130 milLion. In addition, development of new programs in the university and vocational education could cost as much as US$1.2 billion. However, these programs would not be aunhed until a full analysis of need and feasibility have been completed. Particula attention would be paid to these programs' ability to provide world-elass training and to the capacity of the self-governing entity to finance their operating costs. RW 3.178 The systems of education now operated by the Civil Administration and UNRWA will eventually be merged. Therefore, investments in new faciities should be detmined within the framework of a unified area mater plan to avoid excess capacity in some communites and misplacement of schwols in others. A school mapping exercise is now being carded out, therefore, to Identify where to put major inwetments in the sector. 3.179 The effort to define a Palesdnian uricuum and to introduce more effective teaching methods may encounter resistance from specal interest groups. In order to minimize this risk, evaluating the comrrent education program and desiging refbrms would be caried out by a Palestinian institution, to be developed under the Emergency Asisae Program. 82 3.180 Finally, funds may become available for the development of education reforms and programs that have not been fully appraised. To ensure proper handing of such cases, the Technical Assistance Program stresses the need to develop education data resources and policymaking instituions empowered to manage a fully integrated Palestinian education system. Next Steps 3.181 The School Mapping Study should be completed as soon as possible in order to provide input into the preparation of a plan for the construction of schools. A consdtant should be appointed to examine learning deficits resulting from the loss of schooling during the Intifada. A planning committee for a pedagogic institte should be appointed to facilitate its creation and to afford an interim mechanism for considering issues of educational policy and reform. Terms of reference should be finalized to engage consultants to advise on the merger of the education system of the Civil Adminiaion and UNRWA. Table 3.7 Education Progam Cost Estmates (US$ nilon) rem Ame TOwI Caegoiy Gw Wena 1993 1995 1996 SHip Bank Rehsbi'itatdon of schools 0.0 23.0 15.0 21.0 17.0 38.0 Llbaw and laboratey materials; funitre 27.0 2.0 13.0 14.0 28.0 42.0 Recurrt cos 25.0 15.0 10.0 17.0 33.0 50.0 Totll Educatio-n 52.0 40.0 38.0 52.0 78.0 130.0 3.182 Health conditions in the Gaza Strip and West Bank are similar to those found among other lower- middle income societies: life expecancy at birth is between 65 and 66 years and the infam mortality rate is between 40 and 45 deaths per thousand live births. ITe comninnicable diseases of childhood (acute dehydration, acute respiratory infections, and malurition) are no longer common problems except in a few rural areas. A pattemn of chronic diseases charaWisc of advanced economies has begun to emerge among older adults. Injuries are more common than might be expected (ref£ecting widespread violence, low standads of occupational and highway safety, and generally lax law enforcement). The Intifada has also produced an epidemic of mental health problems. Nutitional status is generally good, with anemia the only nutritional deficiency that attracts note. 3.183 Basic health services are readily avaflable in most communities. These services are supplied by the Civil Adminison, UNRWA, NGOs, and private physicians. Hospital care is offered primarily by the government and by voluntary orgnizato. Two private voluntary hospits-August Victoria 83 and Makassad-provide most terdary care to reidens of the Gaza Strip and West Bank. Palesnins also obtain tertiary care from Israei hospitals. 3.184 The Civil Administraionand UNRWA achieve simiar hethoutcomes, even tioughthey operate radically different health care programs. The Civil Adminisaio spends roughly US$135 per capia a year to provide care to those enrolled in the govement health insurance scheme. I provides public health services and relatively sophisticated hospia care. UNRWA comms less than a uaer as much per capita program that stresses primary prevention, smple curave interventions, and very selective use of hospital services. A major challenge facing the Palestian authorties will be to create an affordable, coherent, unified program of health care from these two systems. 3.185 About 10 percent of the GDP of the Occupied Teriories is spent on health acdves which is a large fraction by international standards. CapiW costs for most health care programs in the past have been met largely from foreign grants and private donations. Therefore, the future Palestinian health care program will require well-disciplined iniatives If it is to be affirdable. Rcent Developments In the Sector 3.186 The Civil Administrton has not increased the ttal number of governt hospital beds since t over the government health service in 1967. It has, however, upgraded equipment at government hospitaFv and cooperated with donors in implementing new Iniiaves In such areas as i n, matena and child health care, and rehabilitative medicine. Cbaritable societies have invested substanal amounts in order to make state-of-the- dgnostic tenologies avaable. The most innovative health care programs have been intated by popular commttees, which have opened more than 200 primary care fcilities since the begning of the bWada. 3.187 The Red Crescent Society and the Pesnian Health Council have pred a DraftHealth Plan for the Gaza Strip and West Bank. The Draft Plan identifie twenty-nine program areas in which heth services might be improved. It proposes implementaton of a four-level primary health care system supported by secondary and tertiary care hospitals. It adopts the World Health Organzon's norms for smtg such facilities. Ihe Draft Plan does not report esdmates of the total Investment cost for this program but concludes that recurrent osts for health care in the yer 2002 would range between 8.3 and 11.2 percent of 3DP, depending on the real rate of economic growth. 3.188 The consistency of the Draft Plan's proposed progam expansion with projected resource requrements has not been asessed. In addiion to cly evaluaing the pmposals contained In the Draft Plan, further work is needed to establish priories and detmine the appropriate spatial dbuion of faclitis. 3.189 An Interi Action Plan has been devised that reflects the broad itentions of the Draft Health Plan. The Action Plan envisages investment of US$221 million Cn 1993 pries and without allowances for contingencies or project management) over the next five years. Long Term Objectives and Strateg 3.190 As noted earlier, a very large (and probably unst ) fraction of GDP is now being committed to the health sectr. herefore, future policies must focus on i=naing the interwfn efficiency 84 of the health sector and on controling the overall costs of health care rather than on expadn the system -particularly at the hospital level. Before major Investmets are undta, a formal assessment of the cost-fectiveness and susnabdility of the actviq should be carrd ouL 3.191 A debate over the sort of health care t the Palestnian commuity wans and needs has already been launched, but participation in that debate should be deepened and widened. As soon as a broad consensus on sectoral objectives can be achieved, regioal helth plasm should be prepared to guide the location of maJor health faclities, such as hospitals, and the acqusiton of costiy technology. The Occupied Terriories also need to develop an equitable and efficient medhnim for financig health care. A responsible central authority sould be empowered to develop a coherent health policy and coordinate activities in the sector. Short Term Objecthes 3.192 The core objective of the Emergency Pogram In the health sector is in 'alt deterioration of the existing health care system while sectoral policies and operational decisions are u.ig made. The collapse of finamnial assistance from regional govenment following the Guf War has endangered the operations of many chaditable and private voluntay organizations. Ihese finacid difficulties have been compounded by a reduction in support from UNRWA for the purchase of care from voluntary hospitals and by a dedine in private payments, particularly for hospital-based care. In order to ensure that staff contue to be paid and essea materials and dgs condne to be available, emergency support should be provided to the recurret budgets of existing health care hIstutions. While the support should not be misinterpreted as endoement of all of the auivities of these instituion, until a serious review of the costs and benefits of controversia programs can be undertaken, health care facilities should not be aUowed to dete4orate serously. 3.193 The health sector's second priority is to rectfy past negect of _ in existg facilities. Beuse of the financial constrn that have afflicted both public and voluntary health care institutions, th maitenance of many health care facities and equiment has been neglected. In order to hba!l deterioration and restore facilities to full effectivene, mediate repairs should be undertaken. In addition, minor iv _ should be funded to enable health care institutions to use their staff, buldings, and equiment more flly In addressing priority healt care needs. 3.194 The health sector's third priorlty is to reinorce, selectively, exist'ng health programs. Particular attention should be paid to imprving acces to basic health care services in rural areas of the West Bank (particuarly Hebron and Jenin districts), where recent studies have found pockets of high infinm and child mortality. In addition, options should be reviewed for the management of health problems dealt with in the past primarly through referrl to usaeli hospitals, lin g the treaent of serious burns and the management of cancers. 3.195 The health sector's fourth priority is to begin to harmonize the health services of the Civil Administradion and UNRWA. Together these instittions will form the core of a future govermment health serece, yet-as noted earier-each operates under a diferent policy regime. In order to develop a unified public health cae system, both administraive and clinical sytems and procedures will have t be redefined. 85 3.196 The health sector's fift priority is to develop a financial and regulatory framework. Work is under way to define a central health insurance scheme. This scheme should allow the present pluralistic, competitive health care system largely intact. The scheme should also ensure that all citzens have access to a basic package of essential health care. In addition, systems for the accreditation of professional staff and the certification of both equipment and drugs need to be established. Particular attention should be paid to controlling the introduction of technologies that have not been demonstrated to produce health benefits comiensurate with teir cost. Program Desciptioi 3.197 The proposed Emergency Assistance Program in health responds to the most immediate needs of the Gaza Strip and West Bank, while preserving options for the nwly constituted Palestinian authority to make important policy choices after it assumes power. This Program is largely consistent with the Draft National Health Plan and the Interim Action Plan prepared by the Red Crescent Society and the Palestinian Health Council. Activies were selected, however, with due attention to the likely burden each might place on the public recurrent budget. Such considerations led to the exclusion of major construction projects and expensive, high technology equipment from the first phase of the Emergency Program. (Decisions about these activities may be revisited after important policy decisions have been made.) The Emergency Program stresses support for recurrent expenditures, the maitanc of exting acilities, and preparation for the eventual assumption of responsibilit for a fully integrad, national health care system built from programs now being operated by UNRWA and the Civil Adminisration. 3.198 In order to ensure that essental staff is retained and critical materials and drugs are kept available, support would be provided to the recurrent budgets of existing health care institutions. The total need for 1994 is estimated to be US$18 million, of which about US$14 million is needed to facilitate the continued operation of nongovenmental hospitals. Because of the drop m household incomes and the increased difficulty of reaching hospitals for people living in the Occupied Territories, these hospitals are suffering from a sharp decline in patient fees. US$4 million is needed to support the recurrent budget of primary health care facilities. Supplements to the recurrent budgets of these institions are) tikely to be required in 1995 and 1996 as well albeit on a declining basis. Most of these institutions maintain audited accounts and have undertaken serious cost-control programs over the past few years. 3.199 The restoration of about 50 health facilities and provision of related equipment is urgently needed. These subprojects have been identified from proposals submitted to the "rld Bank mission in October- November 1993. Additional needs are expected to be presented as the possibility of obtaining assistance becomes better known. Such investments are expeced to cost a total of about US$7.5 milion. Twenty of the facilities that have been identified thus far are operated by the Civil Administration and 17 are managed by UNRWA. Seven are ownes' and ope-ated by voluntary organizations. UNRWA and tie Civil Admini8tration are prepared to implement these subprojects for their respective subsectors. Severa NGOs, including the Save the Children Federation, ANERA, and Catholic Relief Services are qualified and willing to implement subprojects in the nongovernmental sector. 3.200 The selective reinforcement of existing health facilities and programs is estmated to cost about US$10 million. These fimds would rehabilitate and upgrade approximately sixty-five primary health care centers at an average cost of about US$150,000. A third of these facilities are located in the Gaza Strip. These subprojects would be implemented in 1994-1995. 86 Technical Asstance 3.201 TMree tednical assistance projects are Included In the Emergency Program. hefls would assist in the preparaion of plans for transferring athority for health care from the Civil Adminion and UNRWA to Palestnian auhority. Ihe task initially would require only the creation of a senior aministraton and corresponding admn ve syms to replace the Civil A inistaon, but as reonsibility for the UNRWA health care system i aumed by the Palesnian authorities, it wfll be necessary to harmonize diagnostic and rea prtocols, procuremat methods for drugs and medical supplies, conventions for record-keeping, and personnel policies. Tehi assistance could also hdp idefy optdmal ways of providing care for conditions frmerly managed by Israeli teriary hospits. The estmated cost of the technical assisuace projects needed to prepare t"ese plans is US$1.0 million. In order to smooth the eventual merger of the two administrtve institutions, they should be initiated as SOOn as possible. 