The U.S. has poured more than $7.8 billion into the West Bank and Gaza since 1993, yet a new GAO report on anti-terrorism oversight of that assistance finds that the Department of State has not finalized the policies needed to ensure future aid cannot be diverted to terrorist ends. The U.S. Agency for International Development (USAID) administered the bulk of that aid until July 2025, when most programs were terminated and the State Department assumed responsibility.
USAID allocated $624 million in Economic Support Fund (ESF) assistance for the West Bank and Gaza for fiscal years 2022 through 2024, funding 37 prime awards across sectors including water infrastructure and education, as well as debt relief payments to a Palestinian Authority creditor. With a few exceptions, USAID complied with its anti-terrorism policies and procedures during that period. All 37 awards have since ended except for support to the East Jerusalem Hospital Network.
Appropriations acts for fiscal years 2022, 2023, and 2024 each included provisions directing the U.S. Government Accountability Office (GAO) to review the treatment, handling, and uses of ESF funds provided for assistance to the West Bank and Gaza. Congress has since appropriated ESF funding in fiscal year 2025 and National Security Investment Programs (NSIP) funding in fiscal year 2026 that State can use for the West Bank and Gaza, provided oversight requirements are met.
State's Bureau of Near Eastern Affairs (NEA) is now managing the remaining USAID activities in the region, but the department has not yet determined which of its offices will be responsible for any future programming. State officials told GAO that planning had identified potential early recovery and economic development programming for the West Bank and Gaza, but no office has been formally assigned responsibility. That organizational ambiguity matters because anti-terrorism policies developed by NEA would not necessarily extend to other State components, such as the U.S. Embassy in Jerusalem, if those offices ultimately take on programming roles.
Ongoing regional conflict has delayed NEA's initial efforts to develop replacement anti-terrorism policies and procedures, and once those policies are finalized, they would not necessarily apply to other State components if those offices become responsible for future programming. State guidance calls for risks to be identified, evaluated, and mitigated, and determining and documenting how relevant components will mitigate terrorism risk could help State ensure that such assistance is not diverted to terrorist ends.
GAO identified two specific practices from USAID's prior work that State has not yet adopted. The first is the use of mandatory anti-terrorism provisions in award agreements, a practice formerly used by USAID that would help ensure awardees understand their obligations and the associated penalties for noncompliance. The second is establishing timelines for compliance audits, a practice GAO has previously reported could help ensure that corrective actions can be taken before awards expire. Both gaps are procedural, meaning they are addressable through policy action rather than new legislation, which is part of why GAO directed its recommendations to the Secretary of State rather than to Congress.
GAO issued four recommendations, all directed to the Secretary of State: finalize NEA's anti-terrorism policies and procedures, including a plan for how USAID's previous intelligence-based vetting capabilities will be used; document how State will mitigate terrorist diversion risk for any components beyond NEA, such as the U.S. Embassy in Jerusalem; adopt mandatory anti-terrorism provisions in new award agreements; and establish timelines to ensure compliance audits are completed before awards end. State concurred with all four recommendations, though all four remain open.
Readers tracking this issue can follow legislative developments related to foreign assistance oversight through official congressional channels.
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