rose to ask Her Majesty’s Government what assistance they are providing to meet relief and development needs in the Palestinian Occupied Territories.

The noble Earl said: My Lords, I am grateful to all friends, old and new, who have agreed to take part in this debate. The wording is primarily about humanitarian aid, but a debate like this cannot be lifted out of its political context. Hardly any corner of the world has been as disputed, especially in recent times, as Israel and Palestine. Britain was once the occupying force and still bears its share of responsibility for the bloodshed and injustice surrounding Israel’s independence. We cannot allow the known horrors of the Holocaust to outbid those of Deir Yasin, Lod and other places where Palestinians have suffered ethnic cleansing, slaughter and expulsion on a considerable scale.

The new year is always a season of hope, and so the media are full of the usual speculation about road maps. The Palestinians have been through the process of Oslo, Camp David and elsewhere, and all they know are promises. We have a duty to search for peace and human rights there which goes beyond our average commitment, and I believe that our Government recognise that. It must remain a foremost priority for the FCO as well as DfID. Yet I am not satisfied that given our historic role we are active enough in diplomacy, or that our influence on the United States or even on the European Union can be any substitute for an independent British foreign policy, and that includes our relationship with, or attitude to, the elected Hamas leadership, which cannot simply be bypassed.

This has been one of the worst years for Palestine in recent history, and it is hard to see that our Government have made a lot of difference, except in their humanitarian support. In the past 12 months, overall poverty levels have increased from 54 per cent in 2005 to 67 per cent, according to the World Bank, and poverty levels for public sector employees have doubled. World Food Programme figures show that the percentage of people unable to meet basic food requirements increased last year to 51 per cent, up by 14 per cent. UNCTAD suggests that two-thirds of households are borrowing informally. People are literally starving and many feel embittered and angry, like prisoners. The effects of occupation on ordinary life, the physical barriers to human activity such as the “wall” and the closures at hundreds of roadblocks and checkpoints are causes of poverty. They explain the divisions and weaknesses within the Palestinian Administration. The internal fighting between Fatah and Hamas is a new manifestation of an old struggle provoked by the occupation. This has of course increased the casualty list. Thirteen Palestinians were killed in two days last week, but this number is a fraction of the deaths caused directly by the Israeli security forces.

According to B’Tselem’s research, from January to December 27 last year, Israeli security forces killed 660 Palestinians in the West Bank and in Israel. At least 322 of those killed did not take part in the hostilities at the time they were killed. In the Gaza Strip alone, Israeli forces killed 405 Palestinians, including 88 minors. This proportion of civilian casualties is quite unacceptable in modern warfare in any state. Palestinian militants continue to fire missiles into southern Israel, spreading fear but with little other effect. According to B’Tselem, Palestinians killed 17 Israeli civilians in 2006, in addition to six members of the Israeli security forces.

I am mainly concerned today about our own Government’s ability to respond to humanitarian need in the most practical and urgent way. I hope the Minister can reassure us. On 22 December, the quartet endorsed the continuation of the temporary international mechanism for a three-month period. The Minister will no doubt tell us how our Government have responded financially, but how can they ensure the poorest and most vulnerable households will benefit? Why have only 111,000 families so far received this assistance? What will be the effect on the PA’s own capacity? Will the quartet also consider whether, as I suspect, the TIM in any way deepens the division between Fatah and Hamas?

Governments generally do not reach people quickly, even in an emergency. Last summer, many more Palestinians came close to destitution when hospitals in Gaza ran out of fuel, medicines and even food as a result of the PA’s funding crisis. On these occasions it is often only NGOs who are able to help quickly. Medical Aid for Palestinians responded to an appeal from four of the main hospitals in the Gaza Strip just for emergency food. Staff of the PA-funded hospitals had to carry on for months without pay and with mounting debts to medical suppliers and maintenance contractors.

NGO projects constantly incur war damage. Last summer in Gaza for example, 27 greenhouses rehabilitated by Care International were completely destroyed and the nearby Beit Hanoun municipality playground, rehabilitated by Save the Children, was severely damaged. This was the town where 18 civilians were recklessly killed in an Israeli attack in November, which the Prime Minister explained was another “technical mistake”.

NGOs also suffer from the effects of closures and the so-called security wall. Even with permission to travel to east Jerusalem, Palestinians face long hours waiting at checkpoints and crossings. Many families who used to access services at the Spafford Children’s Center in east Jerusalem, for example, were suddenly isolated by the wall. The charity has since been able to open a new outreach centre in Izzariyeh.

Palestinian children have usually suffered most during this year of bloodshed and political uncertainty. According to UNICEF, children in Gaza are living in,

“an environment of extraordinary violence, insecurity and fear”.

The fighting is hurting children psychologically and carers say they are showing signs of distress and exhaustion. I had a Christmas card with a message from one such child, saying:

“If they shut all the world around us, they can’t shut our mouths to talk about our freedoms”.

Remembering that seven in 10 of Gaza’s population are refugees from 1948 who have spent their whole life trapped in camps, I am glad that we are still backing the United Nations Relief Works Agency, which has provided a lifeline from the beginning. Is there any risk of a funding crisis there, as there has been in the past?

It is not money which is lacking in the Middle East, it is justice and diplomacy. Much international aid comes from a variety of sources in the Arab world, both public and private. On 20 December, UNRWA signed a landmark agreement with a charitable foundation in the United Arab Emirates worth $6 million. Under a special agreement with Israel, several countries are now in theory able to send relief aid through Egypt. Yet there are major political and logistical obstacles. There are new restrictions on transfers, and some banks in the Middle East refuse to send even charitable funds. Four trucks loaded with supplies were still waiting on 28 December for permission to enter the Palestinian territories.

Israel continues to be in breach of the 2005 agreement on movement and access, despite some minor easing of restrictions. What are HMG doing about this? It is a humanitarian crisis and the media are largely ignoring it. However, there is a positive side: there are many unsung heroes behind the scenes, and across the divide there is a new generation of peace activists such as the One Voice organisation, which is well known in this House. A surprising number of NGOs, churches and organisations in this country maintain regular contact with Israel.