3.202 Technical assistance is firther needed to help develop the policy and regulory emvironmet for te sector and to design systems and procedues for implemenng these poliies. The Gaza Strip and West Bank have already developed pluralistic health care systems. Many of the voluntary organzations provide high quality services, but competition among them has led to over-investment In and under-use of faciities. Some voluntary organizations have Invested excessively In high techology equipment. In order to increase the affordability and qualty of health care, thse ititions need to b. brought under the guidance of a central authority. This study would elaborate and evaluate options and assist government in drafting the rules, regulations, and procedures need to implement the options selected. This assistance is eimated to cost US$0.75 million. 3.203 Arrangements for financing the health sector also need to be explored. A study of health Imsurance options has been prepared by internationl consutants. The proposals need to be evaluated. Policy issues posed by the recommended health insurance scheme also need to be analyzed and debated. In addition, mechanisms need to be elaborated for implementing a Palestinian health insurance scheme. This project would provide consulting services and financial support to the Palestinian health authority to help t carry out this task. The total cost of thls effort sestmaed to be about US$1.25 milion. Impact and Benefits 3.204 he actdvities outlined above are intended to provide emerg,. icy assistance to enable the Palesnia authorities to take responsibility for the health sector. The program would put more than 110 health facilities in sound operating condition and would produce the analyses required to make critical policy choices. 3.205 Improvements in the health care infrastructure would directly bedefit about 150,000 people. A sound policy framework for the sector would not only contribute to the provision of essential health services to all Palestinians but would also help preserve the rich civil society, developed during the occupation, as a way for communities to deal effectively witb their needs for social services. 3.206 Costs. The total program of Emergency Assistance to the health sector is expected to cost about US$70 million Substantal additional spending may be necesary depending on the outcome of on-going policy debates. If the entire program of iwestments being proposed under the Draft Health Plan were endorsed, further external assistnce of US$205 million would be needed. 87 3.207 RIs. In the absence of a cledy defined national health policy and health cae flanchg mehanisim, major lnvesament and program design Issues cannot be addressed at pres The Emergeny Asistance Program, therefo, foue on the development of this policy enviom and on the ma_sonam of existing cpacity to deliver care. Depending on the outoome of the policy debatei, major invesnents In hie sector may be required. 3.208 Neat Step. A ough review of th needs of hdiual Ituios for recurrent co financing shod be carried out and plans fmulated to ensure their speedy recovery of fianca viabfit. Ihe lit of fcilities seeking assice for rehabiliton and expasion shoud be vetted and detiled plans prepared ior die work. Task forces should be appointed for the study of te merger of Civi Administaton and UNRWA programs, prepaation of a regulatory framework for prvate and wluntary providers of care, and the financing of health serices. Table 3.8 Health Pmoram Costs Estimate (US$ Mmilo) Totw C4ftvoIy I 1994 195 1996 Gaia Wes . _ _ ! __j =ank B.. R- abilittio of clnis and 6.0 4.3 3.0 3.6 9.7 13.3 Eqimn 2.0 2.2 0 2.0 2.2 4.2 Reue coas (eucL UNRWA) I 19.0 18.0 10.0 21.0 26.0 47.0 Total _ 27.0 24.5 14.0 25.6 36.9 64.S Nonl-Governmenta rgnzain 3.209 Over the past qur century, Palesdnian society has developed R broad spectrum of intuabo and ornizaons ht opewaes educational sysms, medical services, agricultu cooperatives, social welfiae systems, research instes, and legal assisace centers. Under fte occupation, this Ifatctr has been a diverifed and responsive provider of services tfiat were otherwise inade or nonexist Supported minly by externul financiers, Palesini NGOs have been the main arciec of tis inru. 3.210 The initial soci and religious institutions in this sector originated when the area ws under Jordanhn, Briish Madae, and even Ottoman Jurisdicion.hese institutons (p larly charable so es), inidally tended to be udan based with narrow su , usualy reuited from the more privileged sectors of society. While the services they extended were higly valuable, their grass- root reach tended to be imited. 88 3.211 Bgnning in the late 1970s, popularbased social organ ons began to emeg. Members of these new orgazatins tended to view their more established counterparts as socialy conservatve, politically passive, and incasiy out-of-touch. New popular commitees directed their attention to the community and combined the provisions of services with an actvist political message. In the initia peiod, most of these ornizations recited their practioner from a broad pectrum of political sym _es. 3.212 ITe In4fda ignited an explosive growth in these popular commit. External tuding for tie Occupied Territories increased sharply following the InWada and stiulated a proliferation of new NGOs In all fields of actvity. Ihe health sector captured inteationa imaginaon and the lion's share of new fimding. Broadly speang, the rapid expansion of medical dinics reated not only to obvious and urgent medical and health needs confrontig the Palestinia popuation, it also reflected competition among the poltic factions for the stature, defrnce, international recognition, and supporters that stood behind the vauious popuar health commis. Ihe exponendal growth in the number of NGOs (especially in the health sector) was accompanied by an acceleraing sectarian rivalry and competiton. Even NGOs that tried to separate themselves from these political tensions eventually found themselves engulfed in factiona discourse. 3.213 In spite of these excesses, the period of Occupation and the XWada have supplied Palestinian society with a *lcity of voluntary organzatons extending essenal services. They also accustomed Palestinians to active and energetic participation in molding their own com_mty institutions. NGOs embody local, private initiative coupled with community egaemet 3.214 The cut Palestinian NGO sector is large, unco and fragmented. The estimated 1,000 NGOs can be roughly classified into three distinct groups: The Unions of Charitable Socdeties form the largest, and in many respects, the most stablished group. Its membrship includes the Red Crescent Society, the University Graduae Union, and the sllamic Charitable Society. In total, some 318 different local societies are organized into four regional groupipgs. Ninety percent of the members are located on the West Bank. These NGOs combined have some 15,000 employees and a membership of 21,400 individuals. They organize nummrous activities, including adult literac classes, weaving and sewing courses for women, orphanages, physical rehabilitaton centers, welfare programs, and kIndergartens. They also run major nongovernmental hospitals and universities. It is organized under residual Jordanian or (in the case of Gaza) Egyptian law and thus have enjoyed legal statussnce 1968. They are required to have stautes, elected boards and officers, and annual audited financial statements. The aggregate budget for the Unions of Charitable Societies is currently US$61.5 miUlion (mosty salaries), of which only some US$19.5 million are covered by iternally geneated revenues, leaving some US$42 million to be covered from other sources. Historically, the Societies have received major funding from lordan, otier Arab counties, and the PLO. Jordanian contributions fell drastically after 1988, when it 89 relinquished its claim to jurisdicton over the West Bank.M Assistance fom other Arab countries, and more recently from the PL0, has almost vanished. The Societies' aggregate current deficit could be on the order of 50 percent of their annual budgets. TIhe Zakt Committes operate under the jurisdiction and partal coordination of the slamic trust, or Waa. Operaing under sllamic law, Waaf property is held in perpetuit, with its income reserved for specified groups of persons or for charitable purposes. In the case of the Z74k Committe, members (under Waqf supervision) collect, administer, and adt funds collected from the local community and otbwsr sources in order to provie a range of welfare and healft services to the community. In generd, Zat commiUees are regaded as relatively efficient organiaions and fincianllymuch more self-relatother NGO sectors. ANERA estimates the annual budget of ihese committees at about US$9 million, of which over 90 percent is disbursed on the West BanL Zak commitees should not be confused with the niany underground welfre organ a establisbed by militant Ilmic groups, although to a certain extent, membhip overlaps. Unlike the Zat committees, these latter groups emerged only in the late 1980s, particarly in Gaza The effective, nonpartsan manner in which they extnd needed welfar sermices appears to provide them with increasing respect and lnfuence. v The "Popular Sector* is the most recent part of the NGO sector. Most of its groups originated after 1987 as a host of committees and groups coveing the full spectrum of social activites. Provision of health services has received particular attention, arguably to the detriment of other needed services and activities. 3.215 While the NGO sector as a whole can be considered the alternative infrastructure of Palesinian society under Occupaion, the Popular Sector has operated as the alternative, grass-roots social frastuct of the Ihifa. Its members tend to be younger, more innovative, and more aggressive with regard to intemational financing those of the other two NGO subsectors. Untl recently, its commitees were unregitered and consequently operated without any form of regulation. While some of the Popular Sector groups have operated with high and impressive standards of professionalism, others have mainly been politcal recrting grounds and show-cases for their political sponsors. Many popular NGOs have now registered as nonprofit organizations. Most of their finance has come from Europe, notably the Nordic countries, and Canada. hbnding of the NGO Sector 3.216 Funding of the Palesdtian NGO sector currently flows through a multitude of channels and in vastly disparate amounts. Some NOOs (erhaps the majority) receive external contributions limited to only a few thousand dollars annualy. Others depend on contributions of hundreds of thousands monthly. Whatever the sums, the Palestinian NGO sector is highly dependent on ternal financing. 1! Tho Jordann contbution in 1993 is estimd at anly JD 340,000. I/ Al of the figure cited er ae ao tions ony and should be tread with cyau 90 Very few finance a sigificant poraon of their activies from inealy gen_ed revenues. A reliable ovenview of tbe cut fiana situationIs mpossible to obtaln among other reasos, becuse o published figures exst concerning funding from Arab govenmts e Islamic ins utns. Tbis fiuding has been emated to bave oncebeen in the rage of US$30 to 100 million anualy in thepast, altbough cuet coattions have dropped to only a small faction of this figure since the Gulf war. 3.217 Ike UNDP estimates that the overll flow of recorded exWnal assistance to the Occupied Teritories in 1992 was on the order of US$174 million. This figure includes support for UNRWA's rrnt epeses of US$98 million and capitl expenditures of US$11 million. If all fnding to UNRWA were eccluded from these flows, UNDP figures would suggest hat in 1992 some US$65 million was channeled :to the Occupied Territories of which US$43 million came from bilateral (inly Western) donors and US$22 million from nmltilatr ones. ANERA etates that the 'popular NGO sector3 of approximately 200 ecmmis and insttes of various sorts received some US$15-18 million of the total flow. It must be stressed that these figures probably significantly undimate he ext of the Palestinian NGO sector's reliance on eernal assistance. Not only are contributions from Arab and Islamic sources absent in these calulatons, but the substantial funding previously provided by the PLO is also largely mising. 3.218 Channels otffuding. Intemational assistanceto Palesdnian NGOs has kendiverse-tometms higly obscure-forms, including the deposk of sbtant funds into lsraeli bank personal dolar acounts of reident Palestinias with foreign cinship. In addiion to disbu to multilateral chamnes such as :INRWA, however, most recorded bilateral disbure have been direcdy made to loca NGOs. Some counties have chanelled fins to local NGOs through their own national voluary organizatons. To a large extent, it has been foreig NGOs rater thanaonal govement who have been erustedwith select Palestinianpartners, 4entfingprojects, m oring them, auditg acounts and evaluating results. Hundreds of foreign NGOs are involved. The competce of these NGOs Qike ta of their Palestinian counterpats) has been rather mixed. Regardless of the degree of competence, however, proper auding and accountability have been problematic, particularly In the Popular NGO sector. 3.219 Setoral disribution of asstanc. The overwheming majority of dibursements have gone to socil service actvies in health, education, and humanitn assistance. If funding to UNRWA is included, these activites in 1992 absorbed some 85 percent of total recorded disbu . If UNRWA figures are excluded, 60 percent of the remaining flow was directed tO social service activities. Health services receive more external fuding tman any other single sector, with approximately half of all European assist to the Occupied Territories in 1991-92 going to heat-reed programs. The numbers of Palestinian NOOs operating in the health sector is both a cause and a result of this fact Education, the second largest recipient of exte assistace, absorbed at least US$15 million in 1992. JI UNDP. 1993. Comn of Ru_a AsLta to dwe Ocupied Patnim Teauv, Jeulm Il 11 tota contrbution from WesterEmBuope durig dis pedod wa apprxmtly US$30 milloL NENGOOD, 1992. Dleoiy of E&Wpean Go _uwel S&Wport to te Ocapi Paetinia Terroa. Jelem: Occped Teritodes. 91 3.220 Unfornately, assitn to the critical areas of social nfrasuctr ad at women and youth and, most notably, to economni development (such as agricuture, nduty, and job creaon), bhm remained a relatvely low prioriy for the donor community. In fact atenl recorded investment In to cnomic sor rersnted only 5 per of total disb 3.221 Regonal distribudon of as_sistn. Because of UNRWA's large reret costs, etra assista ppars to be fused on Gaza UMWA exclud om te equaons, however, a more complicated picture emerges. According to UNDP figures, ewme 42 percent of non-UNRWA fundnAg in 1992 was targeted to Gaza and 58 percent to the Wet Bank 3.222 I one object;ve i to reach the more vulnerable groups withn Palesnian society, and particularly the refigees In Gaza, this migt appear as an equitable regal diuftionof funding. Of the more 1,000 estimated Palesdnian NMOs, however, ony about 100 are located in the Gaza Strip. The majoriy of the better-fnanced NGOs are he d in relatively affluent areas outside Gaza, and In Gaza, there is widespread rancor at what is perceived ' be preferential treatment accorded to the West Bank If the largest NGO sector, the Union of Charit&.o Sociedes, is examined, the same pat of regional COnce Dai is revealed. The allocation of the Societies' employees clearly reflects the allocaion of its acivities, and of the 15,000 indviduals employed by he Chariable Societies, only some 800 are employed in Gaza. Within the West Bank itself, the poorer Hebron has less than half as many the charitable societies as the more prosperous, Nablus area of the West Bank. 3.223 No direct correspondence between the geogrqphical dibution of NMOs and geographical disburseets of exten funding is being suggested. Nevereless there seems to be a marked tendency among many NGOs to concenae funding on relatively well-ndowed sectors (suc as halth) and on Palestnins who already have the best access to services-a pattern ta eacrbates sectoral and regional disparites. Paestnian NGOs during the Interim Period 3.224 Despite past problems-the competitive duplicaton of sevices, the importation of inappropriate and at times harmfi technologies, the uversion of funds and the subordination of professional standards for political advantage-the rich and vaded Palestnian NGO sector is an immely valuable resource. The of the diversity of this sector, together with its diversity, should be regaded as a high prWiy. Palestinin NGOs provide a wide variety of basic socia services to large pordons of Palestinia society, literacy classes, agricultural cooperatives, vocao training, credit associations, sports clubs, housi councils, cultual actvies, chld care and health seAvices. It woud take considerable time before the newly emergig, still fragfle Palestin public inston could supplant the services exteded by the NGO sector. It will also require a long and considered policy discussion as to whether such an evetuality woldd be desirable. 