Action Fiche for occupied Palestinian territory (West Bank and Gaza Strip)

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1 Action Fiche for occupied Palestinian territory (West Bank and Gaza Strip) ANNEX 1 1. IDENTIFICATION Title/Number Improvement of living conditions of vulnerable Palestine refugees in Jerash Camp Total cost EU contribution: EUR 2,000,000 Aid method / Method of implementation Joint management with international organisations: European Commission, UN Financial and Administrative Framework Agreement (FAFA) Implementing organisation: United Nations Relief and Works Agency for Palestine Refugees (UNRWA) DAC-code Sector Reconstruction relief and rehabilitation 2. RATIONALE 2.1. Sector context The United Nations Relief and Works Agency for Palestine Refugees (UNRWA) was established by General Assembly resolution 194 in 1949 to provide humanitarian assistance for some 950,000 Palestine refugees who were forced to flee their homes as a result of the 1948 Arab-Israeli war. UNRWA works in five fields of operation: Jordan, Lebanon, Syrian Arab Republic, West Bank and the Gaza Strip. A Palestine refugee as defined by UNRWA is anyone whose normal place of residence was in Mandate Palestine during the period from 1 June 1946 to 15 May 1948 and who lost his/her home and means of livelihood as a result of the 1948 Arab-Israeli war. The descendants of the original Palestine refugees are also eligible for registration with UNRWA, but only refugees living in its five fields of operation are eligible for the Agency s services. Today, approximately 5 million Palestine refugees are registered with UNRWA. Jordan hosts the highest number of refugees almost 2 million, refugees registered with the Agency in Jordan. These refugees live in 10 official camps, three unofficial camps or are spread throughout the country. As of January 2012, there were 135,932 ex-gazan refugees registered with UNRWA in Jordan (1948 refugees, displaced from Gaza in 1967). Additionally, while there are no official estimates of the number of persons displaced from Gaza residing in Jordan, previous unconfirmed media reports have placed the number in Jordan at around 100,000 to 150,000. UNRWA registered ex-gazan refugees are largely concentrated in Jerash and Marka camps. Jerash Camp The Jerash Camp, known locally as Gaza camp, was set up as an emergency camp in 1968 to accommodate 11,500 ex-gazan refugees (Palestine refugees who fled to 1

2 ANNEX 1 Gaza in 1948 and were displaced from Gaza in 1967) and displaced persons from Gaza (Gaza residents who were displaced in 1967 for the first time) who fled from the Gaza Strip as a result of the 1967 Arab-Israeli war. Currently, there are 26,785 refugees in the camp that are registered with UNRWA. Of them, approximately 14,000 live within the official borders of camp. The population of Jerash Camp is almost exclusively made up of ex-gazan refugees and displaced persons from Gaza. They are entitled to hold temporary, two-year Jordanian passports, but they do not hold a national ID number a survey conducted in 2007 found that 97.2% camp residents held temporary 2 year Jordanian passports. These passports serve only as travel documents, an identification document and a residency permit. Without a national ID number, there are a number of services and professions that ex-gazan refugees are excluded from or have limited access to, including the Jordanian National Aid Fund (poverty support), university scholarships, the majority of positions in the public sector, and occupations such as dentistry and legal practice. In addition, they face restrictions on property ownership, political inclusion and driving public vehicles. Moreover, the limited validity of the passports also makes overseas employment difficult. Consequently, this group of refugees face a number of socio-economic challenges. Poverty is a major problem in the camp. A substantially higher proportion of ex- Gazan households in the camp fall within the lowest income quintile compared to other Palestine refugee camps in Jordan. The residents consistently score lower on possession of assets (assets index), and present the lowest proportion of residents holding permanent jobs and the highest proportion of seasonal and irregular job holders and day labourers. Not surprisingly, a disproportionately high number of residents in Jerash Camp and its vicinity depend on UNRWA s Social Safety Net (SSN) support which consists of quarterly food and cash assistance and is offered to families assessed to be living in abject poverty. According to UNRWA records, 11.5% of the refugees currently registered in Jerash Camp are categorised as SSN beneficiaries, whereas the overall percentage among UNRWA JFO beneficiaries in Jordan is 2.9%. The ex-gazan children in the camps pursue education by attending 4 UNRWA schools up to Grade 10 and then pursue their high school education at Government of Jordan schools. In terms of health services, UNRWA provides primary healthcare to registered refugees. Refugees avail secondary and tertiary care from non-unrwa hospitals. At Jordanian hospitals, UNRWA reimburses part of the cost to registered refugees, but only up to JOD 100 for the majority of refugees, and up to JOD 150 for Social Safety Net cases. There is a lack of possibilities for socio-economic participation for the most vulnerable, particularly the disabled and women. The Community Based Rehabilitation Centre (CBRC) had limited facilities and resources, and community awareness on the needs and possibilities of the disabled was limited. Likewise the Women s Programme Centre (WPC) in Jerash Camp was unable to function effectively due to limited resources and know-how to organise awareness sessions 2

