In response to the passing of the Anti-Terrorism Clarification Act (ATCA), the Palestinian Authority (PA) formally renounced all financial assistance from the United States. Congress passed the ATCA into law in October 2018, and it will take effect at the end of February. It ties Palestinian leaders’ reception of American financial assistance to the issue of legal jurisdiction within the U.S. This new law, sponsored by Senator Chuck Grassley (R-IA), affirms that should the PA accept American money, then “courts in the States could hold it responsible for acts of terrorism against U.S. citizens and pursue it for any monetary judgments.” In practice, this means that American victims of Palestinian terrorist attacks would be able to file lawsuits against the PA and PLO in US courts for compensation, which is projected to be in the hundred of millions of dollars, if Palestinian governing leaders continue to accept any amount of American foreign aid.

Senator Chuck Grassley (R-IA) delivering testimony in May 2017 (Wikimedia).


Given the potential to face bankruptcy from a litany of legal cases, Palestinian officials believe they have no choice but to refuse aid. In a letter to U.S. Secretary of State Mike Pompeo, Prime Minister Rami Hamdallah formally stated the PA’s position on the matter. He wrote that as of January 31st, “the Government of Palestine no longer wishes to accept any form of assistance referenced in ACTA” and that, despite the unambiguous decision, it would reconsider if the ATCA were changed in a way that would protect the PA from lawsuits in American courts.

To be sure, the ATCA is neither related to any prior Trump Administration decision about US financial aid to the Palestinians nor to the contentious relationship between the Palestinian leaders and the President. However, its passing is overshadowed by lawmakers’ decision to defund UNRWA a few months ago. Even so, the U.S. continued to send millions to the PA in security aid over the last year. Now, the Palestinian Authority’s decision to forego receiving money ends more than a decade of direct U.S. aid. Furthermore, the act brings an end to some U.S. Agency for International Development (USAID) projects—including two water projects and an unfinished school—in Gaza and the West Bank. State Department officials have stated that arrangements are being made with subcontractors to wind down these projects.

Beyond the risk of leaving USAID projects incomplete, experts warn that the ATCA could have serious implications for the Israeli-Palestinian security relationship. Jihad Harb, a Palestinian researcher and analyst, notes that without funds for security, the PA will not only have fewer resources to operate but it “will also have less incentives to continue security cooperation with Israel.” Although coordination between Israel and the Palestinian Authority has waned during times of conflict, they still share intelligence and coordinate on arrests to prevent attacks. Israeli officials are also voicing concern over the Act’s potential to weaken this bilateral security effort. Eitan Dangot, Israel’s military governor of the Palestinian territories from 2009 to 2014, stated that any damage to the security budget will “cause serious problems” and hurt “the coordination, the loyalty, the trust…and the work that has been done since Oslo.” While the Israeli Foreign Ministry and U.S. Embassy declined to comment on the issue, former U.S. ambassador to Israel Dan Shapiro also noted the repercussions of the Act “have alarmed the Israelis sufficiently enough” to the extent that some courted policymakers in Washington to amend it in early January. However, the government shutdown in the US hindered the Trump administration’s effort to change the law. The ATCA signifies the degree to which American foreign policy and financial aid continue to play a formative role in the region.

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