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* Prepared by an independent evaluator: Mr. S.V. Divvaakar, Managing Partner, Ace Global Consulting LLP, India (supported by Ms Pooja Daga, and Mr. Sagar Sachdeva, Project Managers at Ace Global Consulting LLP).
17. The APPU is directly responsible for: production of the annual report to the TDB; the research publications as committed; and for training missions in the field. In technical assistance, the unit plays the role of a coordinator between the PA institutions, donors and other specialist units inside UNCTAD. In the past ten years, there were not more than two projects under implementation at any time, with implementation periods of two years, on average. The main deployment is in field missions for training, donor engagement, consultations with counterpart institutions, and project review missions.
18. The Unit began with two RB staff (P5 and P4), but the addition of technical cooperation activities has necessitated additional staff. This was managed initially (2001-2005) through a P2 position funded by Netherlands, and subsequently a P3 post funded from the budgets in the APPU’s project pipeline. However, in 2010, with the P3 staff moving to another post in the United Nations, and with no project pipeline, the post could not be maintained. A replacement is likely by July 2011, currently for one year, contingent on new projects being secured financially. There is also a general-service staff member dedicated to support in the area of TA and other areas of work.
19. Field Presence: Lack of field presence has been cited as a constraint by a few donors, United Nations agencies and PA institutions, besides the APPU itself. However, field presence does not automatically imply a direct expatriate presence; the role of the United Nations Resident Coordinator (UNRC) and the Non-Resident Agency (NRA) focal point is to adequately represent institutions like UNCTAD on aid coordination structures. The national counterparts are also not in favour of high field presence costs, and recommend local staffing to the extent possible.
20. Joint Programmes/ Implementation: So far, work under the APP programme has been handled almost entirely within UNCTAD. However, system wide reforms in the United Nations system are increasingly witnessing joint programming and joint implementation in the field among United Nations agencies. UNCTAD is the proposed lead agency in the Programme on Trade and Productive Capacities (part of the United Nations CEB initiative), which also includes UNDP, ITC and ILO. A programme document prepared in early 2011 awaits funding. However, the evaluation noted apprehensions in the field as to the effectiveness of NRAs leading multi-agency joint programmes.
5. Donor engagement
21. So far, PAPP technical assistance has been supported by: Norway, Netherlands, European Communities, Canada, IRDC and Italy. The unit has experienced challenges in securing financial closure for follow-on projects, with some proposals (Dry port; Empretec-2; and until recently the Palestinian Shippers' Council (PSC) - phase 2) floating for up to three years. The viability of some projects was also affected by implementation challenges and also inadequate donor support for activities in Gaza.
22. Donor reluctance for funding some projects has been a confluence of many reasons:
24. Spanning more than 25 years, UNCTAD work has adapted to changes in the political and economic realities of the oPt, while remaining consistent with its mandate. Beginning in 1979 with a focus on initiating studies (United Nations resolution 109 V), the scope and thrust of the Programme has evolved over the years, through: identifying and capitalizing on promising opportunities for accelerating Palestinian economic growth; supporting economic development and institution building efforts; responding to implications of widespread economic crisis resulting from closure policies and movement restrictions, and more recently to supporting Palestinian state building efforts (Accra Accord).
25. UNCTAD’s analysis and policy advice, reflected in its reports, focus on six key constraints in the oPt: (i) Absence of national sovereignty; (ii) Territorial fragmentation; (iii) Limited economic policy space; (iv) Vulnerability to external shocks; (v) Land-locked and limited access to markets; and (vi) Inadequate physical infrastructure. The thrust of UNCTAD’s work has been to elaborate- through qualitative and quantitative analysis and use of economic simulation modelling and inform the international community of the implications of the continuance and, in some times, exacerbation, of these constraints, on the lives of the Palestinian people in the absence of the essential policy space and functioning organs of sovereign states.
26. Research and analysis: The bulk of the analytical work and the resultant technical assistance is in five broad areas:
28. The evaluation took up eight 1 reports (covering a diversity of themes and spanning a twelve-year period until 2010) for a more detailed study of the content and to infer key messages from their analysis. Observations on some reports are summarised in Annex 3 (TD/B/58/6/Add.1) to this report.
