EXECUTIVE SUMMARY: President Joe Biden has said he wants to resume aid to the Palestinians, but recent Palestinian laws are making it difficult for him.

Congress has banned US aid to the Palestinian Authority (PA), citing the PA’s incitement of terrorists and financial rewards to terrorists and their families. To open the way for aid to Palestinians, the Biden team is distinguishing between the PA, which Congress has deemed pro-terrorist, and Palestinian non-governmental organizations (NGOs), which Congress has not classified as such. But the PA has blurred that distinction.

If Congress determines that NGOs are no longer independent of the PA, or that US-provided NGO funding will be shunted into the PA treasury, it could compel the administration to suspend all US aid to the West Bank and Gaza.

The PA’s recent Law-by-Decree No. 7/2021 is the latest in more than two decades of PA actions aimed at eroding the independence of civil society. The decree requires that NGO work plans “conform” with those of the PA. It authorizes Palestinian officials to transfer NGO funds to the PA treasury with virtually no transparency. It also imposes new fees on NGOs, effectively compelling donors to NGOs to subsidize the PA. If US aid is caught up in that scheme, it would violate US laws prohibiting economic assistance to the PA.

Congress can be expected to examine the PA’s control of NGOs as part of its oversight of US aid.

This study summarizes the PA’s gradual nationalization of Palestinian civil society organizations. It recommends that Congress review which US funds have ended up in the PA treasury, examine whether NGOs are independent of the PA, and determine whether US economic aid is precluded by Law-by-Decree No. 7/2021 or other PA laws and regulations.