Time for the U.S. to Stop Funding the Palestinian Authority

President Barack Obama and Secretary of State Hillary Rodham Clinton.

The U.S. funding policy towards the Palestinians could best be described by Albert Einstein’s definition of insanity: “doing the same thing over and over again and expecting different results.”

In the last five years, the U.S. government has poured at least $4 billion in aid to the Palestinians, with very little to show in return – except more terror and corruption.  Time has now long come to ask whether the U.S. should continue funding at all.

Last week, in a virtually unprecedented move, Secretary of State Hillary Clinton overruled a House Foreign Affairs Committee hold on $59 million in funding to the Palestinian Authority (PA), thus blatantly disregarding the integrity of Congress.

The money was ‘held’ by request of Committee Chairwoman Ileana Ros-Lehtinen (R-Fl), largely out of concern it may reach the hands of Hamas and be used to commit acts of terror against Israel and the United States.

According to a State Department official, Secretary Clinton released the funds, because they were viewed as providing “critical support to the Palestinian people and those leaders seeking to combat extremism within their society and build a more stable future.”

Which “leader” might the State Department have been referring to when they spoke of combating extremism? The same PA President Mahmoud Abbas who has invited Hamas into his government?

According to the Congressional Research Service, since 2008, annual U.S. bilateral assistance to the PA has averaged over $600 million, including $513 million for the current budgetary year.

In addition, the U.S. is also the largest single-state donor to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), donating over $1 billion over the last five years to an agency that continues to perpetuate Palestinian economic dependency on foreign aid. UNRWA is unquestionably one of the greatest obstacles to peace in the Middle East.

Given the United States’ own financial woes, and with a peace process at a standstill, it is a timely occasion to ask what exactly has the American taxpayer received for spending $4 billion in aid to the Palestinians over the last five years.

President Abbas appears to have no interest or desire to resolve the conflict, repeatedly shunning Prime Minister Netanyahu’s offers of direct negotiations. Instead, Abbas has embraced Hamas, a group sworn to Israel’s destruction and designated as a terrorist organisation by the U.S.

Only last month, Majida Al-Masri, the Palestinian Minister of Social Affairs from Abbas’s Fatah party, said Palestinian unity and reconciliation between Fatah and Hamas was needed in order “to turn to the struggle for the liberation of Palestine – all of Palestine.” ‘All of Palestine’ of course includes the Jewish State of Israel.

Abbas, often touted as a “moderate”, has done nothing to stop the virulent anti-Israel and anti-Jewish incitement in PA controlled media and schools. Public squares and streets continue to be named after terrorists, and the Abbas-led PA is giving thousands of dollars to families of Palestinian terrorists in Israeli prisons and suicide bombers involved in attacks on Israel.

The PA is also cracking down on press freedoms in the West Bank, recently jailing two female journalists – one for exposing corruption in the Palestinian mission in France, while another for daring to criticise Abbas on Facebook.

And then there’s Abbas’ ongoing pursuit of unilateral statehood at the UN, notwithstanding President Obama’s expressed wishes to the contrary.

Corruption continues to rule the PA. The PA presidential elections that were supposed to be held two years ago have been repeatedly postponed byAbbas. In the meantime, he has consolidated his grip on power while sidestepping and usurping his own Prime Minister, Salam Fayyad on monetary oversight, most notably through the Palestine Investment Fund (PIF).

The PIF is a sovereign wealth fund created in 2003 to manage state assets in the wake of former President Arafat’s pervasive corruption. The PIF is meant to be “fully owned by the people of Palestine” and “financially and administratively independent”. However, Abbas has placed the PIF under his personal control by removing Fayyad’s oversight powers, and appointing his cronies onto the board and awarding lucrative contracts to his sons.

Since Abbas was elected President in 2005, an estimated $1 billion has gone missing from the PIF. In addition, construction and public relations firms run by Abbas’s sons have “won” U.S. government aid contracts in sham tenders worth over $2 million.

While the Palestinian people are dependent on foreign aid, the Abbas family has amassed a wealth estimated in the dozens of millions dollars, with lavish properties across the Middle East and investments throughout the world. Abbas, without the keffiyah, is in effect no different than Arafat, with corruption still rampant throughout the PA.

Those that oppose cutting aid to the Palestinians will argue that it will undo Prime Minister Fayyad’s impressive “institution building” and economic growth in the West Bank, which according to the latest IMF figures, is averaging 8.2% over the past four years. However, it’s important to keep in mind that very little economic activity could have been achieved without Israel’s security presence there. Were Israel to leave, the relative stability in West Bank would give way to violence and another power struggle between Hamas and Fatah (as it did in Gaza) and the economy would suffer again as a result.

In 2011 Fayyad declared: “The current expenditure has been reduced from $1.8 billion in 2008 to $1.1 billion in 2010 and we will gradually wean ourselves from [foreign] aid by 2013. Moreover, “[i]t is an important benchmark for reducing reliance on the need for external assistance,” he added. So one would have expected that in 2012, the PA would need even less foreign aid. But in March 2012, the World Bank warned that unless donor support is increased, the PA might not be able to continue to provide basic services to its people. So, where did all the money go?

On March 21, 2012, responding to protest that  Fatah leaders have neglected Gaza, their spokesman Ahmad Assaf announced that the PA has spent over $7 billion in Gaza since Hamas took over in 2007. This includes $120 million each month (half of the PA budget) to pay the salaries of around 80,000 civil servants in Gaza. However, many of these so-called ‘civil servants’ actually work for Hamas.

The U.S., together with the World Bank and other donors, have relied on Fayyad’s promise that aid money would not reach Hamas or be used for any terrorist activity, but even Fayyad himself has stated that controlling Palestinian finances “is virtually impossible.” And given that money is fungible, there is simply no way of guaranteeing that U.S. aid dollars to the PA are not ending up in the hands of Hamas in Gaza.

Some also contend that U.S. aid is necessary in order to leverage U.S. power on the Palestinians vis-a-vis negotiations with Israel. However, $4 billion in U.S. aid has clearly bought us very little leverage, judging by Washington’s inability to get Abbas, and more recently Fayyad, to even sit in the same room as Netanyahu.

The Palestinians’ ‘Arab brothers’ across the Middle East have thus far failed to provide financial support to the PA, and are unlikely to jump on the aid bandwagon any time soon, even in the absence of U.S. funding. Notwithstanding some regular political posturing, with winds of the ‘Arab Spring’ blowing, the plight of the Palestinians barely registers on the radars of Arab donors.

Secretary Clinton’s release of funds to the PA is yet another sad example of how the U.S. funds corrupt regimes in the Middle East and elsewhere to the detriment of its own national security and that of its allies.

Arsen Ostrovsky is a Legal Fellow at the American Center for Democracy.

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