3 ANNEX 1 for the community on human rights and self-reliance. The EU project 1 carried out from started to address these challenges. When it comes to accessing the labour market, there are a number of specific employment restrictions placed on ex-gazan refugees in both the public and private sector. Property laws impose restraints on self-employment, and ex-gazan refugees experience difficulties in obtaining business licenses for starting small businesses outside the camp boundaries. UNRWA operation in Jerash Camp UNRWA runs four (two each for boys and for girls) preparatory level (Grades 1 to 10) double-shift schools in Jerash Camp for 5,027 students (2011/12 academic year) in two school buildings. The Jerash health centre, which was built in 1989 with assistance from the Danish Refugee Council and recently expanded with the assistance of the Government of USA, has been able to cope with the increasing demand of health services with additional equipment also provided by the EU project. The health centre provides preventive and curative health services to beneficiaries living in Jerash Camp and the surrounding area. UNRWA s Relief and Social Services Programme provides direct financial and nonfinancial aid to refugees registered in the SSN. The Jordan Field Office also encourages self- reliance in the camp through poverty alleviation schemes, and community-based, locally-managed institutions and services concerned with women and the development, rehabilitation and integration of refugees with disabilities. In addition to health, education and relief and social services, UNRWA is responsible for rubbish collection in the camp. Housing conditions in the camp are substandard for the majority of the ex-gazan refugee families. The majority of the shelters in Jerash Camp were built in 1967 and the poor economic conditions of most families restrict their ability to rehabilitate their homes and extend the shelters to accommodate family growth. Large families often reside in single or two-room shelters, with limited access to daylight or proper ventilation. The 2007 survey of Jerash Camp found 65% of the shelters to have roofs of zinc or asbestos sheeting. Almost 80% of the households also reported encountering severe problems in winter, including leaking roofs, water seepage through walls, and shelter flooding. The poor living conditions are even worse for vulnerable groups within the refugee community: youth, women, the physically and mentally disabled and the unemployed. Additionally, environmental conditions in the camp are sub-standard. The lack of proper (underground) sewage and the lack of proper automated waste removal result in poor sanitation conditions in the camp, contributing to the spread of preventable diseases. UNRWA Jordan Field Office (JFO) has been implementing camp improvement programmes since its establishment and has demonstrated tangible results in 1 UNRWA Jordan Field Office implemented an EU funded USD3.4 million Project: Assistance to Palestine Ex-Gaza Refugees in Jerash Camp benefiting 27,000 underprivileged refugees in the Camp from September 2007 to December

4 ANNEX 1 delivering these services. However, UNRWA s General Fund allocation is not adequate to meet a number of human development needs, including the shelter needs of Jerash Camp. Hence, UNRWA actively seeks project assistance to fulfil key shortcomings in its ability to meet the most essential needs of Palestine refugees in accordance with its mandate. The proposed project will use the Shelter Database created under project. The database was created on the basis of physical rehabilitation needs assessed by using comprehensive door to door mapping, rapid assessment of needs and detailed assessments and poverty assessment. The project will extensively use this database in planning, implementing and monitoring the project. The output targets set for this project are from the database of the 3039 shelters in Gaza camp. Access to potable water has been a major problem to the refugees due to cost and irregular supply. Municipal water is heavily subsidised in Jordan but many ex-gazan households can only afford it with great difficulty. Moreover, due to serious budget deficit the cost of piped water is likely to increase making it less affordable. Likewise, due to cost of electricity, most poor households rely on kerosene and Liquid Petroleum Gas (LPG) to heat water thus adding heavy strain on their meagre income. For example, in the Jerash Camp, only nine households out of 633 have water heaters, none of which are from renewable, solar energy. Alternate and renewable sources of potable water and the use of renewable energy will enable the refugees to offset many of these costs Lessons learnt The EU project assistance to Palestine ex-gaza refugees in Jerash Camp, Jordan ( ): UNRWA Jordan Field Office implemented an EU funded USD 3.4 million project "Assistance to Palestine ex-gaza refugees in Jerash Camp" benefiting 27,000 underprivileged refugees in the Camp from September 2007 to December The lessons learned from the project, particularly the recommendations of the Jerash Refugee Camp Shelter Reconstruction Evaluation Final Report conducted with the EU in 2010, will be applied in the design, planning and implementation of the proposed project. For example: The recommended maximum number of shelters per site engineer will be followed. Provision is made for a part-time electrical engineer. Provision is made for increased community training on maintenance of shelters to avoid issues of damp etc., as well as on use of the new energy and water technology. Although these measures increase unit costs, they will improve the quality and longevity of shelters provided to the most vulnerable Complementary actions This action falls within the EU contribution to UNRWA's activities for Palestine refugees. 4

