Select Committee on International Development Written Evidence

Memorandum submitted by Maurice Ostroff


  This memorandum presupposes that any serious study of the effectiveness of Development Assistance requires an analytical approach, carefully distinguishing between the facts and propaganda. It makes no pretence at being comprehensive and responds only to items 1, 2 and 9. The memoranda already published on the Committee's web site, have fully documented the truly tragic circumstances in which the Palestinian people are living. A careful study indicates however, that unfortunately, most deal with the symptoms in the form of the harsh conditions under which the Palestinians are living and ignore the basic causes. Certainly, in the short term, symptoms must be treated, but in seeking the long-term solution, it is essential that unbiased efforts be made to identify the root causes and address them.

  The writer appreciates the enormous value of work being done by the several humanitarian agencies who have submitted memoranda and in particular, while having reservations about certain aspects, commends the constructive memorandum submitted by Christian Aid[160]Because of its high value, an addendum has been added to this report in which certain aspects of CA's submission are discussed.

  While the Committee's terms of reference do not call for recounting the history of the conflict, it will be unable to arrive at realistic, workable solutions unless the recommendations and observations submitted are placed in their proper context, taking into account the background and the circumstances which led to the present situation. Otherwise, they are liable to be dangerously misleading, resulting in superficial conclusions.

  As indicated by the name of the Committee, the "Occupation" is a central issue and ending the occupation is the self-evident solution most commonly offered in the memoranda already published. Certainly, Israel's rule over the Palestinian people in the West Bank and Gaza must be brought to an end, but the problem with calls to "end the occupation" is that they mean different things to different people. Some consider Israel's presence anywhere between the Jordan and Mediterranean as occupation.[161] Others regard the occupation as referring to all areas beyond the 1947 partition lines and yet others demand only that Israel withdraw from its incursions into areas allocated to the PA. Most refer to the occupied territories as those, which came under Israeli control in 1967. It is plainly obvious that, to be given any serious consideration, the call for "an end to the occupation" must be clearly defined. As explained in appendix A, many who use the expression "end the occupation" actually intend to suggest territorial adjustments as called for in resolution 242 and as proposed in the Road Map. (See appendix A[162].)

  An attempt is made to add some balance to the shortcomings in memoranda, which examine the present situation in isolation, without considering the preceding causative events. Clearly, if the Committee is to arrive at valid conclusions, it must consider both sides of the conflict, carefully avoiding arguments based on invalid assumptions.


  The Committee is performing an invaluable task in seeking ways and means to improve the effectiveness of aid. One cannot help but wonder how much better off the Palestinian people would be today if all donated funds had reached the intended beneficiaries; not only in receiving more aid, but by a reduction of the terror made possible by use of the misappropriated funds. With less terror there would have been less of the harsh Israeli reactions.

  For a long time, despite growing serious allegations, the EU was reluctant to accept that funds intended for aid were being misappropriated; a reluctance succinctly phrased by Chris Patten in his famous declaration that he wanted the issue investigated "like a hole in the head."

  But the evidence has become overwhelming. No doubt Committee members will have read the authoritative report "Where Does the Money Go? by Dr. Rachel Ehrenfeld[163], an expert on corruption and transnational crimes. She describes how Yasser Arafat has used criminal means, including drug trafficking, money laundering and counterfeiting to divert funds intended for development of the Palestinian state, to terrorism and to personally enrich terrorist leaders while amassing his own personal fortune.

  On 10 November, 2003 carried the headline "Israel Warned West Years Ago of Arafat Pocketing Funds"[164] It reported further that according to a CBS 60 Minutes broadcast Arafat secretly squirreled away some $1 billion in public Palestinian funds and gathered another billion from Israeli tax revenues. It quoted unnamed U.S. officials who estimated Arafat's personal wealth at between $1 billion and $3 billion, much of the first billion coming from international aid to the Palestinian Authority.

  On 7 November, 2003, the Herald Online of Scotland, reported that Arafat has amassed a personal fortune of up to £1.8 billion . In addition his wife Suha Arafat, who lives in Paris, receives 60,000 pounds monthly to fund a lavish lifestyle. In addition, her mother also enjoys a luxurious life in Paris at the expense of the Palestinian taxpayers. The report continues that Arafat, still controls most of the £3.3 billion in international aid that has flowed to the Palestinian Authority over the past nine years, during which time he has established a system of financial aid that guarantees the support of a host of Palestinian factions.

  On the same date (7 November, 2003) BBC World News reported that a BBC investigation has found that the Palestinian Authority, headed by Yasser Arafat, is paying members of a Palestinian militant organisation which has been responsible for carrying out suicide attacks.

  Generous, well meaning donors must be devastated to discover they have unintentionally been funding the terror they abhor. As Palestinian type terror is now spreading globally, any actions resulting from the Committee's deliberations which prevent the diversion of donor funds to terror, will serve not only to reduce the heat in the Israel Palestinian conflict, but will inevitably assist the international fight against terror (see appendix B[165]).

