Political Economy of Aid in Conflict: An Analysis of Pre- and Post-Intifada Donor Behaviour in the Occupied Palestinian Territories

Despite conflict-affected economies being among the largest recipients of aid worldwide, the theoretical frameworks and the political inclinations of donors make it very unlikely for their assistance programmes to have a lasting developmental impact in conflict zones. This paper highlights the key shortcomings in donors’ theoretical frameworks, policies and approaches when dealing with a situation of conflict – suggesting that such shortcomings in some cases could even contribute towards a prolonging of the conflict itself. A pre- and post-Intifada analysis of donor activities in the occupied Palestinian territories is presented in order to demonstrate the stark shifts in donor funding in response to the rise of conflict: from development spending to institution building and governance reforms. It is argued that this shift was not only out of tune with the emerging needs of the Palestinian economy, but also, in some cases, helped worsen the impact of the conflict on the Palestinian economy – yet, nevertheless, it helped to justify the donors’ continued presence in one of the most politically-charged conflicts in the world.