Arab states freeze millions of dollars in aid to Palestinians

Ha'aretz - February 11, 2001 - Arab countries have suspended the transfer of hundreds of millions of dollars collected in recent months for the Palestinian people for fear the money will end up in the wrong pockets - exacerbating the already rampant corruption in the Palestinian Authority, Israeli security sources told Ha'aretz.

Arab states decided at an October conference in Cairo to transfer some $1 billion to the PA to alleviate the suffering of the Palestinians, caused by Israel's clampdown on them due to the violence of the Al Aqsa Intifada..

It now appears that a considerable sum was, in fact, raised, but not sent to the PA. Sources told Ha'aretz about $230 million was raised - a large proportion in Saudi Arabia and the Persian Gulf states. The contributing Arab countries and the banks through which the money was to move demanded that Chairman Yasser Arafat show complete transparency in the funds transfers and give a detailed report on how it was spent. This Arab demand followed past experience with money sent to Arafat's regime.

A great deal of money sent to the PA, especially from Europe, the United States and Japan, after the establishment of the PA, did not reach its intended destination. Through the collection of arbitration fees, monopolies and numerous other schemes, a large proportion of that money ended up in the bank accounts of PA officials, including Arafat, himself, and his economic advisor, Muhammad Rashid.

Because the PA has evaded the current demands made by the Arab donors, the money - most of which is being held in the Islamic Bank in the Persian Gulf - has been frozen. Israel doubts the PA will accede to the Arab donor demands, because it wants control over the flow of money. [ http://www.imra.org.il ]