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Executive Summary

Independent Task Force Report
Strengthening Palestinian Public Institutions

June 28, 1999

Council on Foreign Relations

 

The Interim Period of Palestinian Self-Government Arrangements in the West Bank and Gaza Strip as stipulated in the Declaration of Principles signed by the Palestine Liberation Organization (PLO) and the state of Israel on September 13, 1993, came to an end on May 4, 1999. During that period the two parties signed additional agreements on the transfer of functional and territorial jurisdiction to the Palestinian Authority, which assumed direct responsibility for the conduct of daily life and for cooperation and coordination with Israel in a wide range of spheres.

Progress toward a permanent settlement of the decades-old conflict between Palestinians and Israelis, as well as toward peaceful relations in the region, requires the establishment of a capable, credible, and meaningful Palestinian political entity. Good governance is a necessary condition for the success of the peace process, and therefore all parties bear a responsibility to assist and facilitate the strengthening of Palestinian public institutions.

The United States, the European Union, Norway as chair of the international donor community, and the international community as a whole hold this view firmly. They have demonstrated a sustained commitment to these goals, extending strong political support, reassurance, and diplomatic input to the process. Moreover, the international community pledged $4.1 billion in assistance for Palestinian reconstruction and development in 1994-98, of which some $3.6 billion was committed against specific projects and $2.5 billion of which was actually disbursed by the end of 1998. Around 10 percent of total disbursement was directed toward Palestinian institution-building.

The construction and consolidation of effective and democratic governing institutions based on transparency and accountability is a major step on the road to attaining genuine self-determination for the Palestinians, peace and security for Israel and its neighbors, and stability for the region as a whole. This is the basis for the Palestinians to gain ownership over the assistance, investment, and planning programs that are at present shepherded by the international donor community and its representative institutions on the ground. Ownership is necessary for the Palestinians to make a successful transition from externally assisted emergency rehabilitation and post-conflict reconstruction to sustainable social and economic development, greater self-reliance, and confident competitiveness in global markets.

A primary goal of the Palestinian Authority, and of its partners and counterparts in Israel and the international community, should therefore be to achieve good governance, based on the following:

The issue is not only one of organization—that is, of the structures composed of individuals working toward common ends. Even more important, it is one of the rules, norms, and practices that define public institutions and their operating culture and determine relations with their constituents. The Palestinians are moving into a new and decisive phase in their national history, and the purpose of this report is to assist in identifying what needs to be done in order to make that transition successfully.

 

Purpose of the Report

This report performs both diagnostic and prescriptive functions with respect to the public institutions of the Palestinian Authority. Its three objectives are as follows:

To these ends, the report assesses Palestinian public institutions in relation to the following four requirements:

The report is intended for use by four audiences: first, members of the executive, legislative, and judicial branches of the Palestinian Authority; second, senior civil servants and police officers in the Palestinian Authority; third, nongovernmental organizations and other private-sector and civil-society associations in the West Bank and Gaza Strip; and fourth, the governments and multilateral institutions providing and coordinating international assistance to the Palestinians. For this reason the report is being issued in both English and Arabic, and the Task Force proposes to follow up its main recommendations through a continuing dialogue with the Palestinian Authority and other relevant bodies.

 

The Nature of the Challenge

The Palestinian Authority assumed its responsibilities under conditions of particular adversity and complexity for a governing institution in a post-conflict situation. The Palestinian Authority was expected, under exceptionally difficult circumstances, to build public institutions capable of promoting good governance, a democratic political system and pluralist civil society, and a free market economy. By the end of the stipulated Interim Period, it was directly responsible for the civilian affairs of 95 percent of the Palestinians, other than those living in East Jerusalem.

Yet the Palestinian Authority has lacked undisputed control over key resources such as land, water, and contiguous territory. It does not have exclusive jurisdiction over the legal and administrative systems that serve its population, nor does it have unfettered access to external markets. A large share of its operating budget remains dependent on transfers of taxes and duties collected by Israel on its behalf, reaching 40 percent of the Palestinian Authority’s domestic revenue in 1998.

