Arafat’s missing millions

July 30, 2002


1. "Arafat's hidden millions" (Al-Watan al-Arabi, Saudi paper, July 12, 2002)
2. "Arabs halt funding to PA" (Middle East News Line, July 26, 2002)
3. "Who's financing terror now?" (Jerusalem Post editorial, July 27, 2002)

I attach three items relating to the finances of the Palestinian Authority.

-- Tom Gross



Arafat's hidden millions
Excerpts from Al-Watan al-Arabi
July 12, 2002

The Saudi owned Paris journal Al-Watan al-Arabi reported on July 12th that most of Arafat's close associates are concerned with the future and asking questions about the billions of dollars reportedly taken by Arafat and they want to know what happened to the money?

The experts say there are at least 7 billion dollars involved that were gathered through numerous devices, including donations from Palestinians employed in the Gulf states and other countries, and financial aid provided by Arab countries. These billions are now causing secret controversies within the PNA for several reasons that include the possibility that Arafat is finished as leader of the Palestinians. Also upsetting to these searching for the missing funds is the nonexistence of any financial records that prove the quantity of amount of money received by the Palestinian Authority over decades and how this money was spent. Clearly, the quiet controversy within the PNA is to determine Arafat's complicity in the missing funds and the need for any new president to seize control over this wealth so he can exercise the power necessary for his position.

Al-Watan al-Arabi questions the stories of Yasir Arafat squirreling away billions in secret accounts and asks if this just a story spread by his adversaries and enemies? The journal asks why do the estimates of funds in "secret accounts" vary from about $7 billion to about $40 billion? They ask where are the financial records of funding received by the PLO since its inception in 1964? They ask where are the financial records of the PLO expenditures? They ask why did Palestinian financial records disappear after each upheaval affecting the PLO? The journals point out that all the PLO's records vanished when it left Amman during the PLO's presence in Jordan. And the records in Beirut also vanished when Palestinian fighters left Lebanon as they vanished in every other instance.

The journal also reports that high-level Palestinian figures are speaking out about Arafat's wealth and the PNA's need for these funds to assist in forming a state. Additionally, they report that sacked Palestinian security figures leaked details of Arafat's wealth and said that they have documents to prove their assertion.

Moreover, the journal reports that informed sources revealed that the United States government prepared a secret file about Arafat's wealth. They say that the file contains information about Arafat's fiscal assets and secret accounts and documents containing the names of Palestinian and Arab 'businessmen'; but whose real job is to manage these funds for Arafat. They add that the file has information about property owned by Arafat in many countries, including South America. These properties are described as large plantations that along with cash investments and shares are in the names of Arafat's representatives.

The journal says that United States sources leaked information about this file to Arab and Palestinian personalities and would use the information later on to ensure that this wealth will be transferred officially to the PNA and then to the proposed state.

Al-Watan al-Arabi closes by asking is Arafat going to disclose the funds owned by the Palestinian Authority registered in his name or in the names of unknown businessmen? Or will the Palestinian people stay poor?



Arabs halt funding to PA
Middle East News Line
July 26, 2002

Several Arab countries have halted funding to the Palestinian Authority amid accusations that chairman Yasser Arafat embezzled funds meant to aid Palestinians.

Palestinian sources said the Arab League funding was meant to finance the Palestinian health system as well as improve infrastructure. The sources said Arab countries froze more than $200 million in funding pledged to the PA after reports in the Gulf Arab media asserted that Arafat had embezzled $5 million in Arab allocations.

The sources said among the countries that have suspended funding to the PA are Morocco, Kuwait, Oman, Qatar and the United Arab Emirates. They said Egypt and Jordan have sent little financial help and instead have focused on the transfer of food and humanitarian aid to the Palestinians.

Palestinian officials have confirmed a sharp reduction in Arab and Western aid. They said many countries have pledged tens of millions of dollars but have placed conditions on delivery of the aid.

"The United States has allocated $50 million in humanitarian aid to the Palestinian people, and other countries did the same," PA International Cooperation Minister Nabil Shaath said. "But the actual supplies that arrived were little."

Shaath has been touring Saudi Arabia and other Gulf Cooperation Council states in an effort to renew Arab funding. The PA minister has stressed that Arafat has implemented reforms meant to increase financial accounting and transparency.

Saudi Arabia has maintained funding to the PA, the sources said. But the sources said Riyad provides the lion's share of aid to Hamas and individual Palestinian municipalities.