  The collection by Israel of customs duties and taxes on behalf of the PA is an agreed procedure but Israel's delays in transferring the funds to the PA cause serious difficulties. Since the beginning of the intifada three years ago, Israel froze payments of more than 2.5 billion shekels in tax revenues to the PA as a result of evidence that large proportions of the funds were being misappropriated to support terrorism. However, since late last year, after USAID agreed to monitor the destination of the monies, Israel began transferring it in monthly installments to the PA.

  The impact of controls on the movement of goods and people is much more serious as the Palestinian economy was, and continues to be dependent on employment not only inside Israel but also in the settlements. Prior to the outbreak of the second "Intifada" in September 2000, Palestinian workers and business people from the West Bank and Gaza (WBG) freely entered Israel without interference. Permits were only required for work. 146,000 Palestinians were working in Israel and the settlements (about 22% of total Palestinian employment). Average wages for Palestinian workers in Israel have generally been about 70 to 75% higher than those in the WBG. In 1999, labour income from Israel accounted for about 20% of Palestinian GDP,[166] and the importance of this source of income for the Palestinian economy cannot be ignored in any plans for alleviating the distressing situation.

  The dilemma faced by the Israel authorities since the violence erupted is how to distinguish genuine work seekers from potential terrorists. They have attempted to do this by a system of work permits and it is worth noting that even during the worst periods of violence 33,000 Palestinians continued to work in Israel. Without attempting to judge which came first, the chicken or the egg, every realist accepts that control of the movement of goods and people is inevitable in Israel's efforts to prevent entry of suicide bombers. Terrorists on their way to carry out attacks have been pre-empted at checkpoints and border crossings, saving countless lives. Even the Red Cross found it necessary to caution the Palestinian Red Cross Society in May 2002 for using ambulances to ferry ammunitions and combatants[167]The situation which needs to be seriously addressed in a non-partisan manner by the Committee is the anomaly of daily acts of physical and verbal Palestinian violence against Israel on the one hand, while simultaneously demanding employment in Israel, unrestricted entry and removal of the barriers which have been created to prevent acts of terror.

  Not only workers have been affected by the closures. Prior to September 2000, Palestinian and Israeli business people and merchandise were moving feely between the WBG and Israel to the mutual benefit of both. Hopefully, with an end to violence, this state of affairs will be restored.

  There may be room for debate about the proportionality of Israel's responses, but not even the fiercest Israeli critic doubts that the incursions into PA areas, restrictions of entry into Israel proper and targeted assassinations are defensive measures.

  There can be no doubt that the presence of Israeli troops in the PA areas and restrictions on movement cause untold suffering to Palestinians and should be brought to an end as soon as possible in the interests of Israelis and Palestinians alike. No Israeli soldier welcomes his tour of duty in these areas and every Israeli desperately seeks a solution, which will make it unnecessary. Why then are they there? The solution is obvious; stop Palestinian terror and Israel will immediately withdraw from PA territory, the restrictions on movement will end, the hated fence will become unnecessary and negotiations towards a fruitful peace can commence.


  In considering the potential for Palestinian economic cooperation with Israel, lessons must may be drawn from the situation in pre-intifada days, and by considering ways and means to return to it, pointing to a light at the end of the tunnel. Far from bringing any benefits, the intifada, which has cost so many lives, effectively aborted a promising hugely optimistic situation. An end to the violence and abatement of incitement hold the promise of a slow return to the halcyon days before the violence erupted when Israelis flocked to the Palestinian territories on weekend shopping expeditions and Palestinians equally enjoyed visiting Israeli shopping malls.

  Many projects were in the pipeline for joint ventures in the West Bank that would have fostered cooperation between Jews and Arabs, created employment and generously redistributed municipal tax revenues to depressed Palestinian areas. As an executive member of the Israel South Africa Chamber of Commerce, I was personally involved in a small way, in an initiative to establish a forum for cooperation between Israeli and Palestinian business people. We met in Jerusalem and Ramallah and had arranged a substantial joint function, when the violence erupted and aborted our efforts.

  Natan Sharansky, when he was Minister of Industry and Trade, reported that he personally saw Chairman Arafat reject countless projects that would have bettered the lot of his own people simply because they would have served to decrease tensions between Israelis and Palestinians. He wrote that Arafat continually spurned efforts to help the Palestinian Authority establish an industrial park in Gaza that would have encouraged investment in Palestinian areas, created tens of thousands of jobs and alleviated poverty. "Unfortunately" wrote Sharansky "it became obvious that Arafat's response was due to a fear of the development of a Palestinian society not fully under his control".

  One cannot avoid speculating why Chairman Arafat chose the path of violence rather than accept and build on the opportunities to achieve a state and improve the lot of his people. The Clinton/Barak offer would have given the Palestinians 90% of their voiced demands. Evidently he was following his hidden agenda, as revealed by the "moderate" late Faysal Al-Husseiny who described the Oslo Accords as a Palestinian Trojan horse and unequivocally declared that the Palestinian Strategic Goal was a state from the Jordan River to the Mediterranean Sea. (Al-Arabi, (Egypt) 24 June 2001).