Furthermore, by May 1999 Israel still exercised full control over 71 percent of the West Bank and 30 percent of the Gaza Strip, and over the movement of people and goods between the two areas and within them. Israel also held responsibility for overall security in an additional 19 percent of the West Bank that came under the territorial and functional control of the Palestinian Authority, and in which roughly half the local Palestinian population resided. Finally, Israel has retained complete control over all external borders, airspace, territorial waters, and the electromagnetic sphere of the West Bank and Gaza Strip.

Within these parameters the Palestinian Authority was expected both to construct a pluralist political system and maintain law and order internally, and to enhance peace with Israel and security for Israelis externally. It has confronted these challenges in a political atmosphere that was highly charged and marred by violence. At the same time it was also required to pursue difficult negotiations with Israel over the transfer of additional territory, while dealing in a peaceful and orderly manner with issues of major contention such as Israeli settlement activity, house demolitions, and border closures.

In the five years since its formation, the Palestinian Authority has succeeded in thefollowing:

The Palestinian Authority should be measured against performance in the real world, not an ideal one. The Palestinian Authority has achieved levels of service delivery, revenue mobilization, financial accountability, and utilization of international assistance that are at least commensurate with, and in some aspects exceed, those in countries of comparable development and income. Recent data show an upward trend in key social and economic indicators. Because these important achievements tend to be overlooked in reports such as ours that focus primarily on remedial action, they deserve special emphasis.

Yet much remains to be done. The Palestinian Authority suffers shortcomings that range from insufficient institutionalization of citizens’ rights and the concentration of executive power, through the use of large-scale public-sector hiring to ease unemployment and to reward political loyalty, to instances of police violence and flawed financial management.

The Palestinian Authority faces the same dilemma as other emerging economies do: every advance in raising standards of living and promoting economic growth heightens consumer expectations and deepens the need for capital-intensive and technologically advanced imports. Similarly, social and economic development coupled with population growth propels rapid urbanization, which in turn poses complex challenges for the provision of infrastructure, services, and other resources, and highlights the need for effective local government.

The Palestinian Authority faces additional challenges that will impose an increasing burden on its human and financial resources and organizational capacity in the future. Foremost is a population with a very high natural growth rate that will add an estimated 1.8 million Palestinians to the 2.9 million already living in the West Bank and Gaza Strip, including East Jerusalem, by 2010. Additionally, since 1991 the West Bank and Gaza Strip have received large population inflows as Palestinians have lost residence and employment in Kuwait, Libya, and Algeria. To this must be added the potential impact of the possible return of Palestinian refugees of the 1948 and 1967 wars from the diaspora.

Population growth poses an increasing demand for public infrastructure and services, and therefore a continuing need for appropriate expansion in public administration, hiring, and finance. This is a consideration that both the Palestinian Authority and the international donor community must take into account when recommending and designing reforms. Yet excessive and non-productive public-sector hiring has already shackled the Palestinian Authority with the paradoxical mix of a large wage bill and low pay, and a future pension requirement that it cannot meet. Furthermore, every advance in providing public infrastructure involves long-term, recurrent costs for operation and maintenance. Debt management will therefore soon become an additional challenge.

The Palestinian Authority and the public alike should conclude from the nature of these challenges that present policy and practice cannot be sustained. The international community has recently pledged $3.3 billion in assistance for 1999-2004, but it neither will nor can maintain financial and technical assistance at these levels indefinitely, whatever its political commitment to Palestinian-Israeli peace and to Palestinian self-determination.

The political and material circumstances, both past and present, are difficult. External actors, including Israel, are responsible for helping resolve problems to which they have contributed. However, this does not make it any less incumbent on the Palestinian Authority to address the flaws and gaps in its institution-building and to strive constantly for improved performance and more effective and accountable governance.

