Palestinian Authority Corruption

What about corruption in the Palestinian Authority in the territories they control?

  • Frankly, the Palestinian Authority, which is corrupt and cavorts with terror… is not the basis for a Palestinian state moving forward. [National Security Advisor Condoleezza Rice, San Jose Mercury News, June 15, 2002]

Since its creation in 1994, Yasser Arafat’s Palestinian Authority has presided over the collapse of the Palestinian economy. He was given billions in aid, and squandered what he and his cronies didn’t steal. With GDP down nearly 70 percent, Palestinians have seen their collective national net worth reduced by more than two thirds. Virtually nothing remains of a once reasonably vibrant private sector. Corruption exists on a scale that even the normally approving Europeans cannot abide. Public infrastructure has disintegrated. Public health standards, in 1993 the highest in the Arab world, are among the lowest. And the disastrously self-destructive terrorist war against Israel that Arafat started in September 2000, has reduced Palestinians to the most desperate conditions they have seen since the creation of Israel in 1948.

Lawlessness in the Territories

Ahmad Tabouk. leader of the armed militia group Fatah Hawks,ruled Nablus after Israeli troops withdrew, as agreed under the Oslo Accords. Insisting that they were acting in the name of Arafat, they settled squabbles with the other militias by engaging in running street battles. But they came to specialize in gunning men down in broad daylight. They shoot lesser offenders - drug users or men accused of committing "moral" crimes - in the legs. They kill people who they believe have provided the Israeli army with information that has led to the death of wanted Palestinians. Palestinian gunmen killing so-called "collaborators" reached new high levels in 2002 in conjunction with Israel's Operation Defensive Shield against terrorist infrastructure in the territories.

Corrupt Administration of the Palestinian Authority

In addition to outright theft or misappropriation of funds, there is also faulty administration and a bloated public payroll. One of the chief consumers of funds in the chronically deficit-ridden Palestinian budget is the "police force" that exceeds 2% of the population, a size far above the limits imposed by the Oslo agreements, a force that is armed with weapons that are illegal under those agreements. Notwithstanding the large size and excessive armament of the force, it has not created the security environment that was its raison d'etre. In fact, the Palestinian police -- really Arafat's army -- are implicated in terrorism against Israel.

There are many documented reports of rampant corruption and misuse of funds within the Palestinian Authority and its related governmental bodies. For example, in 1997, the PA received $548,727,000 from the international donor community. It also received more than $800 million in tax revenues collected by Israel from Palestinian Arabs. At the end of 1997, when the PA released its annual financial report, $323 million - nearly 40% of the annual budget - was "missing." Yasser Arafat is believed to have personally benefited, possibly with billions of dollars flowing into personal accounts. Yet, the world community continues to make donations to Arafat's organizations in order to try to buy peace, a process that is usually called extortion. Arafat and his coterie of unofficial economic "advisors," in the words of David Hirst:

  • ... have thrown up a ramshackle, nepotistic edifice of monopoly, racketeering and naked extortion, which merely enriches them as it further impoverishes the society at large.

The embezzlement of US taxpayer funding, on a vast scale, by Yasser Arafat and other members of the Palestinian Authority is detailed in the report "Corruption within the Palestinian Authority", referenced below.

An investigation by Newsweek in 2000, on the brink of the Camp David talks, revealed abuses at almost every level of the Palestinian Authority. Said Newsweek:

  • Many top ministers staff their offices with cronies, dole out valuable contracts without oversight and create their own monopolies, which crush competition and drive up prices paid by hard-pressed consumers. The courts are powerless because Arafat simply ignores any inconvenient rulings. His 14 separate police forces enforce the whims of PA officials rather than laws aimed at protecting ordinary Palestinians. "It's a mafia state," says Abdul Jawad Saleh, a former Agriculture minister who was beaten by security forces recently for leading an anticorruption protest.

Muhammad Rashid, Arafat's economic adviser, is vice president and one of the principle stockholders in Paltel, the monopoly set up by the PA and the Palestinian Development and Investment Co. (Padico) to run the telephone service.

In an investigative report from December 1998, The Financial Times reported that Rashid and Paltel were deeply involved in stealing the $160 million Gaza Employees Pension Fund, which was transferred to the PA by Israel in 1994 and emptied of its funds by Rashid between early 1996 and late 1997. Freih Abu Medein, the PA's justice minister told the paper at the time the money had been invested in telecommunications projects.

The Palestinian Mortgage Housing Corporation was involved in scandal in 1998, when the EU discovered that $20 million it had donated for the construction of low-cost housing in Gaza had been used instead to build luxury apartments for wealthy supporters of Palestinian Authority Chairman Yasser Arafat.

After eight years of the Palestinian Authority, by 2000 the average Palestinian in the West Bank or Gaza had a lower income and worse condtions. It is possible that Arafat walked away from Camp David so he could continue to use Israel as a scapegoat rather than face the mounting problems of the Palestinians under his rule.


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