29. Overall, the evaluation finds these reports to be rich in data and incisive in their analysis, providing an appreciation of the significant challenges and constraints to growth under occupation. Collectively, these reports attest to the enormous economic potential of a peace arrangement on one hand, and the extreme vulnerability of the oPt economy to Israeli security measures.
30. The overriding inference from a number of these reports is that the policies of occupation in the oPt inflict a huge cost on the Palestinian people and render the PA institutions unable to attain self-sufficiency and sustaining their operations through available revenue sources, in turn leading them to become overly dependent on external support. The reports covering 1994 until 1999 provide a positive account of the economic gains from the PER implementation despite its limitations in enhancing the policy space for the PA. The most important conclusion and endorsement of the PER is that by 1999, the PA had managed to eliminate revenue deficits in 1999, was able to manage its recurrent expenditure without donor dependence. The overwhelming conclusion of subsequent reports is that conditions and policies since 2000 have utterly reversed this progress, with the situation in the Gaza strip far worse than in the West Bank.
31. The conclusions of these reports provide useful policy directions for the PA to maximize the potential from its constricted policy space, and identify specific areas for revision or adjustments to the PER, which remains the only operational instrument governing the economic arrangements for the oPt. To an extent, these also provide a menu of specific “asks” for removal of critical bottlenecks imposed by Israeli policies and procedures in the oPt.
32. Technical Cooperation: Launched in 1995, technical cooperation has remained oriented toward strengthening institutional capacities for the achievement of national development objectives in four clusters: (a) trade policies and strategies; (b) Trade Facilitation and Logistics; (c) Finance and Development; and d) Investment, Enterprise Development and Competition. Since 2000, the emphasis has been on building and strengthening of institutions of the oPt to cope with the conditions of occupation and additional access and movement restraints, and acquire capabilities for carrying on the functions of state institutions.
33. Individually, most projects have demonstrated high relevance to addressing these institutional strengthening needs. Important knowledge gaps and capacity needs in customs administration, debt management and financial planning, trade facilitation, and integrated macro-economic planning, as identified in national priorities have been covered by technical assistance activities. These projects were all based on UNCTAD’s recognized expertise, proprietary tools and platforms, besides in-house competence areas, and have been implemented in other settings as well.
34. On the other hand, UNCTAD faces new challenges in retaining its space and visibility in the development canvas, which are significant pointers for its future engagement strategy.
35. The most important is that Palestine's objective of securing admission into important bodies such as WTO, the United Nations and others, and also secure Israel approvals for critical projects, does influence the choice of development partners. Second, agencies bringing in funds have an edge over others that merely execute and utilise these funds. UNCTAD suffers serious disadvantages in this respect, being dependent on extra-budgetary support; and also entailing higher, Geneva-based overheads. Third, UNCTAD’s focus on government and insufficient engagement in recent years with key private sector institutions – PALTRADE and Palestinian Federation of Industries (PFI) - denies it several opportunities even as most donors are increasingly focusing on private sector led growth strategies. Lastly, a few stakeholders also observed that UNCTAD's advocacy orientation on occupation policies, at times restrict its opportunities for a wider range of partnerships and projects.
36. Three senior officials and ex-officials associated with UNCTAD activities for several years also observed that the unit needs to be more energetically engaged with the priority needs and more responsive to requests for assistance, and that the quality of the relationship, which has been excellent in the past, needs to be sustained through high responsiveness to requests for support. Although such opinions can be subjective, they provide feedback as to the need for greater investment in the institutional relationship at the highest levels.
37. Research & Analysis: The sustained coverage of the conditions of the Palestinian people for more than 25 years forms an authoritative repository, highly appreciated by stakeholders, including academia, several donors and also other development agencies. UNCTAD reports highlight the linkages between policies and measures of the occupying authority; the law, order and security conditions in the oPt; and the resultant state of growth and development; and portray the inherent contradiction in states of ‘growth under occupation’. Several reports also provide specific directions for solutions through a greater level of policy making freedom in the oPt.
38. Intergovernmental consensus and servicing of expert meetings: UNCTAD has done its best in highlighting the need for interventions to improve the economic and social conditions in the oPt, backed by empirical evidence of its studies. However, its ability to influence intergovernmental processes remains limited. This can be gauged from the attention given to this subject, with the TDB spending between two hours and a half-day session per year deliberating on the outputs of the APPU, and with the Board subsequently just "noting" the secretariat report.