It is imperative for the Palestinian Authority, in its own interest, to demonstrate its ability to see and acknowledge its own shortcomings and to take ownership of the reform process by leading it. The end of the stipulated Interim Period offers a timely opportunity to usher in a new phase of constitutionality and reform as the Palestinians move toward full self-determination. That opportunity should be seized.

 

Strengthening Public Institutions Under Adversity

It must be recognized that the Palestinian Authority has had to establish and operate effective public institutions in a short time span within a framework of limited territorial jurisdiction; geographical fragmentation; nonsovereign control over land, population, and natural resources; and stringent security obligations toward Israel. The time span and framework have often impeded the development of optimal institutional structure and proper practice. They also have imposed at times contradictory requirements on the Palestinian Authority in such areas as respect for human rights, freedom of political expression, and provision of security. The risk is that if present structures and practices go unreformed, they will shape and even predetermine future ones in negative ways.

In the Palestinian view, many of the shortcomings and tensions arising from institution-building during the Interim Period can be remedied only in the context of sovereign statehood. In this view, duality of control and confusion over the proper chain of command, as well as division of political authority between PLO bodies and the Palestinian Authority, exemplify the problems that arise because the Palestinians do not exercise their right to self-determination in the form of an independent state. Palestinian concern is understandable, especially if constitutional, political, and administrative arrangements designed for limited autonomy during the Interim Period were to acquire unwanted permanency, whether by design or by default.

Without prejudging the outcome of negotiations between the PLO and Israel, this report recommends reforms that are within the present powers of the Palestinian Authority to implement even under adverse circumstances. These recommendations are fundamental to the establishment of good governance, a democratic political system and pluralist civil society, and sustainable development and a free market economy during the transition to the permanent settlement and beyond. Palestinians may regard these reforms as essential steps in the formation of an effective, efficient, and democratic state:

  1. A formal constitution or Basic Law would set forth the fundamental principles underlying the establishment, functions, separation, autonomy, and accountability of the executive, legislative, and judiciary branches of government.

  2. A leaner office of the presidency, transferring routine administrative and operational tasks to other offices, branches, and levels of government, would strengthen the president’s ability to provide more efficient political, diplomatic, and national leadership, while enhancing the performance of those lesser tasks.

  3. A more effective Legislative Council would exercise enforceable oversight and decision-making authority on broad policy and budgetary issues, and be responsible for receiving and implementing the external audit findings of a statutorily established General Control Institute.

  4. A more independent judicial system, supervised by an autonomous Supreme Judicial Council, would enforce the rule of law, the sanctity of contracts, and a newly integrated, harmonized national legal and regulatory framework more suitable to a free society and market.

  5. More transparent, accountable, and unified financial operations would improve the cost-effectiveness of public administration and employment, the capability to anticipate increased needs of a rapidly growing population, and the comprehensiveness of both internal and external audits. They would also enhance public confidence.

  6. A leaner public administration, with significantly reduced personnel, meritocratic recruitment criteria, and a simpler organizational structure, would ease the financial burden and improve the effectiveness and efficiency of service delivery.

  7. A civilian-controlled police force would be subject to political, legal, and financial oversight by the Legislative Council as well as the appropriate ministries, and its role, rules, and relationship to local government would be clear to all.

 

The Politics of Reform

The principal challenge facing the development of effective public institutions is not technical, organizational, or financial, but political. The Palestinian Authority has considerable human resources at its disposal, with many highly qualified professionals and an educated and skilled workforce. In addition, it has the political goodwill and material support, both financial and technical, of the international community. Numerous management consultancy studies and reviews identifying needs and recommending specific solutions have already been conducted for the full range of governing institutions in the West Bank and Gaza Strip. However, what determines the effectiveness of governance is the nature of the emerging institutional culture and the manner in which the different parts of the system interact. It is in this sense that any improvement will be highly political, and that the beneficial impact of reform of any type will be comprehensive.