These activists are often witnesses to acts of destruction such as house demolitions. According to B’Tselem, Israel demolished 292 houses in military operations in the Occupied Territories. They were home to 1,769 people. In only 80 of these cases were the home owners given warning. What is the international community doing to help the victims of these house demolitions?

Just before Christmas, our church leaders visited Bethlehem, stood beside the victims of civil war and the occupation and expressed solidarity with the dwindling Christian community. But Munib Younan, the Bishop of the Evangelical Lutheran Church of Jordan and the Holy Land, put it more forcefully last July, when he said:

“Is it not time to move [on] from the logic of war, self-justifying violence and acts of terror … [and] for world leaders to repent—to admit that they have failed to bring a just peace and then to humbly change course? … Can we not know righteousness like an ever-flowing stream? … We see a world where we allow injustice to prevail at a gut-wrenching cost of human life, freedom and dignity”.

So far the bishop has received no answer to these questions.

My Lords, the noble Earl, Lord Sandwich, deserves the admiration of us all for his unflagging humanitarian concern for the Palestinian people. I declare an interest as a former director of Oxfam and as a member of the Friends of Oxfam. Indeed, a good deal of what I want to say is based upon Oxfam front-line experience.

It seems to me that any lasting solution will depend upon the willingness of Israel and the outside world to listen to and talk with an inclusive cross-section of Palestinian representatives. We cannot pick and choose the negotiators whom we regard as acceptable and then expect success. To do that is inevitably provocative, and it is unconvincing to preach the virtues of democracy and then to shun meaningful co-operation with those whom the people elect. I do not believe that policies which isolate the elected Palestinian Government while supporting the president’s office help to resolve the civil conflict that now threatens the whole fabric of Palestinian society.

To oversimplify by talking of extremists or moderates does not take into account the highly complex political realities. It also risks alienating large sections of the Palestinian people. Indeed, it is all too possible that the Israeli, US and our own approach of openly favouring Fatah with support and money could well assist in provoking the implosion of the Occupied Territories, especially Gaza. Unless, God forbid, that is the intention, if the quartet finds itself unable to work with Hamas it should at least strive to avoid exacerbating the division between Hamas and Fatah.

Meanwhile, the destabilising humanitarian plight of the Palestinians remains grave, as the noble Earl has illustrated. As I argued in our debate last month, the suspension of international aid to the Palestinian authorities—$350 million of direct budgetary support in 2005—coupled with the cancellation of technical support and humanitarian schemes and the withholding of tax revenues by Israel of $814 million in 2005 and an estimated $700 million in 2006 have led to a dramatic increase in poverty. The World Bank reported last November that public service workers received only 40 per cent of their normal salaries, and in the same month UNRWA reported that 1 million Palestinians were living on less than half a dollar a day. Indeed, on 12 December, Reuters reported Filippo Grandi, the deputy head of UNRWA, as having said that aid policy was perceived as politically motivated impoverishment. According to the UN Office for the Coordination of Humanitarian Affairs, the Palestinian Authority has only 34 per cent of the income it had in 2005.

Despite the 27 per cent additional aid given by the European Union since 2005, the temporary international mechanism, known as TIM and extended by the quartet for three months in December, has nowhere near adequately met the situation. While it is true that 70,000 public service workers receive partial payments under TIM and 73,000 social welfare payments are made by the mechanism, some 90,000 government workers, mostly security personnel, are excluded from the scheme. Many key workers, including those in the public health sector, are left without regular salaries.

The normal annual Ministry of Health budget for medical supplies is $43 million, but only $8 million in donations has been received. It is winter, and stocks of drugs are severely depleted. In some areas, hospitals have closed or moved to providing only emergency treatment. Some doctors report receiving no funding at all from TIM. The Union of Health Work Committees, an NGO that runs a hospital and four health centres in Gaza, fears it will collapse for lack of funds. The union is owed half a million dollars by the Ministry of Health for its sub-contracted services, including vaccination campaigns and surgery. In fact, it is on the verge of bankruptcy. While it receives 300 litres of fuel daily through TIM, its basic services require a further 400 litres a day. I understand that other NGO health providers face very much the same difficulties.

An Oxfam assessment team has found that many water and sewage projects have been suspended because of a lack of funds. Before disengagement, 95 per cent of household water bills were paid, but it is now only 25 per cent. The Coastal Municipal Water Utility, a public/private partnership, depends on those bills to pay its workers, most of whom have now lost their salary. In addition, municipalities and their staff, who act as joint implementing partners, also lost their incomes because of the embargo on the Palestinian Authority.

It is significant that TIM provides its funding through the Fatah office of the president, thereby creating parallel funding structures and institutions. The UN Office for the Coordination of Humanitarian Affairs, the World Bank and others have expressed concern that this could undermine existing ministries. Surely it is an urgent priority to resume payments to the Palestinian Authority. Earlier today, we were debating the White Paper on good governance. I fail to see how deliberately creating parallel systems of administration in such a situation can help good governance.

It is clear that the situation I have been describing has given a powerful twist to the spiralling violence between Palestinian factions. According to the OCHA, that violence has increased by 800 per cent since 2005. With security and police excluded from the temporary international mechanism, different security units are allied to Hamas or Fatah. Negotiations by our own Prime Minister and European Union officials aimed at paying 70,000 security workers seem, unfortunately, to have come to nothing. Those workers support hundreds of thousands of family members. David Shearer, the head of the OCHA in Jerusalem, recently said in evidence to a Commons committee that current aid policy was creating a “failed state”.