5 2.4. Donor co-ordination ANNEX 1 As a result of increased awareness of the plights of refugees living in Jerash Camp and also due to successful UNRWA advocacy work, donors awareness of the situation in the Camp is increasing. Swiss Development Cooperation (SDC) is currently implementing a USD 7.1 million project to connect 2,500 shelters with a much better sewage system and a new water supply system. The Jordanian Government's Department of Palestinian Affairs (DPA), an Italian NGO, two local NGOs (Community Development Office and Al-O rua Al-Wothqa Committee), and local philanthropists are also currently implementing shelter improvement activities. The Camp Service Committee of the Department of Palestine Affairs (DPA) is responsible for overall co-ordination of shelter related activities in the Camp. UNRWA will closely collaborate with the Camp Service Committee and engage, as appropriate, the Committee in resolving implementation level challenges and in facilitation of project work. One key co-ordination task is creating a linkage between the project supported shelters with the sewer system and piped drinking water scheme being constructed by SDC/DPA. At the Amman Field Office level, UNWRA senior management will ensure appropriate and effective communication and co-ordination with the DPA. The planning process will involve participation of representatives from the Camp Service Committee, non-government organisations, community based organisations, and community representatives. 3. DESCRIPTION 3.1. Objectives The overall objective of the project is to support the refugees; particularly those identified as abject poor, living in the Jerash Camp in achieving a decent standard of living (UNRWA Mid Term Strategy, Goal 3). The project will provide safe and improved living spaces, access to piped water connections and underground sewage facility, thus enabling the refugees to live a more dignified life and allowing them to break the cycle of poverty. The specific objectives of the programme are: a. To improve the living conditions of 80 of the most vulnerable refugee families classified as "abject poor", including those on the Social Safety Net programme of UNRWA and people with disabilities, in Jerash Camp. b. To pilot a rain water harvesting system in order to reduce dependency on the municipal piped water system, which is irregular and likely to become more expensive due to reductions in subsidies. The attainment of the second objective will help UNRWA and the international community to expand rain water harvesting in Jerash as an effective solution to enhance the refugee population s access to water for domestic use. In fact, it has 5

6 ANNEX 1 potential to become a pilot for environmental best practices across camps and at national level Expected results and main activities The main result will be the improved living conditions of the most vulnerable refugee families through new and rehabilitated shelters and through reduced dependency on municipal piped water systems hence reducing the cost for access to water. The two main activities foreseen under this programme are: a. Improved living conditions of 80 of the most vulnerable refugee families, including people with disabilities, in Jerash Camp by rehabilitating (fully or partially, as necessary), 19 shelters and by completely demolishing and replacing 61 dilapidated shelters. A majority of the shelters will be built/rehabilitated using a semi-self-help approach to promote participation of and empowerment of refugees through capacity building to take greater control of their lives. UNRWA will build the main structure through the traditional method of hiring engineers to ensure their structural integrity and safety. Shelter owners will take responsibility for completing the finishing work where they have the capacity to do so. A detailed procedure will be developed drawing on UNRWA experience of Ein El Hilweh Camp, Saida Area, Lebanon and lessons learned drawn from the EU, KFW 2 and BMZ 3 projects of Jordan Field Office. Social workers will play a significant role in all aspects of shelter work. With an aim to promote local employment and sustainability, through creation of capacity from on-the job learning opportunities, the proposed project will engage local contractors as much as possible. Savings, if any, generated from this approach and other measures will be invested in increasing the number of shelters rehabilitated. The project will follow a flexible approach to accommodate special circumstances that might prevent a refugee household from planning and implementing the selfhelp component because of the following factors, for example: i. The household is a female headed household with no other adult member who is able to take responsibility for the renovations. ii. iii. The household is headed by a person with a disability compromising their functional capacity and there is no other adult member in the household. The household has aged members with no young adult member to assist in the work. b. Successful piloting of rain water harvesting to reduce dependency on municipal piped water system, which is irregular and likely to become more expensive due to reduction of subsidies. 2 3 Kreditanstalt für Wiederaufbau, German government-owned development bank. Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung. 6

7 ANNEX 1 Studies have shown tremendous potential for rainwater harvesting in Jordan. The potential for water harvesting in Irbid Governorate has the highest estimated yield of water harvesting among the 12 governorates of Jordan. Moreover, rain water is used widely in Irbid City. Water collected from rain is chemically very high quality but biological standards of the water are below the WHO (World Health Organisation) recommendations; this requires regular cleaning of catchment area before the rainy season. The available data show that hydrological features of Jerash are favourable to rain water harvesting. However, the average shelter plot size in Jerash Camp is 70 m 2 and roof surface will vary as per the type of the shelter. This is not a large area for collection of rain water in sufficient quantity. Moreover, the open spaces in the plots are not large enough to build individual collection tanks. Therefore, the project has made an interim planning assumption that a shared system reservoir would be a practical option in the Camp environment. This planning assumption will be updated once a feasibility study is completed in the camp. UNRWA has a fully operational Area Office in Irbid and a team of staff in the Engineering and Construction Service Department who will also support the project. In addition, senior management level leadership and guidance, use of office facilities and equipment, and administrative support services will be provided as an in-kind contribution to the project. All activities of the project will be implemented by following a participatory approach and with involvement of local stakeholders in the camp. The project will hire staff on fixed-term contracts to avoid any increase in burden on the UNRWA General Funding situation. All contracts will be terminated by the end of the project period. The design and improvement of shelters will be fully discussed with the shelter owners and agreed before commencing civil works to ensure beneficiary ownership. A written consent and acceptance of terms and conditions, which will include social commitments such as non-violence against women and children, commitment to children s education, practice of good hygiene, upkeep of the shelter, etc., will be obtained from household heads before project support is committed. The project will assist, possibly in collaboration with community based organisations, the shelter owners in developing a simple plan for general maintenance and upkeep of the shelter before handing over the renovated/reconstructed shelters to the families. The self-help component is designed to promote capacity of refugees to take greater control of their developmental needs in future Risks and assumptions Political stability and implications of conflict in the region: The political environment in Jordan remains sensitive to the changes that have been sweeping through the Middle East and North Africa since January The Government has provided a supportive environment for peaceful demonstrations on 7