The most serious costs to the Palestinian Authority of shortcomings in its public institutions are also likely to be political. Opinion polls conducted in the West Bank and Gaza Strip regularly reveal dissatisfaction with the level of public services, a perception of waste and corruption in the public administration and police, and a loss of faith in the institutions of governance, particularly the Palestinian Legislative Council and the judiciary.

These negative consequences have provided ammunition to the Palestinian Authority’s detractors in the Palestinian opposition, in Israel, and abroad. Equally serious is the possible erosion of political support in the international donor community, with taxpayers and parliamentarians questioning the wisdom of directing a high proportion of a limited aid “pie” to the Palestinians instead of other developing countries. To not reform is not an option.

To strengthen and reform public institutions requires considerable political will and skills. To do so while conducting final-status negotiations with Israel and preparing for the transition to a permanent settlement and full self-determination requires even greater courage, foresight, and perseverance. These are qualities demonstrated by the Palestinian leadership, which has engaged constantly since 1994 in the arduous task of setting up effective self-government while negotiating further phases of the Interim Period.

The Palestinian leadership needs to be strong, capable, and self-confident in order to meet the challenges ahead, and it is entitled to define and steer its own course accordingly. It should therefore see good governance, as well as the reforms intended to bring it about, as a source of strength. Integral to the Palestinians’ exercise of genuine self-determination are the institutionalization of citizens’ rights, establishment of the rule of law, creation of a viable and independent system of justice, empowerment of civil society, invigoration of the private sector, and delegation of authority and assertion of institutional autonomy throughout the public administration.

 

Main Recommendations

Constitutionality

The Oslo accords and subsequent agreements between the PLO and the state of Israel formed the framework within which the constitutional basis and legal system of the Palestinian Authority were to be formed. The Palestinian Legislative Council that was formed through general elections in January 1996 approved a Basic Law as the primary constitutional document of the Palestinian Authority, but this has not been promulgated by the executive. Instead, the mixture of inherited codes and laws in effect until June 5, 1967, have been applied. This has led to accusations of overconcentration of presidential power, rule by decree, selective use of legal codes, and disregard for democratic process. The fact that the Oslo framework did not provide explicitly for the renewal or extension of the presidency and Legislative Council has increased the perceived ambiguity of constitutional arrangements.

  1. The president of the Palestinian Authority should either promulgate the draft Basic Law as a whole, or at least promulgate parts of it and pass them into law separately. In the latter case the separate Basic Laws should govern the legislative process, independence of the judiciary, and citizens’ rights. The end of the stipulated Interim Period and transition to the permanent settlement need not affect this, because basic constitutional principles should remain unchanged.

  2. The Palestinian Authority should establish a constitutional court, or suitably empower the supreme court, to ensure that laws and systems are constitutional.

The Executive

The executive branch of the Palestinian Authority follows the presidential model of government, with a high degree of concentration of power. This includes the power to issue legal decrees in all spheres, to make appointments to the civil service and the police, to establish or dissolve public institutions, and to disburse public funds. Much of this concentration of power was embodied in the Oslo framework. Yet the centralization of authority, detailed micromanagement, and lack of delegation of administrative authority in some fields have weakened executive ability to manage a growing and increasingly complex system of public administration and finance. The risk is that social and economic policy will drift, organizational evolution will be haphazard, and public personnel will expand unchecked. Modification of current executive practice would reduce the administrative burden on the presidency in particular, and so strengthen political leadership and macromanagement.

  1. The cabinet should formulate a plausible, consistent, and clearly articulated program for government and adhere to it. Ministers should be enabled to operate according to set tasks and budgets that are not subject to sudden or arbitrary change or to constant renegotiation.

  2. The cabinet should be further empowered to coordinate government policies and to oversee the development and reform of public administration and the public sector more generally.

  3. The cabinet should submit the general budget to the legislature for review and approval in a timely manner.

  4. Reduction of the number and range of public institutions presently attached to the president’s office would reduce the administrative burden on the presidency and so strengthen its ability to formulate and pursue key policy objectives.