3.225 The current structure of the NGO sector reflects the conditions under which it evolved. The exigcies of the hnifda fashioned the types of activities that received priority from NGOs and donors alike. But as political authority is changing, so are the priorities of Palesdnian society. NOOs should be challenged to align their actes with the rpirements of emeging realities. Ismues such as the enrichment of social life for youth, the enhanemet of the soci and eoonomic status of women, the Jl UNDP. 1993. Cmpediwn of Etend Aultal. uenalm 92 envitonment, human rights, and economic development should recive much moe attention ta thy have hitheroo. in this context, the exceedigly va le work done by the various womens coms m should be metoned. Ibese groups have succeeded in foming a single umbrlla organization ad, thefore, have the functioning cooperative struct that Is lackin many other area. Moreover, their activities on the comunity level have made a specil conbutio to the more vu4erable, often nglted groups. Ihey deserve more atenion and support fm onal financiers. l.e Legal and Regulatory Framework for Futu1 Asitae 3.226 In many Middle Ean countries, NGOs are hgrate Into lhe relevan government mistry, which funds them and exercises domiat control. Ihe cost of this arragement is usually loss of independence and the inability to safeguard the expression of a pluralt of viws. It would be regrettable if such a model were selected for reguladng the Paletnian NGO sector. To maintain NGO independence while bringing the sector under regplatlon by the statutory framek, a system of fimdi lg, economic accountability, trsparency (both financial and in NOO actvites), and professional stndards of pfmance needs to be developed. This system must also be simple, easy t understand, and readly applicable. 3.227 Al NGOs that aeceive external funding (ethher Palestinian or foreign) or are employers should be officially registered. The documens required for regitration would indlude a list of aecutive board member, NGO officers, and the saes of the NGO. For all NGO activities that Involve specialized profsion&l Interventions, a mininal list of profssional standards am1 s ns would be drawn up by PECDAR and adhered to for all NGO-related actvites. 3.228 o be ding Famwk Al registered NGOs would be free, without prior apval, to submit applications for funding for their ongoing programs, either to Palestnian ahoite or to International agencies. Conuerning fiuds assigned from intaional agencies under the Emergenq Aitanc Progam, either PECJDAR could serve as the Intermediry receiver of funds or the NGOs could inform PECDAR about direct fund transfers. Final arrangements need to be agreed upon. Whatever is agreed, al NGOs should be requred to submit a ful sl of accounts for inspection by independent public or prive audiors acceptable to the fundinm agency. It is proposed that any shortfall that cannot be saisfitoriy accounted for would, pending ue process, become the personal liabiliy of the executive board members of the relevant NGO. 3.229 The Role of the I Communty. While n interatona agencies have opeaed at high levels of prsnaism in the Occupied Territories, others have not adhered to dt same standards. Some have been motivated primarily by political concers, some have failed to expend sufficient effort to assess the communiy's real needs, conibung to duplication of effort and the constuction of ill-sed facilities. By using nonprofessional considerions in the selection of staff and of NGOs, innatnl agencies have exacated the factionalism that has increasingly become destructive in the NGO sector. While neither the NGOs nor the international agencies who fund them have been able to coordinate their acdons in the past, contiution of this state of affairs under th present and fiture conditions-when much larger sums of money are involved-would be disastrous. With long- term sustainability of key importce, future projects should be carefully screened paricularly carefully for the capability of the institons involved to carry recurrent costs. 93 3.230 Youth and Women Developmtet. An urget priority durig the Emergency Program I to re- estblish normal personal and co_mmity life and, most Importantly, to renea youth into an orderly society. Me generation of youth who reaced adolescence during ke Jivhda bypassed many norm developmPital experiences In their transition to adulthood. Programs are now needed to help these youth acqure a capacity for pardcipation and leadrhip In formal and informal ommunity groups. A program of summer activities (including compeive spors, community sevice, and cras) is being planned to acilatae the resmption of norma life and to srengthen social and organizational skills. 3.231 The Ian4da has also profouny affcted the roles and oppornmities avaiable to women On many women, it forced greater reponibiity and more public roles, and contributed to the development of new sevice opportunities. As Palesdnins resume a more nonnal life, women are likely to retun to mwre traditional toles and reponsiilities. By creating new options for female service and leadership, the place of women In the society can be Improved and solidified. A pilot program for Youth and Women Development, estimated to cost US$15 milion and focussing on Gaza, is being proposed for the 3-year Emergency Prognrm. Private Sector Development 3.232 This report focuses on acdvities and inves_ents normall;, Adetaken by public sectors, but it Is clear that the prvate sector would have to play a critical role in the overall development of the Occupied Territories. Public sector investment alone Is not sufficient to boost economic growth beyond the short term; without the development of the private sector, any economic growth stmulated by the public sector-led Emergency Assistaem Program activities would, in aHl likelihood, prove unsustainle. Becaus of eventual public financing constraint and limited public administrative and instiuonal capacity, a development strategy based upon strong development of the private sector is most appropriate for a self-governing Palestinian authority. 3.233 The priate sector now plays the central role in the producton and distribution of goods and swvices in the Occupied Territories and wod, in the future, continue to dominate agiculture, manucturig, construction, housing, commerce, tourism, and other service sector activities. To assist private sector development, there are certain themes and basic gidtelines for government policymakers. Analysis of private sector development eisowhere suggests that authorities should seek to establish an enabling overall policy-conducive to both domestic and foreigl investmenttbat promotes private sector acfivity, and an efficient financial system to support private sector development. stablihment of an Overall Enabig Policy Envlronment 3.234 The existence of an overall enabling policy envionment conducive to private sector development Is dependent, first and foremost, upon macroeconomic stability. The maeonomic policy envronment currently existing in the Occupied Territories is defined through their economic relationship with Israel. With monetary and trade arrangements stil to be negotiated, self-governg Palesinians will need to make macroeconomic stability their key policy objective. 3.235 Private sector development also requires a legal framework, property rights that are respected, contracts that are enforced, rules that are transparent, and an impart arbitrator for contract disputes. Bankruptcy procedures and rudes must be clear, and also laws to protect the private sector from capricious 94 acts, or seizu, on tie part of the state. An adeque legal system and reuatoy frmework isteore essential to business. In tie case of the Occupied Tertories, the occupation has impe pecil difficulties that need to be addressed Immiatly by the Palestian self-goverg auxity to foster developmnt of the private sector. 3.236 he miconomic policy eonment includes domestic rions and policies affecting goods prices (such as price controls, trade policies, and other govenmnt interventions that could lead to market and price distortions), policies and regulatons afecting the prices and functioning of factr makets (such as labor legilation or interest rate controls), competion policies (nlluding controls over market entY and exit), and tax policies and administration. A tolerant public attitude tDward private profit-making also helps private sector developmat 3.237 The policy framwork is also needed for direct foreign investment. Harnessing the financial and human resource potenti of the Palestinian diaspora could prove of major importance to the Occupied Territories' economy. In addition to bringng in much-needed capital, foreign direct invetment in the Occupied Territories could contute up-to,date technology, maagement know-how, and access to wodd markets. Success In promotg and enaging direct for investment for the Occupied Terarites would require, however, good prosp-cts for political stabiity nd peace d the Policy, regulry, and judicial elemens menioned above. To promote private enterprise from the grass roots up, governmn should concentate on upgrading the human resource-base and on makig inbfnation and servie (such as standards tesdng) readily avalUable through a wide range of market-supporting insttuo. It coudd alo open up to private sector the provision of public services such as water supply, road m_cc, healt care, and educaton. Development of an Efficent Finncal System 3.238 Financial systems are essentl for mobilizing swags, maging risk, alloctng resources from savers to investors, and faciting findacil nsactions. A well-functioning financa secor is thre ceral to expndn investment in and enhanig the productvity of the private sector. Growing evkience from empirical mucountry studies links financia sector development and economic growth to pvements in economic efficiency. Evidence furtier suggests that the level of financia development is a predictor of future economic growth and efficiency advances. By motivatng the return of flight capital, financial sector development also eases constraints on private investment. 3.239 The development of the financia system in the Occupied Territories is preseotly considerably less than one would predict, given economic indiutors for comparable economies. Currendy, the Occupied Territorie are served by only two banks-the Bak of Palesie in Gaza and the Cairo-Amman Bank in the West Bank. Ihere are also branches of Israeli banks, used primaiy by Isaeli setders, in these areas. Ihis situaon will surely change as new Palestinian banks are formed and foreig banks open branches and subsidiaries in the Occupied Territories. 3.240 In addition to a paucity of banking ins"tions to handle nomal baking anactns, there is also a scarcity of financial ne iaion to facilitate the transfrmation of short-term savigs into long-term loans to the private sector. The establishment of a supportive Instuional setting to allow such Inrmediation will take time to develop, and banks cannot be expected to fnance long-em investmen until long-term financial Istuments become available. 95 3.241 Donors, however, have reny earmarb4 loam for the private sector and could eamarmk more resoc r tis purpose in the ftur. CurreTly, these funds are i by a large number of sttio cated specially to hande them Whil there are exce s, ts Institutions lak the professioaldism needed to carry out len opeations ad suffer from low rates of collection. Thdr staffi appear to operate as grant ispe rather than financl mediaies. Clearly, a more efficet approach Is requed for t future. 3.242 A strategy to develop an efficient financial sector would be to enact needed lea nvome and reguton inside and outde the baking system, favoring growth of a sound commecial banking system. Over time, Instition could be built to provide sufficient rlsk-shara, mechanisms In the local economy and to incra the domesic long-tm saviogs. The creation of a Developme Bank is proposed as a provisional mechanim to allow for the channelling of etenal loans of longer maturity to the private sector in a way that would support the emergence of a sustainable domesdc financial system In the future. 3.243 The two non-Israel ban; operating in the Occupied Terrtories do so under two different legal frameworks-the Bank of Palestine In 6aza was licensed under Isradi legislation, whfle the Cairo-Amman Bank in the West Bank was lcened urler Jordanian law and updated by an Israeli decree to confom to the lats developame in Jordan This itrduces a double stdard in the functionng of he Palestnian baks and complictes their supevi The procedures now being used by Israeli and Jorda Cental Banks are common al over the world for the operaion of branches. In most parts of te world, however, foreign branches represet a smal part of te banking system. In the Occupied Territories they would repres a very lage part of it. While these arrangemens may help acoelerate the establishmet of baons in the Occupied Terrkoris, they soud be seen as temporary. 3.244 In the future, ban ks t out the Occupied Teritories should operate under a single law and be supervised under a single set of regulations. Regulaton and supevision could be unified under a Paletinian Banking Authority. Initially, the sysem would necessay rely heavily on bank Inspecto carried out by eminers from negbon counties. It should, however, immediately hire Palestins to begin Intensive trainn on the job and in specil wuses. These courses, tu&ght by experienced supervisors, could be taken both abroad and inside the Occupied Territories. Traning should Include extded vii to supervising agencies abroad. In the case of foreign banks, the new Banking Authority should encourage creaion of full subsdiaies capitalized inside the Occupied Territories and licensed as Palestinian babks. In the case of subsidiaries, home country atorites should guarantee their capital. Also desirable is the creaton of joint ventues between foreign banks and domestic investors. 