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Israel Warned West Years Ago of Arafat Pocketing Funds
By Julie Stahl
CNSNews.com Jerusalem Bureau Chief
November 10, 2003

Jerusalem (CNSNews.com) - Israel warned Western leaders years ago that Palestinian Authority Chairman Yasser Arafat was using international aid to the Palestinians to make himself rich, but those leaders wouldn't listen, a senior advisor to Israeli Prime Minister Ariel Sharon said on Monday.

Arafat secretly squirreled away some $1 billion in public Palestinian funds, a CBS 60 Minutes broadcast alleged on Sunday. He gathered another billion from Israeli tax revenues, the report said, and it quoted unnamed U.S. officials who estimated Arafat's personal wealth at between $1 billion and $3 billion.

Much of the first billion came from international aid to the Palestinian Authority. The U.S., which for years had given money to the PA only through nongovernmental organizations via the U.S. Agency for International Development, recently removed those restrictions, allowing for direct aid to the PA.

Over the last year, the European Union has been trying to trace the funds it transferred to the PA, some of which Israel said has gone to fund terror attacks against Israelis.

Senior Sharon advisor Dr. Dore Gold said that he was not at all surprised by the disclosures in Sunday's report because Israel warned the international community for years about Arafat but the West would not listen.

"Israel has followed the way Palestinian Authority officials have lined their pockets with international aid dollars," Gold said in a telephone interview.

"For that reason, Israel has called for greater transparency in Palestinian finances and is now insisting that Arafat and his supporters return these stolen funds to the Palestinian people," Gold said. But he added that "no one is holding [his] breath" waiting for it to happen."

Israel had frozen payments of more than 2.5 billion shekels (some $550 million) in tax revenues to the Palestinian Authority since the beginning of the intifadah three years ago, charging that the funds were being used to carry out terror attacks.

But under heavy U.S. pressure, Israel began transferring the money in monthly installments to the PA late last year after USAID agreed to monitor the destination of the monies following the appointment of PA Finance Minister Salaam Fayyad.

"This issue of Arafat's corruption, similar to his support for terrorism, we knew about it in the 1990's [but] nobody listened," Gold said.

Fayyad, a former World Bank official who was appointed as finance minister last year, has been working to uncover corruption in the PA accounts and to set things right.

Fayyad acknowledged in the 60 Minutes program that there is "corruption," "abuse" and "impropriety" in the PA that has to be "fixed."

The program alleged that among Arafat's monthly expenditures is the $100,000 a month he gives his wife Suha, who lives in Paris with their daughter. He reportedly pays about $20 million a month in cash to his security forces.

Arafat managed to maintain control over those security forces over the weekend, when PA Prime Minister Ahmed Qureia relinquished an earlier demand that General Nasser Youssef be appointed as interior minister, with control over security.

The U.S. and other members of the Quartet - the U.S., European Union, Russia and United Nations - have tried for more than a year to pressure the Palestinian prime minister to wrest control of the security forces from Arafat and put them under the control of a prime minister who it was hoped would crackdown on terrorism.

But Qureia agreed over the weekend to put the security forces under the control of the National Security Council, headed by Arafat.

Both Israel and the U.S. criticized the move but Israel said it was still willing to give Qureia a chance to prove himself.

"Israel is willing to engage with any Palestinian leader; obviously the depth and intensity of contacts is a function of combating terrorism," Gold said. "The focus of Israel is on Palestinian performance."

But Gold said it was unlikely that there would be the crackdown on terror that Israel is expecting as long as Arafat remains in control.

"As long as Arafat is involved in security, it seems unlikely to go very far," he said. It is not logical that "Arafat who financed terror [for years should be] involved in counter-terrorism. It has proven over a decade to be unworkable."

State Department spokeswoman Amanda Batt said the U.S. also was unhappy with the move.

"The [PA] prime minister must have control of all of the security forces, and Washington insists that terrorists and military organizations not under the control of the Palestinian Authority be disarmed and dismantled," Batt said on Sunday.