39. Meanwhile, the considerable coverage given to occupation policies in these reports has invited criticism from a few members States, on grounds that these receive much more space than the substantive coverage of UNCTAD’s activities and projects during the year, and that the assessments do not consider official information and data provided by Israel (even though UNCTAD draws on authoritative sources including the World Bank, PCBS and Israeli Statistics for its reports).
40. Technical assistance projects/ activities: The aim of most projects was to create and strengthen institutional capacities based on assumptions of greater freedom to formulate and manage economic policies. However, under the current structures and conditions of occupation there is very limited policy space for exercising macroeconomic, trade and labour policies. Under such conditions, technical assistance works in a sub optimal environment, which drastically reduces its potential for impact.
41. As a rather small and specialist partner, UNCTAD’s results manifest in terms of the knowledge, capacities and resilience created in the beneficiary institutions to develop, sustain, re-emerge and rebuild through cycles of conflict. This evaluation believes that the survival and continuation of these nascent institutions and their ability during the past ten years to re-emerge and manage their limited political and financial space without internal collapse, is in itself an important indicator of the impact of the development assistance to the oPt. Further, UNCTAD has contributed the tools for the PA to analyse, monitor and channel its policies in line with the national development strategies.
Evaluation Observations Summary on selected projects
· Training of personnel
· Trade statistics and risk management systems
· Direct Trader Input
· Reconciliation with Israeli customs
The project will be handed over to the PA under its next phase, presently awaiting financial closure.
July 2000-2001, ended in 2005
· Computerization and installation of DMFAS 5.3 in Arabic
· Study on financing of public investments
· New phase under discussions
· Enhance technical capacity of PSC staff.
· Familiarize shippers' on the different aspects of trade facilitation, and the role of PSC
· Obtain competitive rates, reduced charges and fair treatment for Palestinian shippers from service providers.
· Access and disseminate latest information on modifications
· Build public outreach with Goyt, private sector and international institutions.
· Ensure PSC sustainability
The project assisted in the constitution of the PSC, and supported training workshops covering international maritime procedures, trade facilitation, and also familiarization visits to Israel ports and other international locations. The PSC was able to function as a representative of the industry and present all their issues, even procuring legal services on behalf of members, and assisting members in successfully exporting to distant markets.
The PSC also engaged with the authorities in the PA, Jordan, Egypt and Israel, besides Israeli, Swiss and European Shippers Councils and the ASYCUDA team. It also brought out a web site and several trade policy briefs and other publications on relevant issues. Financial sustainability through fee-based services has remained challenging due to the ground conditions and the sub optimal levels of business.
A second phase of the project is now approved for funding by Canada.
Italy (MED 2000); ILO
· Translation and adaptation of training materials
· Empretec workshops
· Local training capacity
· Follow-up assistance and support entrepreneurs
An emergency phase, funded by ILO and a new counterpart institution (PFI/PFESP) was formulated to continue the project and extend to Gaza, besides some activities to ensure self-sustenance of the local institution. Implementation could not take place in GAZA. However, 130 EMPRETECOs were created, including 21 women.
Lack of ownership and continuity of local partners, besides funds mobilization has been a major weakness of the project, which has been unable to secure funding for a new phase planned with a nongovernmental agency, SEC, as partner .
· Design an investment retention program Design an institutional building plan
· Design a training program,
· Study tour / training at leading investment promotion agencies
The project experienced a delay of more than three years in completing the industry survey and database of enterprises. Based on the survey and other inputs, an investment promotion programme was prepared to be shared in 2007. In 2009, UNCTAD undertook a research project on the need for after care strategies in the oPt, which became the seed for another proposal for PIPA. However, this proposal has not yet received positive consideration from donors, while some stakeholders also feel it has not been pursued actively .
