The Bush Administration’s search for partners to promote “peace” and “democracy” within the Palestinian Authority (PA) resembles Lord Charles Bowen’s “blind man in a dark room looking for a black hat — which isn’t there.” For the first time, the Bush Administration plans to give $150 million in cash directly to the Palestinian Authority (PA) Treasury, as part of a $496.5 million “aid” package, including $410 million for development programs. This added to the $86.5 million for CIA “security training,” which Congress authorized in April 2007. The CIA has apparently assumed the Palestinian terrorist-training role previously held by the former Soviet Union. Since 1994, the CIA armed and trained thousands of Palestinian “security forces,” who subsequently joined every Palestinian terrorist organization.

CIA Palestinian training success is best described by a member of the PA’s Chairman own security unit, – Force 17, officer Abu Yusef: “The operations of the Palestinian resistance would [not] have been so successful and “would not have killed more than 1,000 Israelis since 2000, and defeated the Israelis in Gaza without [American military] trainings,” he boasted in August 2007. Since the Oslo Accords, the PA received some $14 billion to $20 billion in international aid, according to a 2007 Funding for Peace Coalition (FPC) report to the British Parliament. Each Palestinian received $4,000 to $8,000 per year. In comparison, the U.S. Agency for International Development (USAID), provided $1 billion in humanitarian aid for 2.5 million Darfur refugees from 2003 to 2006 –only $100 per person annually. Moreover, of the $7 billion pledged international aid, only $5 billion were spent to assist more than 5 million Tsunami victims in more than 15 countries on two continents. The PA received “the highest per capita aid transfer in the history of foreign aid anywhere,” according to former World Bank country director for Gaza and the West Bank, Nigel Roberts.

Not surprisingly, hundreds of thousands of Gazans spent more than $300 million in less than two week shopping spree, after Hamas blew up the border with Egypt. Yet, the Palestinian economy is in ruins, Why? In March 2007, PA Prime Minister and former World Bank official Salam Fayyad, told London’s Daily Telegraph: “No one can give donors that assurance” that funds reach their designated destinations. “Where is all of the transparency in all of this? It’s gone.” Controlling Palestinian finances, Fayyad concluded, is “virtually impossible.” Palestinian violence has escalated since the 1994 PA establishment and PA officials have produced an unbroken record of unfulfilled promises and outright deception.

Yet President George W. Bush in his January 28 State of the Union Address, reassured the Palestinians that “America will do, and I will do, everything we can to help them achieve…a Palestinian state by the end of this year.” Nevertheless, U.S.-favored PA President Mahmoud Abbas, who in 1957 with Yasser Arafat co-founded the al Fattah terrorist group, assumed the role of his predecessor. Like Muslim Brotherhood, Marxist–trained Jihadist Arafat, neither does Abbas “recognize that confronting terror is essential to achieving a state where his people can live in dignity and at peace with Israel,” as President Bush declared.

Abbas remains committed to the organization’s reason d’etre–destroying Israel and expelling the Jewish people from the region. Despite public Fattah-Hamas leadership disagreements, branding one another “murderers and thieves,” Abbas arranged on Jan. 30 to give Hamas $3.1 billion of $7.7 billion that international donor community pledged last December in Paris. Abbas’ support for Hamas is not new. In Feb. 2007, He announced, “We must unite the Hamas and Fattah blood in the struggle against Israel as we did at the beginning of the intifada.” He stated this en route to Mecca to meet with the Saudi King, and Hamas terror chiefs Khaled Mashaal and Ismail Haniyeh.

The Saudis pledged hundreds of millions of dollars in “humanitarian aid ”–which, like previous pledges, they failed to deliver. Rather than $660 million in annual aid the Saudis promised in 2002, the kingdom donated only $84 million since then, according to World Bank reports. Other Arab League members, who in 2002 promised $55 million monthly to foster PA economic development, gave even less.

Meanwhile, however, the Saudis and the Gulf states funneled hundreds of millions of petrodollars–some raised in government-sponsored telethons –to reward Al Aqsa Martyrs Brigades, Hamas and Palestinian Jihad suicide bombers and fuel the anti-Israel Jihad. Indeed, “Saudi Arabia remains a source of recruits and finances for …Levant-based militants,” said National Intelligence Director J. Michael McConnell, before the Senate Select Committee on Intelligence, on 5 February 2008. McConnell should have included USAID on his terror-funding list.

A Dec. 2007 USAID audit reported that the mission administering its funds gave money to groups and institutions affiliated with U.S. designated terrorist organizations, including Hamas and Islamic Jihad. It warned: “Without additional controls, the mission could inadvertently provide support to entities or individuals associated with terrorism.” USAID “failure” to prevent funds from reaching Palestinian terrorist is not surprising given U.S. previous Administrations support for Arafat, and now for Abbas, who repeatedly claims: “We have a legitimate right to direct our guns against Israeli occupation,” while reiterating his desire for “a political partnership with Hamas.” It is time for President Bush to remove his blinders and stop donating U.S.-taxpayer funds to this murderous partnership. It is also time for Congress to demand a proper monitoring program to oversee the legitimate use of U.S. aid to the Palestinians.

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Dr. Rachel Ehrenfeld is author of Funding Evil; How Terrorism is Financed and How to Stop It. She is director of the American Center for Democracy and member of the Committee on the Present Danger.

Alyssa A. Lappen, Senior Fellow at the ACD, is a former editor for Forbes, Corporate Finance, Working Woman and Institutional Investor.