8 8 ANNEX 1 price increases, salary raises, and political reform. In addition, the Government has taken some measures to address the demand related to the salaries for public servants and efforts are being made to ensure participation of all groups in the forthcoming national election. These measures - including some constitutional amendments related to strengthening of electoral reform, constitutional court, civil liberties - improve the quality of governance as well as mitigate the risk of an Arab Spring in Jordan. The risk is registered as medium to high, though a complete collapse is not expected. Increase in project cost: The global fuel price increase is taking a serious toll on the Government's coffers as 97% of the energy needs are met from imported energy sources. The government has already increased fuel prices once, and the recent decision to raise them a further 10% to reduce the budget deficit has been put on hold amidst nationwide protests. The cost of construction materials has gone up by 6% in 2012 and further increases in fuel prices are likely to push prices further up. To mitigate the inflationary risk, the project will set aside 10% of budget in contingency for shelter construction and rehabilitation work. Lack of co-operation/ownership: UNRWA JFO has a long-standing professional relationship with the DPA. Participation of the Department through the Camp Service Committee in planning and monitoring the project activities as well as compliance to the construction norms and standards of Government of Jordan will promote the co-operation and collaboration with the government authority. At the community level, the project will ensure that all key stakeholders, including women and youth, are well informed about the project objectives, outputs and processes as part of project inception activities. Moreover, the participatory and inclusive processes will remain core of the project approach to promote participation and ownership. The project will build on the successes and lessons learnt from camp improvement projects funded by EU and the German Ministry of Co-operation (BMZ) Cross-cutting issues Gender, youth, disability and protection are four key cross-cutting themes of UNRWA Medium Term Strategy UNRWA has a gender and disability policy and protection strategy in place. In addition, UNRWA Planning Guidance on Cross-Cutting Themes will be applied to address key cross-cutting issues applicable to the project. The Gender Co-ordinator, Youth Officer, Disability Officer and Protection Focal Point Officer will provide the required oversight and guidance on the work of the project team in facilitating and ensuring implementation of the four themes. Short duration services of technical experts will be acquired to strengthen the project response, especially with regards to the self-help component to make sure the shelter designs are as responsive, within the limitations posed by the space, to the needs of women and disabled people as possible.

9 ANNEX 1 The work plans and progress reports will include special mention of the planned, achieved and underachieved progress on cross-cutting issues. Two green technologies, namely solar heating system and rain water harvesting system, will contribute to environmental sustainability and financial security of refugee households Stakeholders The direct beneficiary of the action is the Palestine refugee population in UNRWA's Jerash camp. Naturally, UNRWA, as well as all donors and host countries supporting UNRWA are also key stakeholders. 4. IMPLEMENTATION ISSUES 4.1. Method of implementation The programme will be implemented through joint management by means of a contribution agreement with UNWRA, the UN Agency mandated to provide services to Palestine refugees, in accordance with Article 53d of the Financial Regulation. UNWRA complies with the criteria provided for in the applicable Financial Regulation and is covered by the Financial and Administrative Framework Agreement (FAFA) concluded between the UN and the European Commission. The change of management mode constitutes a substantial change except where the Commission "re-centralises" or reduces the level of tasks previously delegated to the beneficiary country, international organisation or delegate body under respectively, decentralised, joint or indirect centralised management Procurement and grant award procedures For agreements with international organisations, all contracts implementing the action must be awarded and implemented in accordance with the standard documents laid down and published by UNRWA Indicative budget and calendar The total EU financial contribution to the operation amounts to EUR 2 million. The overall operation has an implementation period of 48 months, including 36 months for implementation and 12 months for a closure phase Performance monitoring The Agency's overall management of the Monitoring and Evaluation tools within the Department of Internal Oversight Services have been deemed adequate to ensure coherent, accurate, and analytical reporting to UNRWA's management, donors and hosts, both on impact and results. Over the past year, comments received from donors concerned the need to include more indicators on efficiency, effectiveness and processes. The Agency has revised its Monitoring and Evaluation Matrix in close co-ordination with major donors 9

