Select Committee on International Development Written Evidence


Memorandum submitted by Take-A-Pen for Israel's Chairman, Endre Mozes

HOW BUDGETING TECHNIQUES OF THE UK AID TO PA COULD HELP OR HARM POLITICAL SOLUTIONS TO THE CONFLICT?

INTRODUCTION:

  The subject of the present submission is the manner in which the UK aid to the Palestinian Authority, and particularly its methodology of budget planning and control, have influenced the Israeli-Palestinian-Arab political process in general, and the PA's readiness for the decisive steps required under the peace process agreements, in particular.

  This submission contains an uncommon description of the political process, it briefly refers to certain known remarks on the PA spending, and in its focus there are original professional remarks on the aid money's budget planning and control, and their effects.

  The examination of the UK aid's budgeting techniques, whether the use of aid money was, or was not planned and controlled in an accountable budget linked to the political process, is submitted briefly by Take-A-Pen's Chairman, Endre Mozes, MSc. M.Eng., MBA, US Certified Cost Engineer and Consultant, with many years experience as responsible for Budget Planning and Control of about $300 million annual spending within a large organization.

ABSTRACT:

  There are wide-spread and at least partly well-founded allegations on corruption and misuse of the financial resources of the Palestinian Authority in general, and, as a part of it, of UK aid money too. There are several allegations in full detail on personal Palestinian corruption, like filling huge private bank accounts and financing luxurious life of PA functionaries and family members. These may be detestable cases of corruption, but are probably not directly harmful to the peace process. More detrimental has been for the peace process the misuse of financing for such sinister purposes which were in sharp contradiction both with the peace agreements and with the original intentions of the UK aid, such as: acquiring weapons (Kareen A), financing terror accessories (like explosive belts for suicide bombings), and giving salaries to active terrorists (such as to the members of the Arafat-controlled and formally Fatah-led al-Aqsa Martyrs Brigades), etc.

  But what the present Memorandum suggests as the main reason of the absence of success of UK and other aids to the Palestinians in promoting peaceful political arrangements, is not the partial misuse of money described above, but the lack of tight budgetary planning and control: there was no detailed performance-related budgetary plan, dedicating payments of UK (and other) aid, item-by-item, to specified measurable goals; no strict follow-up and control by UK staff on the execution of this budget plan, and, most important of all, the lack of clear conditioning of the actual monthly payments of the aid on, or theirs linkage to, the absolute abstention from and avoidance of terror, violence and other major breaches by the Palestinians of the agreements of the peace process.

  Seemingly the UK financial aid was granted to the PA accompanied by clear UK guiding documents, and also some joint understandings with the Palestinians, on the aims and principles of the aid. Those responsible for the technicalities of the UK aid presumably did not want to spoil the UK aid's look as a generous support by entering into miniscule details. But general requirements and understandings of conceptual nature are not sufficient for effective budgeting in most cases, particularly not if the recipient has no proven record of reliable budget control, and even less if the two sides have not had a history of effective planning and budgeting co-operation. Without a detailed budget plan, all the items of which are dedicated to meeting measurable goals, so-called "deliverables", the intended use of resources can not be secured even in a non-violent environment, which is not exactly the PA's case.

  This goal-oriented budgetary planning and control can be illustrated on two possible future examples.

  For one, if the budget for future UK aid is intended to be planned in detail as described and recommended above, to be strictly controlled and in some cases even managed as a project by UK personnel, these activities must be properly budgeted themselves. Their rate can be about 0.6% of the total budget, up to 4% for the projects to be managed and possibly conceptually engineered by UK professionals. If thus properly budgeted, that detailed budget planning and control will happen.

  Another example: MK Michael Melchior suggests, as described in Attachment A, and asks the supporters of the peace process to help the sides to empower a rational, moderate coalition of religious and cultural leaders from both sides, possibly with the participation and facilitation of Christian leaders, in order to provide an alternative to totalitarian extremists dominating the media and public opinion today and making real peace almost impossible. Presuming that this suggestion is approved to be supported by UK aid, it must be detailed in an action plan, from the first meetings to the application in education systems, which or part of which would be installed in the budget in financial terms. If properly budgeted, such a moderate coalition of religious and cultural leaders would probably raise and start to function.

  On the other hand purposes not approved in similar details would not get financed.

  But, as said before, worst of all were the consequences of the lack of clear conditioning of the continuation of the actual monthly payments on an abstention from Palestinian terror and other major breaches of the agreements of the peace process. This lack of conditioning of UK and other aid to Palestinian non-violence was interpreted by the Palestinians, the PA as well as the public, as a tacit acceptance of their violence against Israel by the UK as semi-legitimate. This perception was, of course, not justified by the real views of the British government. But neither was it effectively discouraged by them, since official British condemnations were expressed in a tone of understatement, not always properly understood in the Middle East. At the same time this perception of a tacit UK acceptance was strongly underlined by a large part of the British media, led by the BBC which was considered as sort of a semi-official voice of Britain. The quasi-official BBC, as well as the Guardian, The Independent and others, failed to denounce even deliberate mass murders of Israeli civilians as "terror", murderers and terror-organizations were consequently called as "activists" and "militants".

  In March 2002 Palestinian organizations, including the Arafat-controlled Fatah military arm, the al-Aqsa Brigades, financed partly by the PA, killed 123 Israeli civilians in 26 terror-attacks in one month alone. British aid continued to flow undisturbed to PA, during and after this period! As a result the PA saw no serious incentives to comply with agreements.

  As a statesman put it, "the PA wanted the rights of a state and the obligations of a gang".

  This false Palestinian perception of UK's tacit acceptance of their violence, caused mainly by the continuing flow of aid without regard to even the most violent surge of Palestinian terror against Israeli civilians, was clearly counter-productive for Palestinian efforts to perform their obligations, and so for the Israeli-Palestinian peace process as a whole.

  But lessons learned from it can turn the UK aid to a leverage to the peace process in the future.

CONCLUSION

  Future UK aid to the PA, if strictly subject to the implementation of detailed planning and tight control of a goal-oriented budget, with actual payments conditioned on PA's continuous fulfillment of their obligations, can become a most effective and practical leverage to the peace process.

Thus the goals intended by the aid would be reached, while unintended and counter-productive purposes could not be covered by UK aid.

  Without applying the recommended budgetary techniques, aid may be detrimental to Palestinian fulfillment of obligations as described, and to the whole political process, again.

   (Attachments A to D not printed. Copies placed in Library.)

November 2003


 
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