Reporting the Palestinian economy – some good news

Reporting accurately on the Palestinian economy has never been easy. If you look carefully at the documents of the World Bank or the IMF, they often contain statements that the data collected from Ramallah and Gaza is not of the most relaible of standards. That said, various news items more recently have given the outside world a better understanding as to how revenues are used by the Palestinian Authority and by Hamas.

Why is this important for all readers? Because according to the OECD, approximately 70% of Palestinian expenditure comes from overseas aid. And the overwhelming majority of that aid comes from the generosity of Western taxpayers, who in turn are suffering from their own economic uncertainties.The OECD estimates that the Palestinians receive around US$2.5 billion in direct aid annually. Ostensibly, the USA is the largest single donor, but much of UNRWA’s support comes from the pockets of European citizens. 49% of the total sums are designated for ‘other social infrastructure’, whatever that may mean. (BTW, total annual contributions towards all global aid peaks over $130 billion. Thus, per capita, the Palestinians receive a very healthy share of the handout).

And where specially does this money end up? Here are four quick case studies:

  1. A few weeks ago, I discussed how in spite of the checks in place, monies from the UK and from the EU seep through to political prisoners and terrorists. Coblogger Arnold Roth has expanded on this theme. He believes that “the perpetually financially strapped PA spent $144 million paying salaries” in 2014 alone.  Thus, using the 70% factor, donors (including British taxpayers) paid out about US$100m towards helping these ‘deserving people’.
  2. On a similar note, the Palestinian commentator Khaled Abu Toameh observed this week that “The Palestinian Authority has used international funds to build prisons and detention centers in the West Bank where torture has become the norm.” He outlines how the Independent Palestinian Commission for Human Rights (ICHR) has received 782 complaints concerning torture and similar abuses. Again, the money to maintain this state of affairs primarily came from overseas.
  3. Moving away from direct political issues, even culture is not immune to the misuse of funds. The New York Times revealed that a spanking new museum in Ramallah was opened on the basis of a US$24m budget. This is to be a great celebration of Palestinian history and art. However, due to internal wrangling, there is not one exhibit for inspection. So, I am forced to ask, where did the budget disappear to and how was it accounted for in front of the donors?
  4. And then there is UNRWA, where the EU is proud to show off its contribution. VP Mogherini announced on 4th April:

Since 2000, EU has provided over EUR 1.6 billion to UNRWA out of the European Neighbourhood Instrument (ENI) allocation for Palestine. The bulk of EU aid for UNRWA, EUR 82 million per year for the period 2014-2016, has gone to finance its General Fund (or  Programme Budget)………On top of this, there are ad hoc temporary projects financed via other instruments. Humanitarian funding to UNRWA amounted to EUR 5 million both in 2015 and 2016 (of which, EUR 4 million for shelter assistance in Gaza)……….

Well that is clear. However, less than a month later, we learnt of an event that took place at the UNRWA refugee camp in Aida, near Bethlehem. This celebrated a violent attack on Israeli buses a few days previously. And it would appear that this abuse of funds is not restricted to one isolated party.

I could list other items. For example, Hamas has returned to building offensive tunnels against Israel. Such an operation can only be carried out by syphoning off raw materials meant for the reconstruction of the area.

If there is good news it is that more and more of this misuse of Western generosity is being reported. However, sadly, Western governments, the EU and others are failing to take serious action. Meanwhile, the instigators of the verbal and military war against Israel grow richer. It is great to be at the head of the food chain.

Give aid by all means, but make sure you can check where it is going in a transparent and accountable manner. Otherwise, send it to those who do not just need it but will…………..actually receive it.

About the Author
Michael Horesh is a recognised business coach and mentor, and has helped clients collectively to create millions in added value over the past decade. He has substantial understanding of the workings of the Israeli economy and the financial situation of the Palestinians, as well as an incisive way of looking at Middle East issues.
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