1. Introduction

1.1 Research Questions and Methodology

This research analyzes the regulations governing non-governmental organizations (NGOs) in Egypt and Palestine. Jam^ciy_t khayriya - charitable associations and other NGOs - have been leading the efforts at promoting economic and social development in local communities throughout both societies, especially in the past two decades. In the absence of effective governmental projects that address the most basic needs of various communities, non-profit groups (Islamic, Christian, secular, feminist, labor, and capitalist) are attempting to fill the void. Governments in Egypt and Palestine are increasingly unable to devote limited resources to a plethora of problem areas - education, housing, health care, day care, agricultural and industrial productivity, transportation, and employment. Elements of would-be civil societies in different settings must fend for themselves.

In recent years, NGOs in Egypt and Palestine have been extended tremendous responsibility for socio-economic development. The international donor community has coupled that responsibility with substantial economic and technical assistance. In Egypt, the Social Fund for Development, established by the World Bank in 1990 and currently capitalized at over $640 million, is relying on NGOs to help it in its efforts to ameliorate the social costs of economic adjustment and privatization. In Palestine, NGOs similarly are being touted as the most appropriate mechanisms for achieving the economic development that has eluded (or been denied to) Palestinians for decades, development that is vital to the success of Palestinian autonomy. To demonstrate such faith in the NGO sector in Palestine, the World Bank is planning to establish a $15 million Trust Fund for NGOs in 1996.

While great hopes lie with NGOs in both of these distinct political and economic settings, there nevertheless remains great pessimism among development specialists familiar with both societies. The pessimism is a result of the understanding that NGO activities in both places (Egypt, a nation-state; Palestine, a state that is currently "under construction") traditionally have been restricted. The pessimists are bolstered in their argument by the fact that Egypt's Law 32 of 1964 is generally aimed at limiting the autonomy of NGOs and at keeping governmental control over their activities. As the Palestinian National Authority (PNA) works to regulate its NGO community, there is great concern among the NGO and international donor communities about the way in which the PNA will establish its legal and regulatory mechanism to govern (and control?) the NGOs under its auspices. Of special concern is the fact that the PNA looked to the Egyptian law (among others, including Jordan's law) to find "inspiration" in drafting its own. Still, despite the uncertainties of the legal/regulatory environment within which NGOs must operate in Palestine, and despite the strict regulation of NGOs in Egypt, local social activists as well as donor officials understand that NGOs remain the "key" to development in both countries.

This research project seeks to demonstrate that the trust put in NGOs is well placed because of the laudable history and continuing potential of non-profit, charitable, developmental, and civic associations in the region. This is a follow-up and an expansion of previous field research conducted in Egypt during 1990-91.

1. 2 Hypotheses

This monograph is part of a larger research project, currently in progress but far from concluded. The initial question I faced once I arrived in Palestine to conduct research for the larger research project was suggested to me by a great many Palestinians, in both the PNA and the NGO community. It is summed up as follows:

The way in which the PNA deals with NGOs now indicates the underlying philosophy of the coming regime. Is this philosophy of the PNA supportive of civil society, democratic governance, and popular participation or is Palestine "destined" to be ruled by another authoritarian Arab regime?

In interviews with PNA officials as well as Palestinian NGO (PNGO) leaders, it was evident that the proposed law aimed at governing charitable associations and private institutions had much in common with the Egyptian law of associations. PNA officials admitted "looking at" Egypt's law as well as laws from Jordan, Denmark, and the United States. As Egypt's law has been under attack by the NGO community there and somewhat, though more quietly, by the international community, the fact that Palestine would look to the outdated and much maligned law in Egypt as a model was an outrage to international donors and PNGO representatives; it also came under attack by some officials in other parts of the PNA, including PECDAR and the Ministry of Justice.

If Palestine is threatened with a restrictive and undemocratic regime (though I make no claims that this will occur), the NGO community is in danger of having its laudable past remain in the past; its future will be less than stellar under any law that severely limits its freedom of movement and gives a Palestinian government extensive powers over its activities. PNGOs face another threat to their sustainability and that is the very real threat to financial support from the international donor community. As governments world-wide seek to support the PNA and President Yasser Arafat, they shift monies that used to go to sustain NGO activities away from these and into the coffers of the PNA. This has already begun to occur. The PNA is unlikely to take that money and deliver it to the same NGOs that used to receive those funds directly. This financial issue is connected directly with the proposed NGO law in that the latter stipulates in various places that NGOs must get permission from the PNA to receive funds, especially foreign funds.

