Michael Horesh
Michael Horesh
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US$ billion or $5.4 billion – what is worth more?

Putting the astronomical sum pledged to rebuild Gaza in context

Last week, the international community pledged US$5.4 billion dollars in order to support the estimated 1.8 million people of Gaza in the aftermath of the war with Israel.

A humongous sum, one commentator has tried to give the dollars a sense of proportion. Michael Freund observed that the release of the Ebola plague has barely justified approximately US$1.0 billion of contributions. Millions of Syrians and other human refugee problems around the globe are also valued less highly.

It appears that while John Kerry is still looking for an extra US$200 million to combat Ebola, Qatar has committed US$1 billion to Gaza. Similarly, “the US pledged $212m (£132m) in new aid, while the United Arab Emirates and Turkey both committed $200m (£124m). European Union foreign policy chief Catherine Ashton said donations from member states would reach $568m (£353m).” etc , etc.

Let me clear, whether you blame the bombing of the Israeli air force or the fact that Hamas booby trapped streets of housing, at least 5% of Gaza residential buildings were destroyed. Hundreds of thousands require new housing. The issue is not the cause. At a time when Europe is facing another recession, the question is can the placements of the new donations be accounted for?

The original request from President Abbas was for a mere US$4.0 billion. However, historically donors, particularly from the Middle East, have rarely delivered in full. And as the Financial Times pointed out, a significant amount will seep out to the growing class of corrupt Gaza millionaires.

That stated, there are four key ways in which the sums can be transferred. And each methodology reveals a disturbing lack of transparency for the generous donors.

A) Palestinian Authority (PA). Except for brief periods under Prime Minister Fayyad, the PA has never declared fully their financial accounts. When I last checked the pages of the Palestinian Ministry of Finance, the links to the detailed statements would not open out. Furthermore, the PA does not govern Gaza, which is run by Hamas, a known supporter of ISIL.

B) UNRWA: Despite the name, this organisation is not supervised directly by the UN. And even though its annual budget breaches the one billion dollar level, it has no external and independent auditor! During the Israel-Hamas hostilities, UNRWA was forced to admit that its facilities are used by terrorists – exposing the abuse of Western taxpayers’ contributions.

C) NGOs: Increasingly since 2001, NGOs have become to be seen as a ‘kosher’ mechanism for transferring money to the Palestinians. While the aim here has been noble, several such charities have been exposed by NGO Monitor for operating in the political sphere rather than impacting on the lives of ordinary Palestinians. For example, monies transferred by the royal Swedish government are utilised to denigrate Israel, supposedly a friend of the monarchy, rather than to benefit Palestinian society.

D) PEGASE: Created by the European Union  in 2008, PEGASE seeks to ensure that Brussels’ support for Palestinians ends up at designated targets. Stephan Fule is the European Commissioner responsible for enlargement and neighbourhood policy. In response to a question from Lynn Boylan MEP, he reported last week how “Aid to Gaza is part of the overall package of cooperation with Palestine and no separate ‘accounting’ is kept. However, for the period 2007-2013, our estimate is that:

1) For PEGASE, payments to beneficiaries in Gaza correspond to 1/3 of the allocations for civil servants and pensioners and 2/3 of the amount for Vulnerable Palestinian Families. The overall contributions for the 2007-2013 period amounts to circa EUR 1.5 billion

ii) In addition,

  • For UNRWA, aid to Gaza targets 1.2 million refugees representing 1/4 of the total refugees assisted by the Agency. The total EU contribution to UNRWA for the referred period has been around EUR 950 million;
  • Infrastructure projects amount to EUR 23 million and projects for the private sector to over EUR 30 million;
  • Humanitarian assistance amounted to over EUR 225 million, including 74 million to UNRWA

Note that the figures are “approximately”. So the EU admits that it has no ability to add up how much goes out to the Palestinians.

Note that “civil servants ….. and 2/3 of the amount for Vulnerable Palestinian Families” is ‘Newspeak’. for Hamas officials and families of convicted terrorist.

And thus note why it is not a surprise that in December of 2013, the European Court of Auditors could not substantiate that donations to the Palestinians had been used properly.

Bottom line: However much of the 5.4 billion is transferred, very considerably less will be received or felt by the average person in downtown Gaza City!

So what will make a difference to the lives of ordinary citizens in Gaza? And does Gaza really need US$5.4 billion, an amount bigger than the economies of over 50 countries?

Well, Israel has been criticised for operating a closed border with Gaza. Actually, it is the Egyptian side, which is sealed. Israel lets in hundreds of trucks of humanitarian supplies most days a week, even during a war. (By the way, it is Qatar that has been financing these transports, and thus their above contributions are nothing new.)

Ban Ki-Moon, UN Secretary General, delivered a speech at the Cairo donors’ conference, claiming that the fault of the conflict in Gaza lay in Israel’s occupation. Yet, Israel separated itself from Gaza back in 2005. Everyone does agree that their should be greater freedom of movement at the border crossings, and President Rivlin of Israel echoed this in an address to Ban.

What is the missing factor? For years, Hamas invested billions in building up a war machine against Israel. While never able to defeat Jerusalem, the dynamic and nimble infrastructure of tunnels and rockets threatened, maimed and killed. None of this investment created wealth, happiness and prosperity for its own people….except the oligarchy, as the Financial Times described. If Hamas was to think in terms of mutual peace, now that is a concept of near immeasurable value.

The world has yet to learn how to fund and to repeal the threat of Ebola, Islamic terror and many other problems. Regarding Gaza, US$5.4 billion appears to be a secure number for the peace of mind of global leaders. It allows them to believe that they can achieve a reduction in poverty. Meanwhile, the plague of Hamas remains free to build up its resistance.

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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