When it comes to humanitarian aid to the Palestinian Authority, transparency and accountability are non-existent. Critics of P.A. practices are met with arrest by Palestinian security.
The result is a rich Palestinian elite and largely underdeveloped P.A.-ruled areas of Judea and Samaria. That elite has built exclusive neighborhoods around Ramallah while leaving thousands of shoddily constructed apartments without services for the rest of the Palestinian middle class.
All the while, Western governments look the other away. To most of these governments, P.A. corruption is a given and not to be questioned. Both the European Union and United States have ignored the P.A.’s crackdown on Palestinian critics.
With no peaceful outlet available, opponents of P.A. leader Mahmoud Abbas and his aides have turned violent. Fatah has split into numerous factions, many of them with their own militias and linked to organized crime. P.A. security officers augment their salaries by working with organized crime, particularly around Hebron, Jenin and Nablus.
Arafat acquired at least another $1 billion in tax revenue relayed by Israel for Palestinian workers. Again, the money went straight to Arafat’s personal account in Israel’s Bank Leumi in Tel Aviv.
The Israeli leadership looked away and even justified this to Western donors, saying Arafat needed cash to maintain support, particularly in the Gaza Strip. Another $100,000 a month went to Arafat’s wife, Suha, who was living the life of a queen in Paris. In all, Arafat was estimated by U.S. government investigators to be worth between $1 billion and $3 billion.
Little wonder that within three years of the P.A.’s establishment, Palestinian auditors found that nearly 40% of the P.A. budget, or $326 million, was misappropriated, a figure that rose to $700 million less than a decade later.
In the end, Arafat got away with stealing billions from the Palestinian people as not one Western government made this an issue. This set the tone for theft at all levels in the P.A. Bribery became rampant; P.A. officials paid themselves two or more salaries and even skimmed from others. As the Palestinians saw it, this marked a tradition within the leadership of the PLO, which employed a system of favors to control constituents, exclude rivals and operate without opposition.
Enter Abbas
Under Arafat’s successor Abbas, nepotism reached every level of civil service, with ministers and senior officials packing in their relatives for nonexistent jobs. Many officials who already commanded salaries of $10,000 per month, or more than 10 times that of ordinary civil servants, opened secret bank accounts in Jordan with the money they received in bribes.
Under Arafat, Abbas portrayed himself as a model of Western-style governance and transparency. That ended as soon as he became P.A. president. The difference is that instead of directly stealing from the P.A., as Arafat had done, Abbas employed his children. Abbas’s two sons established a network of businesses that dominated foreign aid and investment in the West Bank. The economic empire run by Abbas’s two sons—Tareq and Yasser—has been worth hundreds of millions of dollars and is fueled by the president.
The empire run by Abbas’s sons is built around a consortium called Falcon, which is deemed to have taken over the Palestinian commerce and labor market in the West Bank.
The support of the P.A. leader ensured Falcon’s edge over all Palestinian competitors. The consortium has extended its reach into the most profitable areas of the West Bank.
In all, the wealth of Abbas’s two sons was estimated at $300 million.
Ironically, much of the start-up money that served as the foundation of Abbas’s wealth came from Arafat himself.
Mohammed Dahlan, who has been a challenger to Abbas’s leadership over the past 15 years, asserts that Abbas received $1.4 billion from Arafat’s personal finances, transferred after the latter’s death in 2004. According to Dahlan, Abbas is hiding $600 million of this fund, which Dahlan claims was deposited into his account by then-Prime Minister Salam Fayad.
Mohammed Rashid, the economic adviser to Arafat who rose from a low-paid journalist to one of the richest Palestinians in the world, has reckoned Abbas’s embezzlement at least $100 million.
Abbas’ elite
With so much to protect, Abbas has helped foster a loyal elite. He has built palaces and approved the construction of exclusive closed communities for his top supporters around Ramallah, the government center of the West Bank. One such community, known as the “Diplomatic Compound,” contains dozens of two-story homes and several apartment buildings. To save families from having to enter nearby Ramallah, Abbas has approved the construction of an exclusive shopping mall under his control.
