Banking On Terror

By Jerusalem Post | by Dr. Rachel Ehrenfeld
Thursday, February 27th, 2003 @ 5:15AM

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A rumor that the European Parliament had passed legislation to begin an investigation into the Palestinian Authority’s use of EU funds, is just that. Francois Zimeray, a MEP (Socialist Party, France) was quoted in Haaretz on February 24 as saying to the World Jewish Congress that such an investigation is underway. He either mis-spoke or was misquoted.

On February 2, 170 members of the EU Parliament demanding accountability, despite Commissioner Chris Patten’s strong objection, signed a petition to open a parliamentarian investigation into the EU’s aid to the PA.

The following day the European Anti-Fraud Office (OLAF) announced that it has begun an external investigation “in relation to allegations of misuse of funds donated by the European Union in the context of EU budgetary support to the Palestinian Authority.”

What has taken OLAF so long?

The PA’s own documents demonstrating how the PA and Yasser Arafat used EU funds to pay for terrorism were discovered by the IDF and have been available for over a year.

Volumes of the Palestinian Authority’s own documents, including many graced by Arafat’s own signature, ordering the Palestinian Ministry of Finance the recipient of hundreds of millions of dollars in EU budgetary aid (The EU’s annual budget is about $101 billion) and additional $950 million in humanitarian aid just for the year 2002 to pay members of the al Aksa Martyrs Brigade for killing Israeli citizens, or else for procurement of explosives and illegal weapons.

These and similar documents motivated Ilke Scroeder (Green Party, Germany) and a small group of like-minded ethically conscious European Parliamentarians to demand a full parliamentary investigation.

Finally, on February 13, the Conference of Presidents of the European Parliament decided that instead of a full investigation, setting up a “Working Group” to look into the matter would be enough. But don’t hold your breath, this “Working Group” is made of the very same members of the Budgetary and Foreign Affairs Committees who were supposed to monitor how the PA was spending the EU’s taxpayers’ money.

EU donations to the PA since the Oslo Accords have included demands for accountability, and similar demands have been attached to the EU’s direct budgetary assistance since the PA began attacking Israel in September 2000. However, despite EU claims to the contrary, no real effort to monitor how the money it provided the PA was actually spent has ever taken place. The EU claims that the International Monetary Fund (IMF) monitors the PA budget, and EU.

COMMISSIONER for External Affairs Chris Patten maintains that “EU assistance has clear conditions attached to it and is closely monitored by the IMF at the Commission’s request.” His office has also stated that, “the IMF conducts a close review of monthly fiscal information covering the whole of the PA budget, including the wage bill.”

In bold contrast however, IMF staff members have contradicted Patten’s claim on several occasions. The director of the IMF’s Middle Eastern Department, George T. Abed, acknowledged on September 2002 that “with weak institutions and a budget of nearly $1 billion, there has, no doubt, been some abuse.”

And he added that even “the Palestinian Legislative Council itself has complained about this,” and finally that “the IMF does not and cannot control downstream spending by the various Palestinian agencies.”

The EU has been arguing that it will only accept the fact that the money it sends has been funding terrorism if there are mechanisms to identify how each individual Euro is spent.

But as money is fungible; and as the EU gave direct funding toward PA salaries, and additional money to the PA Ministry of Finance for various projects; and as the PA’s own records prove that it used the Ministry of Finance to pay for terror activities, what other evidence is needed to show that the PA allocated money received from the EU to fund terrorism?

In June 2002, after international condemnation of the PA’s corruption, Arafat appointed a new Minister of Finance, Salam Fayyad. He is a former IMF official who, assisted by outside experts, began an attempt to overhaul the corrupt system. As a result, Israel agreed to renew its transfer of payments for Palestinian tax funds, which it had withheld fearing the money would go to fund terrorism.

These payments, unlike the EU’s are being monitored by a special group of accountants brought in by the US. However, there are already reports that Arafat ignores and circumvents Fayyad, by ordering others in the Ministry of Finance to pay to known terrorists, thus continuing to assert his control over the PA’s funds.

Despite all this, the EU decided to continue its financial aid to the PA on the grounds that it is not convinced that Israel will continue to transfer the money to the PA.

This decision not only perpetuates the EU’s unwillingness to account for the whereabouts of money it gave to the Palestinians, but also the EU’s lack of accountability and transparency.

Instead of coming clean, the EU Commission headed by Patten, and the Conference of Presidents thought it was better to sweep the investigation under the carpet. Only this time the red on the carpet is the blood of the victims of terrorism.

Categories: Anti-Corruption, Terrorist Financing, U.S. Policy

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