Donors Balk at Funding PA Corruption
United Nations and European Union officials increasingly fear that the worsening economic conditions in the Palestinian Authority will only increase poverty and lead to more violence. But for the first time, the EU is seriously threatening to withhold further funding unless the PA starts to combat terrorism and adopts a revised and “transparent” budget plan.
The highest-level EU delegation to visit the region in over a year was set to arrive on Monday for talks with the PA and Israel, with discussions expected to focus on the severe economic crisis in the PA. The delegates will address Israel’s role in the troubled Palestinian economy, while also relaying to PA officials that millions of dollars of European economic aid will be released to them only if they present a new budget that is open to review. The EU reportedly is also exerting heavy pressure on the PA to stop targeting Israelis if it wants to receive more monetary aid.
The EU, a large provider of economic assistance to the Palestinians, has let it be known since Sharon’s election that it is “deeply concerned” about the deteriorating economic situation in the PA resulting from the closure of the territories and Israel’s unwillingness over the last few months to transfer VAT levies to the PA.
Since the end of November, the Europeans have given some $52.5 million in emergency aid to the PA to pay salaries, with another $55.3 m. already allocated for the same purpose. However, at a meeting last month of EU foreign ministers, it was decided that this money would be released only on condition that the PA present a revised, “transparent” budget, and that the transfer of funds be part of an overall effort by international donors that included Arab states. But most potential international contributors, especially the Arab states, are wary of handing more money over to Arafat’s corruption-riddled regime.
The Arab League decided at an emergency summit in Cairo last October to transfer some $1 billion to the PA to alleviate the suffering of the Palestinians brought on by their violent uprising. Over $350 million of that sum has been collected, but has yet to be sent to the PA. The contributing Arab countries and the banks through which the money was to move demanded that Arafat show complete transparency in the funds transfers and give a detailed report on how it was spent. Because the PA evaded these demands, the money has been frozen in a Saudi bank.
Palestinian representatives to the Arab League called on the Arab nations Sunday to release the monies earmarked for the PA, and said that the same norms of “transparency” fitting for a private company cannot be expected of a nation at war.
But the Arab and EU demand for accountability comes as a consequence of Arafat’s long record of financial impropriety. Nearly half the money sent to the PA in recent years, especially from Europe, the United States and Japan, did not reach its intended destination. Through the collection of arbitration fees, monopolies and numerous other schemes, a large proportion ended up in the private bank accounts of PA officials, including Arafat, himself, and his economic advisor, Muhammad Rashid.
Meanwhile, Palestinian officials vow to continue the violence, claiming that the difficulties of the Israeli blockade will not discourage their efforts. “The Israelis have to understand that we won’t make a deal based on security for bread,” Fatah militia leader Marwan Barghouti was quoted as saying in THE NEW YORK TIMES. “Security for independence – that is what we are looking for.”
But UNRWA chief Peter Hansen said Sunday that Palestinian endurance under the Israeli blockade and the resulting economic breakdown may be reaching its limits. The PA’s economic growth rate and gross domestic product have plummeted, farm production has dropped 74% since October, and the average per-capita income for Palestinians has dropped from $1,400 to $1,000 in the “West Bank” and $800 in Gaza.
Sharon has repeatedly promised that Israel will relieve its economic pressure on the PA if Arafat comes out with a clear declaration in Arabic calling for an end to the violence, ends incitement in the PA-controlled media, and renews security cooperation with Israel.
Used with Permission from International Christian Embassy Jerusalem.