3.245 The creadon of a Development Bank is mentioned in the Declartion of Principles as a means to provide long-tm lending for Investment There are also strong argumers for the creation of a long- term credit faciliy to meet the imed needs of such credit in the Occupied Territories, and several proposals are currently being discussed on how to create such an ititution. To design a long-term credit facility, it must be decided whether it should lend at subsidized inteest rates and direct its credit toward prefrred activnes and whether it should be a retafl or a wholesale ision. 3.246 literest Subsdies. Many proposals presented for the establishmeat of a Development Bank argue that in an envirownmt where entrepreneurs have been reluctm to invest for many yea, subiizaton is needed to promote investment. However, in light of int"aiional experience in thes matters, there are Importmt reasons why the Occupied Terries shoud avoid heavly ubsi credit * The presence of subsidzed credit prevents the emergence of maret-based i m and insttions to provide investment credit on a sustinable basis. 96 * Subsidized intet rates tax domesdc sav'Dgs by atificy loweang e cost of capital. Ihis reduces *wentves for self-fit-acng of investment, becase aget with capitl that could be invested In the economy can borrow Intead and meet thirk capital needs at subsidzed rates. * Subsidized interest rates promote the adopdon of capltal-inentlvetechnologles, artdficialy reducing demand for labor. This hurt the poor and reduces the competitiveness of the eoonomy, which does not then benefit from Its tru compaive advantag. Lower-thn market interest rates create a siation of excess demand for subsidzd crdt To equilibrate demand and supply, subsidized credit has tb be rationed, which opens the door for coruption and biases compedtion in favor of a few fortae eerps. Credit subsidy encourages excessive risk-tking, becausethe subsidies conveyed through htere rates are higher the higher the debt. This eourages the creaion of excessiely le';eraged Companies. By ardficially increasing the risk to the banking system, it can lead to a contraction of credit lsewhere in the economy (especially for smaler and medium size fims). * Interest-rate subsidies are regressive, with big entprs benefing more fiom them tham smaller ones, for the simple reason that they have more scope to borrow. Tbis would be particlarly perverse in the Occupied Territories, where the rapid creation of enterpases is needed to diversity the economy, and given the fat that new enterpises generally start small. 3.247 In sum, if the public sector wants to provide subsidies for investment, interest rates are not the appropriatevehicle and directed credit should also be avoided. Tho Development Bank shoud lend at markt-intest rates under market terms of contracting and repayment. 3.248 The Palesan Deveopment Bak. There are two main ways in which a long-tm credit fclty can be created. One is through a retail instution hat lends diety to enterprises. Tis is th standard model of a Development Bank. The other is an apex, or second-tier, wholesale insihim, whih lends to the public throgh commercial bans and other retai agencies. 3.249 The retal altative. Most of the Development Banks created during the 1960s and 1970s were Government-owned institutions, borrowing from bilat and multil aid agencies and lending directly to investors. Experience with this kind of instution, however, has been disapointig. Existen of a retil Development Bank prevents the emergence of a healthy, compettive, diversified fiani system. Fmancl imd es are rightly reluctant to compete with development bans nd therefore tend to abandon markets where they operate. Retail, long-tem development institutions generally suffer from insufficient knowledge of market conditions and palitie. One of the key elements in a good credit decision is knowledge of the customer. hsDutions working only with long- term credit are exposed to their customers only when they are planning a major long-term investment-which tends to happen fiqueny. In the process of long-term lending, an intimte coOnection with commercial bank, which work dafly with their cstoms and thereore know them well, is essential. 3.250 Being owned by the Government, development banis are subject to poli influence in their credit and stng decisions. Over time, portfolio quality deteriorates, genrng heavy losses with detimentl development impact. To reduce such problems, a Development Bans loans, to the wext poss.ble, must be subject to a market test. 97 3.251 The wholsale alternatve. Apex (or wholesale) intittons tend to have the same lnte problems (polical nuence, a culture with principles diffent from thos of the market, lak of incentive to allocate resources in te most efficint way and to collect loans) as rtail ones. The advtages stem, rather, from the market test of having to lend through privaWe ra banks. Since the apea Insti n cannot lead directly, k can only react to the dmands oming from the market thro an intmediary intiuton. As long as the interiediary-or fis te-institution react to madket incnives, the process of lending is subject to the discipline of the market regardless of fte ownership of the apex instution. 3.252 Suggesed principles for th peration of the prposed Development Bank: * The Development Bank should be n apex ins on. Et shoud give top priority to keeping its capital intact, and furtmore, to in_cing it throuh the years at a rate higher than the rate of inflation. Commerciad risk should be wih the first-ier inter ries, so that, if a final borower does not repay, the fi-tier Itmediry would take the loss. - The Development Bank shodd quaify first tier i ies on the basis of financia strength and good perfdrmance. Ihe crIta used to quaify institutons should be pblcy known and adhered to without exception. The apex instition should be under the supervision of the pwposed Paltnian Baking Authri. -- The Bank would lend at maret in rates detem d by an agreed indicator in the relevan urency ta woud adjust according to cames in market coditions. LnIng at market rates shodd be the rule, without expton. If the Development Eank gets loas at concessional rates, the extra profits would go to enlarge its capital. * The Development Bank would not make long-tem loans on the basis of short-term resources but would operate ina the medim- to long-term makets depending on the maturity of the loans obtained. The allocation of its resources should be determined by demand from the market)N Proposed Support 3.253 Under the Emergency Aisance Program, while private sector acdvities m howing, telecommunications, and agriculture would rec4ve support through the proposed Development Bank, the need for support to the private sector far exceeds investments suggested. Total investmn support to the private sector is esmated at US$300 million over ftree years, US$80 milion for hovsig, US$100 milion for telecommunications, and US$20 milMlin for agricultre. Fiancial resources of the Development Bank would be supported though direct contribudons by donors or by guarates for specific bond issues floated by the Bank. .12/ This codd pose a problem wih some bilateral or ;mltatwa Isitions, which mig insist thath funds be used for specific sect Taking money oan ths tms woud be detrimental for the perforn - 1 of the institution, wich could find itself payin terest or fes an funds that have no demand. In tes case, he Devepnt Bank might volumteer to nap the funds as an ageny-tt without boawng them but charing for teir et, allocaon, and coectin 98 3.254 Tec al Assiste. To support the development of the private sector In th emerging Palestinian self-governing autority, a number of technical assitn acvities are envisaged. Ihey cover many of the as mentioned above and would consist of studies, training, and Inston building. For example, an in-depth sdy Is needed before a defitive strucure for the proposed Development Bank-including the way k should treat foreig exchange risk and defime leading rtes to reflect market forces-can be recommended. Agrdiwu 3.255 On average, in fiscal 1991, the agricultr sector accounted for some 28 percen of GDP in the West Bank and 26 percent in Gaz. The sectoral share of GDP and sectoral employment levels are high gven the level of national income. Although the sector was sucessfid in targeting export markets in tie 1970s, exports have declned considerably since then, while production has kept growing. Production growth has contnued despite restrictions on inrnl distibution, limited access to natural resources, modest and declining levels of private and public investment, and little new technology. The Occupied Territories' regulaory framework and ins onal support services have not been conducive to sector development. The paradox of growing production in a hghly constrained environment can only be explainedby the counerbalancing effect of distorions in the labor markets, such as limited opporunities in the rtt of the economy and gowing unrecorded exports to Israel. 3.256 NGOs currently perform a dual uction: providing public sector services and supporting private sector opeatios. Most agricultura investment Is cuntly handled by NMOs and the frmers themselves. NMOs have become the preferred vehicle of impl on for both foreign and locally finced programs. However, ftis way of development financing in an uncertain, dangmg, and inconsisteny applied policy envioment has resulted in a patchwork of activities wit variable objectives-some of which lie outside the purview of agruld development altogether. Considerable overlap exists between programs and few programs are area-wide. Some project-exploiting the current ambiguity concerning the roles of the public sector and NGOs-mlx public and private components. Oter projects are not sustainable without subsidy (some )f it directly to private farmers). Still, oters involve NGOs in the agoindustry or in production acdvities tgat should be private as a maer of principle. Issues and Sategy 3.257 The current policy framework is not susanable. The recenty signed Delration of Principles, while providing an impetus to n ain of sectora performance in the longer teum, will in the short term create additional policy uncainty. The agriculture sector is not one of the five areas of early empowerment in the Declaration of Principles, and the timing of the transfer of authority in the West Bank is stil the subject of negodations. It appears likely that several key policy issues will remain unaddressed, or only pardy addressed, for some tme. These include the improvement of inten transport and exteal market access, thae improvement of production technology (with better agrcltu support services and greater access to research), the adjustment of policies and insiutions regulatig access to natural resources, food quality and safety aspects. 99 3.258 MIb second key baue is the weak perfirmance of the public sector, and Xh multiple and overapping roles of the NMOs. U. -4rtainty over the exact dming of the transfer of authority can cause gaps in regulation and poses further problem for those desiging future insftuonal fiuncdons. With the transition to Palesdniaa authority in Gaza and Jericho schdultd ahead of that for the West Bankl, fr examle, many issues may have to be addressed sequentially and solutions be area-specific. Dermiig and establishing the future funcons of public authorties In die sector and redefining the role of the NGOs will be key elements of success of future sector performance. 3.259 The example of the effect on water management in Gaza is Illustrative. Early indications are that, in Gaza, Civil Admini on control over water use has already been s dubta ly reduced, whie Palestinian water manageme institutions and policies have yet to be prepared and ebtablished. In an area in which contnuing resource management is essental, the resulting regulatory vacuum has led to a rapid increse in the number of unlicensed irigaton pumps. Excessive exloiation of the aquffer in an area restricted during fte occupation now threatens Gsza's wate resources. Given the limited sstanable yield and overexploited state of the aquifes even before this expansion, the uncontrolled exploitation curnty taking place will soon seriously affect the qcaty of water avaiable for domestic and agicultr use, with potentally c tophc implications. Controlling water use in Gaza, thrfore, soud receive top piority. 3.260 During the threeyear Program period, tae overall agric secor objective woud be to define and strengthen essential public functions, seek agreement with Israd on key isues reated to transport, narketing an1 access to natural r:sources to lay the basis for long-tm policy and regulo refom while maintning essentia public services curreatly provided by NMOs. Aspects of enviromna management that are within Palestinian auhfority should also be vigorously pursued. Structural adjustment of private sector productin should follow esablishment of new sector polies. 3.261 With the agriculurl sector facing a crisis in marketing tradition products and the increasihly act water consta in Gaza, initia steps to advancing the policy diaiogpe on access to makts and nural resources should have high priority. Meanwhile, investment support is suggested for specific uI ca works essential to agriculture-rural roads, rehabilitation of public wells-that bave lacked sufficent invetent in the past. Labor-inensive eonmental investments-which benefit large segmait of the rurl population-are also high priority. Whfle structural adjustment of production should be pursued by the private sector, to assure the continuation of essential agniciturl support services and address exising mbal in these services, budget support to NGOs would be provided in such area as extension, training, product qualiy, animal health, and product safety. Spedfic extension activities and regulatory measures to be reviewed by the PEPA wowud be supported to sensize farmers regarg excessive use of pesticides. Ihe definition of the role of the public sector, strengthening of the performance of newly creaed s i, the analysis of sector issues and the design of new sector policies would be suppt under the Technical Assistance Program. 3.262 As long as the institutional and policy picture remains uncertn, larg e investment in the private or NGO sector should be approached with caution. Until basic rules concening market access, taxes, the local reguatory regime, land, and water have become clearer, support for such investmet-with the exception of rebilitation of wells in the West Bank-should remain limited. Even during the Emergency Program, investment in productive activities shoud, in principle, be left to private investors and the past practice of sppotig and subsidizing farmers through semipublic schemes fmded by extenal donors be discouraged. Too often in the past, private investment has reflected the polit and regulatory framework rather than sound financial principles. New ventures need to be carefully 100 reviewed, pardeularly where expsive land reclamation and olive grove expasion is proposed. Sound privae sector nvesten, however, should be encouraged under the Emergency punam wih the proposed Palestiian Development Bank etending credit for valid prlvAte agriculur investment 3.263 In the longer term (five years or more) the agricul sector should focus on enhancing hoe agricultura areas with competitive potential through: Efficient handling of such public sector fuctons as policy, regulatory control, natural resource management, agricultural support services (education, extnsion, applied research, coordination of research, data collection), and market promotio (thug public and private institutions). * Development of a policy framework that improves access to markets and iternal movement of ptoduct, reduces reguatory constrain, rgulate and Improves access to natral resources, and encourages structura changes in production patterns. * 3Expandig and maitning essential in. * Strengtheing finmancial-system suppcrt for private investmeat in the sector. 