· Installation of the programme at various beneficiary institutions
· Training programmes on the use of the model
· A policy paper using the results of the model
42. The successful operation of the ASYCUDA is a unique example of good cooperation, not only between UNCTAD and the PA but also enabled by the sustained support of donors over multiple phases, and, a proactive and supportive approach by Israeli authorities and attendant institutions. The ASYCUDA project amply demonstrates the potential for fruitful and constructive cooperation on the ground even amidst challenging political conditions and sensitivities, based on the tangible gains for both the PA and Israel from an effective post clearance tax reconciliation arrangement that was the prime objective of the project. Similarly, another project- the Palestinian Shippers' Council (PSC) - received some support from Israeli private sector bodies such as the Israel Shippers Council (ISC) and the Peres Centre for Peace.
43. In comparison, projects directly aimed at private sector enterprises faced challenges of continued uncertainty in the enabling environment as well as inadequate local ownership, and may seem premature in hindsight, although they were all based on the expectations of a successful resolution of political dialogue. Despite their relevance, the evaluation expects there to be continuing challenges in securing extensions of projects for investor retention and enterprise development until a substantial improvement in ground conditions, i.e. investor demand, well-established local ownership and co-financing mechanisms are in place.
44. Prior to 1995, research and analysis reports constituted the main if not only activities at the APPU. However, the recurrent work programme presently consists of two research reports over a two-year period, besides an annual report to the TDB, i.e. two reports each year. A proposal to increase the number of recurrent studies on Palestinian economy were resisted by some member States at a recent UNCTAD meeting, and resultantly dropped in the interests of obtaining consensus. Therefore, despite the possibilities, the work programme includes only two recurrent outputs per year.
45. Meanwhile, several technical assistance projects faced delays in execution, largely due to the adverse ground conditions marked by conflict. In some projects, the allotted funds could not be completely used, as some planned activities could not be undertaken. Two projects were aborted midway: Empretec due to withdrawal of funding support by donors; and DMFAS, following a continuance of activities for several years without obtaining donor consent (see Table 2). The following table provides a summary of the deviation in the implementation periods of each project.
Planned and Actual Completion times for selected Projects (in months)
50. Local ownership of initiatives: The most important ingredient for sustainability is the local ownership of the initiatives undertaken. Most of UNCTAD’s engagement has been with the PA directly, with sufficient ownership of some initiatives such as ASYCUDA, economic policy making and DMFAS. However, there have been some challenges in others, particularly Empretec, which saw two changes of national partners, beginning with a financial institution, then an industry federation. Lack of co-financing capacity was an important element behind these changes. Further, the project document for the new proposed phase is based on yet another partner.
51. Financial sustainability: Sufficient attention has been given in the design of projects like Empretec and PSC to prepare beneficiaries institutions to become financially self-sustainable, through membership and fee-based services. However, this was difficult to achieve due to the poor paying capacities of the private sector, due to the adverse business conditions and economic contraction under periods of conflict. It is also difficult for a revenue-short PA to sustain these institutions from budgetary resources. Even in successful projects like ASYCUDA, supporting programme staff from the PA's resources has remained fragile in between project phases.
52. Institutional capacities: Attrition of trained human resources is a challenge at technical cooperation projects aimed at building institutional capacities. Indeed, this has been the case in projects like PIPA, Empretec, and, to a smaller extent, ASYCUDA. In some cases, this attrition has been from career improvement prospects. The gaps left by departure of trained persons have not been bridged or with similar levels of training and exposure.
53. Continuity of political stability: A stable political leadership in the oPt is a critical pre requisite for progress and development as much as the course of the bigger dialogue process. While this been true for a considerable period since the formation of the PA, challenges have emerged since, and a fractured mandate exists at present. The future course of events will have an important influence on the political climate resultantly on the implementation of assistance as well.
54. Peace and Security for Economic Development: The biggest challenge to sustainability continues to be the absence of an enforceable framework of mutual accountability under any interim economic arrangement over the occupied territory. The fate of growth and development in the oPt precipitously hangs on perceived conditions of peace and security, with any adverse assessments potentially reversing all the economic, physical and social progress attained until any given point.
IV. Conclusions and recommendations
55. Amidst extremely challenging and adverse field conditions, UNCTAD has continuously remained engaged with the PA and other beneficiaries, addressing their pressing needs, through economic policy advice and technical assistance, for institutional capacity development. To a large extent, this steadfast engagement of over 28 years has been due to the creation and resourcing from regular budgets of a special Assistance to the Palestinian People unit.