  5. The president’s office should devolve to the appropriate ministries and agencies all programs and projects that involve disbursement of funds but that do not relate directly and necessarily to the conduct of the presidency.

  6. The Palestinian Authority should enhance the role of local government. To this end municipal elections should take place, and the Palestinian Authority should devolve greater powers of service delivery, revenue collection, and public works to local government and delineate responsibilities clearly between the Ministry of Local Government, the Ministry of Interior, the police force, and municipal councils.

The Legislature

The creation of the Palestinian Legislative Council through general election and universal suffrage in January 1996 was one of the major achievements of the Palestinian Authority. Palestinian lawmakers have accumulated valuable experience and demonstrated growing capability to debate legislation, government policies, and budgets. However, they face a principal challenge to avoid marginalization and to reinforce the role of the legislature. The Oslo framework did not provide explicitly for the renewal or extension of the presidency and the Legislative Council, raising further questions about their role and relationship beyond the end of the stipulated Interim Period.

  1. The Palestinian Legislative Council should adopt a multiyear legislative agenda, as a more realistic means of organizing and completing its primary function.

  2. The executive authority should enable the Palestinian Legislative Council to review the general budget more effectively, by making timely submissions to the legislature and by adhering to its approved terms.

  3. The Palestinian Legislative Council should be empowered to exercise effective oversight over the executive authority. To this end it is the Palestinian Legislative Council that should approve the operating budgets of the judiciary and other independent oversight bodies, including the General Control Institute.

  4. The ongoing consolidation and integration of the diverse and often conflicting body of laws and ordinances presently in effect in the West Bank and Gaza Strip should be completed.

  5. The legislature played a central role in drafting the Palestinian constitutional framework for the Interim Period and should continue to play this role as the Palestinian Authority prepares for the permanent settlement. The draft Basic Law provides a useful starting point for any new constitutional document to be prepared for the next phase.

The Judiciary

The rule of law and the provision of oversight over the executive and legislative branches of government cannot be achieved without a functioning judiciary, which is equally important for the conduct of civil society and free market enterprise. Yet the judiciary is in a state of disrepair. Part of the burden has been taken up by traditional social institutions and practices, while another part has been undertaken informally by public officials, such as the governors appointed by the president of the Palestinian Authority. These mechanisms can usefully provide alternative dispute resolution, but excessive virtue should not be made of necessity. Such mechanisms cannot replace the need for trained and independent judges and a unified legal code, without which there is a serious threat to the rule of law, public order, and enforceable contract.

  1. The Judicial System Law passed by the Palestinian Legislative Council in December 1998 should be promulgated.

  2. The executive authority should assist the reestablishment of a Supreme Judicial Council enjoying genuine independence.

  3. The powers and responsibilities of the Minister of Justice should be fully defined, and should not duplicate or supplant those of the Supreme Judicial Council or senior judicial officers.

  4. The recommendations and targets stated in the Rule of Law Strategic Development Plan issued by the Ministry of Justice in 1996 should be implemented on an accelerated timetable, as a matter of urgency.

  5. State security courts should be abolished. As a first step the executive authority should define their mandates clearly, make them open, allow for credible defense, and provide for appeal to the Supreme Court.

Public Administration

Public administration in the Palestinian Authority is still weak in certain areas. These include duplication of functions and redundancy of institutions, competing chains of command, insufficient delegation of authority, excessive compartmentalization in certain respects and lack of departmental autonomy in others, inadequacy of formal procedures, insufficiency of information flows within and between institutions, and inadequacy of routine external audit. Personal and political interventions mean that internal rules and regulations do not consistently operate as stable, institutionalized, and predictable procedures that are not easily reversed.

  1. Until the promulgation of the Basic Law or another constitutional document, laws of establishment defining mandates, tasks, and job descriptions should be issued for all ministries and agencies.

  2. A general review of public administration should be conducted with a view to simplifying its overall structure and reducing the number of ministries and agencies.

  3. The raft of reforms recommended by the Palestinian Authority’s Core Group on Public Administration should be implemented without delay.