If we are to maintain support for what will inevitably be long peace negotiations, the suffering and dislocation I have described must urgently and effectively be addressed. Failure by the international community to do so will undermine its credibility when it has a vital political role to play. That political role must involve nurturing regional goodwill and support. We must therefore really try to see statements such as those by our Prime Minister and Javier Solana in favour of President Abbas through the eyes of the region and the Palestinians themselves. Through many of those eyes, such statements are, perhaps inevitably, seen as an attempt to assist in what many would regard as, in effect, a coup against Hamas. Of course Hamas must come to recognise Israel and its right to exist. That is essential. But every day, all the time, we have to keep asking ourselves whether what we are doing or not doing, and what we are saying or not saying, makes that more or less likely.

My Lords, almost four decades of protracted occupation and conflict have left the Palestinian territories with what might be best described as a “war economy”, with all the implications that has for social, economic and political development.

The Palestinian economy relies heavily on donor aid, including the temporary international mechanism devised by the European Union and the World Bank, which bypasses the Hamas-led Government and provides aid direct to Palestinian people. Although I support this mechanism and the work of the diplomatic quartet established by the United Nations, the United States, Russia and the European Union, I have concerns over the cutting of funding. For example, one effect of the freeze in aid is that salaries of some 160,000 government workers have gone largely unpaid. That cannot but further undermine the Palestinian economy and civil society.

A significant share of donors’ assistance in the last four years has been for relief efforts aimed at poverty alleviation. Poverty will undoubtedly continue to be a serious problem as long as current political conditions persist. Certainly, the grotesque levels of poverty in some Palestinian territories, especially in the Gaza Strip, remain a recruiting sergeant for disaffected and alienated youth. It is right therefore that poverty alleviation should have a high priority in Palestinian development strategy.

Micro-financing has helped to develop economies around the world and I believe there is no reason why it cannot be part of the solution in Palestine. I have seen for myself the success of micro-financing in some parts of the globe, including in the Indian subcontinent, where micro-financing of very small scale enterprises has proved a significant stimulus to economic growth and the creation of new breeds of entrepreneur. It has also provided women with the opportunity to gain empowerment, through gaining success with funding and resources, and start small home businesses. That is especially important at the current juncture. In effect, they can help themselves and their local communities through such small entrepreneurial schemes, which will help to circulate finance within local villages and communities.

Yesterday I was with the High Commissioner of Bangladesh, discussing at length the micro-credit and financing arrangements in Bangladesh and the success of the operations. Some of what they do can perhaps be replicated in the Palestinian territories. I have recently been asked to become involved with a group carrying out micro-financing operations in the Palestinian territories. I believe that micro-financing could provide some Palestinians with the key to improving their own living standards and aiding economic development. Could the Minister kindly tell the House what steps, if any, have been taken to support micro-financing schemes in the Palestinian territories?

Unfortunately, I feel that providing relief and development is only a short-term solution. It is important to recognise the adverse effect of economic dependence of the Palestinian territories on Israel, formed over the past decades. On that point, may I ask what measures Her Majesty’s Government are taking for a new policy framework to move from providing relief and development only to one which helps the Palestinian people to become more economically empowered?

Without such empowerment all forms of peace proposals and dialogue, although valuable, threaten to remain ineffective. As poverty aids violence, so wealth creation will aid stability, for both the Palestinian territories and Israel.

Experience in the Holy Land has shown that hopelessness leads to violence, but the prospect for empowerment leads to peaceful co-existence.

My Lords, there is an issue that unites the interests of western Governments with Hamas: corruption, the bane of governmental and commercial worlds alike.

A divisive issue to the formation of a Unity Government has arisen, exacerbated by a US/Israeli demand that the post of Finance Minister be given to Salam Fayyad—a past Finance Minister about whom there are grave reservations.

Participants argue that the West has not been following the detail closely enough to make informed judgment. US diplomats have been stating that if Abu Mazen is left with no choice but to choose Fayyad, albeit through coercion, this would unlock the $800 million Palestinian customs-taxes held back by the Israelis. That is tantamount to blackmail in my book.

I call on the British Government to not proffer similar unreasonable opinions, to allow the Palestinians in this regard to administer their affairs and to not interfere. Senior Treasury officials, supported by Ed Balls MP on behalf of our Chancellor of the Exchequer, have travelled to Palestine twice recently. I understand that they were advocating the US line.

Hamas will argue corruption and will veto any attempt at nomination, others would say Fayyad is at best guilty of extreme ineptitude. An isolated Hamas Government will not tolerate western pressure over this appointment, which is of critical importance for the institutional building of transparent governance and the laying down of the foundations for a future vibrant, progressive Palestinian economy.

Numerous examples abound of mismanagement, including increasing government expenditure by 50 per cent to the extent that there was not enough money to pay public sector salaries; underselling investments and giving away unsecured loans worth millions; and, equally worrying for the donor community, mortgaging funds specifically donated for health and education projects; and not having any programme to attract inward investment but also not even fulfilling agreements with existing investors.

In addition, the Economist Intelligence Unit reported this time last year that during Fayyad’s time as Finance Minister, some $700 million were secured through PIF funds by the Finance Ministry, against all the rules.

Out of a population of 8 million worldwide, other worthy moderate proven finance-ministerial candidates exist. I could identify for example Shukry Bishara, a past senior vice-president of the Arab Bank and today’s chairman of the Palestine Investment Fund; George Abed, ex IMF and now head of the Central Bank; Ibrahim Dabdoub, managing director of the National Bank of Kuwait in the Gulf; and Mohammed Mustafa, ex World Bank, managing director of the PIF and close advisor on all matters to Abu Mazen. Other good names exist.

In conclusion, as a thought on how not to win friends, no leader likes being dictated to. This is self-defeating, particularly when coming from the US, from whom any coercion is interpreted with deep suspicion, a death-knell for advancing causes.

My Lords, I congratulate the noble Viscount on his timely speech and apologise to him and to your Lordships; I had a hospital appointment which went on far longer than expected.

My link with the Anglo-Israel Association is duly registered. I shall make but four brief comments. First, the starting point is clear: without doubt, there is real poverty in the West Bank and Gaza. Christian Aid quoted in the Foreign Affairs Committee report on terrorism published last June figures from July 2005 showing that more than 2 million people on the West Bank survive on less than £1.05 per day, and the situation is much worse in Gaza, where on average citizens live on less than 85p per day, well below the official UN poverty line. According to ILO statistics, unemployment stands at 23 per cent to 24 per cent; in the south of Gaza it stands at 50 per cent, with youth unemployment there at 70 per cent.