56. UNCTAD remains a small but specialist player in the development assistance canvas, with no field presence. However, it brings a number of proprietary tools and techniques, and has enjoyed the confidence and trust of the PLO since 1979 and subsequently the PA since its formation and most, if not all member States. However, UNCTAD must demonstrate a more effective engagement and responsiveness to continue to retain this confidence amidst an increasing choice of development partners under changing realities of the oPt.
57. UNCTAD’s research and analysis has been strong in its assessment and articulation of the underlying causes of the poor state of development in the oPt, linking them directly to specific policies and procedures of Israeli authorities, building the economic and human development argument for the cessation of occupation. However, these assessments and conclusions are not shared- rather their objectivity has been challenged, specifically on grounds of non-inclusion of Israeli official data and reports in these assessments, and on grounds that these do not consider the positive measures announced by Israel to progressively ease the restrictions.
58. UNCTAD’s technical assistance has largely been based on its mandate, and responding to needs expressed by beneficiaries, in conformance with the priorities set out under national development plans, focusing on institution building. Collectively, the technical assistance projects have made useful contributions to assist the PA in institution building in areas of economic policy, statistical information and financial management, and trade facilitation. However, the results have been below potential, due to periodic reversals of ground level conditions, physical destruction, and shifting priorities toward emergency measures and crisis management, and away from a calibrated, planned path to consolidate the benefits from technical assistance.
59. Yet, measuring from the objectives of assisting the PA in building institutions sufficient for a functioning government, reports to the Quartet by a number of agencies- the WB, IMF and the United Nations- attest to the satisfactory attainment of this initial target for 2011. As an important partner in the customs administration and economic policy formulation assistance, UNCTAD’s contribution to this result is implicit and undisputable.
60. Despite its historic relationships with the oPt, UNCTAD faces potential challenges in responding to new and emerging priorities of the PA and other beneficiaries, which cause a re-orientation in its engagement in the oPt. These challenges emanate from: i) the PA’s need to mobilise adequate financial commitments (which has somewhat been a challenge for the APPU for strategic priority areas such as garnering support to more effectively pursue and influence the PA’s inclusion in important international forums such as the WTO); ii) an increasing trend of donor-supported, field-based interventions for the private sector which has not received adequate engagement in recent years; and iii) lack of field presence and partnerships, and its absence from the aid coordination structures in the oPt, all of which limit its ability to make additional contributions despite its relevance, capabilities and expertise.
61. Endorsing the relevance of UNCTAD’s programme based on the continued state of economic and social conditions in the oPt, the evaluation recommends that UNCTAD follow a two-pronged approach: retaining its evidence-based advocacy on the costs of occupation policies, but also strengthening the coping approach of “managing the possible”, i.e. making the best of the available opportunities within the constrained policy space. In particular, the evaluation considers that there is a strong basis for UNCTAD to devote some of its analysis to identify and evaluate concrete areas for a Private Sector led Indigenisation Programme in addition to traditional export diversification focus prescription to reduce the trade dependence on Israel, given that indigenization of industrial sectors in the oPt for basic building-block industries, such as steel, cement, food processing, metals, etc. has enormous potential to kick-start growth without overly affecting trade with Israel
62. The evaluation recommends a broader consultative approach to building the work programme, based on a review of the previous year’s work and a list of priorities identified by the PA in terms of policy advisory; training programmes; research papers; and technical assistance project formulation.
2. Results Effectiveness/Impact
63. Research & Analysis: Arguing for private sector development as a second track for UNCTAD’s initiatives, the evaluation considers it important to complement current approaches which focus on private sector institutions or support small/micro enterprises, with a strategy to identify and develop opportunities to build a few strong, anchor industries, which have the potential for scaling up competitively, demonstrating absorptive capacities, and generating employment, import substitution and tax revenue, and become the nuclei for other ancillaries.
