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Palestinian Territories
State building as the path to peace

The unresolved conflict in the Middle East is dominating life in the Palestinian Territories. Recurring violent clashes, political deadlock and constant restrictions on the movement of people and goods put a strain on people and the economy. The consequences are high unemployment and a never-ending potential for conflict. The situation in the Gaza Strip is particularly volatile. The people there have insufficient water, electricity and jobs.
On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW Development Bank is involved in promoting employment and education, the water sector and municipal development in the Palestinian territories. KfW also supports the reconstruction of housing destroyed by war in Gaza and infrastructure in Palestinian refugee camps.
In a region marked by water scarcity, the Palestinian territories and Israel have important groundwater reserves. Resources are becoming scarcer and water quality is declining, which affects Israelis and Palestinians alike, since both depend on cross-border reserves.
One third of Palestinian households are not connected to the central water supply system and are supplied with substandard water by private providers. In addition, bottlenecks in the central supply system occur time and again, especially in the summer months. The situation in the Gaza Strip is alarming. The groundwater there is practically undrinkable due to pollution and salinisation.
Only a small portion of waste water is treated in the Palestinian territories. Untreated wastewater pollutes the environment and poses a risk to people's health.
Since the beginning of Financial Cooperation in the Palestinian territories, programmes in the water, sanitation and waste sectors have been financed with a total grant volume of around EUR 300 million.
KfW's support includes the expansion of the drinking water supply and the construction of modern waste water treatment plants in both the West Bank and Gaza. Some of the treated wastewater is also used for agriculture. KfW also supports waste management in the Ramallah/Al Bireh region.
The continuing Israeli occupation and the intra-Palestinian conflicts are placing a considerable strain on economic development in the Palestinian territories. Many companies are cut off from their supply, sales and labour markets by closed borders. At the same time, many people lack the right qualifications for the labour market. Unemployment is high.
The German commitment is responding to this situation with a wide range of measures: KfW, together with other European donor agencies, is helping the Palestinian Ministry of Education to improve the education system. This will allow new schools to be built and practical vocational training courses to be developed.
The European-Palestinian Credit Guarantee Fund (EPCGF) was established in 2005 with the aim of strengthening in particular small and medium-sized enterprises (SMEs). The Fund facilitates SMEs' access to medium and long-term bank loans, thus strengthening their viability and securing jobs and income. The regional SANAD Fund also supports local financial institutions.
The Employment Generation Program (EGP) provides access to paid work for people who are fit for work – this helps to improve the income situation and also supports various social organisations, e.g. for people with disabilities.
With the creation of the Palestinian Authority in 1994, the central administrative structure was created in the Palestinian territories. The municipal level - the cities and municipalities – also plays an important role in relations between the state and its citizens and in the provision of state services.
A national municipal development programme was developed in cooperation with various international partners with the aim of enabling the municipalities to adequately fulfil their responsibilities in terms of content and funding. It is implemented by the Palestinian Municipal Financing Fund (MDLF) which the German government participates in via KfW. Municipalities can use the funds from the MDLF, for example, to build roads and playgrounds. The transparency and quality of the local administration influences the level of funding provided by the MDLF.
In the course of the Arab-Israeli conflict, hundreds of thousands of Palestinians fled their homeland in 1948 and in the following years. In addition to today's Palestinian territories, many refugees found shelter in the neighbouring countries of Jordan, Lebanon and Syria. Without a political solution to the conflict, they still live there today - often with limited rights and under precarious living conditions.
Financial Cooperation supports Palestinian refugees through the UNRWA refugee relief organisation. The relief agency was founded in 1949 and is thus one of the oldest programmes of the United Nations. It is responsible for ensuring basic services for currently around 5.3 million Palestinian refugees.
KfW's support includes measures to improve the social and economic infrastructure in Palestinian refugee camps in Lebanon, Jordan and in the Gaza Strip. These include, for example, the construction and rehabilitation of schools and health stations, the expansion of roads and public places and the improvement of sewage and waste disposal in the camps. KfW also promotes local employment opportunities for vulnerable refugees and the reconstruction of destroyed housing. By directly supporting UNRWA's education and health programme, KfW is helping to ensure adequate schooling and health care in the region.
Further information
- Learn more about the impact of our work in Palestinian Territories in our transparency portal
- Read more about our completed projects in the evaluation reports on the Palestinian Territories
- On the website of the Federal Foreign Office you will find detailed information about the Palestinian Territories
- The BMZ's priorities in the Palestinian Territories can be found directly on the Ministry's website
Local office
KfW Office Ramallah-Al Bireh
Director KfW Office: David Kunze
Abdullah Joudah Street Bldg. 35
Ramallah-Al Bireh
Palestinian Territories
Phone: +972 22 40 07 30
Fax: +972 22 40 07 31