The Palestinian Leadership's Hidden Budget

by Brad Nielson

November 16, 2006

Since the cessation of the war in Lebanon, Palestinian officials have played up the notion that their government is lacking funds. Ironically, there is no official method to monitor the issue. Following the election of Hamas, the Palestinian Finance Ministry has ceased to publish its accounts on the Internet.

As the Funding for Peace Coalition (FPC) has consistently noted, official reports and accounts do not reveal the full level of income for the Palestinian leadership. For example, this month, yet another leading Hamas official was caught smuggling money into Gaza. It is impossible to assess how much money goes unreported, nor the large amounts of armaments, which have also been purchased and made their way to the Gaza region.

The kidnapping of journalists may be another example of a lucrative source of income. Fox News reportedly paid $2 million to free its abducted employees, Steve Centanni and Olaf Wiig, from the Gaza-based Popular Resistance Committees. The groups are closely linked to the Preventative Security Services and the Al Aqsa Martyrs Brigades, both part of President Abbas's Fatah faction.

The Palestinian rejection of transparency was recently exposed by the International Monetary Fund (IMF). It recorded that direct payments to the Palestinian Authority from combined European and Arab sources were up some 180% on last year. $US 420 million was donated in cash between April and September 2006. These payments, while only partially offsetting monies withheld by the Israeli authorities, are separate to those deposited in the World Bank's newly established Temporary International Mechanism, to UNRWA and to other NGOs.

What the IMF fails to explain are the sources for the extra funding, which has allowed the Palestinian government to hire thousands of extra staff for its security services. And, when many civil servants, teachers and others are demanding to be paid regularly, it is unclear why there has been a significant increase in private sector bank deposits.

It is the Palestinian Finance Ministry, which has elected to hide the true figures from the public. At a time when Palestinian leaders are talking about poverty, they have yet to explain why there is so much liquid cash to swash around.

The full report of money smuggling is carried below.

Hamas deputy tries to enter Gaza with $2 million

Source: Reuters 14 Nov 2006

By Yusri Mohamed

ISMAILIA, Egypt, Nov 14 (Reuters) - A senior Hamas politician, trying to bypass a financial boycott on the Palestinians, attempted to cross into the Gaza Strip from Egypt on Tuesday carrying $2 million, Egyptian border officials said. The move came two days after the Cairo-based Arab League pledged to break a Western economic boycott imposed on the Palestinian Authority after Islamist militant group Hamas won January legislative elections.

"The Palestinian official arrived at the border and informed the Egyptian side that he was carrying about $2 million collected on a trip to Saudi Arabia," one of the border officials said, speaking on condition of anonymity. He said border guards stopped Hamas deputy Mushir al-Masri from crossing, telling him that he had to "wait for coordination" to take the money across the border. The border ultimately closed without approval being granted.

A Palestinian official in Egypt confirmed Masri had been delayed while trying to take cash across the border, jointly operated by Egypt and the Palestinians, and overseen by European monitors. He said the money was aid for the Palestinian people.

Palestinians technically control the Gaza side of the crossing but its operations can be blocked by Israel, which has shut the border frequently this year over what it says are threats by Palestinian militants.

Arab foreign ministers meeting in Cairo on Sunday pledged to bypass a boycott imposed by the United States and its partners in the Quartet of Middle East mediators to pressure Hamas to recognise Israel's right to exist, renounce violence and accept existing peace deals.

"There will be no compliance with any restriction imposed ... The Arab banks have to transfer money (to the Palestinians)," Arab League Secretary-General Amr Moussa told a news conference after that meeting.

The Arab ministers said they would agree on mechanisms to get around the sanctions, which have increased hardship in the occupied West Bank and in Gaza. But ministers presented scant information as to how they would get approximately $100-$150 million in outstanding Arab aid pledges to Palestinians.

One Arab diplomat has said the League was able earlier this year to successfully transfer $100 million to the Palestinian Authority, although he did not say how.

Hamas officials have successfully brought cash across the Egyptian border into Gaza previously. In June, Foreign Minister Mahmoud al-Zahar brought $20 million across the border stuffed in 12 suitcases.

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