Even if their intentions are more honourable, today's Scandinavians can still find themselves on the frontline in the Middle East. One of the most dangerous areas in the region is Gaza, where the Swedish International Development Agency (Sida) is funding a study for a power transmission network. Most foreign workers have been evacuated from Palestinian territories since the outbreak of the current intifada in 2000, but employees from the Swedish company Sweco are digging in. 'The workers have been shot at, which is serious,' says Eric Severin of Sweco International. 'But they have really settled down and stayed for the last three years. You could say we have Vikings there.'

A defining moment for Scandinavian diplomacy, the 1993 Oslo peace accord now lies in tatters, but humanitarian aid from northern Europe still plays a major role in keeping Palestinian society from total collapse. The West Bank and Gaza still take up the vast majority of Scandinavian aid to the Middle East.

'Our main aim was to support the peace process and the development of Palestinian state institutions, the municipalities and so on,' says Christina Regnell of Sida. 'The original plan was to provide assistance up to the end of the Oslo process, then from 1999 aid would slow down. Unfortunately, that didn't happen.' Swedish humanitarian assistance to the occupied territories this year reached SKr 248 million at the end of June, nearly double the amount disbursed in 2001 as a whole.

The amount of international aid donated by most European countries tallies roughly with the size of their economies. However, the Scandinavian governments dig deeper into their pockets. Taken as a proportion of gross national product (GNP), Denmark and Norway are the two most generous aid donors in the world, while Sweden comes in fourth, closely behind the Netherlands. In the case of Denmark, the minimum threshold for contributions is set at 1 per cent of GNP by a parliamentary resolution (see table).

These are the only four counties in the world to devote more than 0.7 per cent of their GNP to international aid: the target set by the UN in the 1970s. They have not been shy about persuading their wealthier western cousins to follow their example. Writing in the International Herald Tribune in March, Norway's Prime Minister Kjell Bondevick said, quite simply, 'rich countries must do more.'

Critics of international aid schemes often maintain poverty cannot be alleviated simply by throwing money at it. But in the case of the West Bank and Gaza the Israeli reoccupation and continuing violence leave donors with little choice. The Sweco workers are an exception: most direct technical co-operation and assistance programmes have been closed down over the past year as governments have evacuated their advisers. The majority of aid is now channelled through the few international agencies to keep employees on the ground, such as UNRWA and the International Red Cross.

'Through what we call the Louisiana process, we attempted to create co-operation between Israeli and Palestinian societies, funding training workshops and creating joint forums such as websites and newspapers to lay the groundwork of the peace process,' says Lars Faubourg-Anderson of the Danish International Development Agency (Danida). 'I'm afraid to say that almost all these activities have come to a grinding halt.'

In the long term, aid agencies are particularly concerned about the basic ability of Palestinian civil society to function under its own steam. 'We have to look at who is benefiting,' says Regnell. 'The Palestinian Authority [PA] is relying on Arab and EU funds at the moment, but that cannot go on forever. What we would really like to do is to support private sector development.' Before they were disrupted by the Israeli military offensive, most assistance programmes were directed at breaking this dependency on outside aid. However, many of the problems came from within the Palestinian administration itself.

'We were working on a democratisation programme with the PA, which included support to the legislative council, the local ombudsmen and forensic training for the police,' says Faubourg-Anderson. 'But a plan to assist in the training of judges waited several years for a law on the independence of the judiciary. It has only now been passed by Arafat, but we got tired of waiting and suspended it.'

Danida has encountered similar problems in Egypt, which is the only other Middle East government with which Denmark has a development co-operation agreement.

Egypt has received some DKr 1,800 million in grant assistance since the agreement was signed in 1989. In accordance with a development strategy drawn up in 1996, local and Danish companies primarily work on projects in the areas of water and sanitation, environment and energy.

'Co-operation with Egypt is not easy, largely because of the bureaucracy,' says Faubourg-Anderson. 'Also the government is not particularly progressive when it comes to poverty elimination, which is key to Danish assistance. The will is there, but things are moving very slowly.'

The slow legislative grind creates practical difficulties. One of Danida's most ambitious projects, to create an independent water authority in Aswan, is faltering without the legislation needed to develop an open market where competition and elements such as cross-subsidisation are possible. Another, more basic, problem is ensuring aid gets to its intended target. 'The slow process of reform means there is a lack of absorption of aid. We estimate that there is about $2,000 million committed to Egypt which cannot be accessed,' says Faubourg-Anderson. 'The ratification of projects by parliament can take ages - one project for a fertiliser factory, worth about DKr 100 million, took at least three years to ratify.'

Traditionally, Scandinavian aid is limited when it comes to the rest of the Middle East, but the increasing integration of Europe already has aid agencies taking a greater interest in other Mediterranean states.

'Until 1998 the Middle East was not of great interest to Sida, except for the West Bank and Gaza. But as we grow closer to Europe, there is a growing interest and increasing contacts with development agencies in the area,' says Regnell. 'Strictly speaking, the Middle East countries are not developing countries, but middle-income states which shouldn't really receive our support. However, in the end it's not just about poverty. It's also about trying to spread the knowledge of human rights and democracy.'