Select Committee on Foreign Affairs Written Evidence


APPENDIX

NON-EUROPEAN FUNDING TO THE PA

US AND WESTERN NATIONS

  According to USAID, the official arm of US development and assistance programs overseas, America is the largest single-nation bilateral donor in the West Bank and Gaza, having given some $1.5 billion (approx. €1.25 billion) in the period 1993-2004. [52]

  Many other non-EU nations, as diverse as Norway, Japan, Canada and New Zealand have consistently paid out generous aid allocations to the PA in excess of their existing commitments to UNWRA. Japan, for instance, a nation with little perceived strategic interest in the fate of Israel and the Palestinian territories, gave $767 million (€640 million) in the 10 years following 1993. [53]

WORLD BANK

  The World Bank, meanwhile counts itself the "fifth largest donor in the West Bank and Gaza," having disbursed some $260 million (€216 million) to the PA since the start of the intifada in September 2000, "including over $100 million on behalf of other donors." [54]

  In recent months the organisation has increased its role mediating potential solutions for the economic recovery of the Gaza Strip post-disengagement soliciting substantial increases in international aid commitments for large-scale structural projects, such as the proposed Gaza seaport and airport.

ARAB LEAGUE

  Harder to trace are the donations of Arab League members, which have been estimated at anywhere between $1 billion[55] and $2 billion: [56]vast quantities of which have been funnelled through private accounts of pan-Arab financial institutions. In February 2004 an IDF raid on Ramallah Branch of The Arab Bank uncovered a raft of documentation that, according to Israeli authorities, proved the Bank's instrumental role in the systematic laundering of funds for both terrorist activities and graft. [57]

ISRAEL

  Partly due to the fungible nature of much of the aid from the Arab world, Israel, by the end of 2000, began withholding substantial sums of VAT revenue and excise owed to the PA for fear it would be used to fund terrorist attacks against its citizens. Under growing US pressure, however, Jerusalem was forced to abandon this policy following the 2002 appointment of Salaam Fayad to head up the PA Finance Ministry. Fayad, an internationally respected US-trained IMF official, began instituting major reforms in the handling of PA funds, introducing the direct payment of PA salaries through banks rather than by cash and even confronting PA Chairman Yasser Arafat's personal control of the vast PA Presidential budget.

  Between January and August 2003 Israel had paid out NIS 1.15 billion (€232 million) of the NIS 2 billion (€404 million) held back in tax revenue during 2001 and 2002. [58]The remaining NIS 850 million (€172 million) was used, by order of the Israeli courts to pay outstanding Palestinian Authority debts to Israeli hospitals, public authorities and utility companies. [59]

November 2005













52   USAID West Bank and Gaza Program Budget: http://www.usaid.aov/wba/budget.htm Back

53   Ministry of Foreign Affairs, Japan: http://www.mofa.uo.jolregion/middle elpalestine/summarv.html Back

54   World Bank press notice 2004/333/MNA: "World Bank Launches Multi-Donor Trust Fund To Support Reform Program," 27 April, 2004. Back

55   For a discussion of the disbursement of the openly pledged $1 billion in funds from Arab League members since 2000 see ECI Issue Brief "European Funding of Palestinian Institutions," January 2004, p 14. Back

56   "Managing European Taxpayers' Money" cites a now expired link on Saudi Arabia's UK Embassy website indicating that the Kingdom alone has given close to $2 billion in aid to the "Palestinian cause" (Appendix A, p 36). Back

57   For a more detailed discussion of Israeli allegations that the Arab Bank has played a leading role in laundering funds for terror see: http://www.intelliaence.org.il/eng/finance/bank.htm Back

58   Figures Based on the Representative Shekel (NIS)-Euro (€) exchange rate of 4.95 on 1 August 2003. Back

59   "Israel Completes Hand-Over of Tax Levied for PA," Ha'aretz, 5 August 2003. Back


 
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