64. Research work should be intensified in new occupation-resistant sectors (to borrow the term from UNCTAD research), particularly in knowledge sectors, which are less vulnerable to access and movement restrictions and also do not add to security concerns. For instance, a cluster for the provision of Arabic translation services (IT-enabled services could assist in the creation of a strong export service sector with considerable employment potential. While the idea itself is not new, the evaluation recommends that a strategy to attain scale and competitiveness by initially supporting the creation of a few large, scalable and competitive centres of excellence, and not develop a spread of small, sub-scale enterprises. The revenue opportunity could be substantial, from governments in the Middle East and North Africa (MENA) region, as well as development agencies and intergovernmental bodies. For instance, even the mandatory Arabic translations of United Nations documents could be a sizeable opportunity.
65. UNCTAD should work more actively with credible and authoritative Palestinian as well as Israeli institutions that are pursuing similar and complementing themes, and engaging in advocacy based on economic arguments. This evaluation, based on a quick perusal of some publications of Pal Trade, MAS, the Peres Centre for Peace and the AIX group (composed of Palestinian and Israeli economists), considers these to be useful, objective and complementary to UNCTAD's work, and potentially revalidating UNCTAD's arguments as voices on the ground, besides partly compensating for the lack of field presence and visibility on the ground.
66. Technical Cooperation: Many flagship products of UNCTAD have already been introduced in the oPt with different levels of success. However, based on the findings of the evaluation, two areas offer further potential for impact: transit rights; and risk management aspects in trade facilitation, as these hold the keys to addressing growth as well as security concerns. These would represent technical approaches based on best practices for risk-mitigating, yet less trade-infringing security measures, based on UNCTAD's arguments on the costs and impact of occupation.
67. For private sector programmes like EMPRETEC, UNCTAD should intensify the approach of a licensed franchisee model, drawing on the standard and approved methodologies, managed by local institutions and periodically reviewed and renewed by UNCTAD, instead of implementing these from Geneva. This would, at a minimum, imply working with partners already developed in earlier phases, to the extent feasible.
68. Inter-governmental Consensus Building: Given the potential for debate on its neutrality and transparency, the evaluation recommends appropriate and due consultation of beneficiaries in the selection of themes; and, documenting the process used in selection, review and clearance of the annual reports. The evaluation also recommends a more inclusive process of content generation in the reports, drawing not only on official data provided by all parties, but also involving credible local institutions to contribute the ‘evidence from the ground’, without sacrificing the Secretariat’s independence and final ownership. Also, the process of consensus building needs to extend to government institutions, academia and research institutions, besides social media, which is now an accepted dissemination channel in the United Nations system.
69. Work Programme Balance: APPU’s role as coordinator of technical cooperation should not be at the cost of its policy advice and Research & Analysis focus, particularly in view of concerns articulated by beneficiaries. UNCTAD must continue to provide increasing policy advisory support for macroeconomic policies, trade, and labour, and find ways to be able to respond at short notice, be readily available for consultations, second opinions and scenario analyses on an increasing range of policy matters, drawing on the specialist resources in the house, as well as a roster of regional experts. Policy advice work should be duly documented on the website to avoid any impressions of neglect or reducing priorities.
70. Bridge building: There is a need to reinforce relationships at the highest level with the PA, building on the long history of cooperation and legitimacy. UNCTAD should be more responsive to requests, and make available its advisory services on call, fully using available in-house expertise, as well as sourcing relevant external expertise for specific areas. Financial arrangements for such short notice services would need to be structured differently than the traditional project-specific assistance which is unsuited to such on-call advisory engagements. Although the prescription of specific mechanisms and structures for such funding would be beyond the scope of this evaluation, this evaluator wishes to propose that a way of securing such assistance could be either through a trust fund available to the PA, to procure short term assistance from any agency, or creating a window under the United Nations CEB cluster programme on trade and productive capacities, currently awaiting donor support.
71. Local Partnerships: The APPU needs to work seriously on improving its relationships with all the key actors within the PA, with the major donors, improve visibility through inclusion in the LACS, and build new bridges with key partners and alliances on the ground.
72. Organization: The evaluation considers the present staffing to be adequate for the current recurrent work programme, with perhaps an additional post funded from XB resources to assist in managing the new technical assistance projects. The evaluation recommends that such additional resources be, ideally, based in the field rather than in Geneva. The CEB Cluster project on the trade and productive capacities provides an opportunity to test this approach to build a field presence in the oPt through the One United Nations model and focal points for NRAs such as UNCTAD.