3.264 Restructring of the instittional framework should seek to retn a plurality of services while prevenang the overlap of functions. Changes in the sectoral producton paten, and in the functions and structure of public Instuons, should be carefully scheduled to avoid excessive shocks in production or employmeat Program Desrpion 3.265 General. Ihe thre-year Emegency Program proposed supports ifrestment ndluding construction of rura roads, refurbishment of public wels, and investme in such actvities as erosion control) insutional strengthening (nkdlng stengthning of agricultul support services such as agricultural education, taing and extension, trainig programs for rural women, improvement of food safty, animal health, and management of pesdcide use) ana support for private sector activities. Wilth istional development and policy formulation of overridg importance, a sector policy study to identify and analyze intionalnd polcy alratives sod receie top priority. 3.266 Invment Program. This program supports investments in essw*al public infrastructure and Insttutions. * 'The rural roads constucton program would be executed manly by NCOs which have been effective in the past building rura roads. About US$8-0 million would be allocated to this activity. * Reurbiishment of exist, publicly-owned wells (provided licene have been isued for such work) should be swoted under the Program. It is esmated it about fifte public wells (ree in the Jericho area) coud be refubished over the next three years, at 101 a total cost of US$8.5 million. Technical assistce is helping to prepae detailed designs and implementation arrangemes for these wells. * Investments in tie area of improvement of ttie environment (such as erosion control through foresty development, land reclamation, and measures to enhance water infiltration) would be supported at a total cost of US$5 million. * IInvestment in public sector support functions and stren g of public sector food safety rlion and enforcemont (UJS$5.0 million). Th. desig of thi component would be based on the recmendations of the proposed sctor policy and Insttutional study. 3.267 Private Sector. Future private sector performance requir iWestment to restructure production in order to ebhance efficient resource use and focus on new markets and products. Support through the proposed Palestin Development Bank would also aim at on-farm and agro-indusry investments. in addition, reconstruction and refurbishment of existing private wels on the West Bank (pwrovided permits and licenses have been obtained) would be supported in principle, provided adequate financing and cost recovery arrangements were deternined. These cost-recovery arrangements should take into account that during the past twenty-five years many prvate owners of wells were unable to perf refurbmt and repair and that many wells (although prvately owned, usualy by tradionai groups of farmers) perfom a public function. If adequate cost-recovery arragements can be put in place for these priatse wells, US$5.0 nillion would be allocated for their repair and refrbishment. For Gaza, no public support for wmU rehabilitation is r ded as long as the exisig break-down of water management measures contiumes. Assistance for well rehabilitation may be contemplated once a sstainable water management program has been put in place by the Palestinian public sector. 3.268 Institutdons. Support for the sector program should genealy be directed throu edstig hamnnels. However, support to gthen future public sector funcdons in agdculture would be directed at the future Palestinian agriture deprte and PEPA (US$S5.0 million). Direct budgetay support is suggested for ongoing and new agricultural training progrms executed by NGOs (UJS$2.0 million); for the joint program linkig the agricultual faculties of Heron, An-Najab, and Gaza universities (US$1.5 million); and for continuing NGO activities in the fields of training (regarding fertlizer and pestidde use) and animal health (US$1.5 million). 3.269 With the stmeture of agricultural extension still under discussion, only current levels of exteon woud be supported. Further expansion of NGO programs should await reslts of the agricultura policy study recommended as part of the Techni Assistan program. Given the important role of women in agricuture, however, strong support and an expansion of training programs directed at women is suggested, as is apport that enables women to strngthen their economic role in agcltre producdon, processing, and marketing activites, and those related to home economics and nutrition. AppIed research should be supported primarily during the second half of the Proam, once a policy framework and research priorities are in place. 3.270 Level of Preparation. Actual investment projects received covr only a small part of the proposed sectoral invetme program, relecting the difficulty of obtaining proposas from most agencies Involved in the sector In a dmely fashion. For a considerable porion of the pronosals received, furthermore, it is uncertain how far desin studies have progressed or whether backgmrund dumetatio and procurement documents are available. Most need additional design work. Most proposed poets, 102 involve relatively simple civil works, for which contucion could geraly be executed by loca ontracors or instttons. 3.271 Ribsb. The mIn risk to the progm b deay in the establishm of a public insIutional and policy frmework or in bilatea negotations-eiher of which could delay structural adjustnent of the agiculr sector. Progam fimds for NGO acivities could also be misdirected to activlites that eliter have low priority or that belong in the private sector. To help prevent this, a sector policy and institonal study should be completed and is recommendations implemented as quicldy as possible. Table 3.9 Agrculte Program Costs Estlmate (US$ mfllion) Year Area TOti QfegOry 1994 1995 199 Gaze WB R_ural roads 2.0 3.0 3.0 1.0 7.0 8.0 Public Well Refwrbishing 2.5 3.5 2.5 8.5 8.5 Envir -mental Investmen .5 2.0 2.5 0.5 4.5 5.0 nsiuo sgh 1.0 2.0 3.0 2.0 3.0 5.0 Total 6.0 | 10.5 IU.0 3. 23.0 26.5 Memorandum Items Gnclded In NGO and Private Setor components of main program) Year ~~~~Area TOMa Category--- ___ - ____________________ _ 1994 199 1996 _ az WB Vocatioal tr_a ng 1.0 1.0 1.0 1.0 2.0 Agriultur faculties .5 .5 .5 .5 1.0 1.5 Food safety, quiity .5 .5 .5 .5 1.0 1.5 Total NG0s 1.0 2.0 2.0 2.0 3.0 5.0 .~~ .- - -. - r Privaewes - 2.0 3.0 - 5.0 5.0 Oher Prvate Investment 1.0 5.0 9.0 5.0 10.0 15.0 Total Pivate 1.0 7.0 12.0 5-. t s.0 20.0 103 Environment, Cultural Resources and Tourism 3.272 Successful economic recover" of the Occupied Tetritories would reqr the effcve Integs on of enviromental, ltur resources, and tourism management Into the develpment procss. In January 1994, the Palestinian Environmental Protection Authority (PEPA) was established. Currently, ther is no formal Palestinian structuro for managemt of culral resources-including archaeologlcal and historical sites and sigificant vernacular architecture. Local organizations conced with these Issues to date have been lmivrses, research ites, and NGOs. The Higher CouncU for the Arab Tourist Industry, founded in 1992, channels private sector support for tourism. Issue and StrategD 3.273 AvaWlable personnel with specialized experdse h these thrae areas are limited In mnmber. hey generaly haw, sA high level of academic training however, and most bave expetienc as academic strators and consultants. In the last seveal years, foreigl support Ls been provided for small- scale capacity buiding, applied research, ad enviroml educadion projects by Palestinian vironmental and culural resource orgazaions. 3.274 IlTes issues have not been a piority for the Civil Adminitratio and cive management by Israeli authorities has been restcted to administratio by the National Parks Auhodty for major sites, suh as "ericho. Only in the last few years, for instance, have major projects prepared by the Civil Administratincluded enviro studies. Ibere has been no systematic collection of basic data on environmenl conditions. Available iormation I litned to that collected by the Civi Admnin, UNRWA, local universities and research inues, or by Egyptian and Jordanian authrt before 1967. Informatio on areas of ecological significance and on some types of arological sites has been collected by Israeli specialists. Data concerning historical sites and areas of dsificant venacular architecture Iadequate for management purposes. 3.275 To date, the Higher Council for the Arab Tourist Industry has sougt assistce for the prpaMio of a torism master plan. In the envkonme sector, the firs large project to be suported is the preparation of an Environmenal Profile for Gaza, with official funding from the Netherlands. 3276 As noted in the sector pmeson concemning ag e, water supply, wuwr, and solid wase, en. vonditions in the Occupi T ties are generaly poor and those in Gaza are among the worst In the Middle East. While the proposed itervention under ihese sector pgram woud signicany assist In addressing eniomental problems, concrrt mes should also betken to dwdeop the management frmeork and institional capa-tty to prevent these tys of problems fiom bein xacbatd in the future. The need to create a local -agement capacky for the evionme is recognized in the DecartIon of Princples (Artide VI, Pam 4) and has been acted upon dhough the rece e ishme of the PEPA. It is proposed that, under the Program, support be provided for development of the PEPA and for a complementary stcture for manement of cultural resources and tourism. Development of these slructureb would help provide the management and administatve fraework necesay to address emvironental issues in the early stages of development. rather thao add them later at sigificany higher physical, social, and fiscal oot 104 3.277 Actions also need to be tan to nsu t nw public and priva sector imre made by local and foreign interests do not result in the deadaion of nonrenewable natural and cutural resouces. This is especially importa with regard to the protection of scarwe r resources fi1 direct and nirect forms of pollution; manag of pesticides to avoid harmful heat afects and pollution; damage to culuail resources that are the basis for tourism; and protecdon of the coat zone, wbich provides potentil for an expanded tourism and rreationa industy. The absence of inf aton about these resources or basic monitoring systems to measure key makes It difficult f local exaet to aluate current conditions, monior trends, and fomla strategic aproaches for their management. 3.278 Over the next three years, the stegy would be to focus efbrts in and cultur resources and tourism management on the developmeat of istittions, esaient of admi osative fhmeworks, and preparation of practical plans for the dfective mana of these resources. In the case of tourism, efforts would focus on a parsip beween public and private intes. Ihe stray would be to focus efforts on preventatve measures to avoid future problems from occuring and on curative measurs to correct present problems. Emphasis would be on creatig a capacity wiin these organizatons to pardcipat in the planming and ie o of economic development programs for the Occupied Tertories. Support for moning systes and analytical capacity in the PEPA would be desined to complement investnt programs undakn in other sentrs-pataly water, watewatr and solid waste management, and pesticide manageme 3.279 lThrougboutthethre-yeartimefe, Intitnastugt gandhmources developmnt would continue and organzato begin tD move into a routine operational pamtter This pedod would see the imple on of addiional field-lev eviro opatio dentifed during the preparation Of the Envronmetal Action Pln 3.280 Mhm cultura resoue Ientory, to be completed in under the Technicals e Program, would provide detailed hormation on which cultura arshoud receive attetion during this phas he tourism master plan would provide the basis for the Implbn of a series of priort activties to promote y sound tourism development In both the dshrt and medium tm, successfol establshmen of a local capacity tor nir and cultural resource management would requie sustaed support fer applied training. Tourism would requre traing at all levels. r ram Descrxlptlo 3.281 OvarvIew. The tree-year program incudes a series of activ for o ea management, cultur resource managemen, and torism planning and davlpment T.he acdvities for management include: Development of a management firaework and capacity building Cldudlng the acquisition of and training on scientffic equipment). * Preparaon of t laws and regulation, iding envrometa * Preparation of an envipa g famewor * Support for environmental educaton and public awas progms. 105 * Preparation of a groundwater managemeat and monitoring system for Gaza. 3.282 Cultura resource management activites include: * Development of a management famework. * Preparaton of an inventory of cultural asss. * Development of an applied trining program. 3.283 In tourism, the strteg would be: * Support for creation of a Tourist Authority. * EExansion of the sector. * Preparation of a master plan to help avoid potential cultral heritage, and social problems. 3.284 ITis program assumes that a sigifican amount of the work would be undertaken by palestian institutions and expert, who could collaborate with foreign speciai as required. It does not include nding wor priority activies for which funding is already ommitd by bilateral donor agencies. As noted above, these activities would complement investment ac taken under other sector progms. 3.285 actves would be implemented by the recendy establised PEPA. It is anitcipated a info&mal arrangements for cultural resource management would remain until a Palestian Tourism Authority has been stablished, and that the Higher Council for Arab Touist Indushz would manage tourism activities and contue rersenting privae sector bnrest. 3.286 _nwI Framewerk. The Program would spport development of the PEPA as a publc eniroental organizton. Tis would involve the preparaton of a charter of thories and r nlities, design of an effective iMtutona suure (including a central organation and a netwk of regional offices), and preparation of basic den polices and guilelines. Trainn would be provided in administaion, program planning, and in technical topics to both fulA and part-time personn. Emphasis would be placed on makin the PEPA fully opeatonal in as short a time as possible. 3.287 1 Acon Plan. The Technical Assisce Progrm would support prepation of an E Action Plan for the Occupied Territories to provide a strategic framework fo a long- term progrm of eviroentaI mageme and to establish prority needs for envinmn investo s, capcy building, and applied research in cooination with real eel plans. Ihe Plan would include an EAP overview volume (which would provide a strategic plan for actions in both Gaza and the West Bank in an integrated m , Including a regional pepective), an Profile of Gaza, and an Proffle of the West Bank. Currently the Government of the Netherlands is sppordng preparation of an Eviroenl Profle for Gaza, and at the request of the Palestinians, it plans to provide funding for the West Bank Environmeal Profile and the Plan overview activities as well. 106 3.288 Environmental management mechanss. Using a consultative process to allow for maximal public participation, development of the PEPA would also include preparation of environmental assessment procedures designed to be an integral part of the development and land use planning process; preparation of environmental standards and a complementary monitoring, laboratory, and data management system to provide a capacity for water-quality monioring in the short-erm, suppoig efforts in improvement of enviuonmental health conditions; and establishment of an Environmeal Information Center funded by the Government of Austia, which would facilitate access to environment information. 