The “Diplomatic Compound,” originally meant for foreign diplomats, was paid for both with P.A. funds and foreign investment.
In 2011, Abbas’s adviser Majdi Khaldi requested $4 million from Bahrain’s foreign minister for the community, formally opened a year earlier. The P.A. ensured the feasibility of the project by transferring public land at 60% of its market value.
In some cases, Abbas has involved his trusted loyalists in major business deals. One example has been Mohammed Mustafa, deputy prime minister and economy minister in the P.A. until 2015. Mustafa was appointed head of the Palestinian Investment Fund, directly linked to Abbas and which holds 18% of the Arab Palestinian Investment Co., or APIC. APIC, registered in the Virgin Islands and which includes at least one Saudi investor, dominates the Palestinian economy and operates companies in such areas as food, medical supplies, automobiles and shopping malls. The holding company has 1,500 employees, making it one of the largest employers in the West Bank.
Mustafa began more than a decade ago as Abbas’s economic adviser. Soon after succeeding Arafat in 2004, Abbas took direct control of the Palestinian Investment Fund and chose all of its directors.
A key change was Abbas’s dismissal of Rashid, Arafat’s adviser as PIF chairman, replacing him with Mustafa in January 2006. Two months later, Abbas placed Mustafa on the board of the much larger APIC.
By 2009, Mustafa was appointed chief executive officer of one of the two cellular phone companies in the West Bank, Wataniya Mobile. Not surprisingly, PIF has owned 34% of Wataniya’s shares. Today, Mustafa is on a list of international figures alleged to be involved in tax evasion and money laundering, known over the last year as the Panama Papers. He is said to be under investigation by international agencies but remains left alone by the P.A.
Still, Mustafa has little to worry about as long as he remains in the West Bank. Abbas employs the threat of arrest against virtually all of his Palestinian critics, including legislators.
In February 2016, Palestinian Legislative Council member Najat Abu Bakr demanded an investigation of P.A. Local Governance Minister Hussein al-Araj, who had been accused of pocketing $200,000 from a deal for the construction of a water well. Al-Araj, however, is a close associate of Abbas, and within hours of her accusation, Ms. Abu Bakr was threatened with an arrest warrant and fled to the PLC building for safe haven. Before that, the PLC member relayed documents to a P.A. anti-corruption commission that were said to have supported her allegations against al-Araj. In the end, Washington and the other donor nations stayed silent and the affair was hushed up.
Target Dahlan
Abbas has, however, fought a crusade against corruption when it comes to his rivals. His main target has been Dahlan, who has often called for Abbas’s resignation and who commands support in numerous Arab states, particularly Egypt, Jordan and the United Arab Emirates. On Dec. 14, a P.A. court sentenced Dahlan in absentia to three years in prison on charges of embezzling $16 million of public funds in 2007. The case was reopened after nearly 18 months and in time for the Seventh Fatah Conference, which Dahlan threatened to turn into a debate over Abbas’s political future. Two days earlier, Abbas lifted the immunity of Dahlan and four of his supporters in the PLC—all of whom were accused of embezzlement and arms trading.
Few would argue that the 58-year-old Dahlan is clean. Like many others in the P.A., Dahlan became rich off foreign funding and contracts. As early as 2006, Dahlan and his family began to invest in real estate in the former Yugoslavia. The then-P.A. security chief opened several companies in Serbia and Montenegro, including Al Fursan in Belgrade. Like Abbas, Dahlan used his children, particularly his son, Shadi, to maintain the businesses. Shadi has helped establish a network in Montenegro, including a company called Levant International. These companies were presented to the United Arab Emirates, which sent a delegation in search of business opportunities in Montenegro in 2008.
Montenegro valued the senior Dahlan, and in 2010 he and his wife were granted citizenship in recognition of what was described as their friendship. Then-Prime Minister of Montenegro Milo Djukanovic credited Dahlan with building ties with the UAE’s royal family. Two years later, Dahlan served as the liaison between the much larger Serbia and UAE Vice President Mohammed Bin Zayed Al Nahyan, also crown prince of Abu Dhabi. Not long after, Dahlan was granted citizenship by Serbia, which allows him to easily travel throughout Europe and meet Israeli and Arab representatives.
