The Unsurprising Corruption of Palestinian Authorities

Recent publications in the international mainstream media of reckless and dishonest management by Palestinian authorities of their economic affairs and their scandalized response to it recall the eye-opening surprise of the corrupt chief of police in the film Casablanca who was "shocked" to find that gambling was going on in the room that he frequented. The media, print and television, suddenly revealed what even journalists of the New York Times must surely have known for years: that the Palestinian authorities are corrupt and inefficient, and that large sums of money given to them and their leaders are missing.

The immediate reason for the disclosure stems from the leaking of the main contents of a report soon to be publicly released by the European Court of Auditors. This body was established in 1975 by the European Union to monitor the income and spending of money given by it in foreign aid. The new 2013 report of the Court reveals that $2.7 billion in direct aid to the Palestinians between 2008 and 2012 could not be accounted for and appeared to be lost. In addition, EU investigators who visited Jerusalem and areas on the West Bank were unable to obtain information or speak to Palestinian officials about corruption in the areas they controlled.

Mahmoud Abbas, president of the Palestinian Authority, (PA), on October 11, 2013 once again laid blame on the "Israeli occupation" for the difficult economic situation of the Palestinians. The "occupation," he stated, was the central reason for the poor economic conditions in which the Palestinians find themselves. This "occupation" exploited Palestinian resources and lands which directly led to an increase in deficit. In fact, the estimated budget deficit in 2013 is expected to be $1.4 billion. As a result he doubted that there would be funds available to pay the November salaries of the 150,000 PA workers, out of a population of two million, if international aid is not received. He did not try to define in which sinking hole the lost nearly $3 billion had gone.

Though the international community, much of the mass media, the World Council of Churches, as well as the Palestinian leaders may persist in blaming Israel for this state of affairs, their views are belied by the voices of Palestinians themselves over the last few years. In June 2012 the Palestinian Center for Policy and Survey Research issued the result of a poll showing that a majority of the Palestinian population thought that the Palestinian authorities were corrupt and that freedom of the press did not exist under Palestinian rule.

The result showed that 72.9 per cent believed the administration in the West Bank under Mahmoud Abbas was corrupt, and 61 per cent of those in the Gaza Strip believed the rule of Hamas there was corrupt. Also, only 23 per cent believed freedom of speech existed in the West Bank, and only 15 per cent believed it did in Gaza. Another poll by the Palestinian Center in September 2013 showed that 79 per cent believed the Abbas administration was corrupt.

Objective analysis by outsiders has confirmed this view. Transparency International, a Berlin group concerned with monitoring corporate and political corruption, states that the ineffectiveness of the Palestinian parliament since 2007 has "given the executive (branch of Palestinian government) unlimited management over public funds." There have been "significant shortcomings" in management of funds. The group is currently investigating 29 Palestinian officials on counts of fraud and money laundering.

The reality is that the Palestinian Authority received, per capita of the people it controlled, 25 times more aid, mostly given to UNRWA (UN Relief and Work Agency) for Palestinian refugees, than Europeans received after World War II. Moreover, over three-quarters of the funding of UNRWA comes from democratic, non-Arab countries, primarily the U.S., Britain, EU, Germany, Sweden, Norway, and Japan.

In particular, the U.S. has, since the mid-1990s when Palestinians have had some form of rule over the West Bank and the Gaza Strip, committed over $4 billion in bilateral assistance to the Palestinians, who have received per capita almost the largest amount in international aid. Since 2008, the U.S. has given on average about $600 million a year to the Palestinians in bilateral aid: in 2013 the U.S. is giving $444 million. In addition, the U.S. has given $4,150 million to UNRWA since its establishment: it is the largest single state donor. All this U.S. aid has been given not only for humanitarian reasons, but also in the hopes that Palestinian terrorism may be ended, and that Palestinians would be encouraged to enter into the peace process. So far those hopes have been in vain.

Instead of dealing with the reality of Palestinian wastage and theft of financial resources, critics of Israel persist in their bias and prejudicial behavior. Typical of this is the vote of the Presbyterian Church, USA, to boycott all products from Israeli settlements in the disputed territories and its call to all nations "to prohibit the import of products made by enterprises in Israeli settlements on Palestinian land."

Yet the Presbyterian Church and all other advocates of boycott, divestment, and sanctions against Israel should have long been aware of the corruption and self-destructiveness of Palestinian authorities if only by looking at the career and behavior of Yasser Arafat. Though much of his activity was secretive in character and though he appeared to live modestly, a considerable amount of money disappeared while he was the Palestinian leader. According to some accounts Arafat diverted $900 million of government revenue to private bank accounts between 1995 and 2000. Even now, Arafat's widow, Suha, is living a luxurious life, said to be on a very large income, in Paris and Malta.

Israel for a time put its collection of sales taxes on goods purchased by Palestinians, which was supposed to go into the Palestinian treasury, directly into Arafat's personal bank accounts. Ironically, some of this was deposited in Bank Leumi in Tel Aviv, Israel's largest state-owned bank, as well as other sums put in the private Geneva bank, Lombard Odier, and yet more that he used as "walk around money" in a way familiar in Cook County, Chicago. Other reports suggest that Arafat had a secret portfolio close to $1 billion with investments that included a Coca-Cola bottling plant in Ramallah, a Tunisia cell phone company, and venture capital funds in the U.S. and the Cayman Islands. Monopolies that were profitable in products such as flour and cement were allocated by Arafat to his intimate associates.

Instead of making peace with Israel the Palestinians have been wasting their resources. In view of the evident continuing corruption and mismanagement that almost everyone is now willing to acknowledge it is hard to take seriously, as some well meaning people have done, the Palestinian pretense of being victims of "Israeli oppression."

Michael Curtis is author of Jews, Antisemitism, and the Middle East.

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