Down And Out In Palestine

By The Washington Times | by Dr. Rachel Ehrenfeld, ACD Director
Thursday, March 15th, 2001 @ 6:49AM

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Any attempt of the Bush administration to restart the peace process in the Middle East must first recognize why the Palestinian economy is on the brink of collapse.

According to surveys by the research center of the Israeli Yad Tabenkin, the West Bank per capita gross domestic product (GDP) before the Oslo accord in 1993 was approximately $3,500, and in Gaza, about $2,800. Now, the per capita GDP for both territories is around $1,300. And U.N. Envoy Terje Roed-Larsen says that 30 percent of the Palestinian people live on less than $2.10 a day.

Before Yasser Arafat and the Palestinian Liberation Organization (PLO) entered the territories in May of 1994, the Palestinian per capita GDP in the West Bank was about 40 percent of the $8,000 Israeli per capita GDP for the same period, and in the 1990s, the economic development of the West Bank exceeded that of Israel. If that trend would have been allowed to continue, the West Bank’s GDP would have reached at least $7,000 by now, similar to Saudi Arabia, and 700 percent higher than the average in other oil-devoid Arab states such as Egypt, Syria, Jordan and Morocco.

In 1990, the CIA estimated that the PLO had between $8 billion to $14 billion worth of assets generated from 5 percent tax on every Palestinian working in Arab countries. However, according to a 1993 British National Criminal Intelligence Service (NCIS) report published on the eve of the famous “hand shake” on the White House lawn, most of the PLO’s assets originated from “donations, extortion, payoffs, illegal arms dealing, drug trafficking, money laundering, fraud, etc.” A General Accounting Office (GAO) investigation of Mr. Arafat in November 1995 was kept secret, due to “national security interest.”

Subsequent to the “hand shake” on the White House lawn on Sept. 1993, Mr. Arafat received at least $3 billion more from the United States and the international donor community, again, without any serious demand for accountability. The present condition of the Palestinians in the territories is a grim affirmation that becoming the official leader of the Palestinian people did nothing to change Mr. Arafat’s old habits.

Shortly after the current Intifada began, Arab donor countries pledged to give $1 billion to the Palestinian Authority to ease the economic hardship of the Palestinian people. However, the Arab donors’ past experience with money given to Mr. Arafat and the Palestinian Authority prompted them to demand, according to reports in Ha’aretz, the Israeli daily, that “Chairman Arafat show complete transparency in the funds” and a detailed report on how it was spent. Mr. Arafat and the Palestinian Authority declined to comply, and the Arab donors suspended the transfer of the money “for fear that the money will end up in the wrong pockets.”

The rapidly growing, very visible social disparity in the territories rows of ostentatious villas and late model Mercedes-Benz automobiles for Mr. Arafat’s cronies while most Palestinians live in dismal conditions began to threaten Mr. Arafat’s leadership. Igniting another Intifada enabled Mr. Arafat to redefine the economic decline in the territories as “sacrifices” to mobilize against the “zionist enemy,” while blaming the victim of the violence, Israel.

In 1994, British National Criminal Intelligence Service (NCIS) sources asserted that following Oslo, the PLO’s illegal activities actually increased. No Robin Hood, Mr. Arafat kept the loot for himself and his cronies, hiding large amounts of money in Swiss and other secret bank accounts, and making large investments in real estate and industry all over the world. At the same time he has done nothing to improve the living conditions of the Palestinians he allegedly collected the money for. Never having to account for the billions he had stolen, he continues to claim poverty.

Now the cat is out of the bag: The Palestinian Authority has admitted that the current Intifada was planned in detail last July following the failed Camp David Summit. Imad Faluji, the Palestinian Authority’s communications minister, told a PLO rally in the Ein Hilwe refugee camp in South Lebanon last Friday that, as part of that plan, all the PLO “military action groups of the 1960s, 1970s, and 1980s are returning to work to escalate the fighting against Israel.”

Mr. Arafat has successfully claimed that Israel causes the economic hardship suffered by the Palestinian people. These claims are based on two fundamentally false assumptions: One, that Israel, rather than Mr. Arafat’s misgovernance and corruption, is responsible for the economic collapse; and, two, that on some level, there is still some hope or belief that the disingenuous behavior Mr. Arafat and the PLO’s leadership is a result of pressure from the street resulting from lack of tangible gains to the average Palestinian rather than Mr. Arafat’s intentions and a reflection of his bad faith in entering the Oslo process in 1993, that led to the establishment of the Palestinian Authority.

Mr. Arafat’s past is a good indication that he will continue to use terror and corruption to stay in power. He does not want to give peace a chance because in peacetime the Palestinians working in Israel will earn many times over those working under Mr. Arafat’s corrupt leadership in the West Bank, and especially in Gaza, where they will continue to earn a pittance. This will lead, as it already has, to demands to end corruption, thus, threatening Mr. Arafat’s regime.

That, more than anything else, explains the failure of “the peace process” wherein the Barak government made unprecedented concessions that Mr. Arafat failed to accept as a compromise to end the conflict. And it is why any attempt by the Bush administration to pick up the pieces of the failed effort appear, at best, extremely difficult.

Rachel Ehrenfeld is director of the New York-based Center for the Study of Corruption and the Rule of Law.

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Categories: Anti-Corruption