Abbas seeks a benign successor
The fortunes of Abbas and Dahlan have played a major role in the succession battle for the Palestinian leadership. At 84, Abbas is looking for little more than to protect the economic empire of his children. The last thing he wants is to pass the mantle to a reformer who would track and seize his bank accounts and assets in the name of the Palestinian people. As a result, Abbas sought to groom P.A. chief negotiator Saeb Erekat as his successor. Erekat, who survived numerous purges over the past 20 years, offered his resignation eight times, only to withdraw it each time under pressure from Abbas.
But to Abbas’s surprise, the selection was vigorously opposed by the Executive Committee and other senior members of Fatah, forcing Erekat to withdraw his candidacy. This was regarded as a blow to Abbas, who invested heavily in rewarding loyalty in the Executive Committee, where members were said to receive a stipend of $30,000 a month as well as a luxury car and VIP privileges.
At that point, Abbas turned to another trusted aide—P.A. intelligence chief Majid Freij, deemed Abbas’s leading deputy. But Abbas has been careful to avoid an announcement or even promote Freij in face of rising opposition within Fatah.
The main opponent of both Erekat and Freij has been Jibril Rajoub, a former P.A. security chief and now member of the Executive Committee. Rajoub, who has distanced himself from both Abbas and Dahlan, has sought the post of Executive Committee secretary-general as part of his drive to become the next P.A. president.
The Palestinian Arab people have been watching the corruption and fighting within the Palestinian leadership. The overwhelming sentiment of Palestinians is that the P.A. is corrupt. In the latest poll, Nader Said surveyed 1,200 Palestinians throughout the West Bank and Gaza Strip. The result was that a record 95.5%—or virtually everybody—believes that there is corruption in the Abbas regime.
The corruption has been seen as embedded in Palestinian politics, headed by a ruling elite that enjoy immunity in virtually every area. This elite engages in the black market, money laundering, human trafficking and profits from foreign bank accounts—activities that will remain secret until a new ruler replaces the old order or becomes mired in a power struggle.
An understanding West
Western governments have confirmed the massive embezzlement of their funding to the P.A. In 2013, the European Union determined that the P.A. squandered nearly 2 billion euros through mismanagement between 2008 and 2012. The report by the European Court of Auditors found P.A. civil servants were receiving their monthly salaries without reporting to work while tens of thousands of others who actually worked were not paid. The European Union and other donors were also called upon to compensate West Bank businesses that were not paid by the P.A. Still, Brussels acknowledged that it did little to press the P.A. to reform the civil service and increase accountability and transparency.
The United States has done little better, with the State Department continuing to withhold the release of reports of P.A. corruption and embezzlement. Like the European Union, U.S. aid, more than $5 billion over the last 25 years, stemmed largely from political rather than humanitarian considerations. That has meant that successive administrations bolstered Abbas’s ability to crack down on critics through the National Security Forces, and to pay convicted killers of Jews.
Washington has consistently paid P.A. debts to private companies, bypassing concern in Congress over Abbas’s fiscal responsibility and priorities.
Indeed, U.S. taxpayer money has ended up paying companies controlled by Abbas’s sons, including a contract meant to improve the image of the United States in the West Bank.
Indeed, Washington has repeatedly turned to Abbas’s sons for contracts in the West Bank. From 2005 through 2009, Tareq and Yasser received at least more than $2 million in contracts and subcontracts, most of them from the U.S. Agency for International Development. Abbas’s Sky Advertising won a contract to improve the image of the United States in the West Bank, while Falcon was selected for a sewer project. Not surprisingly, US AID resisted releasing the contracts to Abbas’s sons and then redacted key pieces of information, including executives and employees involved in the contracts.
Conclusion
With the P.A. preparing for what could be a bloody succession fight and organized crime and Fatah militias in control of much of the West Bank, Western donor humanitarian funds have one purpose: to serve as a key resource for Abbas and his supporters.
In short, the notion that humanitarian aid to the P.A. reaches the Palestinian Arab people has no basis in reality.