Some 8 percent of the Palestinian Authority's
budget is managed by a single individual, PA
Chairman Yasser Arafat, according to an official
report compiled by the International Monetary
Fund.
Under the heading "Economic
Performance and Reforms under
Conflict Conditions," the IMF
document, based on data
provided by the PA, describes
the financial management of
the PA since its
establishment in 1995 and
through to the outbreak of
the Al-Aqsa Intifada in
The figures show, among other things, that some
$900 million in PA revenues "disappeared"
during the period in question and was
transferred from the Palestinian Finance
Ministry to unknown destinations.
According to the report, the 2003 budget for
Arafat's office totaled $74 million, of which a
sum of $34 million is listed as "transfers"
that the chairman uses to pay "organizations"
and "individuals," as the report puts it.
The report describes the management of Arafat's
budget as follows: "The president assumes the
prerogative of providing aid to various
organizations and individuals. Some of them
have legitimate claims, but have fallen through
the safety net and have no recourse other than
appealing to the president. These include
students seeking scholarships abroad, patients
seeking specialized medical care abroad, and
people who have lost all their assets and
livelihood during the conflict.
"However, other claimants and organizations are
part of politically favored networks who should
not be getting such grants under any criterion.
This inevitably raises questions and suspicions
which are inconsistent with accountable and
transparent public finance systems (unless all
transfers and beneficiaries are published).
"The solution is simple. The president's budget
should only cover the president's staff and
operational expenses. All transfers should be
spun off to the respective ministries for
education, health and social affairs."
The report, which was distributed among the
delegations that attended the IMF's annual
conference in Abu Dhabi a month and a half ago,
does not name the recipients of the funds, but
those privy to Arafat's office procedures are
at least aware of the manner in which some of
the money is allocated: Fatah activists and
various associates submit requests; and the
chairman approves them personally.
The donor countries and organizations that are
monitoring the reforms in the PA define "safety
net" as the terms under which funds are
transferred to the PA so as to ensure that they
are not then used to finance terror activities
or further unworthy goals. The report reveals,
however, that it is impossible to keep track of
the funds listed as "the president's budget."
The document calls on Arafat to reveal the names
of the beneficiaries, but does not pose an
ultimatum.
The IMF report also reveals, for the first time,
the official number of security personnel
registered as receiving wages from the PA -
56,128, almost 20,000 more than the number that
appears in the Oslo Accords. The document
criticizes the fact that some of the security
personnel receive their wages in cash through
the heads of the various security mechanisms.