  4. Internal statutes, rules, and regulations should be fully available to all public personnel and should be applied without regard to personal association, political affiliation, or commercial consideration.

Personnel

The Palestinian Authority has a significantly inflated payroll. In the civil service there is overstaffing and job inflation in certain ministries and agencies and at certain levels of appointment. Others are understaffed, especially those requiring specialized or highly qualified personnel. The desire to ease unemployment, combined with political and personal factors, has partially converted public hiring into a means of rewarding loyalty and of securing a mass constituency. This has left the Palestinian Authority with a much higher proportion of the labor force in public employment than is the case in other post-conflict situations. The result is suboptimal quality and efficiency of public services and reduced cost-effectiveness. This threatens the domestic legitimacy of the Palestinian Authority, while burdening it with an exaggerated wage bill and a potentially unmanageable future pension requirement.

  1. All provisions in the new Civil Service Law, other than those relating to pay, should be put into immediate effect. A central, unified structure for civil service jobs in the West Bank and Gaza Strip should be put into place.

  2. Recruitment to the civil service should be initiated and approved only by the duly authorized officials and institutions and should be subject to audit by an appropriate central, independent body.

  3. Personnel matters in the civil service should be under the jurisdiction of the General Personnel Council.

  4. The civil service payroll should be under the exclusive jurisdiction of the Ministry of Finance.

  5. A program should be put into effect to review staffing in key ministries. This program should cover the number and level of posts, as well as the skills and experience required to fill them.

Planning

The Palestinian Authority has attained higher levels of planning, in a short span of time, than many developing countries. Increased attention to a sectoral approach, prioritization of projects, and macroeconomic analysis have allowed it most recently to assume ownership of the revised Palestinian Development Plan for 1999-2003. However, insufficient clarity in the Palestinian Authority about overall policy goals has impeded definition of explicit social, economic, and administrative targets, not to mention formulation of appropriate operational strategies. This also impedes long-term planning to address questions of economic viability and of the sustainability of social policy in view of high population growth rates and projected trends in regional and global markets. The challenge is partly technical, but it is also one of political authority and the proper division of tasks between the relevant public institutions.

  1. There needs to be a single Palestinian planning body, a role provided at present by the Ministry of Planning and International Cooperation, with undisputed authority over the planning process. To this end it should receive the political support of the cabinet and the legislature.

  2. The Ministry of Planning and International Cooperation should lead duly formed sectoral working groups representing relevant “clusters” of ministries and agencies.

  3. The division of responsibilities regarding public expenditure management should be clarified between the Ministry of Planning and International Cooperation and the Ministry of Finance.

  4. The Ministry of Planning and International Cooperation should be confirmed as the clearinghouse for all applications for international assistance made by all ministries and agencies.

  5. Planning should take special account of anticipated increases in demand for public infrastructure and services as a result of population growth, social and economic development, and changing technologies and trade patterns in global markets.

Public Finance

International assistance to the Palestinians is tightly monitored by the donor countries and representative institutions, but the domestic revenues and expenditures of the Palestinian Authority lack transparency and completeness of accounts. This has led Palestinian bodies to make accusations of financial waste, mismanagement, and misappropriation of funds, especially with regard to the 1994-96 period. There is a high level of international satisfaction with implementing agencies such as the Ministry of Finance and the Palestinian Economic Council for Development and Reconstruction, but proper financial management, planning, and practice need to be strengthened further. The diversion of public revenue to accounts not under the purview of the Ministry of Finance has caused liquidity problems. This has led in turn to compression of cash expenditure, costly domestic borrowing, and accumulation of arrears. At the same time, the centralization of revenue collection away from municipal authorities has increased the central treasury’s administrative costs and increased subventions to local governments.

  1. The general budget prepared by the Ministry of Finance should be submitted by the executive branch to the legislative for debate and approval in a timely manner. It should reflect all public revenues and expenditures and contain full, detailed breakdowns of both items.