The noble Earl has asked what assistance Her Majesty’s Government are providing for relief and development. This is my second point. The fact is that the European Union is the principal provider of financial and technical assistance to the PA and the United Kingdom is a major bilateral donor. These figures are easily obtainable from the website. Between 1994 and 2001, the European Union and its member states contributed €3.47 billion to the Palestinians, far in excess of the pledges made at the post-Oslo donor conference in Washington. Since the intifada and the economic collapse there, the EU has contributed more than €1 billion. In 2005, the EC’s financial assistance to the Palestinians was €192 million for direct support, infrastructure, institution building and social services. Direct financial assistance was obviously put on hold when the newly elected Hamas Government refused to accept the international community principles of recognising Israel, renouncing violence and accepting the international agreements. Yet direct aid to the Palestinian people accelerated so that within the first two months of last year almost half the normal annual budget was committed and, as we have heard, on 1 September all elements of the temporary international mechanism—the TIM—were declared to be operational. By that time, €330 million had already been made available by the EU.

Given those facts, it is surely difficult to argue that the economic and social problems are due to any neglect by the European Union. The Palestinian Authority has perhaps more aid per head of population than any other territory. Yet it is still not clear that the European Union and the United Kingdom are given credit in the Arab world for that contribution. Perhaps the European Union should re-examine its public diplomacy.

That said—this is my third point—there is perhaps a danger that the outside world will view the Palestinians largely as victims who are in no way responsible for their condition. The evidence to the Foreign Affairs Committee report last June quotes Transparency International, which states:

“Corruption is a major cause of poverty as well as a barrier to overcoming it”.

The question has to be asked: where has all that money gone? In September 2003 the IMF stated that it had identified $900 million in public assets that had been diverted into the private accounts of the Palestine leadership. In January 2005, shortly after the death of Chairman Arafat, Al Jazeera estimated his private fortune at between $4.2 billion and $6.5 billion. Corruption was clearly part of the reason for the electoral defeat of Fatah, and it makes the task of President Abbas more difficult. The EU should have insisted on greater transparency to reduce the misuse of its funds, and it should in future institute more effective procedures when aid is resumed, with a far more vigilant OLAF.

The social problems are exacerbated by the high fertility rates in the Palestinian territory. The Palestinian Central Bureau of Statistics publication, Palestinian Children—Issues and Statistics, Annual Report 2006, published last April, quotes a 2004 survey indicating that the total fertility rate in the Palestinian territory is 4.6 children. It is 4.1 in the West Bank, which doubles the population there in 31 years, and 5.8 in Gaza, which doubles the population there every 25 years. In other Arab countries, the total fertility rate is lower. In Syria and Jordan, for example, it is 3.7, and the fertility rate of Israeli Arabs is less than four. With such a booming population, it is clearly much more difficult to provide jobs, housing, education and infrastructure.

Finally, at the heart of the social and economic problems is the fact of instability. Which private investors are likely to be attracted in the current conditions? All roads lead to politics: the intifada, the struggle for top dog between Fatah and Hamas, and the gloomy prospect for a political solution. Hamas appears to have gained some confidence in the past few months and seems ready to ignore the political and economic boycott. Money is smuggled to it through the Rafah crossing. The two-state solution appears to be losing ground. I note yesterday’s declaration by the Hamas political leader in exile, Khalid Meshal, stating,

“in reality there will be an entity or state called Israel on the rest of Palestinian land. This is a reality, but I won’t deal with it in terms of recognising or admitting it”.

This may be a marginal softening of words, but it is still light years from the Arab League Beirut formula of 2002. After its unilateral withdrawal from Lebanon in 2000, and from Gaza in August 2005, Israel clearly sees little hope in further unilateral moves. Obviously, there is fault not only on one side. For example, progress on easing closures has been slow, there have been freight delays, and there is the issue of release of the customs receipts. The IDF appears to be seeking absolute security, which causes deep frustration. I am confident that Israel would wish to promote a stable and prosperous Palestine and find a negotiating partner that can deliver.

The only final sign of hope is that there is likely, as a result of the initiative by the German chancellor leading the EU presidency, to be a reinvigoration of the peace process. Equally, as a result, Condoleezza Rice will be in the area tomorrow. Chances of progress are dwindling, but the quartet, including the EU presidency’s and our Prime Minister’s efforts, surely should begin a new drive for a settlement.

My Lords, we should all be grateful to my noble friend Lord Sandwich for initiating this debate on the vital and urgent need for relief and development assistance in the Palestinian territories.

The Palestinians, whether in Gaza, on the West Bank, or in Jerusalem, need more than development assistance; they need hope—hope that the world will pay more attention to their longing for a state of their own, a state with contiguous boundaries, living at peace with its Israeli neighbour; a state whose viability is not being daily undermined by the continuing expansion of illegal Israeli settlements, and a state whose Palestinian inhabitants and those who wish to help them can move freely from one end of their territory to another, without checkpoints, harassment or the so-called security wall. For all these reasons, they need hope that the quartet will be reactivated after months of apparent inactivity to pursue the aims of the road map, to which the vast majority of Palestinians and a significant number of Israelis are deeply committed.

What hope can any of us, Palestinians or Israelis have in the current situation? I note that the Prime Minister, in reply to a question in the other place yesterday, spoke of his hope that the quartet would meet again before long. I hope that the Minister in reply can give us more assurances on that. I welcome also the Prime Minister's repeated acknowledgment that a solution to the Palestinian problem lies at the core of resolving the crises in the Middle East, including Iraq. But where is there any reference to the Palestinian problem in the statement made yesterday by President Bush on his strategy for Iraq? On the contrary, the president appears to have ignored the advice of the Baker-Hamilton commission, and presumably that of his friend the Prime Minister, by refusing to accept any link between the crisis in Iraq and the Israeli-Palestinian conflict.