10 ANNEX 1 including Australian Aid, the EU, the United Kingdom and the United States. Within the forum of UNRWA Advisory Commission (AdCom), members have welcomed UNRWA s effort to consolidate and improve the quality and consistency of monitoring and external reporting and encouraged further discussion on the Donor Harmonised Framework in 2012/2013 with the objective of a common understanding and acknowledgement of this monitoring process for the period The Harmonised UNRWA-Donor Report ( ) will serve as the primary performance monitoring tool for the planned contribution agreement foreseen within the framework of this decision. Overall monitoring of the project covering management, administration, finance and programme will be the responsibility of the project manager. In this task, s/he will be assisted by one planning and monitoring officer and one senior finance/admin/database assistant. A short-term technical expert, responsible for developing and providing guidance on implementation of self-help component of shelter construction, will also monitor and report on the component. Corrective measures to modify the design and implementation of interventions will be carried out on the basis of the findings Evaluation and audit As the foreseen contribution agreement will be concluded with UNWRA under joint management, the financial transactions and financial statements shall be subject to the internal rules and external auditing procedures laid down in the Financial Regulations, Rules and Directives of the Organisation. UNRWA s accounts shall be audited by the United Nations Board of Auditors, who shall certify the financial statements of UNRWA required to be submitted under Regulation 11.2 of UNRWA s Financial and Administrative Regulations and Rules. The United Nations Board of Auditors shall report to the General Assembly on the accounts and operations of the Agency as it deems appropriate. UNRWA Jordan Field Office conducts internal audit in accordance with the procedures of UNRWA Department for Internal Oversight Services Communication and visibility In accordance with the visibility provisions under the EU-UN Financial and Administrative Framework Agreement (FAFA) and with the EU-UN Joint Action Plan on Visibility signed in September 2006, the EU and the implementing organisations will work together to ensure appropriate visibility actions for the programme as a whole, as well as for specific interventions and activities under the programme. Standards regarding visibility will be derived from the Communication and Visibility Manual for EU External Actions 4. Adequate communication and visibility will be ensured by the EU Delegation's monitoring of the adherence to the 2013 EU-UNRWA Communications and

11 ANNEX 1 Visibility Plan. This plan is aimed at drawing attention to the ongoing partnership between the EU and UNRWA and the EU s support for Palestine refugees. 11

12 ANNEX 2 Action Fiche for the occupied Palestinian territory (West Bank and Gaza Strip) 1. IDENTIFICATION Title/Number Total cost Aid method / Method of implementation PEGASE 2013: Direct Financial Support to recurrent expenditures of the Palestinian Authority Part I EU contribution: EUR 60 million maximum Project approach direct centralised management DAC-code Sector Social/welfare services 2. RATIONALE 2.1. Sector context Since its establishment in early 2008, the PEGASE mechanism (French acronym for Mécanisme "Palestino - Européen de Gestion et d'aide Socio-Economique ) provided direct financial support for the Palestinian Reform and Development Plan (PRDP). Through this support, PEGASE sustained the Palestinian Authority's (PA) efforts in the four PRDP key sectors of governance, social development, economic and private sector development and public infrastructure. The PRDP, presented by the Palestinian Authority for a three-year term ( ), received an unprecedented level of external support in 2008 that was maintained at a reduced but still high amount in 2009 and The PRDP was superseded in 2011 by the National Development Plan, "Establishing the State - Building our Future", covering the period The plan focuses on the legal framework, organisational structures and processes, the use of technology in government, the management of financial resources and the management of human resources in civil and security sectors based on 23 sector strategies. The EU has expressed its support for Prime Minister Fayyad's plan. Since mid-2011, the PA has been experiencing a serious fiscal crisis as not enough donor funds have been made available to cover its budget deficit. The World Bank has appealed for donors to contribute an additional USD 400 million to fill the PA's financial gap for the fiscal year Although no concrete budget data for the fiscal year 2013 is available yet, the outlook remains challenging. In September 2012 disturbances and demonstrations aimed against the PA took place, in the wake of increasing prices, high unemployment and the authority's inability to pay the civil service salaries for the previous month. In 2012, EUR 84.4 million were provided for recurrent expenditures from the EU Budget through the PEGASE mechanism. It should however be noted that an allocation of EUR 72.2 million was provided for Direct Financial Support through PEGASE at the end of 2011 by a budgetary readjustment, which when added to the 2012 financial allocation, allowed for funding for the occupied Palestinian territory (opt) to remain at the same level as These funds were complemented with funds from EU Member States, albeit at a lower level than in previous years. So far, this year EU Member States have 1