  Appendix C[168]contains extracts from an authoritative article by historian and author, Prof Ephraim Karsh, which shows that within a brief period after the 1967 war, Israeli occupation had led to dramatic improvements in general well being, placing the population of the territories ahead of most of their Arab neighbors. The number of Palestinians working in Israel rose from zero in 1967 to 66,000 in 1975 and 109,000 by 1986, accounting for 35% of the employed population of the West Bank and 45% in Gaza. Close to 2,000 industrial plants, employing almost half of the work force, were established in the territories under Israeli rule. During the 1970s, the West Bank and Gaza constituted the fourth fastest-growing economy in the world-ahead of such "wonders" as Singapore, Hong Kong, and Korea, and substantially ahead of Israel itself.

  Israeli business people were actively pursuing paths of mutual cooperation and assistance with Palestinian counterparts.



  Christian Aid, in its admirable memorandum, expresses its belief that the solution to Palestinian poverty is an end to occupation and an agreement, which recognises the right of Israelis and Palestinians alike to live in peace and security. But, from a pragmatic point of view, as elaborated in the introduction and in appendix A to this paper, any call to end the occupation needs to be clearly defined before it can be rationally addressed. If ending the occupation is recognised as an important end goal, rather than a means to an end, it would be constructive

    (a)  to define clearly what is meant by occupation and by ending it; and

    (b)  to study the most effective ways and means by which this can be achieved.

  Clearly the immediate need is for relief from Israel's presence in the PA areas, by whatever name such presence is called, and an immediate return to the pre September 2000 lines. Only by denying the factual history that Israel's incursions into PA territory resulted from the outbreak of violence, can one expect that Israel revert to the pre-intifada lines without a lasting end to the unprecedented Palestinian terror. If one acknowledges this recent history, the first effective step then, is to end the violence whereupon the desired withdrawal of forces, dismantling of checkpoints, lifting of closure; and suspension of fence building can be realistically expected, to be followed by negotiations towards a lasting peace. This viewpoint is unambiguously in conformity with Security Council resolution 1397 which stresses the need for all concerned to ensure the safety of civilians, and which demands the "immediate cessation of all acts of violence, including all acts of terror, provocation, incitement and destruction".

  With reference to the CA report quoting unemployment figures, reference is made to section 2 above, which cites that prior to the intifada, 146,000 Palestinians worked in Israel and the settlements. Hopefully with an end to incitement and the violence it produces, one can look forward to a return to this situation.

  In section 3.1 CA assigns responsibility for today's humanitarian crisis principally to Israel's occupation of the OPT, which it defines as the Occupied Palestinian Territories. Here too, there is a need for clarity. If we are referring to Israel's presence in the PA areas, it is perfectly obvious that it was the Palestinian violence, which provoked Israel to enter these areas, albeit very hesitantly at first. If the OPT refers to all areas East of the green line, reference is made to appendix A in which the occupation is discussed in some detail.

  The writer endorses completely, CA's reference to the Road Map in section 5.1, and especially the statement in section 5.2 relating to UN Resolutions 242 and 1397, that clarity on these issues is a prerequisite for lasting peace, appendix A provides this much-needed clarity.

  In short, while the writer of this paper applauds CA's memorandum he differs with it mainly in regard to the definition of occupation and the order of priority of the steps which need to be taken.

  1.  The first essential, yet easiest step is to insist that the PA stop incitement as demanded by the EU and US endorsed road map, including cessation of Palestinian promotion of hatred in schools, the media and mosques.

  2.  Support the newly appointed Palestinian prime minister Mr Qureia's call, in his words, for an "immediate and comprehensive cease-fire with a return to peace talks based on President Bush's vision of a two-state solution to the Israeli-Palestinian conflict."

  3.  With the terror threat removed, insist on immediate suspension of construction of the fence, to be followed by removal of the portions already constructed.

  4.  Introduce thorough accounting procedures in respect of donor funds, to ensure transparency so that such funds are used directly for the intended welfare purposes.

  Appendices were also submitted. These have not been printed. Copies have been placed in the Library.

November 2003

160   Ev 86. Back

161   Even new school books printed by the Palestinian's own Education Ministry such "Jurrafiyat Falastin", a seventh grade book on the geography of Palestine, deliberately avoid showing Israel on maps. Back

162   Not printed. Copy placed in the Library. Back

163   Dr Ehrenfeld's complete document is available at Back

164   http/ 5C200311%5CFOR20031110c.html Back


166   IMF report Economic Performance and Reform under Conflict Conditions. Approved by the Middle Eastern Department, 15 September 2003. Back

167 Back

168   Not printed. Copy placed in the Library. RECOMMENDATIONS Back

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