EU Funding.org

Arafat's Death and the European Connection

An Analysis

By Brad Nielson

November 14, 2004

The death of Chairman Arafat has presented us with a torrent of commentaries from the world's media. Much attention has been focused on the vast fortune accumulated by the leaders of the PLO and the PA. Reports have described the possible windfall coming the way of Arafat, his wife, Suha and others. Of particular interest was the report from "Al-Jazeera", (click here for the full article) which noted how he had stashed away billions, and this despite the continued reports of poverty in the Palestinian territories.

However obscene the sums may appear to the reader, it can also be argued that these are internal Palestinian matters. After all, many of these stories, although hushed out of the limelight, have been known for years.

What is of more significance is the reporting from some of the braver investigative reporters. They have begun to ask a more pertinent question: Where did the money come from?

The International Media Links Arafat's Fortune to International Donors

Trevor Kavanagh of "The Sun" newspaper in the UK clearly indicates that European taxpayers have been one of the leading suppliers of oxygen to the PA's blossoming bank accounts. (Click here for the full article). Perhaps generously, Kavanagh puts Arafat's wealth at well below estimates in some of the Arab press.

As the Sun was being read around the breakfast table, CNBC TV was also taking up the challenge on the same day. It detailed how Arafat had died phenomenally rich. Further, the source of this income was the distortion of Palestinian Authority (PA) budgets, including money received from international donors. The EU prides itself as the largest source of overseas aid to the PA.

The Daily Telegraph in Britain visited the former treasurer of the PLO, Jaweedf al-Ghussein, who was saddened, frustrated and disillusioned by the current unseemly struggle over the money.

"Eventually, Mr al-Ghussein realised that he had been handed an impossible task - tracing Arafat's billions required a detective, not an accountant. 'I just hope he has left some sort of a will," he told the newspaper, on the eve of Arafat's death. "Or at least some detailed information about all the accounts and the assets, because that money belongs to the Palestinian people, not to him.'" (Click here to see the full report.)

It has been speculated that western journalists are subjected to immense pressure not to write such stories. Hard evidence of this is limited. However, such correspondents have a new column of support. They can now point out that even the Arab media has described the EU donations in considerable detail.

The Gulf Daily News from Bahrain issued a report, datelined Brussels. (Click here to see the full story.) What was of specific importance was not the standard denial from Palestinian sources that Arafat had amassed a fortune. The paper quoted Emma Udwin, spokeswoman for outgoing EU External Relations Commissioner Chris Patten. She says that no EU money was given to Arafat.

Oh really?

What Was Emma Udwin Trying To Hide?

Ms Udwin's explanations are based on a three-sided approach.

First, she claims that the missing $900 million discovered by the IMF was unrelated to the EU contributions.

  1. Ms Udwin knows full well that the IMF audited only one part of the Palestinian funds flow -- that of Revenue and taxes. It found $900m of misappropriated assets. The IMF said in their report that it did not audit the Palestinian expense budget, which was the recipient of the EU funds.
  2. Ms Udwin knows full well that the IMF detailed in the second half of its report severe control weaknesses in the Palestinian budget.
  3. Ms Udwin knows full well that the expense budgets with control weaknesses are presided over by the same thieves that had slipped $900m out of the revenue side of the equation.
  4. And here's the really interesting part: Ms Udwin knows full well that the key figure to watch is not $900m! The EU has poured in EUR 2 billion. This has encouraged member states to pour in a similar amount. This includes direct and indirect aid. The question is not what has been allocated and from what budget. The question is where has the money gone? And are those amounts reasonable? What is asked of Ms Udwin is that she applies basic accounting criteria to these donations, rules that can be found in any well-governed public or private financial operation.

The fact is that this is all one big ruse.

By focusing on the $900m discovered by the IMF, the commission spokeswoman ingeniously implies that there is no possibility that Arafat (or other officials) have diverted funding from the EU. They have tried to contend that 'The European Union …did not pay any direct budgetary assistance to the PA during the period in question, 1995-2000.'

This simply ignores the huge sums transferred under other programs and to other institutions. Let us take one simple example. The EU gave EUR 589 million in the period 1995 - 1999 provided to the "West Bank - Gaza Strip", as aid to the Palestinians was designated in that period. See http://europa.eu.int/comm/external_relations/mepp/docs/euaid_mashraq.pdf

And all these figures exclude amounts provided directly by EU member states. It also simply sidesteps the last five years - a period of unprecedented chaos.

In next part of Ms Udwin's scheme, she claims that the EU no longer gives direct aid to the PA. This is true. However, instead of sending the money directly to the PA treasury, it is channeled via a specially created fund at the World Bank, which hands the money over to the PA. It is understood that the actual transfer is carried out via branches of The Arab Bank , which continues to be cited by international agencies for money laundering.

Finally, in some of her comments Ms Udwin falls back on a familiar theme, quoted by many leading Europeans over the years. Namely, it has been the EU's successful insistence on reforms within the PA that has protected this vast expenditure of assistance.

One such reform being attempted by Finance Minister Fayyad is to bring all Palestinian owned assets under the auspices of the Palestinian Investment Fund ( PIF ). However, this move has yet to be completed, and past attempts to carry this out have been unsuccessful. In fact, the PIF is run by the same team, which 'diverted' the $900 million discovered by the IMF - clearly a case of the cat guarding the cream.

The CEO and managing Director is Mohammed Rashid, who was Arafat's personal financial advisor, and who has been cited in numerous scandals and his reported to have full access to the Rais's fortune. The board members include leading Palestinian cabinet ministers, which excludes any possibility that it may act as in independent body to monitor overseas donations. (See http://www.palestineinvestmentfund.com/download/Annual%20report%202003.pdf )

Summary

It may be possible to argue that Ms Udwin has been a touch naïve. Even so, as never before, there is now multiple evidence from even Arab sources to show that much of the income entering the coffers of the PA treasury did not and does not find its way to the residents of the Palestinian territories.

The best example was recently provided by Issam Abu Issa , the founder of the Palestine International Bank in 1996 in Ramallah. Three years later, $105m of assets had been confiscated, probably absorbed by The Palestinian Company for Commercial Services (PCSC). The CEO of the PCSC was Muhammad Rashid. The following year the PCSC was renamed as……..The Palestine Investment Fund.

In the square world of European politics, Ms Udwin and her sponsors should remember that even an assault from three sides still allows the truth to ooze out.


©2003. All Rights Reserved. Copyright information and fair use notice .
P.O. Box 2009. Rochford, Essex. SS4 1DB ENGLAND. Phone: +44 (700) 593-0923. Fax: +44 (700) 593-0984.