13 ANNEX 2 committed EUR 18 million to PEGASE: The Netherlands and Sweden have signed Memoranda of Understanding (MoU) for EUR 5 million and approximately EUR 4 million (SEK 40 million) respectively to cover salaries while Belgium and Austria have made available EUR 9 million and EUR 1 million respectively for social allocations for vulnerable Palestinian families. According to the PA Ministry of Finance, France has also made a contribution of USD 45.9 million to the PA, but not through PEGASE. Some EU Member States have contributed to the World Bank Trust Fund which has delivered a total of USD million so far this year. From this, the UK provided USD 162 million and France USD 45 million. Other major donors through the fund included Norway with USD 199 million and Australia with USD 79 million. It is hoped that further contributions from EU Member States to PEGASE will be received before the end of Other donors are also providing support for direct financial assistance through non- PEGASE channels, including directly to the PA budget or via the World Bank Trust Fund. Further support has been received from Algeria (USD 99.5 million); Iraq (USD 99.9 million); Qatar (USD million); Saudi Arabia (USD million); United Arab Emirates (USD million). Additional support from Arab donors and from the USA is hoped for, but not yet confirmed Lessons learnt Actions under PEGASE build upon the successful experience of the Temporary International Mechanism in 2006 and PEGASE is implemented in full coordination with Palestinian partners and in full co-operation and transparency with EU Member States, the European Parliament and other donors. It is particularly appreciated by the Palestinian Authority for its alignment with the PRDP and the National Development Plan and the strong sense of ownership on the part of Palestinians, as well as for its flexibility and its catalytic nature in attracting funds from other donors without multiplying transaction costs. A mid-term review of the PEGASE Mechanism was launched by the Commission late 2009, the results of which showed that the flexibility in planning and implementation, the highly competent and professional staff and the use of well proven management systems while continuously innovating improved and new approaches, contributed to the success of this mechanism Complementary actions So far in 2012, a total of EUR 340 million has already been committed by the European Union for the benefit of the Palestinian population: nearly EUR 250 million from European Neighbourhood and Partnership Instrument (ENPI) allocations, out of which EUR 85 million for PEGASE support to recurrent expenditure and EUR 98 million for United Nations Relief and Works Agency's (UNRWA). A further EUR 67 million has been allocated for projects aimed at social and economic development and institution-building in support of the Palestine National Development Plan and EUR 5 million for the Partnership for Peace Programme. From the Food Security Budget Line UNRWA has received a EUR 5 million allocation to provide assistance for its Social Safety Net Programme to provide nutrition for those refugees living in absolute poverty and from the same budget line EUR 11 million has been allocated for Support to livestock based 2

14 ANNEX 2 livelihoods of vulnerable population in the opt. EUR 45 million has been committed as humanitarian assistance to the Palestinian population in the occupied Palestinian territory (West Bank and Gaza Strip) and to Palestine refugees in Lebanon and Syria. Nearly EUR 5 million has been mobilised for civil society initiatives from the European Instrument for Human Rights and Democracy and the thematic line Non State Actors and Local Authorities in Development. More than EUR 19 million has been mobilised from the Instrument for Stability for actions aimed at supporting EUPOLCOPPS (the European Union Co-ordinating Office for Palestinian Police Support) and EUBAM Rafah (The European Union Border Assistance Mission at the Rafah Crossing Point) actions in the security sector. 2.4 Donor co-ordination Local donor co-ordination has been streamlined in accordance with the conclusions of the Ad-Hoc Liaison Committee (AHLC) meeting held 14 December 2005 in London following a proposal by the Commission, the World Bank and Norway to reform the Aid Management Structures. The Commission continues to play a leading role in these structures at all levels, as well as in local EU Member States coordination. Complementarity and co-ordination with other EU actions are assured through regular co-ordination meetings at Headquarters and daily contacts between staff working in the European Union Representative Office (EUREP) in East Jerusalem. The PA made known to potential donors at the Sharm-el-Sheik Conference in March 2009 that PEGASE was amongst its preferred delivery mechanism for channelling funds. 3. DESCRIPTION 3.1. Objectives The objective of this action to be implemented through PEGASE is to support the Palestinian National Development Plan by helping the PA to: finance its budget deficit and implementing its reform agenda; meet its obligations towards civil employees, pensioners and vulnerable sectors of Palestinian society, and thus; maintain the functioning of the administration and the provision of essential public services to the population Expected results and main activities Three categories of public expenditure are in principle eligible for support under this action, for a total amount of EUR 60 million which follows previous Decisions committed on 2009, 2010 and 2011 funds 1. Component 1: Supporting Palestinian administration and services (indicative allocation EUR 50 million) 1 C(2009)5657, C(2009)9388, C(2009)9958, C(2010)6736, C(2010)9321, C(2011)3026 and C(2011)

