Confusion reigns over how to help poor Palestinians

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At the same time, the $100 million-a-year aid program was the key to improving living conditions for Palestinians in the West Bank and Gaza, they said.

The broad support that aid to the Palestinians once enjoyed prompted one Jewish newspaper to joke that the pro-Israel lobby, the American Israel Public Affairs Committee, would change its name to the "American Israel Palestine Affairs Committee."

But in the past year, as the peace process began to stumble, Congress blocked U.S. aid to Arafat's government, and support in the Jewish community crumbled.

The question of Palestinian aid continues to pose diplomatic challenges as the U.S. presses Israel and the Palestinians to resume long-stalled peace talks.

Indeed, under current law, Yasser Arafat and other Palestinian leaders are considered "terrorists" and would be banned from receiving visas to travel to the United States without a presidential waiver.

In August, Congress approved a U.S. law calling for the expiration of direct assistance to the Palestinian Authority. The move came after the Clinton administration was unable to certify that the Palestinians are complying with their accords with Israel.

This forced these same Jewish groups to re-examine their positions on Palestinian aid: Should the Palestinian Authority receive U.S. aid? Should the money instead go to humanitarian foundations and infrastructure projects in Palestinian self-rule areas? Should no Palestinian causes receive U.S. money?

For now, most lawmakers and Jewish groups are supporting aid to the Palestinians as long as it is not delivered through the Palestinian Authority.

Over the past two years, the vast majority of the $100 million in annual aid was channeled through non-governmental programs.

The distinction is important, supporters say, because continued humanitarian aid theoretically allows the average Palestinian to see the fruits of peace without rewarding the policies of Arafat's regime.

The aid process has been further complicated by legislative initiatives in Congress. Last week:

*The State Department was forced to rescind an effort to attach the expired law, the Middle East Peace Facilitation Act, to the foreign aid bill after a bipartisan protest by members of Congress. Congress has been outspoken in its opposition to direct aid to the Palestinian Authority.

*Rep. Benjamin Gilman (R-N.Y.) rejected a State Department proposal to spend $10 million that he has withheld from the Palestinian Authority on a Gaza sewer project. Instead, the money will go to Jordan.

*An attempt by the House to cut off all U.S. money for the Palestine Broadcasting Corporation was thwarted by a technicality. That effort came in response to concerns about anti-Semitic and anti-Israel programming.

Against this backdrop, AIPAC for the first time is publicly opposing direct aid to the Palestinian Authority. For now, at least, it will work with Congress to send money to Palestinian areas but not to the Arafat government.

"Under today's circumstances, we agree with the strong congressional sentiment that aid to the Palestinians, important in helping with humanitarian projects affecting the daily lives of the Palestinians, is the most effective if channeled through private voluntary organizations and other U.S. controlled mechanisms," said an AIPAC spokeswoman.

This position has the backing of most Jewish groups that in the past had urged Congress to continue direct assistance.

For its part, the Israeli government is supporting the move toward indirect U.S. aid. But it went one step further and hailed the international community for providing Palestinian aid, much of which goes to pay the salaries of Palestinian Authority employees, including the police force.

Israeli Finance Minister Ya'acov Ne'eman thanked the World Bank and International Monetary Fund in a recent speech.

"I would like to commend their efforts to assist the incipient Palestinian economy, and thereby promote peace," he was quoted as saying.

Although the Israelis publicly thanked the Palestinians' donors, Zionist Organization of America president Morton Klein said senior Israeli officials have told him they want all money cut off.

That is why, Klein said, he continues to lead the fight against all aid to Palestinians.

"When God wanted to get the Jews out of Egypt, did he send money to Pharaoh? No; he sent 10 plagues," Klein said. "He didn't say, `I'll give you $10 million.'"

But Klein represents a minority in the organized Jewish community.

"Economic deprivation in the territories create conditions that are fertile for extremism," said Martin Raffel, associate executive vice chairman of the Jewish Council for Public Affairs.

"I don't see any of our member organizations opposing" economic aid to the Palestinians, he said. "No one thinks it's a good thing for Palestinians to be poor and uneducated."