In an overall challenging socio-political context, local government is a driving force for promoting both state building and local economic development in the Palestinian Territory. Contributing to both of these objectives constitutes the backbone of the bilateral cooperation in the Local Government sector in the Palestinian Territory. The collaboration between villages through Joint Service Councils is seen as a first step for capacity building of local governments – in particular the smaller rural local government units – to improve service provision, promote local development, including villages in area C (Israeli controlled). Since 2001, Belgium tries to facilitate and strengthen collaboration mechanisms between local government units, with a particular focus on the smaller local authorities. The Local Government Reform and Development Program (LGRDP) - phase II is a further step in this direction.