The Palestinian Authority donor machine

The notion that humanitarian aid to the PA reaches the Palestinian Arab people has no basis in reality.

The Palestinian High Court in Ramallah  (photo credit: REUTERS)
The Palestinian High Court in Ramallah
(photo credit: REUTERS)
When it comes to humanitarian aid to the Palestinian Authority, transparency does not exist.
The result is a rich Palestinian elite, which builds exclusive neighborhoods around Ramallah, leaving thousands of shoddily constructed apartments without services for the rest of Palestinian society.
Yasser Arafat set the tone for the PA when he arrived in Gaza in 1994. Arafat took control of every contract and investment, using donor money to build a secret $1 billion portfolio, including investments in Coca Cola, a Tunisian cellular phone company and venture capital funds in the US and Cayman Islands.
Arafat stole $1 b. in tax revenue relayed by Israel for Palestinian workers. The money went to Arafat’s personal account in Israel’s Bank Leumi in Tel Aviv.
Some $100,000 a month went to Arafat’s wife, Suha, living in Paris. Arafat was estimated by US investigators to be worth between $1 b. and $3 b.
Within three years of the PA’s establishment, Palestinian auditors found that 40% of the PA budget, $326 million, was misappropriated, a figure that rose to $700 m. a decade later.
Not one Western government objected. This set the tone for theft at all levels in the PA. PA officials paid themselves high salaries and skimmed from others.
Under Arafat’s successor, Mahmoud Abbas, nepotism reached every level of civil service. Officials, often related to Abbas, commanded salaries of $10,000 per month, more than 10 times that of ordinary civil servants, and opened secret accounts in Jordan with money received in bribes.
The difference between Abbas and Arafat: Instead of stealing from the PA, Abbas employed his two sons, Tareq and Yasser, to set up businesses that dominate foreign investment, building a consortium called Falcon, which took over Palestinian commerce.
Abbas has pumped at $890,000 into Falcon, with branches in Jordan and the United Arab Emirates and a monopoly on the sale of US cigarettes.
Then there is Al Mashreq Insurance Co., operating 11 branches in the PA with a worth of $35 m., headed by Yasser Abbas.
In all, the wealth of Abbas’ sons is estimated at $300 m.
Mohammed Dahlan, a challenger to Abbas, asserts that he received $1.4 b. from Arafat’s personal finances after the latter’s death in 2004. Dahlan asserts that Abbas concealed $600 m. of this fund. Mohammed Rashid, economic adviser to Arafat, reckons that Abbas’s embezzlement reaches $100 m.
Abbas fosters his own elite, builds palaces and approves construction of closed communities for his supporters around Ramallah. One such community is known as the “Diplomatic Compound,” where Abbas approves construction of a shopping mall under his control.
In 2011, Abbas’s adviser, Majdi Khaldi, asked $4 m. from Bahrain for that community. The PA ensured the feasibility of the project by transferring public land at 60% of its market value.
Khaldi approves the entry of PA officials, security commanders and members of Fatah to the “Diplomatic Compound.”
Abbas uses a multi-million-dollar palace under PA security control. Unauthorized visitors, particularly television crews, are threatened with arrest.
Abbas involves loyalists in business deals, such as Mohammed Mustafa, former deputy prime minister in the PA until 2015, appointed head of the Palestinian Investment Fund, linked to Abbas, which holds 18% of Arab Palestinian Investment Corporation (APIC).
Abbas controls the PIF and chooses all of its directors.
By 2009, Mustafa was appointed chief executive officer of one of the two cellular phone companies in the West Bank, Wataniya Mobile. PIF owns 34% of Wataniya’s shares.
Mustafa is allegedly involved in tax evasion and money laundering, as documented in the Panama Papers. Yet Abbas grants Mustafa protection from prosecution.
In February 2016, Palestinian Legislative Council member Najat Abu Bakr demanded an investigation of Abbas’s Governance Minister Hussein Al Araj. Abbas threatened Abu Bakr with arrest, who fled to a PLC building for safe haven. The matter was silenced.
Abbas has fought against corruption of his rivals – mainly Dahlan, who often calls for Abbas’ resignation. A PA court sentenced Dahlan in absentia to three years in prison on charges of embezzling public funds in 2007.
However, in 2010 , Dahlan and his wife were granted citizenship in Montenegro. Two years later, Dahlan served as liaison between Serbia and UAE Vice President Mohammed Bin Zayed Al Nahyan, crown prince of Abu Dhabi. Not long after, Dahlan was also granted citizenship by Serbia, allowing him safe passage throughout Europe.
The fortunes of Abbas and Dahlan have played a role in the succession battle for the Palestinian leadership. At 84, Abbas seeks to protect the his sons’ economic empire. Abbas sought to groom PA chief negotiator Saeb Erekat as his successor but was opposed by the PLO Executive Committee – a blow to Abbas, who rewarded loyalty in the committee, where members receive a stipend of $30,000 a month as well as a luxury car and VIP privileges.
Abbas has instead offered the mantle turned to a trusted aide – intelligence chief Majid Freij, deputy of Abbas. Yet the opponent of both Erekat and Freij has been Jibril Rajoub, former PA security chief.
The sentiment of Palestinians is that the PA is corrupt. From 1,200 Palestinians polled, 95.5% – or virtually everybody – declared there was rampant corruption in the Abbas regime.
PA corruption manifests itself in the black market, money laundering, human trafficking and profits accrued from foreign bank accounts – activities deemed secret until a new ruler emerges.
Western governments confirm embezzlement of their aid to the PA.
In 2013, the European Union determined that the PA mismanaged €2 b. between 2008 and 2012. The European Court of Auditors found that PA civil servants receive monthly salaries without reporting to work while tens of thousands of others actually working were not even paid. Brussels acknowledges it does not press the PA to reform the civil service.
The US State Department has done little better, continuing to withhold release of its reports of PA embezzlement.
US Aid has blindly provided the PA with over $5 b. over the last 25 years. Washington has consistently paid PA debts to private companies, bypassing concern over Abbas’ fiscal responsibility and priorities.
Instead, US taxpayers have ended up paying companies controlled by Abbas’ sons. Abbas’ Sky Advertising even won a contract from the US to improve the image of the United States in the PA.
From 2005 through 2009, Tareq and Yasser Abbas received at least more than $2 m. in contracts and subcontracts, most of them from the United States Agency for International Development (USAID). The agency will not release contracts to Abbas’s sons and has redacted key pieces of information, including executives and employees involved in the contracts.
Western donor humanitarian funds have one purpose: to act as a political resource for Abbas and his supporters.
The notion that humanitarian aid to the PA reaches the Palestinian Arab people has no basis in reality.
The first step for any effort to ameliorate this situation would be to ask for conditions for aid to the PA, requiring accountability and transparency and the right to protect Palestinian whistleblowers.
At this point, no one in the world advocates such a change in policy.