3.289 Environmental education and public awareness. 7Tere is widespread agreement among Palestinsn experts that-if environmetal conditons are to be improved in Gaza and the West Bank-high priority should be given to environent education and public awareness acdvities. This is especialy important in terms of changing attitudes at the community and individual level towards saniation, waste disposal, and the use of pesticides. Special programs are especially needed for women, who play a cenuwal role in education and houseold management. It Is proposed that the Program would support a variety of efforts in this area, to be conducted by the PEPA and various educational instittions, research institutes, and NGOs. 3.290 Planning hmework and Gaza groundwater n m d monitoring. The Technical Assistance Program would support prepaaution of a Coastal Zone Management Plan and an Oil Spill Contingency Plan for the Mn coast of Gaza, which would include a coastal land-use plan and rmmendations for land-use control in the context of the M Action PlanL A Manaement Pln for Parks and Protected Areas, including a proposed staffing structure, is also needed. 3.291 RecogizIng the critical problem e* groundwater management in Gaza, the Program would support the pr-aration and Implemenion of a Management Plan and Monitoring System in two phases, to be developed on an interim and long-tm basis by Palestinian and interatonal expr. The monitoring system for Gaza's fragile groundwater resources would allow for routine assessment of water quality trends and additional management decisions made to suot the Management Plan. 3.292 Cultural resources management. Program-supported acdvities for ctural resources management would include development of a policy for the protection and conservation of these resources; design of an organizional structure for their management; preparation of guidelines for their evaluation as part of the plamning and envromen assessment process; and development of "chance findW procedures for use by construedon contractos. An inventory of sites woud be prepared for use in their management This inventory would be prepared in three phases through a prdeimiyn inventory conducted as part of development of the cultura resources management fiamenork, a review of existing administrative reports and literature to idenify priority areas, and a directed field s&rvey. Pority would be given to inventory efforts in areas potentally under the greaest pressre kom public and private development activities, such as redevelopment in historic urban areas. An applied training program would be instited to help give stff the administraive, program planning, and tehnical skills required to manage a cultural resources program. 3.293 TouIsm planning and managemet. Program-supported activities for tourism planning and mngement would include development of a Palestinin Tourist Authority, development of a cooperative sture to coordinate public and private tourism activity, and preparation of a Tourism Master Plan. A new Tourism Authority would need a charter defining responsibilities, authority, sector policies, legislation, and guidelines for istiuonal development. The Tourism Master Pln would focus on the 107 developmen of a local and regioal sector strategy, local dvopmet plans, Inftctue and staffing rm ekts, the potential impact of increaed touism, measures to avoid negative efrects, and tourim marketing pls. 3.294 Project Fmultion. Ihe environment, cultural, and towism sectors of the Occupied Tetritores need to receive far more attention than it has in the past in the following areas: * Environmental plannIng. In development planning proess for Program-funded activities and In the selecdon of sites, environmentlt concerns need to be given priority. Special attenion should be given to proposed development activides on sites near places of existg or potetia value to tourim, areas curently protected as nature presenes or for culural reasons of hertage, and aU activities that affect the Mdiernean coastal zont, or the shores of the Dead Sea. * lProtecton of water roues. Given the very imhited avabiliq of water resurces in both Gaza and the West Bank, specia caution should be taken In the selecton of mites and in facility design to avoid the direct or indirect pollution of surface and groundwater. Only technologies that conserve the use of water should be selected. Carefu aftentioi should be paid tn the reliability of wastwater eatment technologies, and propely teated watwater should be reused to the fullest extent possible. * I(anageunmnt of pecides and haardous wastes. To minimize risks to human health and ecology and to avoid water pollution, projects supported under the Prom hold take measurs to assure that only inationaly approved pesticies are used In agricultul and health activities. Actions shoud also be take to minmize or avoid the use of hazardous materials and to evaluate how these mateials should be properly handled and disposed of. * tLand acquidsiton and Invoutary reseitt t. Prepration of proposed projects shouWld give careful attenion to issues of land acquisitio and Involuntary reseement. Curenly, procedures exit under Egyptian and Jornn law and er Mfitary Orders for the acquisition of land. Palestinian culuarl tradiions accord high social status to land ownehip which may limit the wMines to se despite economic nentives. All stes should be field-dhekd to verify td they have eithet formal or inomal settlements. t should be noted that some areas are used seasonally by Bedouin, who may caim trtional ownerhp or land-use rights. * Protecton of coultral urces. Specific meaures should be taken during project planning and design to assur that adverse impacts to arhaeologic sites, historical sites, and areas with significant venacular achicte are avoided. Given the high densit of archaeological and historical sites In Gaza and the West Bank, project-specific reviews shoud be conucted concning the existen of known sites, including arcaeological surveys when aprpriate. Consrcton coacts should also contain stiations of "dhance find" procedure should arcaeologica or hirical materials be discovered in th oure of project imlemention. 108 * Transboundar e _nv bimal Impactb. Given the size and location of th Occupied Territories, prwposed Project activities could wll resutk in trAms a e iroental Inpacts or affect the M anen Sea. Ihese possibilities shul be addressed careflly durig project planning nd measum adopted to mimize suh Impacts to th flest exteaent poible. Pote impacts to the Sea or its coastal area should be assessed with refrence tohe Medit Action Pla Palestina representatives would have to deal wih transbouuary m onenta sues through bilateral or mudlar forums fr these discussions of nmena issue. EnvIromental Reviw Procedures 3.295 In the Occupied Territories today, there are no eV _ _ procedures or lea environmental standards. Applicable Egyptian and Jordanian legislation principaly concern review of water qualty by health authorities and protecton for aceological and hitrical sites. Prparton of assessments and standards for use by the Palestin autoe are prioriy actions under the World Bank-managed Technical Assistance Program to support the PEPA. Support would also be provided for developmen of a management framwork for culu resources (archaeological sites, histrica sies, vernaculs architecture, etc.). Until these procedrs and s ds are prepared and in place, it is re ended that aU proposed projecs be reviewed in conswlati with Palesiian Authorites with regard to their poi I ct, usin either Wodd Bank Opeional Directl .4.01, Eniro_nenal Assessment, or the review procedures of the oopeting fundig organkation. Potenta Eavhrrntl Beneit 3.296 IhepropoW -d ,cultr reurces, and torsm sector program woud gve priority to activies that promote capacity buldlng and Ivetnt actvites that cofer e iro beft. Spt for develpme of tho PEPA and education progrs, for example, would help provde a capacity for nvironm ta management and Increase public u i anld _ These would be comple by measures to develop a management stucture for cutual resources. 3.297 Progam-sprted education actvities would also Improve the wat distribution system by inorming people how to reduce waste and preserve wat qualit. They would help Improve the collecdon of umuicp wswat, support proper treatment, and promote rae for gr wat recharge, Irgated agricultre, and oher benefic puwoses. 3.298 By providing addional collecton vehclles and waste co rs, te Pram would also support the improved management of solid wastes. It would fund the consftrconofer stations and a seies of prpely sited and designed suiary landfius. A tssupportedunder tbe proposed Program would also Improve the managet of liquid and solid wastes. Wi&th he agrcultral sector program, it would support acdons to reduce the use of pestcido and promote the improved managemet of natual resources-including m es to reduce erosion. 3.299 Pvded all Program acvies are subject to rareMmd riW gthedt and ste-section process, tha mtti 8 inclued where necesay, and t environmenaIssues are propely addressed during inmpl the prpoe Emegency PrOr is anticipated to have an overall signficant and pov inampact on the Occupied 109 Teidos. With th ecepto of the possible resetleme of a small number of people to epad sanary landflls, dierte ar no other projet proposals whoso I lmp! would result In Involutary resettmem A nmber of actives require the pura of privaty held land by local authorities. Some maj investm considered for lmplemawaon In the fiir (to be auatd lat In fesblt and studies supported under the proposed Program) may requWi Involuntar resettlemint of a limited number of reside. Findly, under the Prwm at its prest stago of definiton no khn archaelogical or bistDrical sites would be affeced. 110 IV. Implemeon Arranments 4.1 The effective of the assistance pledged by the ntenao community to the Ocupied Teritories depends to a large degree on the capacy of te Palestni to alloae coordinate. ad use that aid ffecdvely. For that purpose, the Palean Economic Council for Developnt and Reconstruction (PECDAR) was etablished on October 31, I93. In addition to its aid manament and investmnt implementation functions, PECDAR I intended for a nstional perod to ao provide the nucleus for economic policy formulation, ovel ependie po , training polces d other fnmcdons of economic sef-government. Figure 4.1) As and when h sefg are created for these purposes, PECDAR wil rasfer tie co g fcons and staff to ths institutions. Structure and Operatios of PECDAR 4.2 PECDAR's governing body is the Board of Governors, wh aoits te Maging Director and Office Directors, provides overall policy guidance for PECDAR activities, se genera Progam pnorities, establishes personnel and administve policy (ncudg proceres fo p_rment, accoung, and audig), and approves PECDAR's budget as well as Individua projecs. It is expected that PECDAR's procedures will be fully defined in he hmdiat future. The broad ol arrange.-oents were approved by the Board of Governors on Januay 11, 1994. (Fpiure 4.2) Key staff have been appointed since that date and offices and other facilities are being mobilzed. Thus, PECDAR has begun to fmnction on the ground. 4.3 Ihe Managing Director frmla (in consultation with the Office Direto) poicy, submit PEC)AR budget o the Board, prent to the Board (upon submi by the respctiv Office Director) indual projects for which Board approval is required, ppoves dida contracts smallr than a specfied amount, approves major decisions by Office Directors, and Is responsible for th managemen of PEDAR as a whole. An internal auditor, legal advior, and pr advior woud be attace to the office of the Managing Director. 4.4 PECDAR has an office for fiancial, administtve and support services and five functonal offices: * Ecnomc policy fomuladon and ProJect Reidew. Eight or nin Professional economists experienced in economic anlysis and treatig, public epd programng, and project evaluation methodology. Ihe offic o *mulate, or directs the formulation of, economic policy options, current and investment ifp_ progm and sector strategies. It plays a mjor role in the review of projects, screening and evaluaig them for economic and Csoial d . t would rely for anytc support and basic studies pardy on the Palestinian Developmnt tu, andiis closy with the Palestnian Bureau of Statstcs. * Aid Coordinaon and Faciltation . Five or six professionas organed along or lines (e.g., EC mdesku, US desk", etc.). Ti office i8 the focal point for reaio with donors cncering the design and pration of all official aid (except as Bhen directlyton n- govenm). To avoid duca,dono shod provide 111 this office with dmely Inboation. Th offic would be a fitator of contct, coordinating the formlation of aid greeme with maultilteral and bilateral donor intitudotis, seeking feig aid ad matching it with the equirmet, parddlpag and leading negoiaons regrng Individual progrms and projects. intbrmation on avabe aid progms and on the priories and prcedu Ofi donor Insutions, facitatig contat ad exchanges between exte institutions and local ages, and (in coeaion with the other offices of PEDAR), regularly reportng to donors on the execution of the Ptogram and its economic and socia mpa. * IPogam Management and Monitoring Offiee (P1MO). D _suse below. * Nonproject Tec al Assstance, Traning, and Capacky-b_Udl . Mr or four profsiols accounlefor managing nonprojetechtnicaassstance, rwim tra needs, saaeinig donor proposals, di _W lfondn, and cdHatigcad 'e (Including in-house candates) sele As In the case of te PMO, ths office would act as much as posle by sontractng. It would establish close cootacts with Palesdinan educational i ons. 3 NGOs and Spedal Progrm: 5-6 professionals. Pviionally, the office would be responsible for deaing witi matters redating to the non-govermmental as well as for providing the overall framework for deaing with UN agence. It wil also be respnsible for dieting speci programs and aies (sich as e progm for the rehabiltatioof detnees), as well as formulation of policies to enoouo privat setor deveopment. 4.5 Program and Prj 1 lt. While owva responsibiltyfor poliymaking and Proga would lie with the Board of Govemnors of PECDAR, reponsibiity for Prgm and projet hnplbn and monitoring would lie widh the Director of the Pwject Managemen and Monbit Office. The PMO itsef would bo direc Involved in projectI only whoe no othe agec was appropae or avaiable, or whern project e large enough to spam municipal jurisdio. To the ext practicable, the PMO wil rely on the services of conpeent conulant (nludi far management and promenta) and on a pnel of local r 4 o to asst agade I dw Ipi tn of insvestmen project. Th us of coutts would help ensure tat PMO reans la and agile, capable of responding to the alenges of maniaging a complex program in a chagin To guard aginst over-cen ztion and ensure that locd needs and prioitie ae atended to, the PMO wi establish an office in Gaza, responsible for overeeing deveopment and coordinatn of the Progam and of project components in Gaza. 4.6 M Or and Staffi. Apart fom ts Director and a Deputy Director for the Gza office, the PMO woudd be organized and saffed as follows (FIgu 4.3): 112 Man Ofe.