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How the EU Funds PA Terror By: David Frankfurter
FrontPageMagazine.com | Monday, March 08, 2004


Whatever his other failings, European Commissioner for External Relations, Mr. Christopher Patten cannot be accused of beating around the bush. He evidently means what he says.

Take the stance he adopted on the repeated allegations of financial impropriety, relating to European funding of the Palestinians. On June 19, 2002, Patten stated: “I repeat. The documents presented to us by Israel do not prove that EU funds have been misused…(nor) has financed terrorism”. 

Things look much less clear today. Officials from the EU’s anti-fraud OLAF office were in Jerusalem recently, reviewing evidence. Has EU financial aid for the Palestinian Authority (PA) been diverted?

However, OLAF is not the only inquiry in progress. French authorities have announced an investigation into mysterious transfers to Mrs. Arafat’s personal bank balance. This might account for some  € 9 million. Where is the rest?

The scale of the alleged fraud is immense. Brussels has handed around € 4 billion to the PA since 1993, directly and via non-government organisations like UNRWA. This excludes significant contributions from individual European countries, from the USA, Canada, and from Arab League states. In 2003, EU transfers reached € 245m. Some suggest that total foreign aid to the PA has finally exceeded the level of funding provided to Israel by the United States.

It’s an open secret that the flow of money to the Palestinians has often lacked appropriate controls. This inherent weakness in the EU’s budget structure is waiting to be tapped by the unscrupulous. At least some of that cash has funded terrorists and gunrunning, even through the misuse of ambulances.  Sadly, the victims of misplaced investment of this kind include citizens of the EU like Marianne Zaoui, murdered by Palestinian activists.

The weight of evidence confirms that much of the EU money paid to the PA has disappeared, with no benefit to the man on the street. Instead of investigating its own channels and procedures, the EC continues to wave an accusatory finger in every other direction.

As Europe’s chief civil servant for foreign affairs, Mr. Patten is in the firing line over these allegations. Fair-minded people are entitled to ask whether the charges against Patten stand up to scrutiny.

Patten himself has long complained that it’s not easy tracking money transfers to the PA. In that 2002 speech, he compared the situation to a previous career posting in Northern Ireland, where he feared that money was also being diverted. An interesting career record.

In his defence, Patten has argued for years that the IMF monitored the distribution of EU funding to the Palestinians. The IMF’s own website did clarify that point, way back in 2002 – unfortunately not by backing the Commissioner but by contradicting him: “…the IMF does not and cannot control downstream spending by the various Palestinian agencies. This matter remains between the PA and the donors.”

Patten’s distinguished team of advisors includes Mr. Alan Seatter, the Head of Division for the Near East Region. In evidence to a UK Parliamentary committee last September, Mr. Seatter gave assurances about the “improved” procedures by the PA’s Ministry of Finance, largely on the basis that the new Palestinian finance minister has introduced proper controls.

Sadly, the minister, Mr. Salam Fayyad, an internationally respected economist, has also spoken clearly. He has repeatedly reported that the PA’s finances remain under a cloud of suspicion. Three short months after Seatter’s conjectures, Fayyad stated: "Unfortunately, the documents related to the revenues from oil products - or how the money was used - can't be found. They have disappeared from the ministry."

Fayyad knows that these revenues, rightfully a resource of the Palestinian Authority, were deposited in a bank account under Chairman Arafat's personal name and sole control.

Meanwhile, Seatter was openly stating the case in London for the PA and how it prefers to request general budget support rather than aid for specific infrastructure projects. What causes Patten’s staff to ignore facts like these?

But there’s more. Last year, Patten and others publicly praised on the management improvements proposed by Arafat’s handpicked prime minister, Abu Mazen.

Abu Mazen, another clear speaker, complained at length in his resignation speech of illegal tamperings with Palestinian civil servants’ salaries, a payroll largely funded from contributions by the EU taxpayer. He abhorred the way that tens of millions were siphoned off annually from Palestinian monopolies. All this and more was simply a ‘cover for theft’.

The EC’s response to the speech: utter silence. Abu Mazen’s statement came some weeks before Seatter’s testimony.

At least, the EC is being consistent. It has just released a statement, sponsored by EC chief Romano Prodi, committing “to review its block on 40m EUR in aid to the PA following concerted reform efforts.”

Should we expect better? Patten’s workload is immense. So, it’s understandable that he apparently did not manage to review fully the IMF findings published in September 2003.  Had he done so, he would have seen that $900m was ‘diverted’ (using the IMF’s term) from PA tax revenues. He would also have noticed that these same ‘diverters’ manage the EU-funded PA budgets - which, the IMF says, suffer from a long list of control flaws.

And Patten’s officials have been up to their eyeballs with Afghanistan and Iraq. Does this explain their failure to appreciate the severity of the evidentiary material previously shown to them by the Israelis, very probably the same documents proffered to the OLAF officials? And as for checking out the myriad of reports available documenting the theft of UNRWA contributions and misappropriation of European donated hospital equipment by PA officials - well, how many hours are there in a day?

Let us not even ask about the EU millions sent to the PA to cover the budgetary gap, stemming from Israel suspending tax transfers collected on behalf of the PA. When the Israelis cleared the backlog and resumed the payments, several members of EU Foreign Affairs committees complained that no attempt was made to recover those EU loans. Some now assert that the Parliament had not actually approved the payments in the first place.  Are Parliamentarians trying to shift the blame to Patten, now that the money seems irrecoverable?

Let’s be clear. Hundreds of millions of Euros have gone missing, but it’s unfair to blame it all on Patten.

But let’s ask this: How in the name of everything decent in Europe is it that a veritable library of verbal, written and circumstantial evidence, all pointing to the same conclusion – massive misappropriation of vast amounts of money intended for the Palestinian Arab people – has been ignored and denied for years? Some plain answers are urgently needed.

Patten’s office no longer seems the place to go. Maybe the EC is just hoping the issue will be filibustered until the summer elections. As Patten always explained, they were all just following the orders of the EU Parliament. Weren’t they?

David Frankfurter is a business consultant, corporate executive and writer who frequently comments on the Middle East conflict.




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