Israeli settlement expansion on the West Bank, in the Jordan valley and around the crucial settlement area of Ma’aleh Adumim near Jerusalem, continues in spite of rather half-hearted criticism by the State Department two weeks ago that plans to build new settlements—and this is the first totally new settlement to be planned for a decade in the West Bank—would violate Israeli obligations under the road map. I hope that the Minister can tell us what protests Her Majesty’s Government have made either publicly or privately to the Israelis about these expansionist moves, and that she will confirm that the Government still regard all Israeli settlement activity in the Palestinian territories as illegal under the Geneva Convention. Much of that activity, incidentally, is also in direct violation of Israeli law. The Israeli organisation Peace Now has confirmed that almost 40 per cent of the land used by Israel for settlement in the occupied West Bank is owned legally by Palestinians.

The constraints on Palestinian movement also grow harsher by the day. Israeli military orders are now coming into force which would ban foreigners using Israeli-registered cars from having Palestinian passengers and require all foreigners entering the West Bank to have prior permission from the Israeli military authorities—requirements that will certainly have very damaging implications for the aid agencies and other NGOs.

To add to the list of Palestinian hardship, which the noble Earl and other speakers have described all too graphically, more than 9,000 Palestinians are being held by the Israelis, of whom 782 are held without trial in administrative detention. Many prisoners are being held inside Israel itself, another breach of the Fourth Geneva Convention.

I accept that many of the measures to which I have referred relate to the Israeli Government’s genuine fears about security, and to the failure of the legally elected Hamas Government to recognise Israel. I hope, nevertheless, that we and the Israelis will take note of reports in the press today to which the noble Lord, Lord Anderson, has referred, that the Hamas leader, Mr Khalid Meshal, has publicly acknowledged the reality that there will remain an Israeli state. I do not wish to press the Minister, as I have often done, on formal contacts with Hamas, but I hope that the Foreign and Commonwealth Office seriously consider authorising our consul-general in Jerusalem and our ambassador in Damascus to have the same sort of discreet contact with Hamas that I and my predecessor had with the PLO and the Palestinian National Congress when we were ambassadors in Damascus in the late 1970s.

The Minister will no doubt give us up-to-date details of the financial assistance which Her Majesty’s Government and our partners in the European Union are giving to ease the plight of the Palestinians. This is very necessary and welcome, as is the need to address the sort of corruption to which the noble Lord, Lord Anderson, has referred. But life in Gaza and the West Bank is becoming daily more and more intolerable. I hope that the Minister will be able to reassure the House that our partners in the quartet, not least our American friends, realise the full enormity of Palestinian suffering and accept the urgent need to take action, to not only halt what is happening throughout the Palestinian territories but to reverse it. This will require not only immense political courage on the part of the Israelis, but also a degree of commitment by the United States, which sadly seems not yet to have attracted the support of President Bush.

My Lords, I thank my noble friend Lord Sandwich for initiating this crucial debate. One cannot deny or ignore the plight of innocent Palestinians living in ever deteriorating socio-economic conditions. As the interior political situation in the Palestinian territories continues to spiral out of control, one must not neglect the civilian population. I am sure that we all hope for a rapid improvement in the quality of life of the Palestinians, as well as peace in the region. My call today is that the aid should be given within a framework of responsible philanthropy, with focus and openness.

Your Lordships will know that, since the election of Hamas in January 2006, our Government with the international quartet have halted direct funding to the Palestinian Authority. As has been made abundantly clear all along, the cessation of the sanctions is dependent on three factors: the recognition of the state of Israel, the renunciation of violence and the willingness to accept existing treaties signed between the PLO and Israel.

Almost a year on, the Hamas Government still refuse to accept these conditions, despite the rapidly deteriorating economic situation faced by their own people. Election does not equate to good government but with election comes responsibility. The international community has offered Hamas a solution to its current economic woes but so far this has fallen on stony ground. In order to alleviate Palestinian problems, the international community requires a respondent. Hamas has until now refused to make that reply.

In an attempt to ensure that emergency and humanitarian aid is available to needy Palestinians, the EU has created the temporary international mechanism, known as TIM, a fully transparent and accountable distribution system able to bypass the Hamas Government. To date over £220 million has been directly transferred through the TIM, of which over £12 million has come from our own Government.

It should be noted that, although able to offer emergency relief, the TIM alone cannot fully provide for the growing needs of the Palestinian population. I stress again that this would be available only through the Hamas Government’s acceptance of the international community’s three preconditions.

The economic woes of the Palestinians have existed for many years and not simply since the election of the hostile Hamas Government. One cannot place the blame squarely on a lack of international assistance from our Government or from any other. According to the World Bank’s former director for Gaza and the West Bank, foreign contributions to the Palestinians have represented,

“the highest per capita aid transfer in the history of foreign aid anywhere”.

The London-based watch group Funding for Peace Coalition calculates total contributions in direct and indirect aid of over £6 billion since 1993, of which £450 million has come from this country. These statistics pose a crucial question, one at the very core of the development of the Palestinian territory: echoing the noble Lord, Lord Anderson, where has all this money gone? Based on the levels of poverty and degradation within the Palestinian Authority, it is clear where it has not been spent. Gaza, too, lies derelict a year after the transfer.

The corruption within the Fatah party of the late Yasser Arafat is well documented. As his people suffered, his own bank balance soared. Again echoing the noble Lord, Lord Anderson, Arafat’s wealth at the time of his death was estimated at approximately £3 billion. There has been no reclaim.

Many have argued that the election of Hamas in January 2006 was based on its anti-corruption platform. However, Hamas has not lived up to its promises, and corruption continues to flourish alongside poverty. Only in November, Hamas deputy Mushir al-Masri attempted to cross into Gaza from Egypt with $2 million. In December, the Hamas leader, Ismail Haniya, attempted to bring $35 million into the territories, only to be intercepted. Once again, the Palestinian population finds itself under the leadership of a corrupt regime whose priorities lie not in the prosperity of the people but rather its own ends. In May last year, Israel offered to transfer 50 million shekels to alleviate the Palestinian shortage of medicines. But the Palestinian Authority demanded the aid in cash and would not accept the offer of medical supplies. Neither was transferred.