  2. All public revenues should be disclosed, and should accrue to a single account under the Ministry of Finance.

  3. The regulatory frameworks and implementation mechanisms developed by the Ministry of Finance to ensure proper financial practice throughout the Palestinian Authority should be put into effect without delay.

  4. Preparation of the public payroll should be brought entirely under the Ministry of Finance, in order to secure the separation of financial and administrative control.

  5. The Ministry of Finance should assume control and management of public-sector pension funds and provide transparent accounting for government liabilities generally.

  6. The General Control Institute should have a definitive framework of laws and regulations against which to audit the public sector and should be made answerable to the legislature.

  7. Central government should devolve collection of the property tax to local government, and municipal authorities should charge the real cost of services to users.

Social Services

The ministries delivering social services have borne an especially heavy burden since the establishment of the Palestinian Authority, and they have performed remarkably under severe financial and administrative constraints. However, their capacity is impeded by limited ability to attract qualified staff, a lack of appropriate facilities and equipment, and inadequacies in long-term projection and planning capabilities.

  1. Performance indicators and cost calculation systems should be developed and applied in order to improve the efficiency and quality of social services delivery.

  2. The social services ministries should further develop the legal and regulatory framework enabling nongovernmental and private-sector providers to compete directly for service delivery.

  3. Forward-looking planning and projection methodologies should be developed as a matter of urgency, in order to anticipate increased demand for public services as a result of population growth and of social and economic development.

The Economy

There is unnecessary duplication and fragmentation of ministries and agencies dealing with various aspects of the economy. Lack of an effective enabling legal and regulatory environment for the proper operation of a free market economy has led to market distorting interventions. Largely unregulated and unaccountable public import monopolies and quasi-monopolies have been created. This leads to undisclosed commercial dealings by public servants and to privileged access for private actors to the award of contracts, licenses, and exclusive dealerships. Pledges made by the Palestinian Authority to privatize monopolies have not yet been fulfilled, and their revenues have not been consolidated under the Ministry of Finance as promised.

  1. Existing ministries and agencies dealing with the economy should be reviewed with the aim of reducing their overall number, merging or subdividing them as necessary in order to eliminate overlapping specialization and duplication of functions.

  2. Sectoral working groups, development strategies, and other formal mechanisms should be established for consultation, coordination, and collaboration between the ministries and agencies dealing with the economy.

  3. The powers of regulatory bodies should be increased and they should be made genuinely autonomous. The Palestinian Monetary Authority should play an increased role in supervising the banking sector.

  4. The draft laws governing taxation, investment, company registration, competition, and other economic activities should be completed and promulgated as soon as possible.

  5. The privatization of public import monopolies and quasi-monopolies established by the Palestinian Authority should proceed as promised, and all commercial concessions should be disclosed.

  6. All public servants, both civil and police, and elected officials should be required to disclose, and if necessary divest, private commercial interests.

Police Force

The police force established by the Palestinian Authority has ensured public law and order in a particularly difficult political and security environment and has achieved a relatively high level of discipline and cohesion. However, it has drawn charges of repeated abuse of human rights, insufficient observance of due process, inadequate separation of functions and responsibilities between its branches, occasionally violent interservice rivalries, and uncontrolled proliferation of parallel security agencies. This threatens the performance of the various police branches, public approval, and the confidence of Israel and the international community.

  1. The police force should be brought under clear civilian authority and should be made subject to political oversight by the legislature. It should also be subject to external audit by a body that reports to the legislature.

  2. The chain of command within the police force as a whole and within its separate branches should be clarified and observed in practice.

  3. The mission statements and rules of procedure drafted by the Higher Council for National Security should be ratified, implemented, and made available for public scrutiny.

  4. Cost-effectiveness in the police force needs to be improved, in part by reducing personnel numbers substantially.

  5. The police force should prohibit any form of revenue collection or commercial activity by its various branches that are not authorized by their law of establishment.

  6. The relationship between the police force and local government should be clarified.