EU plans restarting PA aid: Risk of funding terrorism unresolved

by Brad Nielson

September 26, 2006

Recent meetings of European foreign ministers and other leading diplomats have considered how Europe can restart its funding of the Palestinian Authority (PA).

The question is can the PA - whether led by Fatah under President Abbas, or led through a Hamas controlled government - assure donors that their funds will be disbursed with accountability and transparency? A look at the history of the past few years is not encouraging.

In September of 2003, the IMF put out a scathing report on the PA's management of its fiscal responsibilities. The conclusions detailed poor control mechanisms, huge sums 'diverted', implications of rampant corruption, 'excessive' employment, with an inexplicable number of employees on the payroll - especially in 'security' roles.

Two years later, under Abbas's presidency, the Al-Aksa Brigades were quietly incorporated onto the official PA payroll. The IMF felt bound to comment openly that thousands of new militants had been integrated into the PA over the summer of 2005. Thousands more were reportedly added in the run-up to the Palestinian elections.

The donor community quietly tolerated these large sums spent on supporting a terrorist infrastructure. And the Al-Aksa Brigades and other Palestinian military units continued their attacks against civilians, even after Abbas assumed his Presidential role.

Eventually, when a 13 - 20% wage increase was approved by President Abbas in the run up to the Palestinian elections, the IMF decried the move as a "substantial breach of the Wage Bill Containment Plan". Indeed, the World Bank concluded that "The PA has created a serious fiscal crisis for itself with salary expenditure essentially out of control."

As a direct result, shortly before the Palestinian Legislative Council elections in January 2006, direct European funding of the PA through the World Bank Trust Fund was suspended. For EU commissioner Benita Ferrero-Waldner, the reason was simple as well as instructive for future policy decisions. "The benchmarks have not been fulfilled…the budget should remain within the limits of what the budget has foreseen."

Have procedures improved under Hamas?

The number of PA employees has only increased in 2006. And a new armed, 3,000 strong "operational force", was formed. The members came primarily from the internationally outlawed Hamas' Iz a-Din al-Qassam Brigades and from the Hamas-loyal Popular Resistance Committees (PRC). The head of the PRC, Jamal Abu Samhadana, who was said to have been responsible for the 2003 bombing of a US diplomatic convoy in Gaza and which killed three Americans, was asked to lead the troops.

In parallel, President Abbas announced a further strengthening of his own Presidential guard, upgrading it from 1,500 to 10,000 troops. At a time when the PA claims to be unable to meet its payroll, one has to wonder which priorities were downgraded in order to hire these new recruits.

In the 2˝ years since the IMF issued its damning report, the number of PA employees has grown by around 35,000.

It is instructive to recall the German Newspaper "Die Zeit" publication of an investigative report in 2002, detailing EU support of corruption and violence against civilians. The response of the Commission was derisory, but it made a commitment that:

If any evidence comes to light that the PA is knowingly employing members of terrorist organisations, the PA will need to act immediately to take these people off the payroll and bring them to justice.

The evidence was available then and new facts are constantly emerging. The European Union chose to ignore the information, spending taxpayers' money in direct contradiction of its own laws, its own assertions and accepted mores. All the indications are that the EU intends making the same mistakes with the same horrendous consequences for Palestinians and European taxpayers alike.

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