15 ANNEX 2 The EU will make available an additional contribution to the payment of salaries and pensions to the PA civil servants in the occupied Palestinian territory (West Bank and Gaza Strip). The objective of this activity is to help the PA meet its financial obligations towards civil employees and pensioners. The regular contribution to the funding of the wages expenditure for civil servants reinforces the PA s public finance management and public finance reform implementation. At the same time, it allows the administration to function and thereby to provide services to the Palestinians in the West Bank and Gaza Strip. Component 2: Supporting the Palestinian social protection system (indicative allocation EUR 10 million) The EU will make available at regular intervals direct financial support to vulnerable families in the West Bank and the Gaza Strip. The objective of this activity is to ensure the continued assistance to poor and vulnerable Palestinian families dependent on financial aid from the PA. This activity reinforces the reform of the social protection system and improves PA public finances by reducing pressure on the budget by reducing expenditure through the coverage of allowances due to the beneficiaries of the Ministry of Social Affairs cash support programme. Component 3: Private sector arrears (indicative allocation EUR -none) The PA seeks to develop a market economy led by the private sector. The EU supports the creation of a proper environment for Palestinian businesses to flourish by providing a facility for the payment of debts which the PA has built up towards private sector businesses for the purchase of goods and services. These contributions have resulted in a rapid injection of funds into the economy, providing relief to Palestinian businesses and raising their purchasing power. They further secured the employment of thousands of Palestinian workers and consequently, ensured that the provision of services to the administration could continue. The situation has become particularly acute in the health sector Risks and assumptions It is expected that contributions from EU Member States and other donors will be made available during the implementation period to complement the proposed funds. Fluctuations in the exchange rate may have an impact on funding needs. Full co-operation with the Palestinian Authority is essential. This co-operation needs to be maintained, in particular for the identification of eligible beneficiaries and timing of payments and for the identification of eligible expenditure. All actions under this special measure require that no additional restrictions are imposed by the Israeli government, for example on financial transactions, including transfer of funds between the West Bank and Gaza Strip Cross-cutting issues Good governance principles are applied to the implementation mechanism and ownership on the part of the PA is assured. The actions proposed provide services vital to the social and economic rights of the Palestinian population. 4

16 3.5. Stakeholders ANNEX 2 The direct beneficiary of the action is the Palestinian population. Eligible beneficiaries and expenses are identified through a system based on strict and objective criteria set by the European Commission and based upon requests and information provided by the Palestinian Authority. PEGASE will be implemented in close co-operation and full partnership with the Ministry of Finance, the Prime Minister's Office, the technical Ministries and other Departments and Agencies of the PA and UNRWA. PEGASE will be co-ordinated locally with the EU Member States, other international donors and international organisations. In order to do so, full use will be made of the existing local co-ordination groups already in place such as the Local Development Forum, the AHLC structures, the co-ordination meeting between EU Member States and the EU Delegation. All donors supporting the mechanism will also be key stakeholders. 4. IMPLEMENTATION ISSUES 4.1. Method of implementation This project will be financed under a financing agreement signed with the PA. Direct centralised management will be applied for all components. PEGASE will be implemented by the Commission through the EU Representative Office in East Jerusalem, in close co-ordination with Member States officials and with the Palestinian Authority. Disbursements will be made to the eligible beneficiaries of the Vulnerable Palestinian Families and Civil Servants and Pensioners programmes following eligibility checks and verification and control procedures by external experts and international audit firms Procurement and grant award procedures All contracts implementing the action must be awarded and implemented in accordance with the procedures and standard documents laid down and published by the Commission for the implementation of external operations, in force at the time of the launch of the procedure in question. Participation in the award of contracts for the present action shall be open to all natural and legal persons covered by the ENPI Regulation 1638/2006. The occupied Palestinian territory (West Bank and Gaza Strip) is facing a crisis, as defined in Article 168(2) of the Implementing Rules of the Financial Regulation. As a result negotiated contracting procedures or direct award for grant contracts may be used in accordance with applicable provisions. 5

17 4.3. Indicative budget and calendar ANNEX 2 The maximum contribution to PEGASE Direct Financial Support to Recurrent Expenditures of the PA under this Decision is EUR 60 million. The contribution is indicatively distributed as follows: Component 1: Supporting Palestinian administration and services (EUR 50 million). Component 2: Supporting the Palestinian social protection system (EUR 10 million). Component 3: Private sector arrears (no allocation). All allocations are indicative and may be changed depending on the needs expressed by the PA and the funds received from other donors for specific areas covered by PEGASE. It is anticipated that, as in earlier years, other donors will make considerable contributions. The period of implementation of the current action is 24 months. The funds under this Decision are however expected to be totally disbursed by the end of Funds for the necessary technical assistance, evaluation, audit and visibility actions have already been made available under previous Commission Decisions Performance monitoring PEGASE will continue to implement a comprehensive monitoring, verification and control system to provide reassurance over the use of their funds, and the efficient and effective provision of support to the Palestinian administration and population while fully protecting donor interests. Monitoring arrangements also include reviews to take stock of other donor contributions, reviews by the World Bank on reform progress, reviews by the International Monetary Fund (IMF) on budget execution as well as other relevant political developments. Payments will be executed in accordance with Commission regulations. A sophisticated and uniform financial reporting system is in place and will continue to be implemented, giving detailed information on all operations processed. Individual beneficiaries as well as businesses will be uniformly checked against international sanctions lists Evaluation and audit Financial experts and qualified auditors will work for PEGASE which will be complemented by Commission and EU Member States specialists and international or local experts. Advanced monitoring, control and audit systems are set up for all of PEGASE s activities. All donors participating in PEGASE have full access to the corresponding monitoring and audit reports on the basis of which their contributions are disbursed. 6

