Select Committee on International Development Written Evidence

Memorandum submitted by the Board of Deputies of British Jews

  1.  The Board of Deputies of British Jews welcomes the opportunity to make this submission to the Select Committee.

  2.  The Board is the representative body and voice of the British Jewish Community. It was founded in 1760. As an organisation, the Board has a responsibility to act upon the concerns articulated by members of the community. One of the core functions of the Board is to express the solidarity of British Jews with the people of Israel. It is in this context that members of our community have expressed concerns over the issues raised by the Select Committee's current inquiry.

  3.  The Board of Deputies does not itself profess expert knowledge of the Palestinian economy, its infrastructure or its development needs. But as British citizens and taxpayers, members of our community consider that they are entitled to assurances that public funds which are made available for the purposes of development assistance in the Palestinian territories are properly used and accounted for. In recent years there has been abundant evidence that funds provided to the Palestinian Authority from EU sources have been diverted for improper or criminal purposes, either to support terrorism or to enrich the leadership of the Palestinian Authority. Terrorism and corruption are embedded in the culture of the PA, and there is therefore a special responsibility on all agencies which support the Palestinian economy in any way to ensure that funds made available for legitimate development needs are not diverted for improper or terrorist purposes. In the view of the Board of Deputies, the Select Committee cannot examine objectively the availability of development assistance in the Palestinian territories without assessing the extent to which at least a part of the assistance provided over the past years has been siphoned off for other nefarious purposes.

  4.  In this connection, the Board of Deputies welcomes that fact that B'nai B'rith UK has submitted a recent publication of B'nai B'rith Europe entitled "The Palestinian Authority: Where Does the Money Go?[21] " written by Rachel Ehrenfeld from the New York-based American Center for Democracy.

  5.  The Board of Deputies would also wish to draw the Select Committee's attention to a further paper by Rachel Ehrenfeld entitled "Reforms in the Palestinian Authority: A Reality Check"[22].

  6.  In addition, the Board would draw attention to the IMF's report of 15 September 2003 entitled "West Bank and Gaza: Economic Performance under Conflict Conditions". This is a detailed examination of Palestinian economic performance in recent years. The report is available at

  7.  We would specifically like to highlight a few items:

    (i)  The level of funds that did not pass through the Ministry of Finance, instead being spent directly by the collecting ministry, or diverted to other accounts, such as one under the control of Yasser Arafat (pp 88-89).

    (ii)  "All in all, excise tax revenue and profits from commercial activities diverted away from the budget may have exceeded US$898 million" (p 89, chart on p 91).

    (iii)  There is significant over-employment in the civil service (pp 91-93).

    (iv)  Expenditure management and control contains weaknesses (pp 93-94).

    (v)  Prior to the Intifada.  .  . "the economy grew at a remarkable rate" increasing the standard of living for the Palestinian population. The onset of the Intifada did see a "major decline" in the Palestinian economy, however it "proved surprisingly resilient. And by early 2003 there were already signs that the downward trend had been stopped and that the economy was beginning to stabilise" (p 11).

    (vi)  The IMF alludes to a linkage between the withholding of funds to the Palestinian Authority and their promises to implement audit reform (pp 71-72).

  8.  All these points appear highly relevant to the management of donations to the Palestinian Authority and their diversion for improper purposes.

October 2003

21   Copy placed in the Library. Back

22   Copy placed in the Library. Back

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