Select Committee on International Development Written Evidence

Memorandum submitted by the Conservative Friends of Israel

  1.  Since September 2000, Israel has faced a relentless wave of Palestinian violence. Between 28 September 2000 and 12 November 2003, there have been almost 20,000 attacks against Israeli targets in the West Bank, Gaza Strip and Israel. These attacks have included suicide bombings, shootings, mortar attacks and stabbings, and have resulted in almost 900 Israelis being killed and almost 6,000 injured.[34]

  2.  Under these extremely difficult conditions, Israel has been faced with the challenge of doing its utmost to protect its citizens, while doing as much as it can to minimise the impact of tightened security on Palestinian society. This is not an easy balance to achieve, and Israel is constantly seeking for ways to address the needs of the innocent Palestinians. Among many other measures for example: 38,200 Palestinians are currently permitted to work in Israel; 10,000 Palestinian merchants are permitted to enter Israel, approximately 1,500 Palestinian trucks are authorised to transit goods into Israel and approximately 1,150 Palestinian employees of international organisations are permitted to enter Israel and travel between the Gaza Strip and the West Bank.

  3.  A recent International Monetary Fund report illustrates just how detrimental terrorism has been to the economic and social welfare of the Palestinians.[35] In the five years prior to the start of the violence (1994-99), the Palestinian economy had proved remarkably resilient, growing at a strong rate, generating jobs and increasing the living standards for its rapidly growing population. Furthermore, the IMF also noted that whilst the violence has clearly led to a major decline in the Palestinian economy, it did not totally collapse. Indeed, given the extraordinary circumstances the Palestinian economy proved surprisingly robust. By early 2003 there were even signs that the downward trend had been stopped and that the economy was beginning to stabilise.

  4.  Yet it is not only terrorism which has been the cause of the Palestinians' plight. They have also suffered greatly from the corruption of their leadership. In recent years the international community (mostly European and Arab countries) has sent large sums of money to help support Palestinian basic needs. However, documents captured by the Israeli Defence Forces in Palestinian military headquarters reveal significant levels of Palestinian Authority (PA) corruption and waste, as well as evidence indicating that humanitarian aid has been used to directly and indirectly finance terrorism. (See attached document 1[36]).

  5.  Among the documents found were hundreds of receipts along with photocopies of cheques and other documents. These relate to the transfer of significant sums of money to senior and lower-level operatives and others. These funds were used not only for preventive security (such as intelligence gathering and preventive operations) but also to finance and initiate terrorism.

  6.  Funds were also transferred to various financial concerns in which the Preventive Security leadership has interests, as well as to payments providing "assistance" to the heads of the Preventive Security apparatus, their associates and those favoured by the Preventive Security authorities (including senior political figures). The payments were transferred directly by the Preventive Security apparatus, and occasionally by the Palestinian Ministry of Finance.

  7.  Sometimes these payments occurred with Yasser Arafat's personal approval and sometimes without his direct involvement. At times, the funds were transferred directly to the beneficiaries, and at other times, they received the payments through an intermediary.

  8.  To illustrate of the levels of corruption within the PA, one can look at the PA's payroll. According to official declarations given to aid agencies, the PA claims that it requires $60 million each month to pay salaries, from its total monthly budget of $90 million. However, captured documents (mostly from the end of 2001) show that the PA uses a double reporting system, and in fact needs only 55%-65% of this amount. The PA registered salary expenses of around $40 million, about half for security forces. It then used a low exchange rate during payment of salaries in shekels (3.7 shekels = $1, instead of the representative rate of 4.4 shekels). This created a surplus of $7.7 million. It is therefore clear that this section of the PA budget has been used for the accumulation of surplus funds and their diversion to other purposes.

  9.  Furthermore, the PA also deducts 1.5-2% from the salaries of security forces personnel as Fatah membership fees, as well as placing many hundreds of Fatah activists on the payroll. Many of these activities are engaged in terrorist activities. One such recipient was the commander of the Al-Aqsa Martyrs Brigade, who was responsible for attacks in which 17 Israelis were killed.

  10.  The decision to integrate Fatah activists into the PA's payroll is personally taken by Yasser Arafat, wearing his triple-hat as Chairman of the PA, the PLO and Fatah. His handwriting and signature can be found on many of the relevant documents.

  11.  The captured documents therefore prove that over many years, the PA has used international aid in order to establish a broad infrastructure of Fatah branches and activists, who in time became armed local militia. This was a deliberate and calculated move, which took place throughout the Oslo peace negotiations, and many years before the start of the violence in September 2000.

  12.  In conclusion, the well being of the Palestinian people is in everyone's interest, including Israel. A sustainable economic and social infrastructure in the Palestinian Territories will help discourage Palestinians from engaging in terror activity. To this end, and despite urgent security concerns, Israel has done its utmost to ensure that its legitimate security precautions have as little effect on Palestinian life and economic activity as possible. Tragically, through corruption, waste and its redirection of vital funds to terrorist activities, the PA has consistently acted against the best social and economic interests of the Palestinian people.

November 2003

34   IDF statistics Back

35   "Economic Performance and Reform Under Conflict Conditions". 15 September 2003. Back

36   "Captured Documents Reveal PA Corruption, Waste and the Employment of PA Funds for Encouraging and Financing Terrorism". Not printed. Copy placed in the Library. Back

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