18 ANNEX 2 As well as audits of eligible expenditures to identify and validate payments, the PEGASE team will organise an annual ex-post audit of the programme in accordance with international standards with a view to providing the maximum level of assurance. Donors will be invited to participate. In addition, contributing donors may carry out ex-post audits of expenditures covered by their payments. A comprehensive evaluation report covering the first three years of the PEGASE was carried out and the results have been taken into account in the implementation of the activities. Mid-term evaluations will be performed every 18 months and final evaluations after a 3-year implementation period in line with the PA development planning cycle 4.6. Communication and visibility The action will follow the EU visibility guidelines 2. Progress of PEGASE implementation will be communicated regularly to all stakeholders, including through a monthly bulletin. Regular information meetings are held with EU Member States in Brussels as well as locally

19 ANNEX 3 Action Fiche for the occupied Palestinian territory (West Bank and Gaza Strip) 1. IDENTIFICATION Title/Number Total cost Aid method / Method of implementation Contribution to UNRWA's 2013 Regular Budget - Part I EU contribution: EUR 40 million maximum Project approach joint management with an international organisation - European Commission-UN Financial and Administrative Framework Agreement (FAFA) Implementing organisation: United Nations Relief and Works Agency for Palestine Refugees (UNRWA) DAC-code Sector Material relief assistance and services 2. RATIONALE 2.1. Sector context The United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) provides education, health, relief and social services, microfinance, housing and infrastructural support to approximately 5 million registered Palestine refugees in Jordan, Lebanon, Syria, the West Bank and the Gaza Strip. Established by the UN in 1949 to carry out direct relief and works programmes for Palestine refugees, the Agency began operations in In the absence of a solution to the Palestine refugee problem, the General Assembly has repeatedly renewed UNRWA's mandate. The last few years have witnessed growing concern among the refugee community and in the region over the decline in UNRWA services. Successive funding shortages and subsequent austerity measures and cost reductions have prevented programmes from expanding in tandem with the growth in the refugee population. This has led to the reduction of on-going programme activities and precluded certain actions which normally would be part of UNRWA's regular programme of work. It also had a direct impact on the increased class size in UNRWA schools, rising patient/staff ratios in the health services, and higher caseloads for social workers dealing with the poorest refugees. UNRWA has more than 30,600 staff posts to cover for services provided to 5 million refugees. The Regular Budget, including the General Fund and in-kind contributions, is the Agency's primary means of sustaining core services. According to UNRWA's projected donor-contribution estimates, there will be a shortfall of USD 57.5 million (c. EUR 44 million) in this budget, leading ultimately to stringent austerity measures and further cutbacks of basic services, and possibly to UNWRA being unable to fully meet it its personnel costs for December In order to alleviate this situation, the European Union made available EUR 11.5 million in the latter part of 2012, in addition to the initial EUR 80 million allocation from European Neighbourhood and Partnership Instrument (ENPI) funds. This shortfall would not include funding for 1

20 ANNEX 3 emergency appeals, organisational development or specific projects (like Nahr El- Bared or those assisting Syrian refugees). The ability of the Agency to provide its services is entirely dependent on sufficient voluntary contributions made available annually from donors while UNRWA's General Fund costs are highly fixed (85% of expenditure is allotted to its labour force of 30,600 staff). The Agency has a very limited margin for manoeuvre when it comes to making decisions over where further cost reductions can be made. Staff numbers have not been increased to reflect the increased numbers of refugees. Any cuts would have an immediate impact on the level of basic services provided. This substantial anticipated gap is due to several factors: The high birth rate in the refugee population means that, even if fundings were maintained or even slightly increased, per capita income would drop. Reduced donations from a number of donors under the impact of the financial crisis. The increase in commodity prices has adversely affected its food aid programme. The Agency has been delving into its reserves and effectively living off these in part in recent years. The reserves are gone. The situation has been aggravated by exchange rate losses. The Israeli Shekel has gained strength against both the Euro and the US Dollar. The situation in Syria has increased the demand for relief services from Palestinian refugees affected by the on-going conflict. In combination with contributions from EU Member States, EU overall contributions in 2011 accounted for 47% of the total support to UNRWA. The EU has been a strong supporter of UNRWA since 1971, becoming in time its largest donor. Since the year 2000, the EU has provided over EUR 1.4 billion in support of UNRWA s work. Nevertheless, efforts at burden-sharing are beginning to bear some fruit, with Brazil and Saudi Arabia making their first-ever contributions to the General Fund Rationale of the intervention Continued EU support to UNRWA is an essential element of the EU strategy for the Middle-East Peace Process. One of the key elements of this strategy is to confirm the EU commitment to keep a close watch on the refugee issue, including during final status negotiations. Since 1971, the EU has contributed annually to UNRWA's Regular Budget. This funding is used primarily to cover the Agency's crucial core programme services in the areas of health, education, and social services and is essentially used to pay salaries for teachers, doctors and social workers active in the refugee camps. Moreover, UNRWA has committed itself to the concept of prioritisation, therefore it is expected that the Agency take additional steps to further prioritise services with a clear focus on the most vulnerable Palestine refugees as stipulated in UNRWA's Medium Term Strategy. However, successive funding shortages and 2