“If you’re interested in peace in the Middle East, then all of us must work together to dismantle terrorist organizations, to cut off money to terrorist organizations,” President Bush said during this week’s press conference with Prime Minister Sharon. The president’s statement, however, is belied by the administration’s decision last week to grant another $20 million directly to the Palestinian Authority. Though no Palestinian bombers have killed any Israelis since the beginning of July, terrorism among the Palestinians has not ceased, and neither has the PA’s official incitement against Israel. Despite some reforms in the civilian administration of the PA, the funding of some of the security forces, including members of Tanzim and the Al Aqsa Martyrs Brigade, is still headed and controlled by Yasser Arafat, whose office spends about $3.73 million monthly – at least $500,000 on salaries.

The PA’s stated commitment to reform its corrupt administration included an agreement to disburse all salaries to PA employees through legitimate banks. Despite this, parts of the security forces continue to be paid in cash, opening the door for abuse and misuse by Mr. Arafat, who continues to control the security forces. The terror infrastructure, including bomb-making factories, also continue to receive cash, some from Iran, unaccounted for in the PA’s general expenses. In addition, Mr. Arafat uses cash to buy favors to stay in power.

Clearly, it is too soon to trust the PA with an additional $20 million, as the Bush administration has promised to do. Although the PA’s finance minister, Salam Fayyad, managed to consolidate all PA ministries’ known incoming funds into a single account, not all the contributions from Arab countries, such as Saudi Arabia, are included and there is no oversight over these monies.

By the spring of 2003, known international aid to the PA since 1993 alone reached at least $5.5 billion, but the miserable conditions in the Palestinians territories clearly demonstrate that this aid was not spent to better the lives of Palestinians. Tracking down PA assets, as part of the agreed upon reform, should have revealed the whereabouts of billions of dollars that the Palestinian National Fund and the PA had managed to funnel away from the Palestinian people over 40 years.Yet, the discovery was limited to assets, investments, and commercial activities that could be identified as of January 1, 2003, which, by April, totaled only $600 million.

The billions of dollars’ worth of assets that the Palestinian National Fund and Palestinian officials had acquired up until then remain unidentified and unaccounted for. If the Bush administration is serious about improving the daily lives of the Palestinian people and building up their economy,it will demand the identification and return of all the assets the Palestinian officials have managed to embezzle.

The commissioner of the European Union, Christopher Patten, recently claimed that on account of E.U. money and guidance, the PA “now has a credible and transparent internal accounting system” and “its budget can be controlled throughout its departments.” However, it was E.U. money given directly and without supervision to the PA to maintain its infrastructure that helped finance Palestinian terrorism, at least since October 2000.

Following the appointment of the Palestinian prime minister, Mahmoud Abbas, and the demands of 170 members of the European Parliament to investigate the E.U.’s direct funding of Palestinian terrorism, the E.U. is no longer funneling money directly to the PA. Instead, it is now sending money to ministries and projects meant to improve the poor living conditions and economic situation of the Palestinian people – caused by the Palestinian leadership’s corrupt practices and ongoing terror attacks against Israel.

Some improvement has been achieved in the civil administration of the PA over the last year. Most of the salaries are paid through legitimate banks; the budget of the ministries is more transparent and includes public disclosure in the press and on the Internet regarding expenses and income, and some key public officials have been replaced. Some PA leadership monopolies are being dismantled, such as the oil and cement monopolies, but others remain intact. The intifada tax has been eliminated, but the collection of Fatah membership fees from PA employees goes on as before.

Mr. Abbas stated last week that the Palestinians are seeking “a state that is built on the solid foundations of the modern constitution, democracy, transparency, the rule of law, and the market economy.” America would do well to assist the Palestinians in achieving this goal. However, there have been many empty promises from the Palestinian leadership. America should assist the PA in improving the economy and standard of living of its people only after the PA qualifies for such assistance by rooting out corruption, upholding human rights, and ending incitement and terrorism.

Ms. Ehrenfeld is the director of the New York-based American Center for Democracy and is the author of the forthcoming book, “Funding Evil: How Terrorism Is Financed & How to Stop It.”