Saudi Arabia has agreed to fund an international team of military experts and monitors in an effort to restructure PA security forces. Palestinian officials said the monitors would come from Egypt, Jordan, Saudi Arabia and the United States.

The Arab cutoff has frozen Palestinian developmental projects as well as the operation of several hospitals in the Gaza Strip. The sources said several of the countries that have halted funding are offering to relay money directly to municipalities in the PA.

On Thursday, Israel met with international representatives regarding a renewal of funding to the PA. Israeli Foreign Minister Shimon Peres was quoted as telling the International Task Force on Palestinian Reform that Israel planned to release 10 percent of the $650 million being held in taxes collected for the PA.



Who's financing terror now?
The Jerusalem Post
July 27, 2002

In a stunning and inexplicable reversal of policy, Israel decided last week to begin transferring funds to the Palestinian Authority. Acting under intense pressure from the United States, Prime Minister Ariel Sharon authorized the Treasury to hand over NIS 200 million, or approximately 10 percent of the PA's frozen assets.

And so, just several weeks after it justifiably criticized the European Union for continuing to support Yasser Arafat despite the violence, Israel itself now joins the list of those propping up his terrorist regime with a steady cash flow.

The significance of the decision cannot be understated. Since shortly after the start of the Palestinian terror campaign in September 2000, Israel has refrained from passing along to the PA the monies collected in customs and VAT from Palestinian purchases in Israel or on goods imported through Israel.

As proof of the PA's direct involvement in terror mounted, it was only logical that Israel would choose to desist from financing an entity that was murdering Israeli citizens. To do otherwise would have been unthinkable.

Indeed, as former US secretary of state James Baker once noted, albeit in an entirely different context, money is fungible. Funds provided, say, to help the PA pay clerical salaries will necessarily free up other monies that can then be used for far more devious purposes, such as purchasing weapons, manufacturing explosives, or rewarding the families of suicide bombers.

And, though Sharon reportedly had insisted that no money would be transferred until a mechanism was established to ensure that the funds would go to improve the lives of average Palestinians, even that condition has now apparently fallen by the wayside amid objections by the PA.

Hence, Israel will essentially be giving Yasser Arafat a blank check, with no way of knowing precisely to what use the funds will be put.

Needless to say, there is plenty of good reason to suspect where at least part of it will end up. Shortly after Operation Defensive Shield earlier this year, the government began releasing reams of internal PA documents that had been discovered by the IDF during its sweep of the Palestinian-controlled areas.

Among the papers were handwritten instructions from Arafat himself ordering the disbursal of money to fund terrorists and their activities and pay for weapons to be used in terror attacks. There is no reason to now believe that the money being transferred will go to purchase butter rather than guns, and the government is therefore making a grave error by handing over the money.

Moreover, even if the dollars do not go to sponsor violence, there is still the issue of PA corruption to contend with. Recent revelations have demonstrated that large sums of money have gone into Arafat's own private accounts or been used to defray the living expenses of a PA minister's son studying at a university overseas.

Hence, pouring additional funds into Arafat's treasury, when even the elementary reforms demanded by outsiders have not been implemented, makes little economic or financial sense.

Nor does it make political sense either. Israel has made clear that Arafat is "irrelevant" and must be replaced, a position that the US has belatedly adopted as well. Nevertheless, the transfer of the NIS 200 million will only serve to strengthen his position, enabling him to buy off opponents and demonstrate a tangible achievement which he did nothing to earn.

In so doing, the Sharon government is also unwittingly sending a dangerous message to Arafat, namely that he can engage in terror and do nothing to halt Hamas and Islamic Jihad, and yet he will still get his paycheck at the end of the month.

As admirable as the government's desire to improve the lives of Palestinians might be, sending money to Arafat is hardly the best way to achieve this aim.

After all, the primary reason behind the increasingly dire economic straits in the territories is not Israel's counterterror operations, but the Palestinian terrorism which necessitates them. There would be no need for the closures, checkpoints, and roadblocks if Palestinian suicide bombers and gunmen would lay down their arms and stop murdering innocent men, women, and children.

As long as the PA persists in resorting to terror, it must bear the responsibility for the consequences that result, be they economic or otherwise.

But by agreeing to join the dubious list of those financing the PA, Israel has effectively conceded the moral high-ground. Sharon is now playing along with the fiction that the PA is a partner with whom business can be done, even as the terrorism continues. So, when the next attack occurs though we pray that it won't just bear in mind where the money for carrying it out may have come from.

All notes and summaries copyright © Tom Gross. All rights reserved.