- Sector Specialit. Seven In all, one each for educadon, health, power and teleons, water and sanit , rads and tasport, solid wast, and enviomen Seeor speialists wold assis the Director in esuring that prosas were techicaly and economically sound and justfied; work with and advise project-implementng agencies on best practice in specific sectors; help expedite subproject prepaon and Implemenion; help draft tms of referenoe for tewhical assiste and review and supervise tecdhical assistance prposas and projects; and undera other genera tasks essental for succeul sector and project deveopmen Prcuewmet Officer. The Procureent Officer would work witi implementing agencies on all matters Involving the procum of goods, oversee PECDAR's mnagement and procement conultants for buk purchasing of materias and equipment for Progam projects, help defie procuemant of these projects, draft and irevew specificatio and contracts, and exedite and ensure delivery of goods to their fina destnation. Gaa Office: Sector specials. Four in all, one each for educaton and health, water and sanaon, municipa roads and drains, and solid waste. 4.7 Manging and Prlurent Conutants. For the duration of the Emergenc Prgm, the PMO would conta the services of a retable, competent, and dInteIaionay recuked firm of consuls. Thee Mnaging Procurement Constn would rrt direcdy to the Director of the PMO, aisting with overall progrmming and budgeting luding periodic-at least quarterly-revision and udating to ensr att of Program and budget objectives). While the accounting department of PECDAR would be responsible for all paymes, overall cosolidion of PECDAR's accunts, and commissiong PECDAR's audit, the managing consultas would be responsle for paymeatcertficaton and the design ad m of project acounts. The mana consultants would also help with deveopment of effective operating pmcures and systems; project screening and evaluation; conact evaluaion and award; owtct, project, and prgm monioring; paymen ctfication; project datadocening and accunimng cnomplia with financal smvdt and odkth progam and project covenants. On all matters necessary for esuring effeive ImpI on of the Program, the Maagement consultantwould work with the implementing agencies. he Maaging consultants would also maintain a team in the PECDAR branch office Iu Gaza The managin consultants would provide quali team leaders and seias in ing, budgeting, data proceing, accounting, project financi and economic evuaon, civil ei n, and project manageme procement and supervision. 4.8 Aftr screening projects on the basis of estabLidd cria, the anaging consulants woud reommend selecdto to the Director of the PMO and the Dqty Managing Director, who would have final respoilit fr project selectio 1nd projects emated to cost above cetan benchmak leves (to be decded) would have to be subject to ecnomic evauaon by the Economic Office and cleared by that office pdor to consideation by the Managn D)rector. Smaler projects would be bundled! and submitted for Economic Office clearance based on genera review of economic and sector soundnes of the obude. In all cas, projects and programs of Implementing agencies, including those 113 where PECI)AR itself is the implementing agency, would have to be screened and reviewed by tdo Managing Consultants prior to fnal approval and fiacing. 4.9 Consultants' Panel. Under the Program, support would be provided to municipalities through PECDAR. PECDAR would review and select a panel of four to six qualified and reputable loc (civil/structural/wechanical) engineerig and architectura fims. Qualified individual consultants with a minimum of five to oen years' experience could also be recuited for this purpose. The consult firms/individuals would be selected (following transparselectioncritria) from among proposals invite by PECDAR. The Panel's role would be to aist mnicipalities to idenify, prepare, contract, and supervise infstrucure rehabilitation and improvement projects suitae for finaning under the Program The decision on which consultants from the Panel to employ would be left to tne implementng agency, which could select (on the basis of a lump-sum contract) bids invited from three firms. The Program would support fimnacing for the employment of consultants. 4.10 Project Selection Criterla In order to be eligible, projects to be funded under specifc SubSeo programs woudd first have to be screened and approved by PECDAR staf, assistd by the Manging Consultants. The Managing Consultns wil develop detailed criteria, based on community prority, economic and social impact, disbutional equity, economic and teciaW feasibility, readinss for implemenaion, eviroa impact, consistcy with Program objectives and short-term sector statees, and avoidance of unafordable recurrent cost commimes. These criteria woud be applied firly, explicitly, and transpareny to minmi diputes and ensure effective project selection. Role of Implig Agendes 4.11 Muncipalides and villages would be responsible for implemening acvities for municipal road and drainae, water, waswater, and domestic sanitaon, and solid waste maagement In additon, munipalities and villages could be involved in modest-sized projects for power sysuem and rural roads rehabilitaton They would be assisted in this by local consultant selected from the Consultats' Panel. In undertaking these responsbilities, n and vilages would be rewed to idenify, select, prepare, bid, contact, and supervise projects to be executed by qualified cntar. Detaied procedures would first have tO be developed by the Managing Consultants and PECDAR. G raly speaking, municipalities and villages would be required to: * Identify india projects and develop a program of overall rebabilitation and improvement works on the basis of accepted critera, * Prepare and submit projects-including thical data, cosfing, and cash flow requiremen- to PECDAR for aceening review; * Apply to PECDAR for permission and fundig to employ conslnts from the Panel; * On approva and receipt of funding fom PECDAR, contract the necessary consultants, * With consultants' assistance, prepare detailed desigs and project do aion, Invte and evaluate bids, and decide on contract awards; 114 * Submit project documentation, contract award proposals, and cash-flow requiremen to PECDAR and seek fuding and approval for execting contacs (not required for contracts smaller than US$0.25 million). On receipt of funding and approval, execute contracts; * Undertake technical and financial supervision of contracts; * Submit monthly progress and financiai reports to PECDAR; and * Submit, from time to time, other information PECDAR might reasonably request regarding execution of the Program. 4.12 Although funding support under the Program would only be provided for projects approved by PECDAR, municipalities and villages would have some autonomy in contactg for works estmaed to cost US$0.25 million or less, subject to upward adjusuent following review of performance. To ensure conformity to its guidelines, PECDAR would review the first two such contracts for each municipality. All contracts for works of greater value would have to be reviewed in detail by PECDAR prior to signing and would be monitored regularly thereafter. The basic contracting procedures would be similar for goods contracts. To the extent practcable, goods packges requested by implementing agencies woud be bulked by PECDAR and procured at once on the basis of intenational competive bidding procedures acceptable to the funding agency. Agencies would be required to submit their reqirements to PECDAR for revitw and subsequent action. 4.13 It should be noted that the general arrangements outlined here might be altered for projects funded by donors who have their own rules for consultant selection, procurement, and disbursem 4.14 Sector Imp tion Consltans. Inst n arrngements for the municipal roads and water and sanitation sectors can be used as a model for project implementtion. According to this model, responsibility for implementation is vested in local governments to the extent possible, with existing mnicipal procedures used as is or suitaly amended to conform to donor reqirements. To supplement and build their capacity, municipalities would be provided with consltant assistance. In sectors (power, telecommunications, solid waste, inter-city roads, and transport) where program size, technical complexit or inter-municipal requiements require special arrangement, responsibility for implementation would rest with separate, specialist, sector implemention sultants. Sector implconltants would report directiy to PECDAR and coordinate ir wok wih respective municipaities. 4.15 Sector impleme on nsul would be irnionallyrecruited and contracted by PECDAR on terms acceptable to the fiuding agency. Their role would be to advise and assist PECDAR and the existing utilities in undertaking feasibility studies; preparing detailed designs and costig for improving plant, equipment, and systems; overseeing the bidding and contract-evaluation process; recommending contract awards; supervising contract implementation; and taining the utilities staff to operate plants, equipment, and systems. Since they would evaluate and recommend contract awards, the role of the sector implementation consultants would be broader than that of the local consultants contacted to assist the municipalities, but procedural arrangements for project implementation would be the same in all other respects. 115 4.16 The arrangements for implementing the tercity roads pogrm would also rely on the corting of intenationally recruited, seor-specific consultants. Thes consultan would work closely with exislstg staff of the Transportaton Department of the Gaza Civil Admintation or its successors, and later with the West Bank Civil Adminitraon, in developing a five-year road rehabUitatio and maintenance program and establishing the core of a future Highway Autiority capable of planng, maaging, and maiaing the Occupied Territoies' ntercity roads network. The first two years of this program would be detailed by the consultauts and the Trasport Deatment staff for implementaton under the Program. In all other respect, the Implemettion arragements outined above would apply. PECDAR would be the implementg agency but would rely on the Trasport Department of the Gaza Civil Admisatn or its successors for day-to-day coordination of impleme activities. 4.17 The preparation and imple tion of the solid waste management component of the Program might follow sgty different procedures. In this case, seiists in solid wate management would be employed to assist In preparing and implementing projects. Because such speciaist skill are in short supply in the Occupied Territorles, these consultants would be i nlly and locally recruited on terms and conditions acceptable to the funding agency. For th parts of the sbsector program (such as transfer statons and disposa sits), moreover, that are shared by several muncities and vilages, the mni ties with the greatest managerial and technical capacity would play the lead role in preparing and implementing the progm. In all other respects the procedures outlined above would apply. In cases where many donors are involved, each donor could use its own co ants, contactors, and aprtoval procedures, and the task of sector coordination would fall entirely on the sector specialists withi PECDAR. 4.18 UN Age s and NGOs UNRWA would be reonsfible for Program Imi n in the refgee camps in Gaza and the West Bank. These mpon cude ilitation and improvement of the physical plant and equipment of UNRWA schools; procurement of ssetal books, equipment, and teaching materials; rhablitation and improvement of camp housing; and-in coordination with municipalities-rehabilitation and hnprovement of camp roads and drains. Detailed arrangements for implemenation of its sbare of the Emergency Program would be worked out between UNRWA and PECDAR, and PECDAR holdw give high prioriy to compledag its operating arrangemens with UNRWA, other UN agencies, and NGOs. 4.19 Civil adm ns In the near future, Palestnia rities a expected to take over responsibliy for the Gazn Civi Admi , which curtly plays a phivl role in the Occupied Teiories. How is new responsibt wil be dsd is unclear at this point. What is clear is that this Civil Adm has the capacity to conibute sgnificantly to the success of tie programL While only contingency plans can be made at this stage, h Gaza Civil Admiin, I close consulation with the municpaities and with PECDAR, would certainly be re for the education sector component of the Emegency Progm in Gaza The Gaza Civil Adminisraton would also oversee interurban roads imp e . It is dts proposed hat PECDAR's Gaza suboffice work closely with the Gaza Ciil Adm ation and that nteg the Gaza offie of PECDAR into the operatio of the Palesffnian Cental Adm once established, as a special Inlem on Unit be actively 4.20 On the West Bank, except for the Jericho area, the Civil Administation wi be controlled by Israelis for the near fiture. In the initil stage of the Implem on, its main role wil be in grandig pmit and facilitating the work of the Palestinan 116 Proe 4.21 To avoid a prifetion of differet procuem practices, bidding documet, and ealuato and approval procedures-Itt s rt H donors fincing the Niogec Assita Progran adopt stnrdized procrem procedures to promote maximum tasrec and cost effveness. 4.22 Engines and adminis working for municipaNtm, NGOs, UN agencies, and PECDAR would be fully trained in procum procedures. At present, due to PECDAR's newne and the Ptoject-implementing agencies' lack of intnatoa pwr mnt experience, kmowledge of irnational commercial practices and e procurement procedures is almost totally lackg. Managing and Procurement Cosultat would therefo be rece toasist PECDAR. PECDARs own procuremet specialists will coordinat all procurement activities under dte Program. Ihe speciists will be responsible for coordnating and moniorg all procumnt acvies of the implementing agencies for all donors, overseeing all ntenonal competitive bidding and tecical pOcument, and maitning the records required for accouabflity in the use of funds. 4.23 rfnea Aag or Emwgny Assitanc Program Componens Funded by IDA. AR goods and wok would be procured in accordance with the IDA's GudHwfor Procurmw (May 1992). OT m competing under itenaional competitive bidding would receive a prefee in bid euaton of 15 percen of the CF price or e prevailing custom duty applicable to nonexempt Importes, whichver b less providd they can prove ta the value added to the product in the Occupied Territories emceeds 20 percent of the ex-fctory bid price. Occupied Terriories conuractos competng under international competiive bidding for civil work conta would receive a prefece in bid evuation of 7.5 percen Contracts, for equipment and matrs etmated to cost more t US$250,000 equivalent each wil be procured tough ational competitve bidding, using IDA Standard Bidding Doumnts modified to su the rqiement of individua project packages. Inthrationa shopping-with at least three quotations from tr eligible countries-will be used for conts esdmated to cost less than US$250,000. Loca shopping wil be used for off-the-shelf iems cosdng less ta US$25,000 per package. Directontactn will be allowed for iems of a proprietary natue or for tems required to ensure compatibi with equipme already Insaled. 