State Dept urged to tighten anti-terrorism oversight for West Bank aid

The Government Accountability Office reports that the State Department assumed administration of Economic Support Fund assistance for the West Bank and Gaza from USAID in July 2025. Of the 37 prime awards funded with $624 million for fiscal years 2022-2024, all have ended except the program supporting the East Jerusalem Hospital Network.

GAO recommends that State finalize the Near Eastern Affairs Bureau's anti-terrorism policies and procedures, document how it will mitigate terrorist-diversion risk for components beyond the bureau - such as the U.S. Embassy in Jerusalem - and adopt mandatory anti-terrorism provisions in all future award agreements. The agency is also advised to establish timelines that ensure compliance audits are completed before awards expire. State has concurred with the recommendations, which remain open.

Incorporating leading practices identified by GAO, including mandatory award language and audit timelines previously used by USAID, would help ensure that future assistance is not diverted to terrorist ends. State guidance already requires risks to be identified, evaluated, and mitigated, but the GAO notes that formalizing these steps across all relevant components would strengthen oversight.

Congress appropriated ESF funding for fiscal year 2025 and National Security Investment Programs funding for fiscal year 2026 that State may use for West Bank and Gaza programming, provided oversight requirements are satisfied. The Near Eastern Affairs Bureau has outlined potential early-recovery and economic-development projects but has not yet assigned responsibility for managing them.

GAO's review found that USAID largely complied with its anti-terrorism policies during the FY 2022-2024 period. With State now the lead agency, the GAO emphasizes that adopting USAID's proven safeguards will be critical to maintaining the integrity of more than $7.8 billion in U.S. assistance provided to Palestinians since 1993.