January - February 2007

Aid for Palestinian poverty or a Middle East arms race? A plea to end the folly

The Funding for Peace Coalition (FPC) has identified a new and increasingly dangerous trend in the "game of giving" to the Palestinians.

Previously, the Europeans, Americans and other donors had at least pretended that aid was only to be used to reduce poverty, an essential part of the peace process. Leading the Palestinians away from bitterness is still very much needed.

It is impossible to know exactly how much money has already been given to the Palestinians in direct and indirect aid since the Oslo Accords of 1993. Research efforts of the FPC and others place the figure between $14 and $20 billion. At the low end, that's $1 billion a year or about $4,000 of aid per person- an astoundingly large amount, outstripping any other aid emergency, including Sudan and the Tsunami relief effort.

In the past, as highlighted by many FPC reports, this support was diverted to corruption and violence. In a moment of rare candour, or of frustration, President Abbas confirmed in a Ramallah speech:

We received dozens of investment projects from Arab countries and Western countries and Japan and economic projects and tourism projects, but they never happened. Why? Because we are determined to fire rockets.

Today, the aid is increasingly directed towards funding an arms race; supporting the perceived moderates around Abbas against the fanatics of Hamas, who are believed to be backed by Iran.

The American government is to prop up the Abbas regime to the tune of $86 million in military aid. Criticised by the Wall Street Journal, the paper questioned whether Abbas can be seen as a reliable ally or even as a permanent figure in the region.

And the Europeans are committed to continue their training of the Fatah-backed police forces, ostensibly to build up the forces of democracy and an open judiciary. Under this pretext, both Spain and Finland have upped their contributions since the beginning of January.

For further evidence of misdirected funds, consider the $100 million in Palestinian tax withholdings recently released by Israel. The government in Jerusalem was pressured to hand over the funds, with promises that the investment was to be used for humanitarian causes and for salaries in the social services sector. As soon as the money was received, a senior aide of Abbas, Rafiq Husseini, revealed that Abbas will pay the security forces "from a fund of $152 million (€118 million), including $100 million (€78 million) in tax rebates recently transferred by Israel…"

Hamas also needs money for its military ambitions. The acting finance minister, Samir Abu Aisheh, is projecting that the 2007 budget will amount to $2.56 billion (€1.98 billion), an increase of about $500 million (€386 million) from 2006. This includes cover for the 25,000 additions to the civil service wage bill. And where will the money come from?

"We think the countries that are offering indirect assistance, which doesn't go through the government, will continue to do so, with reasonable amounts like in 2006."

To reiterate, and as the FPC has continuously documented, these extra personnel are mainly to be found amongst the security sections of the budget. Both the IMF and the World Bank have condemned these expenses as excessive.

The Palestinian aid syndrome has become an extended version of a new arms race - previously fought out between superpowers, but now dividing the West against alleged fanatics. It is becoming increasingly irrelevant whether or not the money goes to the poor to relieve poverty and unemployment.

As this newsletter was being prepared, Palestinian factions were formulating an internal peace agreement. As reported by the Palestinian Middle East Peace Center, the outlawed Hamas paramilitary Executive Force will be integrated into the main Palestinian security structure, joining the terrorist Al-Aksa and others. In other words, any Western contributions to the PA will directly pay for terrorist salaries.

Do not expect any drop in poverty over the next year. The lack of precise information over the years on aid usage has emphasised that funding for the Palestinians has been, and remains, clouded by a lack of transparency and accountability. Such gross mismanagement of overseas taxpayer monies ensures that the average Palestinian rarely benefits from the assistance.

Instead of bringing peace and prosperity, aid is being used for violence. It pays for the rifles and rockets pointed against both Palestinian and Israeli civilians. We need to end this madness, immediately.

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