The U.S. Agency for International Development office in the West Bank and Gaza is closing as NGOs must shut down operations in the Palestinian territories by Jan. 31 as a result of apparent unintended consequences of a U.S. terrorism law passed in 2018.

The Anti-Terrorism Clarification Act, which was signed into law last October, stipulates that foreign governments which accept aid from the U.S. government will be eligible for prosecution in U.S. courts for damages as a result of terrorism. For this reason, the Palestinian Authority said it would no longer accept such funds from the U.S.

In a Dec. 26 letter to Secretary of State Mike Pompeo, Palestinian Authority Prime Minister Rami Hamdallah said that while he was grateful for the aid the U.S. has provided to Palestinians, it would no longer accept the funds since the provisions of ATCA could make the Palestinian Authority financially liable in American courts.

“The Government of Palestine, including the Palestinian National Authority and its agencies, does not undertake or accept any responsibility for any public or private aid from U.S.-affiliated sources that is or may be provided directly, or indirectly by any third party, to any non-government Palestinian institution,” Hamdallah wrote.

Although the Trump administration cut off aid to Palestinians last year, programs that had multiyear funding remained ongoing and were slated to be completed through their original end date. But because the provisions included in ACTA mean the Palestinians will no longer sign off on programs being implemented in their territory, those ongoing projects must halt and millions of dollars that have already been obligated cannot be used.  

“There seems to be a sort of a ‘whoops, how [did] this happen? We didn’t see this,’” said Sean Carroll, president and CEO at development and relief organization Anera. “I think a lot of the [congressional] offices and committees are realizing that this goes beyond the intent of the law and really could handcuff any U.S. administration moving forward, this one or future ones.

“Let’s assume that a peace plan moves forward and sides agree to a new peace and the U.S., along with other donors, is going to want to have a development program to keep the peace and ensure the peace, and with this law, that won’t be possible.”

NGOs have been winding down programs and CARE, Catholic Relief Services, Anera, Global Communities and the Near East Foundation all report having to lay off staff as a result of ATCA implementation cutting off aid funds and because of budget cuts. NEF has three programs in the West Bank that must be closed by Jan. 31.

“We had to let 10 people go. It was staff that was covered by USAID-funded projects. We have had to complete early our contracts with our partners, so they will no longer be able to deliver their part of the project,” said Charlie Benjamin, president at NEF.

“We have standing operational costs now that we will not have those funds to cover — so key staff, rent, and other operational costs. The people who we serve will no longer have access to services and activities we provide.”

NGOs said last week before the U.S. government shutdown ended that as the ATCA deadline approached, they had a difficult time reaching people at the Department of State and USAID for information about the status of a potential fix because workers were furloughed.

“We continue to work through the potential impact of the Anti-Terrorism Clarification Act (ATCA),” a USAID spokesperson told Devex in a statement. “In consultation with partners, we have taken steps to wind down certain projects and programs in the West Bank and Gaza. We are examining what future projects and programs may be possible and appropriate.”

To reverse the impact ATCA is having on aid operations in Gaza and the West Bank, Congress would need to pass and the president must sign legislation that includes language clarifying that humanitarian assistance and NGO operations would not trigger legal liability for the Palestinian Authority in U.S. courts. A standalone bill is seen as too politically sensitive, so the language would likely need to be attached to another unrelated bill in the U.S. Congress in order to pass.

The Palestinian Authority has indicated that a clarification of the U.S. law could cause a reversal of its refusal of U.S. aid.

“Naturally, if circumstances change, such that Palestine’s acceptance of aid under these programs could not be used to undermine due process protections for Palestine in the U.S. courts,” Hamdallah wrote in his letter to Pompeo, “then the Government of Palestine would revisit its decision and take the steps to restore these aid programs, which have a proven track record of success.”

USAID and U.S. NGOS already face severe challenges operating in the Palestinian territories, where they must be careful not to run afoul of terrorism laws. They must ensure that no funds end up in the hands of Hamas or support the terrorist group.

Joel Braunold, executive director at the Alliance for Middle East Peace, said that the implications of ATCA are a “double hit” for ALLMEP’s member organizations after the Trump administration announced last year its review of funds that benefited Palestinians.

“The field was already coping with the fact that the largest source of income for cross-border peacebuilding was being removed moving forward, and then secondly the field already had the expectation that the signed contract agreements meant that there would be $8 million coming in in the next two years. ATCA’s just cut that off,” Braunold said. “This is crippling a field that was already … losing its largest donor.”

NGOs say the USAID pullout and reduction in U.S. funds, including its decision last year to stop support for the U.N. Relief and Works Agencies for Palestinian Refugees in the Near East, has led them to diversify their funding streams for programs in the territories.

“It’s pretty devastating,” Carroll said. “We will stay there, we have other funders and other funders will step up, but not at the level that the USAID project was doing.”

NGOs expect to take 90 days to complete project closeout paperwork after programs cease Jan. 31. If a legislative fix to ATCA happens during or after that period, it is unclear if or how the suspended programs would resume.

“There’s some question around that, how easy it will be to restart them. Are we talking about having to do new award processes or can we start receiving awards?” said Eric Garduno, senior policy and legislative specialist at Catholic Relief Services.

“It’s not clear to us yet whether there will be opportunities to pick up where we left off. I think those are details that are still being worked out.”