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The Political Economy of Aid in Palestine: Relief from Conflict or Development Delayed? by Sahar Taghdisi-Rad. New York and London: Routledge, 2011. xiv + 201 pages. Notes to p. 211. Bibliography to p. 238. Index to p. 242. $140.00 cloth. Reviewed by Sara Roy In 1985 I began my doctoral research on an American program of bilateral economic assistance to the Palestinian people in the West Bank and Gaza Strip. Then only a few years old, the aid program was very small and led by NGOs (as opposed to USAID). My research asked whether it was possible to promote economic development under conditions of military occupation. The answer, of course, was “no” and there were many reasons for it. The principal reason was that the government of Israel demanded and was given control over the project-approval process—in violation of stated U.S. law at the time—which allowed the Israeli government to use American aid to promote its own political-economic agenda in the West Bank and Gaza rather than address the developmental needs of the Palestinian people. Israel’s agenda was made very clear to me by a range of government officials: no development, which translated into a pronounced bias against programmatic initiatives aimed at strengthening the agricultural and industrial sectors among other policies. The government of Israel feared the emergence of a viable economic infrastructure in the occupied territories that could compete with Israel’s and possibly lay the foundation of a future state. Reading Dr. Taghdisi-Rad’s impressively researched book, it is strikingly clear how little has changed in the ensuing years with regard to the role of donor aid in Palestine, its contributions notwithstanding. The author, who received her PhD from the School of Oriental and African Studies (SOAS) at the University of London and is an economist with the United Nations Conference on Trade and Development (UNCTAD) in Geneva, powerfully demonstrates that donor operations in Palestine, particularly since Oslo, have further regressed with regard to catalyzing a process of long-term developmental change. By failing to account for conflict and its impact on a given economy and by pursuing a political and ideological agenda that often contradicts the needs and priorities of Palestinians (and that is also shaped by the need of donor governments to secure and maintain a role in the political process), donors have consistently undermined meaningful developmental change—securing, instead, the status quo—and precluded the use of aid as an effective instrument of sustainable transformation. The book’s arguments are clear and compelling; a core feature is the inability of mainstream economics as seen in the neoclassical model—which informs a great deal of donor funding—to incorporate an analysis of conflict economies within its rigid theoretical boundaries and set of assumptions. Dr. Taghdisi-Rad writes, “The universalist assumptions [of neoclassical economics] regarding the operation of markets, the role of the state, and the separation between political and economic analyses, no longer hold in the case of conflict-affected countries, where conflict often . . . alters the economic structures, sectoral priorities, the workings of the market, the primacy of the state, and the power structure of various economic actors and classes” (p. 195). These are crucial (and too often overlooked) points, because the mismatch between theory and reality has a long and painful history in the Palestinian context, which this important book deftly illustrates. This mismatch renders the defining theoretical framework not only deficient but damaging, since it produces distortionary outcomes, notably in the trade sector, which is a focus of the book. One such distortion is revealed in the following fact: despite receiving one of the highest per capita aid allocations in the world for much of the last decade, the Palestinian economy has diminished to the point of virtual collapse, as seen in the near ruination of the agricultural, industrial, and trade sectors. Not surprisingly, the economy is characterized by levels of unemployment and poverty (especially in Gaza) that are unprecedented, high rates of consumption, and low levels of investment, forcing Palestine into continued and deepened dependence on foreign aid. While some of the arguments in The Political Economy of Aid in Palestine are not new, they are skillfully presented and enhanced by extremely important and useful statistical data. The text is, at times, slightly repetitive and protracted, and certain concepts and terms should have been explicitly defined for the reader (including a more detailed examination of the neoclassical economic framework), given that parts of the discussion are technical in nature. But these concerns are relatively minor when viewed against the book’s larger achievements, which are notable by any measure.