Wednesday, May 16, 2007

Aid to Palestinian Authority tripled in '06, despite boycott

This article contains a few paradoxes that those living with Palestinian finances must live with. First, aid can triple and poverty can increase. Second, there is little transparency so it's hard to tell where the money does go. One can guess, but aid donors might want more than guesswork. Finally, it's hard to ask Israel to hand over tax monies to a government that is sworn to Israel's destruction. On the other hand, these are Palestinian tax monies and there should be a mechanism to funnel the funds to appropriate bodies (e.g. health care, schools) without funding terrorism.

Aid to PA nearly tripled in '06, despite international boycott
By Amira Hass, Haaretz Correspondent

Donations to the Palestinian Authority almost tripled last year as a result of the international boycott of the Hamas government, according to a report published this month by the United Nations Office for the Coordination of Humanitarian Affairs (OCHA). Aid in 2006 totaled $900 million, up from $349 million a year earlier.

The boycott meant that most countries refused to channel money directly to the PA, and Israel refused to transfer the tax revenues it collects on the PA's behalf.

However, Arab and Western nations continued and even increased their donations, channeling them through either a "Hamas bypass" mechanism known as the Temporary International Mechanism (TIM), or the office of PA Chairman Mahmoud Abbas. This money, which compensated entirely for the halt in Israeli tax transfers, partially financed the salaries of PA employees and was used to make welfare payments to the needy.

Normally, Israeli tax transfers cover about two-thirds of the Palestinian Authority's budget. Had economic activity in 2006 continued at the same level as the year before, they would have reached an estimated $800 million last year. But in fact, the PA's gross domestic product fell by 8 to 10 percent in 2006.

According to the report, the biggest contributor to the PA last year was the Arab League, which gave $448 million.

The European Union gave $219 million and the World Bank gave $42 million. In addition, the government obtained an estimated $180 million by smuggling in cash from abroad.

The report noted that, in part because less money was funneled directly to the PA, the trend toward greater financial transparency was reversed in 2006, even though the PA's donors have pushed for transparency for years.

For instance, instead of monthly reports on the utilization of the PA's budget, reports were published only semiannually, violating the PA's budget law.

Abbas' office issued no comprehensive data on its expenditures or receipts of money from abroad, while the Palestinian Investment Fund did not fully report its dealings with either the banks or Abbas' office.
Remainder of the article is online at:

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