4.24 It is esdmated that the packaging of civil works contracts wil refl the nature of the works, state of preparation, and Implementato capacity of local contcto and ln.len agencies. Because they would be wiely dipes geographicaly and run by a multitude of agencies-such as the municipalities and NGOs, it is not expected that works contracts costing less than US$3 million (with the exception of thoseqring special consucton and istalon exprie ) would be of ierest to foreign conactrs. Spealied conacts, therefore, and wors contacts costig more dtm US$3 millio per contract wi be procured through ihernadonal compi ve bidding (using the IDA's Standard Bidding Documenht for Civil Works modifed awropdely). All other works contracts wiUl be awarded under local compeive bidding procedur following the implemendfzg agencies' normal procuremen procedures. 4.25 Presently, te pre-1967 procureamws of Egypt (with elements of Paestne Mandate Law and some Isaell Civil AdmnstratIo reguadons) are in force in Gaza, while those of Jorda are in force on the West Bank. TMese procement procedures are sadsfacwy to the IDA with e following proviso: 117 * Tenders must be adverts for at least two consecutive days in a local newspaper of wide circulaion. * Prospective bidders must be allowed a mninimun of dhity days between the frst appeauance of nodtication and bid submaisson. * Bidding documents mut follow the frmat of the IDA's Standard Bidding Documents or that used by UNRWA or the UNDP in the Occupied Terriories. * Foreign bidders must be allowed to submit bids. * Bids will be submitd In sealed envelopes, and both mailed and hand-carried bids will be accepted. * All bids will be opened in public at the same time. * Conteact6 will be awarded to the lowest evaluated bidder. X Bidders will not be asked nor allowed to dhange the ubtac of their bids after the bid- closing date, and price negodatons with the lowest evaluated bidder will be confined to those cases listed in the IDA's Procurement Guidelines. * InI the absence of p n , postquaiflcation creria will be explicitly sated in the bidding dcmns 4.26 Consultacy i will involve both in u osultants and coltiDg firms (mostly ose firms hired to support activities coordiated by PECDAR). Consutants to be financed by funds administared by the IDA will be selected in accordance with the addeA for he Use of Consuds by World Bank Bonwes and by the World Bank as Exeing Agency (Augt 1981), and using the Bank's standard Letter of Invitation and Sample Form of Contrae. for Consultants' Services. 427 Import Arrements. Agements for the importation of goods and equipment-and for the use of foreig contactors and consultants-would have to X worked out indvdly with the responsible authorities. For the proposed IDA Emergency Rehabilitation Project G°intly cofinaced by a number of donors), arramgements are being worked out to faiitate the importation of goods and equipment through Israel without payment of duties and taxes. Aragement for recuperation of Value Added Taxes are also being negotated. While permis and licenses fo foreign contractors and consultants will be required, details of these arrangements will depend on negotations conerng the movement of persons and the area concerned. In general, the Israei Government has indicated it will make every effort to facilitate implementation of the Emergency Assistance Program. Accountn and Audng 4.28 PECDAR's accountng system would record all lending and borrowing transactions, grants and aid received from international donors in accordance, with accepted sndard principles and pracdtes. Recorded transactions, therefore, would give the complete picture of PECDAR's state of affirs-including its financial position, operatng resuts, and the financia perfmanc of all PECDAR- 118 nm projects and programs. Proper records would also failhitat PECDAR's financil contro over al its transactions and activities. 4.29 Where donors choose not to pay contractors direcdy, PECDAR's Treasury and Cash Maagement Unit would receive the fuds transferred from the donors. I would then deposi these funds into Indivual ban accounts, until the time authorized for their disposition. PECDAR would also analyze the funding requirements of each implementing agency, authorize release of funds to these agencies, and prepare monthly reports on the Authority's cash position and on all of PECDAR's final activiies, complete with comparisons of actual and planned expenditues. 4.30 For each fisca year, PEDAR would prepare two semi-anual reports on its acdvities. lhese repots would Include a Statement of Financial Position, a Statment of Income, a Statement of Cash- Flow, and a Statement of Execution of the Budget of Investments-all presened in accordance with proper accounting standards and principles and with genraly accepted practices among financial Institons. IThese PECDAR financial reports would be avaable to the public. 4.31 PECDAR's Board of Governors would appoint a qualified firm of hartered accountants-acceptable to the pincipa donors-as extn auditors. Selection of the audit firm would be made In accordance with regular audit procedures or usin other procedures acceptable to the donors. 4.32 Accountng amngemens for all other implementing agencies would generally follow donor gidelines. Since transparency and accountability are essential for the Program, detailed arangements for record keeping, reporting, and audit have been developed. Donors would require annual audits of all agencies Involved in implemeion of the Emergency Program-including all NGOs. NGOs Involved in the Program would have to be registeed and meet professional stadards (to be developed by PECDAR by the end of 1994). It is further remm that PECDAR implement arazgements making NGO executive board members personally liable for a undomented expendiures related to the Progrm 4.33 PECDAR's Treasury Division would open an account in a banking insdtition for each donor entity. This account woud be used to record receipt of the amount of loans, grans and remnces from each donor instiution in accordance with its respectve Grant Agreement, as well as PECDARs release of these funds to implementing or beneficiary agencies. Witin its accounting sysem, PECDAR will also establish ar identfied Project Account for each project of the Program. 4.34 Each NGO, municipality, and implementing agency would open a separate bank account to record cash remittances received from a disburing NGO or from PECDAR, as well as all payments nude against the account on behalf of the program, project, or service under execution. In addition, each NGO will open a Project Account in its own accountng system and a Chart of Accounts solely for the purpose of recording transactions made for the execution of that project 4.35 Before receiving funds agreed upon for a specific project or service, each NGO would establish an accunting and financia system adequate to the specifics of that orgaizton; an adequate structe of inal controls; and a formal system of authorizations for the use of funds, contract procement, and bidding for purchases and services related to the executon of te project financed through donor grats or loans (see Program docummes on accountng and auding). 119 4.36 Audits of the NGOs, m les and oa beneiciary agene would be pfrmed by di acceptlo to both PECDAR and the donors. In ordr to issue an umbrl opinion regadn the total use of the funds, PECDAR's auditig section dws d also receive a copy of all hidiv project audiw. Envronmenta Aspeds 4.37 If all Program activities are subject to careful .o _ rwiew (especily during te design and s-election process), if o enl Issues are proery addressed during Impi lon d migation included wherever necesay, the Progm could sigaificanty Improve the eanvirohme of the Occupied Tenritories. While no preset project popo require involuntary resettlemet, a nmbr require the purchase of privately-held land. Futur major imvesms (to be evauated in feasibility and enviOmenta stdies suported under the proposed Progm) could requr limied involuary resettlement As of now, no known archaeological or historical sites would be affected by proposed Progm activhies. 4.38 El Review Pocures. lhe are presety no nvirnm stadards or _mmat procedures legally in efct in the Occupied Teitories. Applicable Egyptian and Jordanin legisltion principally concern review of water qua by healt aities and provisions for the protecton of archaeologic and historic tes. 4.39 The Tedcnical Asista program place high priory on support of the Palestinian Environm_eal Ptecdon Agency PEA) and the preparation of ilstandards Palestinian auhorities can enorce. SuWort would lso be provided to develop a maageme fiamwork for cultural resources (such as archaeological and historcal sites and vnuar e). Until procedures and sandards can be prepared and adopted, it is reom that all proposed projects be reviewed in consultaion with Palestinian autrites with regard t pot env impact usig eir EnvironmetAl (World Bank Opeaonal Drecw 4.01) or the e on review procedures of the coopeaing fundig organizat 120 Emergency Assistance Program Figure 4.1: Overall Program Organization I Donor I FPNA I -PD PDAR I PECDAR Group ______ _____ ____ 1 (PMO) .~~~~~~~~~~~~~Po Man = r~~~~~~~~~~~~~~~~~~~~~~~~~Sco Imp).IUN| Prm ConaLdCosult - - -I _ 1- ---- 121 1D Cons.M 121 ----------- - ----------------i S------------------------ Emergency Assistance Progran Figure 4.3: PECDAR - Program Mnagement and Monitoring Office r I r PMO ! GAZA Wato an San.w l Spoc.iaflstan &houran Mun. Rbads _Specialc.ist r Sold Waste SolOW n is , sw.isf 123 At he t I: List of Mision Members (Octow 11-November 22, 193) Miusoa M _uber Specdlty or Tite GJarg, Prom C. Head of the Mision Abu-Akeel, Aly AttDrn Berf, Jeremy Watr Resources Economist Beyman Sue Education Specl Castro, Cludo Vocationa TraWing Speciist Cointreau, Sandra Waste Management Speciali Concepeon, Leonardo Atchitect Devar0an, S huuWamm Economist Diamond, Doug Housi Specialit Diwan, Ishac Economic Tem Leadr EI-Khori, Samir Public Finan Speciist Fenando, Emo Muniipal Engine GoUloday, Fred Human Resources Team Leader Gonzaler-Malaxedievca, Angd Accountig and Auditig Specialist Hamman, Sonca Housi Specist Hayward, John Water Resources Specialist Heering, Mogens Environmeal Speciist Heiberg, Marianne Anthropologist Hinds, Manuel Financial Sector Speciaist Howardi, David Procurement Specialit 124 Lamb, Geoffrey Plic Adminion Specialist Linte, Stephen F. Environmen Specilist Macoun, Andrew Saniay Engeer Mertz, Robert Technical Assistance Team Leader McKecbnde, Alastair Inastructre Team Leader Moore, Ted Power Enginee Myklebust, Nils Telecommunications Speciaist Robotham, Kingsley Lending Task Manager Saghir, Jamal Telecommuiatios Speciaist Schiavo-Campo, Salvatore Insdtutional Specli Shaban, Radwan Labor Economist Skelton Rama Power Sector Speciaist Tyler, William Macro-Economist van Santen, Gert ln Team Leader Wolden, Terje Tranotion Engineer Yucel, Cegiz Transportation Economist Yukcel, Gultekin Proem Specialist 125 Attachment U: List Panin Counterparts Core Team Sanir Abdullah Saieh - Head 828693 957112 Mdhamed Shtayyeh 958521 Samir HuIefleh 857066w7 956602 Said Haifa 951444 Maher Amnasri (09) 376010 854294 AUbdurahm2n Hamad (07) 860560 A>duirabman Altamimi 82334/8S Riyad Alkhudarl (07) 860333 861595 Mabmoud Okasha (07) 861868 Maha Shawa (07) 860595 brahim Dakkak 284272 Hassafn Abulbdeh 951038 Aef Alawneh 95s2s0 9ss243 Amin Haddad II. Inrsrutr AbUlrahmr nEbHamad (07) 860560 Sanmh Alabed water AUxhtdurahnan Altamiml 823354u8 Ayman Rabi 823354/8 Hazim Taoda (07) 860084 863494 Abdulkarim Aaa'ad 956551/2 Taher Nasser Edin 958660 Rizlq Nijim (07) 226 Salm Agha (07) 851168 851003 HussamEm loul (07) 863851 861171 Trnper Samir Abu A'eshch (09) 370042 AUllah 274659 273701 Jacky Qatan (07) 864101 Hussam El-Khu07ndar (0) 86851S 860707 Jaml Ebanna (07) 866267 126 Abdiram Hassan 951487 9S8665 at mnHamad (07) 86056 Omar Ketaneb 957650-3 Sa'd Kharmeh (07) 869099 Mohammed Algharib (07) 835625 HWisam o1omari Sod Waste Mouhamad Alhme 958193 Nasir Alyaziji (07) 864670 822617 Jaber Almghbayyer Sayed Aljadba (07) 860080 868627 Nawal Tayseer Glimam (07) 853444 772155 Nash'at Tabboub 950801 271666 Nader Alsaqa 742642 Abduirahman Hamad (07) 86056 Sleiman Abu Samhadaeh (07) 83622 Samir Mamneh (07) 835622 864713 Abed Salam Zaqqout (07) 851014 Raji Zeidan 956436 Munif Treish 956445 Hani Araft (09) 382908 Harzl Tarazi (07) 863494 860084 Mabmoud Abduilah 985072 953606 Husam Alkh3aendar (07) 868515 860707 Khall Manar (07) 859311-953 Sleiman Sheikh Eid (07) 835633 835075 Ibrahim Elnaha (07) 835292 835075 Panning Hassan Abu Shalbak 955965 Samlh Alabed 952403 957650 Mahier Alhanbal (09) 376779 George Tarazi (07) 869995 Suad Amiri 953768 958187 Jamil Albanna (07) 866267 Suliman Sbaikh (07) 835622 835075 Nbhad Almughani (07) 869147 127 Naser Khudakr (07) 869691 867464 Salah Sakka (07) 865077 863611 Momed Sbakky Environment Muhaad Shtayyeh (09) 370042 Jad lhaq 741889 Adnan Shuqair Lumand Duaig Sufjan Sultan Saed Jasser Judeb Abdulh IIL Human Resoures Coordinator Mouhamad Shtayeh Constructon Maher Alhanbali (09) 376779. Spewo Khourl 955661 Hatem Abu Sha'ban (07) 863140 Rafiq Hassouneb (07) 862383 AR Abu Shallak (07) 864631 Naeim Abu Alhumus 951208 A ldillah AbdulrAnM'm (07) 853195 (hasan Alhelu (09) 370042 Ahmed Hilis (07) 863466 Vocational Traini MSalimud Alghbeish 833942 All Habayeb (09) 370042 HiEmi Hamuad RetrnesProgram Saiin Tamari 953768 Atraik Bakrljyan 284235 128 aft Hmm Hean Mustafa Bargiouti Munther Al-Shauif Ziad Abdin TV. on Coordintors Samur Huleheb 557066 956602 Maher Almasr (09) 376010 85294 Conimcta AR Safaini 956982 Raja Shehadeh 956441 953471 Ghasad Faramand 956713 957650-3 Tawfiq Abu Ghazaleh Jawdat Alkhudari Ahed Bseiso (07) 866603 860120 Salah Alsaqqa (07) 865077 863611 F1nandal Mana , A _unt, and Adtig Naser Abdullm (09) 370042 Nader AIdajani 716618/9 284513 Jihad Hamidan (09) 370042 Amin Haddad (09) 386053 273330 Habib Jaradeh (07) 861963 862008 Souflan 'shi (07) 860026 Anam Alshawa (07) 867126 Publc di trI and nution Bldlng Daoud lanboWli 271265 Hussein Aarij (09) 370042 Mufeed Aishami 289126 Atef Alawneh 952508 955248 Hi Hmd Sami Tarazi (07) 865824 860116 Tedhnical Asidstnce AUbdgfatab Abu Shukur (09) 371122 377257 Bassem Makhoul (09) 370042 Labib Nashahibi 273330 Moi'in Rajab 129 V. Mh=voEew=i Samir Abdulah Sale, Head 828693 957112 Mohamed Shtayyeh 958521 Samir Huileieh 857066/7 95660 Abdel-Fatah Abu Shokr Ami Haddad Nabil Kassis VI. Ad an Wa'el Abu-Ne'me 272383 JUm2n%k Aibu-Zyad 271748 -Sleima Abu Sambadangh (07) 835622 Suleiman Al-Aref 956 Omar Awaad Laura Bawalsa Leia CaInan 95321 Salwa Duabis 954568 985372 Firas HuB" 828526 Omw brahim (07) 855452 Rania Mubtadi 746704 273330 Ibeahim Najjar 957037 Suha Rtabah, 952647 a'moon Sbelh 9522S5 828693 Ashraf Sbnlbi 953423 Futna Sbahwan Mohammed Sub-Laban Mhada Zeidan 741770 Mobammed Zeldan 272934 130 OCCUPIED TERRITORIES WEST BANK AND GAZA STRIP + ARPOS /AIRfIEWS ..YC( ~ ~ ~ ~ ~ ~~~~~=MAJOR HIGAI{WAYS TWO OR MORE LANES, HARD SURFACED ROADS BUILT-UP AREAS UNRWA REFUGECE CAM~PS m n w < <2 Ji \ . EUSES - ARMISTICE DEMARATION UNES, 1949 Nll O-MAN'S LAND AREAS, LARMISTICE DEMARCATION UNE, 1949 JEUALMCTY LIMI UNILTERALLY --EXPANDED BY1tSAEL JUNE 1967; THEN ANNEXED JULY 301980 I NTRNATlONAL BOUNDAES E T~~~~~~~~~~~~~~~~~WS WES ISRAELj,$-! I_ MEDITERRANEAN SEA4 1~~~~~~~~~~~~~~~~~~~~ I ,, --- G. /AX .W -' 1 - :' - ,a ) pat Jf Ua~,ddflmS