-Caveat Lector-

Ha'aretz: Arab states freeze millions of dollars in aid to Palestinians

By Amos Harel  Ha'aretz Military Correspondent Ha'aretz 11 February 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.

However, not all the money was sent, and the PA has accused the Arab leaders
of being indifferent to the Palestinians' plight. The Arab aid to the PA was
to come in the form of humanitarian consignments of food and drugs and to be
transferred via the border crossings with Israel.

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.

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