Palestinian Territories

In a region where water is scarce, the Palestinian territories and Israel have important groundwater resources. The resources are dwindling and water quality is decreasing, which affects Israelis and Palestinians because they both are dependent on cross-border resources. Still, Israel stakes claim to most of the resources; in almost all issues related to water, the Palestinians have to consult the Israeli authorities in cumbersome and bureaucratic processes. The result: water resources are every unevenly distributed between Israel and the Palestinians. One-third of Palestinian households are not hooked up to the central water supply system and are supplied with lower quality water by private providers. Shortages in the central supply system are also a common occurrence, particularly during the summer months. Untreated sewage damages the environment and poses a threat to human health. For this reason, KfW provides support for sewage disposal and treatment. Since Financial Cooperation got underway in the Palestinian territories, total funding of around EUR 212 million has been provided for programmes in the water, sewage and waste sectors. Five of these programmes have already been completed and seven are still in progress. The sewage treatment plant built in Gaza with FC funds was also damaged during the war in summer 2014 – KfW has already pledged the funds necessary for repair.

The ongoing disputes with Israel - particularly mobility restrictions on goods and people - as well the conflicts between the various Palestinian parties significantly affect economic development in the Palestinian territories. Private sector structures are in part ineffective because the companies are largely cut off from their supply, sales and labour markets by closed borders and boycotts. The blockades also prevent companies from finding alternative or new supply and sales channels in the Palestinian territories, in Israel and abroad and thus reinforce dependencies.

German activities include a wide range of measures in response to this situation: the European Palestinian Credit Guarantee Fund (EPCGF) was established in 2005 with the aim of strengthening small and medium-sized enterprises (SMEs) in particular. The EPCGF helps local banks set up financial services for SMEs and shares part of the credit risks with banks. This facilitates SME access to medium- and long-term bank loans, giving them better chances of survival and securing jobs and income. The SANAD Fund also concluded contracts with two financial institutions. The primary beneficiaries are low-income households and micro-entrepreneurs.

The Employment Generation Programme (EGP) offers people in the workforce access to paid work - it improves income and increases the supply and quality of places in schools.

When the Palestinian Authority was formed in 1994, the central administrative structure with responsibility for civil and security issues in cities and rural areas was created in the Palestinian territories. The Ministry of Local Government (MoLG) is entrusted with forming the local administration and structures and, at the same time, is responsible for municipal oversight and approves the municipal budgets. A national municipal development programme was created in cooperation with various international partners with the aim of building municipal capacity for handling content-related and financial responsibilities. It is being implemented by the Municipal Development and Lending Fund (MDLF), which the German Federal Government has contributed to via KfW.