Billions in international donor funds allegedly go missing in Palestine

Billions of euros in European aid to the PLO and Hamas between 2008 and 2012 may have been misspent, squandered or lost to corruption - according to an unpublished report by the European Court of Auditors - a Luxembourg-based watchdog - disclosed in an article appearing in The Sunday Times on 14 October.

Brussels reportedly transferred more than US$2.64 billion to the West Bank and Gaza in that four year period - but had little control over how it was spent - the auditors said in the damning report seen by The Sunday Times.

EU investigators who visited sites in Jerusalem, Gaza and the West Bank noted "significant shortcomings" in the management of funds sent to Gaza and the West Bank.

These disturbing revelations followed closely on the heels of a report in Ma'an News on 10 October claiming that the Palestinian Authority's (PA) anti-corruption commission - established in 2010 - was working to retrieve PLO-owned land registered to individual PLO leaders - according to commission chief Rafiq al-Natsheh.

The commission had recovered around 400 dunums of PLO-owned land in 2012 -

al-Natsheh told Ma'an.

Natsheh's remarks were made after comments by him in in the Jordanian newspaper al-Dustour the previous week that PA officials were moving deposits from Jordanian banks to foreign accounts.

"If suspects accused of stealing public money (are moving funds abroad), that falls within our jurisdiction, We will ask these countries to help us restore the stolen public money, Transferring money anywhere (abroad) will not prevent us from calling suspects to account and restoring that money,"

In rare comments on the location of assets belonging to the PLO - al-Natsheh admitted that bank deposits and real estate collected by the PLO dating back to its inception in 1964 had been entrusted to "trustworthy individuals" and had yet to be recovered.

According to al-Natsheh, some of the money and property - which was supposed to be have been deposited into public accounts when the PA government was established in 1994 - still remains in private hands.

Any possibility of an embedded culture of corruption on a grand scale within the PLO and Hamas - as alleged in these news reports - could well be influencing any reconciliation between the PLO and Hamas who themselves have been locked in an internecine power struggle since 2007 creating two separate fiefdoms where corruption easily flourishes - ensuring that the continuing plunder of large injections of international donor funds will always trump any efforts at reconciliation.

Systemic corruption in the PLO could also be a powerful driver in influencing the continuation of the current status quo with Israel - enabling unjust enrichment of PLO officials to continue at the expense of the West Bank Arabs for whose welfare and advancement such funds received from international donors were to be ostensibly applied.

According to Mona Chalabi on Guardian Datablog:

"The Palestinian economy is dependent on international aid and around 4 in 5 Gazans rely on donations for their survival...

... In 2011, the single biggest donor to Palestine was the United States followed by the EU who gave $281m and $206m respectively."

Other large donors in 2011 (in US dollars) included the UK (82.8 million), Sweden (76.4 million), Germany (57.5 million), France (43 million), Norway (39.6 million), Spain (34.9 million) Canada (34.3 million) and Italy (31.9 million).

In 2012 the Palestinian Authority only received 80% of the promised US$1 billion - well down from the $1.8 billion in 2008.

Continued mismanagement of dwindling international funds spells increasing economic hardship for West Bank and Gazan Arabs.

These donor countries must certainly be concerned at the allegations aired in The Sunday Times.

If the European Court of Auditors Report is confirmed - these countries will have no option but to call for an independent and transparent investigation into the possible misappropriation of foreign donor funds by the PLO and Hamas.

Transparency International - a Berlin-based watchdog monitoring corporate and political corruption - confirms that the state of paralysis afflicting the Palestinian parliament since 2007 as a result of the split between the PLO and Hamas has "given the executive unlimited management over public funds."

A Palestinian opinion poll conducted in July 2012 found that 71 percent of respondents believed that corruption existed in PA institutions under the control of President Mahmoud Abbas. Some 57% of respondents said the same of Hamas-controlled institutions in the Gaza Strip.

Similarly, a hearing held at the US House of Representative's Committee on Foreign Affairs in July 2012 heard evidence accusing the Palestinian political establishment of "chronic kleptocracy"

Transparency International seems to have pinpointed the crux of these monetary and financial woes affecting Palestinian Arab politics and policies with these few well chosen words:

"Presidential, legislative, and local elections are needed to restore the legitimacy of government institutions. This will also reinforce citizens' interests, political accountability and the rule of law."

Whilst the PLO and Hamas continue to deny West Bank and Gazan Arabs the right to vote on who should govern them - any prospects of investigating claims of misappropriation of international donor funds remains a distant dream.

The soon to be released report of the European Council of Auditors could prove to be the catalyst for ending the six year election drought in the West Bank and Gaza - resulting in the appointment of freely elected leaders implementing fully transparent and independent financial structures.

Such imperatives have become all the more urgent following these latest allegations.