“An agreed framework for political progress remains indispensable to reestablish the conditions for the resumption of economic and social development in both Israel and the Palestinian territories,” adds Roberts.
“This poses many challenges to the three main groups: the Palestinian Authority, the donors, and the Government of Israel.”

The report underlines the need for the Palestinian Authority to develop a National Emergency Plan to cope with further economic hardships in 2002, particularly in light of the possibility of regional war. The PA is commended for its early successes in reforming Palestinian governance but urged to go further. The report also points out that there is no way back from reform, and that the legitimacy of the PA is now tied to the successful delivery of the reform program.

The report also calls on donors to disburse a minimum of US$1.1 billion in 2003, and to give top priority to budget support and humanitarian/welfare assistance. Comparing different assistance instruments, the report finds that budget support is more efficient on welfare grounds than food aid or employment schemes, and for this reason expresses great concern at recent signs that Arab and European budget support is less than secure for 2003. Donors are also urged not to abandon their medium-term development programs, and to continue their commitment to the creation of the institutions and infrastructure of a future state.