WHERE-S THE MONEY - 03-Jul-94

(Analysis by Sever Plotzker, July 3, 1994 'Yediot Ahronot', p. B5)

Since his arrival in Gaza, Yasser Arafat has not stopped harshly attacking the countries which promised to aid the Palestinian Self-Governing Authority. Arafat claims that the countries are only talking, making promises and declarations, but not giving money.

The truth is a little different. The money is available. The donor countries are ready to transfer hundreds of millions of dollars - more than the Palestinian administration can swallow and digest - within a very short time. What has delayed the arrival of the money until now has been the deep argument between Arafat and the World Bank, which is serving as trustee and inspector for the money from the donor countries.

The argument is political in nature. Money is power, money rules, especially in such a poor and deficient part of the world like the Gaza Strip. As a result, Arafat and PLO leaders in Tunis wanted to be the ones to sign the checks which are given to the civil administration clerks, Palestinian Police headquarters, teachers, contractors, and suppliers in Gaza and Jericho. They wanted to be the pipeline from which the dollars will flow.

Senior World Bank officials and members of the coordinating committee for the donor countries responded in the following manner: Don't even think about it! Our job is not to aid the PLO, but the Palestinian people. You are saying that organizing the administration takes a long time and the Palestinian people needs employment? Okay, we will directly finance development projects in Gaza. We will pay the policemen's and clerks' salaries directly, without PLO mediation. But we, the donor countries, will not pay PLO personnel's salaries. Forget about it.

Arafat hoped that his visit to Gaza refugee camps would be like the old woman's visit in the play by Diranamet: he would bring sacks of presents to give away. Only, he forgot that the presents were not his. The money comes from taxpayers in the West. Every Danish citizen pays seven dollars to the Palestinian Autonomy; it is clear that Denmark's demand to know that its donation is not wasted or used as political bribes is legitimate.

The idea for international aid to the Autonomy was thought of by the Israeli Foreign Minister, Shimon Peres. As a result of his initiative, representatives from dozens of countries, which declared their readiness to aid the Palestinians, gathered together last October in Washington. The countries promised about $2.2 billion in development aid, over a five-year period, of which $720 million was to be transferred in 1994 as a part of the 'emergency program'. Most of the aid is in the form of grants.

This is a huge sum of money with respect to the range of economic activities in the territories. The World Bank, which is fifty years old and has its headquarters in Washington, was chosen to be the coordinator, navigator and inspector of the aid. At the same time, after many rounds, the PLO is setting up PECDAR, its development and reconstuction council. This council, of which Arafat himself is chairman and Abu Ala director, should be the central Palestinian institution in charge of managing development procedures in the territories. It should be the World Bank experts' local partner. PECDAR regulations, which promised the council political independence, openness to the public and an audited financial administration, were examined thoroughly by the donor countries and affirmed, though with clenched teeth, by the PLO Executive Committee this past May.

From the beginning, the World Bank did not have the capability to finance the Palestinian Authority's beginning current deficit. No country is rushing to donate to a comprehensive, vague goal which provides no political leverage, like the budget deficit of another country. Again, Shimon Peres intervened. He suggested establishing a special aid fund, in the name of the late Norwegian Foreign Minister, Yurgan Hoelst, which would be designated as the 'initial investment in the establishment and running of the Palestinian Administration.'

Peres broke conventions and opposition, and succeeded in transferring large donations to the fund. During their last meeting in Paris at the beginning of June, the donor nations approved the Palestinian Authority's 1994 budget: $430 million, which includes $150 million for start-up costs, running costs and salaries for the Palestinian police. The Palestinian Authority's deficit for this year (not including non-governmental charity institutions) is estimated to be $130 million, which the donor countries have promised to cover. Most of the money, $100 million, has already been collected and allocated. The balance aid, $35 million, is also ready.

Yet, Arafat still came to Gaza empty-handed. Why?

Firstly, because until a very short while ago, he and his people went to tremendous and stupid lengths to bypass this special international aid mechanism, and tried to close deals with large and small companies in the West, in exchange for fat commissions which would be transferred secretly to unknown funds. They intended, for example, to give concessions for a waste disposal factory in Gaza to a well-known European company, in exchange for a fleet of ministerial cars for the chairman and his entourage. Or to construct a floating power plant off the coast of Gaza. In some instances, there was talk about mediation fees of up to 10% of all of the concessions. However, the stories reached the media, were published numerous times, and all of those involved became frightened. In the end, as we saw with our own eyes, Yasser Arafat arrived in Gaza in a single, lone Mercedes with Egyptian license plates. And the electricity to Gaza still flows from Israel.

After his attempt to work under the table failed miserably, a week ago a PLO delegation set out for Washington in an attempt to convince the World Bank and the American State Department to alter the aid distribution arrangements. Abu Ala, head of the delegation, a serious and talented man, laid out the chairman's position: give us the money, he said, and we will be responsible for distributing it. This fund, that fund, what difference does it make to you? After all, we have already agreed that your accountants will follow every dollar of aid which we receive and spend. The tenders will be open, the contracts prepared properly. But to us, to the chairman, it is important that the signature on the checks be ours. Our influence in the territories depends on this issue.

The Americans and World Bank officials answered the PLO in this way: the order of business must be the other way around. First of all, get organized. Establish the Palestinian Authority. Afterwards the aid will arrive. The money is ready and waiting.

Abu Ala left for Tunis, and Arafat for Gaza. He accepted the World Bank's decree; he had no choice. Without the $720 million of aid, there can be no Palestinian Self-Governing Authority.