The lack of accountability and transparency in aid transfers to the Palestinians has meant that billions of pounds have been squandered by the leaderships. We have an obligation to assist those in need, but we also have an obligation to the public to ensure that our expenditure is reaching those in the greatest need. Under both the Fatah and Hamas Governments, this has not occurred and they show no signs of improvement. Again, given the interest of the entire region in this situation, one must question the contributions of the neighbouring Arab states in the quest for peace and prosperity in the region.

Among Israel’s Arab neighbours are some of the most oil-rich in the world. OPEC net oil export revenue projections for 2006 were around $500 billion. Yet, when one examines their contribution to the woeful economic situation of their Palestinian brethren, one sees nothing more than political rhetoric and very little in direct aid.

The destiny of the Palestinians is the key to peace in both the region and the world. We must continue to support the population as best we can, assisting the development of a civil framework run with accountability and under the rule of law. It needs to provide tax and contract law, which is missing, and it needs to be free of terrorism and corruption.

To sum up, given that the responsibility is a proportionate one, the Government should question the need for, and ensure that there is, accounting and independent audit, accountability and transparency. The Arab nations of the region must shoulder their part of the burden, and it should be not only for short-term needs. We need investment in the infrastructure for the future. To echo the message of the late Seymour Lipset, whose obituary appears in today’s newspapers, economic development is a requisite for stable democracy, and that is what we should seek.

My Lords, I, too, should like to thank the noble Earl, Lord Sandwich, for securing this debate and for opening it so effectively. As he made clear, addressing the humanitarian needs of the Palestinians without addressing the political situation makes little sense: both have to be tackled. As David Shearer, head of UNOCHA put it:

“Humanitarian assistance can cushion a deteriorating situation, but it ultimately cannot stop the decline. Ultimately only a political settlement can generate a significant improvement”.

We are witnessing the creation of a failed state on Israel’s borders, which is in no one's interest. At the least, we have to ensure that the day-to-day suffering of Palestinians does not drain support from the wider peace process. The noble Lord, Lord Wright, is surely right that this lies at the heart of the problems in the region. We know that public opinion in both Israel and Palestine is supportive of peace. Saudi Arabia seems to be leading a group to revive the peace process. The Iraq Study Group saw peace in this area as a key to a wider settlement. Everyone agrees that there are few more pressing problems if Israel is to be secure and if the Palestinians are to establish a viable state.

It is now being suggested—and I would like the Minister's comments on this—that the road map has had its day. Everyone knows the issues—the border, what happens to Jerusalem, the recognition and security of two states, the right of return of the refugees and so on. There seems to be a growing feeling that the step-by-step approach, which has got almost nowhere, may need to be replaced by going straight to resolving the key areas of dispute. I would like the Minister’s comments on that. Could she also say, as requested by the noble Lord, Lord Wright, when the quartet, to which the Minister referred yesterday, will next meet, what will be on its agenda and what is being said about continued settlement expansion?

Unilateral action by Israel cannot be the answer; dialogue is required. As the noble Lord, Lord Judd, argued, surely it is inappropriate for the West to refuse to talk to Hamas. No doubt it was brought to power partly because there was no progress on peace, as we saw in the rise of Sinn Fein in Ireland. Surely the worst thing we could have done was to ostracise Hamas, as opposed to dealing with it. As my noble friend Lord Alderdice said in the debate on the Queen’s Speech, it is not talking to your friends that brings progress, it is talking to your enemies, if necessary through intermediaries.

Instead of asking for new elections—a red rag to a bull—we should be talking to Hamas, paying the salaries of those in Palestinian society—the teachers, the doctors and the lawyers—who helped to make it stable, and not starving them. I agree absolutely with the noble Lord, Lord Judd, about the damage our one-sidedness has created. For reasons we all know, we are no longer seen as honest brokers in the region. Our best strategy now must be to work through the EU, or does the Minister have any hope that we could influence the US at all on this matter? It is worth bearing in mind that the American position as a superpower is itself time-limited. We have a small window of opportunity to try to resolve this problem.

I agree with every word the noble Lord, Lord Judd, said about our position in relation to the politics of Palestine and how that is perceived across the Middle East. I share the hope of the noble Lord, Lord Wright, that we will have contact with Hamas.

The humanitarian crisis has reached unprecedented depths. Overall poverty has increased by 67 per cent in the past 12 months; and 76 per cent of Gazans are now without an income. Does the Minister agree that some of the following actions need to be taken urgently: access through Karni with international monitors; the improvement of food security; international support for the treatment of emergency patients and those needing advanced medical care so that they move speedily through checkpoints; and support for the particular children who are suffering, as we have heard?

The financial flows to essential services and humanitarian need must be improved, and, as the noble Lord, Lord Judd, spelt out, the World Bank emergency funding mechanism is clearly inadequate and funding to the Palestinian health and education ministries should simply be re-established. I share the concern about the extraordinary device of creating parallel funding structures and institutions, which UNOCHA, the World Bank and others fear will undermine existing ministries. Surely we should resume payments to the Palestinian Authority.

Israel must also release tax revenues. It is withholding Palestinian customs revenues that would make up half of the PA budget. How can that be justified? We know that that has been a huge impediment to economic growth and humanitarian access to the West Bank. According to UNOCHA, the number of West Bank checkpoints and roadblocks was increased by 40 per cent during 2006 and we now hear that foreigners may have to get permission to get into the West Bank. What implications does that have for the staff of humanitarian organisations? I remember, when trying to get into Gaza with a parliamentary group, meeting people from Christian Aid who, like us, waited hours and hours even though permission had been given for us to go in.

