The truth about the PA’s ‘imminent financial collapse’

Israel’s decision to suspend the transfer of tax revenues to the Palestinian Authority (PA) was met by the latter’s claim that it is about to go bankrupt, as well as by the threat that it would have no choice but to disband itself. US Secretary of State John Kerry has publicly endorsed both the claim and the “threat” of the PA. What I call the “Kerry Rule” (i.e. if he says it, it must be wrong) has been confirmed yet again: the PA is not bankrupt and it will not disband itself.

The PA will not disband itself because its chairman, Mahmoud Abbas, will not kill the cow that he and his cronies have been milking for years. From the moment it was established in 1994, the PA has diverted foreign donations and tax revenues to fill personal bank accounts, to purchase weapons, and to finance incitement and terrorism. The 1994 Paris Agreements put Israel in charge of transferring export tax revenues to the PA, but then-PLO Chief Yasser Arafat asked Israel to transfer the money to a bank account accessible only to him and to his personal advisor Mohammed Rashid. According to Israeli journalists Ehud Ya’ari and Ronen Bergman, some $3 billion were transferred to this account between 1994 and 2000. Arafat used some of this money, among other things, to support his wife’s lavish lifestyle in Paris.

This corruption didn’t abate under Abbas. As former director of the PA’s anti-corruption department Fahmi Shabaneh declared in 2010: “Abbas has surrounded himself with many of the thieves and officials who were involved in theft of public funds and who became icons of financial corruption” (as reported by The Jerusalem Post on 29 January 2010). By dismantling the PA, Abbas and his entourage would have to renounce the millions they siphon every year from foreign aid.
World Bank reports consistently rate the Palestinians as the world’s top per capita recipients of foreign aid. The taxes collected by Israel on behalf of the PA only constitute a fraction of the PA’s budget. By way of comparison, $7.4 billion were pledged to the PA at the December 2007 Paris Conference, while the taxes collected on behalf of the PA by Israel amounted to about $300 million as of July 2007.

A recent paper authored by Prof. Hillel Frisch from Bar-Ilan University’s BESA Center shows that, in 2013 alone, the PA received $2 billion in foreign aid, which means that the average Palestinian received nearly fourteen times more foreign aid per capita than the average Ethiopian ($476 vs. $35). Yet the average Ethiopian is far needier than the average Palestinian: Ethiopia’s GDP per capita is $500, as opposed to $2,800 for the West Bank and Gaza combined. As Frisch notes, these figures are not only discriminatory, they are also inconsistent with the West’s declared policy of struggle against terrorism, since Ethiopia is at the forefront of this struggle, while the Palestinians produce terrorism.

Ethiopia is the largest contributor of forces against the Islamist Harakat al-Shahab in Somalia. The Palestinians, by contrast, intentionally and indiscriminately fire rockets at Israeli civilians and dig tunnels to kidnap and kill Israelis. In April 2011, the Palestinian Authority published a decision officially granting a salary to all Palestinian prisoners jailed in Israel for terrorist attacks against Israelis (as reported by Al-Hayat Al-Jadida on April 15, 2011). These salaries are paid by the PA to convicted murderers thanks to foreign aid as well as to the tax revenues collected and transferred by Israel.

The latest row between Israel and the PA over tax revenues provides an opportunity to end a farce that has gone too far for too long. While the tax money collected by Israel on Palestinian exports technically belongs to the PA, Israel cannot reasonably be expected to transfer money that is used to buy weapons and to dig tunnels to kill Israelis, and to pay the salaries of Palestinian terrorists who have murdered Israelis. Foreign donors cannot put pressure on Israel to release those tax revenues without providing guarantees about the use of that money.

When donor countries look the other way or dismiss the evidence of their monies being used for terrorism, incitement, and personal enrichment, they finance the perpetuation of the conflict rather than its resolution. When John Kerry echoes the Palestinians’ manipulative arguments, he not only corroborates the “Kerry Rule.” He also confirms to the Palestinians that they shall never be held responsible for their behavior.