The broader research project, of which this initial report is a part, is aimed at academics, development specialists, and policy makers. Based on field work and interviews with NGO leaders, government officials, and international donor representatives plus an analysis of primary and secondary sources, my intent is: (1) to better inform development theory about the role of NGOs in promoting development and restructuring using case studies from the Middle East; (2) to examine whether there is a correlation between NGO and civic association activities and political development; and (3) to suggest specific solutions to evident problems facing NGOs in the Middle East. The latter in particular should be of interest to policy makers (domestic and international) and NGO leaders.

To frame and guide this work, a series of hypotheses are specified:

(1) governments inhibit individual and community activism in the realm of socio-economic development;

(2) the jam^ciy_t khayriya (charitable associations) and munathamaat gheir hukumiya (NGOs) promote socio-economic development through the provision of basic social services (education, health care, job training, etc.);

(3) NGO efforts bolster the legitimacy of the existing system.

The flow of ideas from these hypotheses is almost counter-intuitive - i.e., if governments inhibit community activism, how can NGOs function properly to promote development? If NGOs promote development, how does this bolster regime legitimacy? Why does this not undermine legitimacy - especially if governments inhibit NGO efforts? While this might sound more logical than how the hypotheses are presented, in fact the research I conducted in Egypt in 1990-91 suggests that the situation is much more complex than it appears. Governments are not simply "out to get" community activists. Governments often encourage such activism even if they keep a tight control over various types of activities. And most NGO leaders are not working to undermine governments. Many of them need and appreciate government involvement in their activities even if they prefer more freedom of action. And, of course, these hypotheses are posed without suggesting that they are truths; they are ideas to be tested in the field.

Time is also an important factor in kwhether NGOs enhance development and how governments affect these groups. Thus, this research will examine the difference between NGO activity over time and under different administrations: Is control over Egypt's NGO activities more liberal now than it has been in the past? Will Palestinian government enhance NGO effectiveness beyond what they were capable of doing under Israeli occupation? This research is therefore comparative between two societies and comparative within each society over time.

For policy makers working with these organizations, two other issues are examined: (1) "smaller is better" in the sense that small development projects targeted at finite communities promote more tangible results than do large, "demonstration" projects that only secondarily target larger, more amorphous, communities; and (2) "local is more legitimate", in the sense that people prefer to work with and listen to members of their own community who know what community needs are and who can mobilize support and cooperation from a target population; less appreciated are foreign aid contractors and even national government bureaucrats, unfamiliar with local needs, politics, etc. The literature on development and aid provide enough evidence to suggest that these two issues are no longer hypotheses to be tested but can be considered corroborated "fact". These are addressed in this research to determine if there is further evidence for use by policy makers, NGO leaders, and aid donors.

1. 3 Theoretical Framework

The theoretical framework of this research centers on the issue of organizations as key to economic and political development. While this theory finds much in common with Huntington's analysis of "political institutionalization" - e.g., "without strong political institutions, society lacks the means to define and to realize its common interests" - it differs considerably from the state-centrist focus of his analysis. Instead, this theoretical framework is grounded in the analysis of Esman & Uphoff who argue that development, which is intended to improve productivity and distribute its benefits more equitably among the majority, requires a range of supports: Public investments in physical and social infrastructure; a supportive policy environment, suitable technologies, and effective institutions, to enhance the capacities in the public and private sectors. This framework relies also on Bellah and his collaborators who find that the "good society" depends overwhelmingly on institutions and that improvement in communal lives requires people to work within the existing institutional framework to reform the system, not throw it out entirely and start from scratch.

The theory of organizations and institutions as essential to the development process draws on the questions raised by Tendler in her report to U.S. Agency for International Development (USAID), Turning Private Voluntary Organizations [PVOs] into Development Agencies. Tendler traces the movement of PVOs away from their traditional "relief" work to become "mini-development agencies". She criticizes the notion that there is a difference between welfare services and development and demonstrates that PVOs have been making significant contributions to development for years. Implicitly, PVOs/NGOs need not shoulder numerous responsibilities which would lead to greater bureaucratization and generalization. They can continue to "show the way for governments in areas where they have specialized and where, at the same time, targeting on the poor may be easier."

1. 4 A Private Response to the State

The increasing role of NGOs in providing basic social and economic services in various communities throughout the Middle East is a direct response to state-bureaucratic neglect and/or failures in these fields. As such, these organizations are an underrecognized aspect of the world-wide movement toward "privatization" (broadly defined) and easing the state out of its dominant position in economic affairs. This is certainly occurring in Egypt. As NGOs assert themselves by providing a variety of services (health, education, agriculture extension, vocational training) the government pretends to provide - but does so either only on paper or ineffectively, with poor quality and lack of "sincerity" on the part of its employees - this is clearly a case of "private" organizations replacing the state.