We therefore see a dramatic increase in poverty, the crumbling of public services, violence between Palestinian factions—which seems to be encouraged by the policy that we have adopted. That violence has increased 800 per cent since 2005, according to UNOCHA. The Israeli, US and UK tactics of openly favouring Fatah with support and money seemed designed to provoke the implosion of the occupied territories, especially Gaza.

Neither the Palestinians nor the Israelis will benefit from the implosion of Palestine. There seems to be a very narrow window of opportunity for both Israel and Palestine. Their futures are surely intertwined. Disproportionate actions on either side will promote and have promoted instability. Economic recovery must be promoted and blocks to it removed if the running sore of the Middle East is not to prove fatal—as sometimes I fear it may.

In this House, as was shown only the other day, we still hear how unacceptable each side is in Northern Ireland, but we have seen a ceasefire, economic progress and the possibility of power-sharing. That kind of division has been echoed in our debate today. Let us do what we can to bring all sides together in Israel/Palestine without preconditions always scuppering things. Not to do so is surely the road to despair, which takes neither side anywhere.

My Lords, I, too, add my thanks to the noble Earl, Lord Sandwich, for giving us the opportunity to debate this matter today. We have all watched with dismay the recent fighting and instability in Gaza and the West Bank, but this debate has reassured me that this House, at least, is not descending into total despair. We cannot fall into the trap of believing that situation is hopeless: that the Palestinians and Israelis will never regain the road map or find a peaceful solution.

We on these Benches have so often urged the Government to give greater attention to the area. Occasional high-profile visits at moments of crisis are no substitute for continuous involvement at all levels. A peaceful solution will never be magicked out of the rubble, nor can it be imposed on those on both sides who see active enmity as their natural state towards each other.

It often looks like there is nothing more that we can do. As the noble Lord, Lord Wright, mentioned, the necessary requirements for a return to the road map, including that of a Palestinian Government who can be engaged with, seem distressingly absent, but I am encouraged by the many speakers who have urged the Government not to give up. I hope it is not true that we cannot make a difference.

Although high-level meetings between heads of state and influential politicians are obviously beneficial, they are meaningless without support for those non-political groups that do so much work at the local level in trying to improve the lives of the local people. British aid and support for the many grass-root NGOs in Palestine is of real benefit on the ground. These NGOs provide education, healthcare and programmes aimed at allowing Palestinians to break out of the rut that holds them in a seemingly endless cycle of poverty and violence. I hope the Minister can assure me that Her Majesty’s Government will continue to support these NGOs, no matter how bad the situation may become and no matter what other priorities may come and go. With this in mind, we are very glad that the temporary international mechanism was set up to try to protect the Palestinian people from greater deprivation and poverty as a result of the international community’s decision to stop providing aid to a Government who refused to accept the conditions of the quartet, as we heard from the noble Baroness, Lady Deech.

It is quite right that our aid should never be given to an organisation, even an elected Government, which supports terrorism, but nor should those in desperate need of help be held hostage to those politicians who would prefer violence over peace. I am constantly surprised by the continuing lack of meaningful, positive involvement of many countries in the Middle East. It is a given fact that so many of Israel’s neighbours and other Arab countries refuse to recognise it as a state, but as your Lordships have asked, why should this stop them engaging in programmes to ease the suffering of the Palestinian people? Can the Minister explain what this Government are doing to encourage countries such as Saudi Arabia, and other such countries in the area, to try to resolve the continuing sore of Israeli/Palestinian relations, perhaps even through significant, practical aid to the Palestinian people?

As the international community withdrew aid following the election of the Hamas Government, it was remarkable that some of these countries did finally reach into their own pockets. It would be interesting to see whether this aid is continuing to flow or whether, now that the cameras have turned away, the Middle East has resorted to its more familiar practice of investing in words rather than money or effort. All your Lordships have stressed how much we hope that the violence and the threat of civil war will soon end. We hope this debate will motivate this Government to keep up the pressure as much as they can, and that we will soon receive better news about the situation.

My Lords, I too am grateful to the noble Earl, Lord Sandwich, for securing this debate on what assistance the UK Government are providing to meet relief and development needs in the Occupied Territories. I also thank noble Lords for their contributions. I am pleased that we have had an opportunity to discuss the many needs of this disputed area of the world, including the vital need of hope, as identified by the noble Lord, Lord Wright of Richmond.

The Occupied Territories were characterised in 2006 by political uncertainty, economic decline and worsening insecurity. The terrible statistics have been clearly brought to our attention today. The failure of Hamas to move forward and to engage in President Abbas’s efforts for intra-Palestinian reconciliation, Israel’s economic and military response, the abduction of Corporal Shalit and the ensuing violence, as well as clashes between Palestinian Hamas and Fatah supporters, have all affected the prospects for peace.

People on both sides of this conflict are victims of the failure of politics. For the people of Israel, the failure of politics has created a fear that no wall, checkpoint or road closure can quell. For the Palestinian people, the failure of politics has crippled the economy, and the continuing military activity causes untold grief and pain. For extremists and terrorist groups across the world, the failure of politics means that this conflict continues to act as an excuse. Peace is the only solution: a two-state solution that provides for a safe and secure Israel and a democratic and viable Palestinian state, living in peace and prosperity with its neighbour. Ordinary people want their leaders to show them a way towards this solution. The quartet is an important part of the peace process. The noble Lord, Lord Wright, asked when the quartet would meet again. We hope that it will meet in the margins of the forthcoming conference on Lebanon in Paris at the end of this month.

In response to the noble Baroness, Lady Northover, I say that the road map is not dead, although it may be on hold. In November I attended a meeting in Finland, shortly after the French-Spanish initiative—an initiative from, among others, the Spanish Foreign Minister. He stressed his personal commitment to the road map, because it is the only agreement that the Israelis, President Abbas and the whole international community have signed up to. It is the only way forward at present.

