Sept. 2005

Dear Funding for Peace Coalition member,

Israel's withdrawal from Gaza has generated a new opportunity for Palestinian self-determination. The Quartet now expects the Palestinian Authority (PA) to establish responsible governance, which in turn can be leveraged with international support into the elusive regional peace that is so lacking.

A major concern of the international community is whether the Palestinian Authority has the necessary resources to implement this far reaching but achievable goal.

The European Union is again leading the way with an array of schemes - some innovative and some a repeat of programs which have been tried in the past.

New ideas, such as loan guarantee schemes, combine with others, which have been tried before: establishing customs and excise systems; training of security personnel; and help with infrastructure projects such as water and communications.

Where Europe and America have engaged in similar projects in the past, it has never been fully possible to trace where the money ended up. For example, many of the participants in the 1998 training schemes of Palestinians forces were later found to be involved in violence against innocent civilians. Khaled Abu Nijmeh, from Deheisheh refugee camp in Bethlehem, is one example of many. One of the 13 gunmen escorted from the Church of the Nativity siege in Bethlehem, in May 2002, he was eventually given asylum in Italy.

The Funding for Peace Coalition (FPC) has consistently called for responsible philanthropy to benefit Palestinian society. We have insisted controls must be embellished to ensure that contributions reach their desired beneficiaries. This has yet to happen, despite the recommendations that have come from OLAF, the anti-corruption office of the European Commission.

A number of Palestinians, as well as world officials, are beginning to echo the same thoughts. Some even question the wisdom of sending more aid to the Palestinians territories at this stage. In this context, some jarring glimpses into Palestinian finances were provided recently. Our website presents a full analysis.

George Abed is the newly appointed Governor of the Palestinian Monetary Authority. In his words, banks in Ramallah and Gaza are "overflowing" with money. "If you poured in a lot of financing at this time, it would not have a big impact. It would not be very effective." The immediate challenge, according to Abed, is building a modern system to handle the existing capital efficiently, not attracting more - at least not yet.

A similar discussion had previously been aired on "The Electronic Intifada" (EI), a bulletin board for Palestinian issues. In the words of Arjan El Fassed, one of EI's founders: "Even if the international community would double its total aid efforts and donate more than $2 billion US per year, the poverty level would only decrease by about 10 per cent according to World Bank studies." Apparently, the strategy of the previous decade failed the Palestinians, and a new approach is required.

Coincidentally, El Fassad's words were released just as the G8 countries agreed to donate another $3 billion to the Palestinians. This came on the coat tails of a major aid package to Africa. However, few commentators have noted the difference in approaches, nor speculated about projected outcomes. The African deal concentrates on elimination of debt. The Palestinians have little debt, having been given around $10 billion in cash since 1993.

The comments of Abed and El Fassad are supported by the advisor to the Quartet. Mr James Wolfensohn, the former senior official of the World Bank, has gone on record as saying that Palestinian reforms (financial, judicial and social) are now crucial. These reforms are essential if the Palestinian economy is to capitalize on Israel's withdrawal from Gaza.

Given that past aid has disappeared down a black hole, without benefiting the Palestinian people, it is incumbent upon us all to ensure that politicians take responsibility for their actions and ensure that investments in the Middle East are directed to those who need them and not to those who exploit the generosity for personal greed or religious violence.

Will public money be used constructively to establish an environment for peace, or will it once again be willfully thrown into a melee of corruption and violence?

We encourage all members of the Funding for Peace Coalition to initiate contact with their elected representatives and use every opportunity to inform their friends, acquaintances and the media of the issues involved.

Brad Nielson
Funding for Peace Coalition

PS: It is some time since we sent out a newsletter. I hope that you have been visiting our site, and read the analysis we have been publishing. If not, here is a short index of our latest material.

Europe's Abject Failure - September 13, 2005
Two alternative glimpses of the Palestinian Authority's (PA) extensive holdings were recently revealed. Both exude a refreshing candour, as well as a chilling foretaste of possibly more suffering ahead. Read more …

Palestinian Assets Frozen in the USA - September 1, 2005
The US courts have confirmed that the Palestinian Authority has vast and diverse resources. They have also spelt out the link to terror amongst certain elements of the PA, PA employees and other Palestinian organizations. International charities continue to assert that a substantial number of Palestinians live below the poverty line. Read more…

Post-Disengagement: Lessons for the Palestinian Economy - August 31, 2005
With Israel's initiative to cease its occupation of Gaza and 'disengage', a new consensus is emerging amongst observers: a rare opportunity for peace is coming into focus. And with this change, it is anticipated that a path towards a revived Palestinian economy has also begun to open up. Read more…

The Arab bank, the EU and Terror - August 7, 2005
Following events in London and elsewhere, Europe is considering new measures to combat terrorism. At the same time Brussels continues to transfer vast sums through the Arab Bank. The Arab Bank has been forced to close its New York branch, as the FBI investigates its support of suicide bombers and its business with suspected terrorists. Read more…

A new Palestinian Viewpoint on Charity - July 11, 2005
Arjan El Fassed, the founder of the Palestinian Electronic Intifada, says international aid won't help the Palestinians. Read more…

G8 Funds the Palestinians - July 11, 2005
Bombs in London, aid packages announced for Africa and the Palestinians. A connection? Read more…

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