In Palestine there has been no "Palestinian state", only a repressive and economically stifling Israeli occupation. With the development of a Palestinian "state", there appears to be a reverse process than that in Egypt as a national authority attempts to assert itself over the institutions that have sustained Palestinian society for many decades. Private actors (NGOs) remain vital to the supply of health and education services among many others; but state leaders are almost desperate in trying to legitimize their authority in the eyes of the Palestinian public. Providing services is a handy political device to gain legitimacy, if only they can provide services well.

International aid donors (multilateral aid agencies, such as the World Bank and other U.N. bodies) and even many governments (bilateral donors as well as individual governments supporting their own NGO communities) still tend to favor NGOs when it comes to service provision. Their recognition of the benefits provided by such organizations is demonstrated by the increased funding aimed at NGOs by both governments and donors. Egypt and Palestine are evidence enough of this new emphasis. For governments, much of this is no doubt an aspect of control, or an attempt to have some influence in and on these groups and to take some credit for their successes, which are many. Donors, on the other hand, are often frustrated by the lack of progress in the projects they fund through governments. They see NGOs as less bureaucratic, less corrupt, and often more effective and efficient than are most governments and thus as more able to get money and technical assistance directly into the hands of needy community groups. While donors in Egypt have been looking for ways to direct their assistance more directly to communities through local NGOs because of the Egyptian government's ineffectiveness in using such aid, in Palestine the reverse has developed. For years, international donors have provided hundreds of millions of dollars (annually, in the last few years) directly to PNGOs. Now, with the establishment of a Palestinian "authority" or governmental structure, donors are taking money out of NGOs pockets and directing it to the authority. This should prove to have a significant and debilitating effect on the PNGO community.

The enormous expectations placed on Egyptian NGOs by the government and especially by the World Bank to offset the negative effects of structural adjustment and privatization plus the expectations placed on Palestinian NGOs to develop a terribly crippled economy indicate the extent to which states have been unable to fulfill their self-ascribed development and social welfare functions. It also indicates the extent to which an occupying force has total disregard (to say the very least) for the welfare of a people it controls. While governments worldwide abdicate these roles, many fail to relinquish their tight controls over society or to otherwise provide a supportive policy environment necessary to allow societal organizations to more freely assemble, speak, or engage in development activities. This research will assess this worldwide phenomenon and place it in the context of Middle Eastern societies; it thus relates as much to economic development theory as it does to the growing literature, theory, and understanding of "civil society" (and issues of political development, democratization, and pluralism) in the Middle East and elsewhere.

1. 5 Methodology

Conducting this research involves months of field research, visiting scores of NGOs, government offices, project sites, and donor agencies throughout Egypt and Palestine. The methods I use are: open-ended interviews in Arabic and English, on-site inspections, and evaluatiof organizational goals and achievements. In Palestine, unlike Egypt, I have had the opportunity to develop and distribute a questionnaire/survey. In Egypt, the Ministry of Education regulating foreign researchers provides strict guidelines that prohibit questionnaires (as well as tape recording of interviews and even taking notes during interviews!) I rely as well on NGO publications, government documents, and donor reports. The availability of data is enormous as there are thousands of Egyptian NGOs and hundreds of Palestinian NGOs.

This project is not only relevant to the current political and social environment of the Middle East in general, it is also relevant to donor funding policies aimed increasingly at NGOs. It is, unquestionably, of interest to host governments, Egypt and the Palestinian National Authority, both of which claim to rely on NGOs to promote development and reconstruction.

From these Middle Eastern cases, development theorists and policy makers will be better informed about the capabilities of NGOs to fulfill the numerous tasks assigned to them. It is important to know whether NGOs can continue to achieve their traditional objectives (relief, charity, community development) plus satisfy the growing demands placed on them by governments and international aid donors determined to find effective organizations capable of taking on some of the state's responsibilities (e.g., labor retraining, transportation, housing) in the move to a more market-oriented economy. It is as important to understand the role such civic associations play in political development, including but not necessarily equated with democratization.

Even before the comparative analysis is extended beyond the Middle East, the two countries in question may benefit considerably by seeing what is occurring to one another. Palestinians may learn much from Egypt and the situation of NGOs there - even if that learning means knowing what not to do (e.g., establish a restrictive law giving government sweeping powers over NGOs).