As the noble Baroness, Lady Deech, has clearly stated, peace will not be possible while the Hamas-led Palestinian Authority Government do not agree to renounce violence, to recognise Israel, and to accept previous agreements, including the road map. These quartet principles are essential first steps. They ask no more from Hamas than has been asked of previous Palestinian Governments. My noble friend Lord Anderson referred to the reported statements of Khalid Meshal. These comments indicate that a debate is going on within Hamas, presumably as it begins to understand the reality of what will be required to achieve peace and prosperity for the Palestinian people and for others in the region—namely a negotiated two-state solution.

At the same time, while Hamas needs to sign up to the previous agreements and the road map, Israel must stop actions that fuel Palestinian resentment, such as building settlements on Palestinian land and placing restrictions on movement and access. I can confirm to the noble Lord, Lord Wright, that we believe settlement-building to be contrary to international law and a clear obstacle to peace. My right honourable friend the Foreign Secretary raised her concerns about the construction of the Maskiot settlement in the Jordan Valley with Foreign Minister Livni on 2 January. Our embassy makes continual representations to people on the ground in Tel Aviv; they are in constant discussion, making their concerns known about this and other issues. The Prime Minister raises concerns at every opportunity.

In November I also urged Foreign minister Livni to act on the crossing points, raised by the noble Baroness, Lady Northover, among others. Of course, the crossings are vital to the Palestinian economy, as the noble Lord, Lord Sheikh, clearly pointed out. We must do everything we can to assist economic development in Palestine, because there cannot be a viable Palestinian state without a viable Palestinian economy. The prerequisite for economic recovery is improved movement and access, both within the West Bank and Gaza, and to the outside world. If movement and access improve, we would expect the Palestinian economy to rebound fairly quickly. Without improved movement and access, sustained growth and economic development will simply not be possible. Beyond this, as the noble Baroness, Lady Deech, informed us, economic prosperity can be supported by strengthening trade relations and improving infrastructure.

My noble friend Lord Anderson quite rightly said that security was a prerequisite for the necessary inward investment in Palestine. The noble Lord, Lord Sheikh, rightly referred to the importance of microfinance. The UK contribution to UNRWA includes substantial support of its microfinance scheme, and our commitment to UNRWA over the next four years is £76 million.

The noble Viscount, Lord Waverley, who is not in his place because he had to leave before the end of the debate, raised several points. President Abbas has appointed Salam Fayyad as the head of the Palestinian National Fund, a PLO fund, and at the recent meeting between President Abbas and Prime Minister Olmert on 23 December, Prime Minister Olmert agreed to release $100 million-worth of the clearance revenues, and of course we welcome this. Both the Prime Minister and the Secretary of State for International Development visited Israel and the Occupied Territories in December. The Prime Minister made it clear that the Middle East peace process remains a top UK priority. We have not given up and we will never give up on this. He met both Prime Minister Olmert and President Abbas.

While there is much to be pessimistic about, we believe that there are also reasons to be optimistic. The Gaza ceasefire is holding despite continuing rocket attacks on Israel. Prime Minister Olmert and President Abbas have met and, as I stated, they have agreed to the release of $100 million in Palestinian tax revenues and to the easing of restrictions on movement and access. We are waiting for the implementation of those promises now. Further, on both the Israeli and Palestinian sides, there is a new willingness to look at the fundamental issues, and while both sides must find the leadership, vision and courage to achieve a lasting peace, the international community has an important role to play in supporting them—and we will do so. As the noble Earl said, we have a duty in that regard.

I have heard many people outside this Chamber say that since Hamas came to power the international community has cut its aid. That is simply not true. As noble Lords have pointed out, EU aid has actually increased this year by 27 per cent to over $650 million. While Hamas’s intransigence prevents direct aid to the Palestinian Authority Government until it is based on the quartet principles, the UK continues to support ordinary Palestinians, and we are one of the largest European donors. In the past year we provided a total of £70 million to the Palestinians, including our contribution through the European Commission, and this aid is working. The World Bank said at the beginning of 2006 that the economy would shrink by 27 per cent over 2006, but it now says that because of aid the figure has been revised to 9 per cent. Noble Lords have also rightly raised the question of Arab aid to the Palestinian people. The UK is in constant dialogue with key Arab actors, engaging with them on the peace process, and we have invited Arab states to contribute to the temporary international mechanism, one which we helped to design and are backing up with £12 million.

I note the concern expressed by my noble friend Lord Judd and the question asked by the noble Earl as to whether the TIM is exacerbating problems between Fatah and Hamas. The mechanism is helping to meet the most basic needs of the Palestinian people. It is based on need, not on political affiliations to either Hamas or Fatah. Based on an average household of six people, around 900,000 of the poorest Palestinians have already benefited from allowances through the temporary international mechanism, including many households headed by a female. This has a direct implication for children because they often suffer in female-headed households where no other money is coming in. Doctors, nurses and teachers can now afford to get to work and provide education and healthcare. Electricity and water are up and running in most of Gaza and the West Bank.

The Secretary of State for International Development was the first British Minister in recent years to visit the Gaza Strip. He talked to people in Sderot in Israel and Beit Hanoun in the Gaza Strip who have been affected by recent violence. He saw personally how difficult it is for ordinary Palestinians in the West Bank to get to work, go to school and hospital, to visit family and to transport produce because of the stringent movement and access restrictions placed on them by Israel. That has increased our desire to do something about the problem, to make our concerns known and get real movement in the Middle East peace process. While aid is needed more than ever, it is not the solution, as noble Lords have recognised. The Palestinians are one of the most highly aided people in the world.

Peace is the solution. Peace will mean that ordinary Palestinians can get to work, school and hospital, visit their family and transport their produce. It will mean that people on both sides can live free from fear. It will mean that extremism and terrorism elsewhere will no longer be able to cite the conflict as an excuse. While the UK and other donors will continue to provide aid, we will also continue to provide political support to those who want to find a way to peace.

I stress again to the noble Baroness, Lady Rawlings, that we will not give up. As many noble Lords have demonstrated, peace in the Middle East is fundamental to global peace and we have to support every effort at finding a way towards this peace.

House adjourned at 5.40 pm.