Has the EU stopped funding the Palestinians?

By Brad Nielson

May 5, 2005

In the six months since October 2004, Europe has practically ceased its direct funding of the Palestinian Authority (PA). Curiously, the apparent change of policy has not been accompanied by an official announcement.

This period represents the beginning of the Abu Mazen era, the man Europe credits with reforming the PA. At the London Conference in January 2005, heavy pressure was brought to bear on potential donors to give over US$1 billion to the PA.

It has also witnessed the finalising and eventual release of a long delayed report by the EU anti-fraud unit, OLAF, into funding of the PA. To be precise, OLAF issued a press statement in March 2005, but its findings have remained undisclosed.

Despite bold claims by the European Commission that OLAF's work justified Brussels funding policy of the past few years, OLAF did adopt a contrary position. Using the language of diplomats, OLAF announced that there were, and remain, fundamental problems in the way money is handed to and used by the PA.

So has OLAF's work prompted a change in policy?

A recent press statement from a Council meeting of the External Affairs Committee stressed "the importance of accelerating reforms within the Palestinian Authority".

Recent events have tended to justify these concerns. The PA has authorized the purchase of dozens of new luxury Audi cars, with the import monopoly rumoured to be registered in the name of a well-connected local personality. Five Palestinian judges are under investigation for financial abuse. And stories involving corruption amongst the Palestinian nepotistic elite continue to pervade the media. (For example, an item referring to the latest developments on investigations into Mrs. Suha Arafat's finances appears below.)

Evidently, the Europeans are waiting for concrete measures on the ground before making any new and substantial moves. For example, Mr. Wolfensohn, the former President of the World Bank, is due to make some initial suggestions in his new role as the Quartet's envoy for disengagement.

While Emma Unwin and other entrenched Commission mandarins are still trying to hide true facts of the past, it appears that OLAF is being paid a silent tribute. Nobody is admitting it in public. There is a growing sense of optimism that OLAF's efforts may prove to be an efficient guide for future policy-making.

The European taxpayer is left to reflect. Why have those elected and appointed officials, responsible for all the previous mismanagement of European investment on behalf of the Palestinians, not been rebuked by the current Parliament?

France tracking PLO money,,2-10-1462_1693170,00.html

Washington - French investigators are tracking $7m transferred by PLO treasurer Nizar Abu Ghazaleh to the Paris bank account of ex-Palestinian leader Yasser Arafat's widow, The Wall Street Journal said on Wednesday.

Palestinian officials said the Palestine Liberation Organisation controlled a bank account in Tunisia from which millions of dollars in unexplained payments were made to Suha Arafat. They suspect the payments were connected to contracts issued by the Palestinian Authority (PA) under Yasser Arafat before he died last year, the report said.

The officials are trying to find out whether the money transferred to Suha Arafat came through Al Bahr and Al Sakhra, two companies which routinely handled purchase orders placed by the PA and which apparently were seeking, according to one official, to "create a war chest in case the PLO fell back on hard times", it added.

As head of PLO finances, Ghazaleh played a key role in the transfers to Suha Arafat, according to Palestinian officials and French judicial officials probing PLO funds, it said. Ghazaleh, who died last week, was also chair of Al Bahr, and Suha Arafat played a key but unofficial role at the firm, helping to broker purchases, according to the daily.

The investigation follows a European Union probe that found no mishandling by the PLO of the more than $500m the EU donated to the Palestinian Authority from 2000 to 2003. The French inquiry focuses on the legality of the funds passing through Suha Arafat's Paris account.

The Wall Street Journal said that neither Suha Arafat nor her family members, nor PLO chair Mahmud Abbas or officials of Al Bahr or the PA could be reached for comment.

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