European Union Funding of Terror and Hatred: A Chilling Update

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A Funding for Peace Coalition report, scheduled for release in July 2004, reveals that international aid from Europe countries continues to be diverted to the Palestinian elite and their terrorist activities against civilians. New evidence from Palestinian Arabs clearly implies that the Europeans have been continuously duped over the last decade.

The World Bank calls it “the highest per capita aid transfer in the history of foreign aid anywhere.”

Despite the billions handed over to the Palestinian Arabs during the last ten years, Western charities still claim that the average Palestinian Arab’s income is around $2 a day. And if prosperity has failed to result, even more striking is the absence of peace in the region. Ongoing violence and counter actions push it further and further from view.

The Israeli government began showing captured Palestinian documents in early 2002 which, it said, disclosed a pattern of corruption, diversion of international aid, and deliberate violence by the Palestinian Authority (PA) itself.

While the revelations aroused some concern within the donor community, the largest of the donors – the European Commission (EC) – responded with studied coolness and denial. The EC leadership denied the validity of the Israeli evidence at every opportunity, claiming that European aid was well supervised and controlled, and was actually achieving its intended purposes. Asserting that Palestinian Authority (PA) budgets had to be supplemented by outside donors to promote a reform process within the PA, the EC continued and continues to donate vast sums. Eventual peace between the parties, it maintains, is the ultimate goal.

Not everyone bought the hyper-confident Brussels view. Investigative reporting in the European press led to revelations that directly contradicted the EC’s stand. Christopher Patten, the EU’s External Relations Commissioner, went so far as to put his reputation behind the EC positions. And yet, members of the European Parliament, in numbers well beyond the requisite quorum, petitioned for an official inquiry. Their wishes were not respected, and instead, in early 2003, the Council of Presidents established a toothless Parliamentary Working Group, lacking the authority and scope of a parliamentary inquiry. At the exact same time, whether by coincidence or design, OLAF - the EU’s fraud squad – started a top-secret investigation of money flowing from the EU’s vast coffers to the Palestinian leadership.

A growing wave of public revelations in the meantime raised the level of concern.

  • In September 2003, the International Monetary Fund (IMF) reported that it had found $900 million ‘diverted’ from Palestinian assets into private accounts. Its report noted significant control weaknesses – consistent with the IDF claims.
  • The same month, PA Prime Minister Mahmoud Abbas resigned. In his final speech to the Palestinian parliament, Abbas complained angrily of corruption within the PA – confirming claims made by the IDF and denied by the EC.
  • Yasser Arafat’s wife is under current investigation in France relating to mysterious bank transfers from the PA to her private accounts. While the sums involved are modest, totaling $11.5 million, the revelations of Mrs Arafat’s luxurious lifestyle in Paris are not.

The list goes on. Money transfers from the PA budget into the control of avowed terrorist groups; personal financial corruption amongst the PA leadership; the enormous private wealth of Arafat (as reported in Forbes magazine). None of these has moved the EU leadership.

The deliberations of the European Parliament’s Working Group were split 7 to 6 in the end. It issued its report in January 2004. Actually, two reports were published. Both, as the Funding for Peace Coalition reported (see raise more questions than they answer. Acknowledging that a significant level of corruption and financing of terror is evident in the PA, it would be hard to press charges in a court of law because of the ‘burden of proof’, said the parliamentarians.

Notwithstanding, pressure from the World Bank and from some international donors has led to a degree of reform within the PA’s institutions. But the spirit of denial remains firmly in place, even while (or perhaps because of) new international aid packages – each involving tens of millions and supplementary to EU and US aid – have reached the PA from the governments of Norway, Japan, the UK and Canada among others. On May 27, 2004, for example, Baroness Amos announced a £26.5 million package, to be transferred via the Department for International Developments (DFID) directly to the Palestinian Authority (PA).

However new winds began to blow in May 2004, beginning with significant and largely unreported evidence of corruption and violence laid at the foot of the PA by Arab sources. The new evidence shows that the EC’s denials were premature and wrong. Had appropriate action been taken by Patten and the EC leadership when the problems were first identified, many Israeli and Palestinian lives might have been saved, and their suffering mitigated. The evidence raises serious questions as to the sustainability of the vaunted reforms.

In direct contradiction of EU claims during the past three years, there is now clear evidence that:

  • Payments of salaries to PA employees were made in cash and not by direct bank deposit as recently as May 2004. This is a key component of the Arafat system of patronage, corruption and false accounting.
  • When this change away from cash payments was implemented, it was found that 7,000 employee names on the PA payroll were fictitious and removed from the PA payroll.
  • Members of Palestinian terror organizations (organizations officially defined as such by the EU) were receiving salaries from the PA government payroll as recently as May 2004.
  • When these terror salaries were finally blocked, the terrorists reacted by refusing to carry out attacks – and talking about it in a completely open way to the press. In so doing, they challenged the PA leadership’s demands for more terror.
  • Arafat’s prime minister has openly and proudly acknowledged these terrorist groups as being official components of the PA infrastructure. He has promised to restore them to the PA payroll, and says he is working to achieve that immediately.
  • The fragile and few democratic underpinnings of PA reforms are being deliberately removed by the Arafat regime. It has been officially reported that Palestinians living in West Bank and Gaza ‘refugee camps’ are being refused the right to vote in upcoming Palestinian elections.
  • Official PA incitement to terrorism and hate education amongst children continues at school, on television, at sport and in the mosques, often paid for from EU funded PA budgets.

Deeply concerned at the central enabling role taken by the European Union and its political leadership, the Funding for Peace Coalition has sponsored the preparation of a comprehensive non-partisan report. This documents the revelations above, based on Arab sources and other source documents, and analyzes their effects on the prospects for peace.

Members of the press and officials of donor organizations are invited to contact the Funding for Peace Coalition to receive advance copies of the report. It will become available in July 2004.

The Funding for Peace Coalition is an international ad hoc group of concerned citizens interested in peace and alarmed at the absence of adequate controls and of fundamental responsibility in the management of European aid to the Middle East.
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Brad Nielson