National Post
RAMALLAH, West Bank - The controversy over the Palestinian arms ship underlines a situation critics have long complained of: Yasser Arafat's total control over millions of dollars in a budget that has little accountability or transparency.
He uses the money to reward loyal lieutenants and pay for private projects. Opponents say he could easily siphon off the money for an arms shipment with few people knowing.
Though Mr. Arafat denies any knowledge of the weapons shipment on board the Karine-A last weekend, Israeli leaders say it is only the latest example of Mr. Arafat's spending priorities.
"Arafat chooses to buy long-range Katyusha rockets instead of investing in children's education," Ariel Sharon, the Israeli Prime Minister, charged on Sunday, pointing toward the ship he called "this Trojan Horse at sea."
Matters are unlikely to change as long as Mr. Arafat has unfettered access to the million-dollar secret stash, made up of money siphoned off from local tax revenues or donations from Arab states and the European Union.
The fund is officially described as being used to pay for state security and "other purposes," but there is no independent review of how the monies are paid out.
It exists in parallel to the official budget, US$1-billion allocated for government services and monitored by members of the Palestinian Legislative Council, the Palestinian parliament.
"The [secret budget] is the political economy of corruption," says Adel Samara, an economist and a controversial figure in the West Bank.
"It is a special economy based on corruption and patronage."
"He has robbed the general government budget of US$200-million," adds Abdel Jawad Saleh, a former agriculture minister and the representative for Ramallah in the PLC.
For years, PLC members have been trying to make Mr. Arafat publish accounts of his secret budget.
Four years ago, they drafted legislation to establish a constitution. The Basic Law, passed by the legislature in 1998, would enable it to scrutinize the budgets managed by Mr. Arafat, but so far he has avoided signing the bill into law.
In 1999, Mr. Saleh, Mr. Samara and 18 other intellectuals formed the Group of 20 and circulated a petition branding Mr. Arafat's Cabinet as a corrupt entity, principally because it acquiesced in the secret budget.
Both have suffered for their stand.
Mr. Samara, who has a reputation as a left-wing maverick and gadfly, has been barred from holding any university position in the Palestinian autonomy.
Mr. Saleh was beaten while being held in prison in Jericho.
"They wanted to shut my mouth. That is the message for me," he says.
The effects of corruption are easily seen by any visitor to Gaza or the West Bank. The police chiefs cruise the streets in the latest in SUVs and Mercedes, while the chairman himself can occasionally be glimpsed behind the tinted windows of his armour-plated black Mercedes.
Ordinary Palestinians must make do with battered Peugeots or Subarus, or maybe a donkey. Many of them just walk.
In Gaza, the Mediterranean-style villas of the elite -- each with its walled compound and private garage -- cluster near the beach and Mr. Arafat's home.
Barely two kilometres away are the refugee camps of Shati and Jabalaya, whose inhabitants are housed in concrete shacks with tin roofs and no sewage facilities.
And while workers are hurting from unemployment that has surged as high as 60%, members of the elite are cushioned from such hardships.
As the fountainhead of wealth, Mr. Arafat directly controls state monopolies in cement imports and oil and gas distribution, as well as a Palestinian investment company.
There are no independent audits of these companies and bidding on public tenders is almost always awarded according to Mr. Arafat's whim.
The chairman also appoints his own people to key positions that elsewhere would be elected posts, for example, the head of the Palestinian Trade Union. Everyone knows the only real qualification for such a job is the recipient's personal links to the Palestinian leader.
This feeds into the structure of Palestinian society, which remains highly tribal, with the interests of the family group being paramount.
The area is a checkerboard of quasi-feudal fiefdoms. In Nablus, the Al Masris are the chief landowners and have their fingers in many pies, including construction and real estate. Many family members have also held the job of mayor.
The family has benefited mightily, with numerous key contracts, including projects for Palestinian Telecommunications Co. and business park development in Jenin and Gaza.
Hebron is the fiefdom of Jibril Rajoub, head of the fearsome Preventive Security Service militia, while his counterpart in northern Gaza is Mohammed Dahlan. Both men have been rewarded with plush villas, top-of the-line SUVs and cash handouts.
"[Mr. Arafat] would say, 'Here is $10,000 -- go have a vacation in Europe,' or he would give it to people who have allegiance to [him]," Mr. Saleh says.
"I don't believe a leader can mobilize a people against Israeli occupation while his men are corrupt. It is impossible."
In the past eight years, many Western and Arab countries have offered the Palestinian Authority hundreds of millions of dollars of aid.
But Mr. Arafat has refused it because of the string attached -- accountability.
According to the Israeli daily Ha'aretz, the oil-rich Arab states offered him US$1-billion when the intifada started in September, 2000. But they also demanded "complete transparency" over how the funds were used.
To get around Mr. Arafat's reluctance to publish accounts, countries and donors sponsoring much-needed development projects -- health clinics, roads and schools, sewer and water systems -- make sure they disburse the funds and perform their own audits.
Zayad Abou Zayad, the Minister for Jerusalem Affairs in the Palestinian Cabinet, dismisses the corruption allegations.
Although he readily admits to irregularities in decision-making and a lack of accountability over expenditures, he blames this on the Israeli occupation, which he says prevents the proper functioning of government.
"It is crippling the legislative council. We are not allowed to meet," he says.
"Council members cannot pass through military roadblocks. The legislative council has not convened for a year. It cannot discuss the budgets or any other issue."
Mr. Arafat's supporters say the oppression caused by the Israeli occupation is also the reason for the delay in Palestinian elections. Plans for the election seem to have been permanently shelved.
However, Mr. Samara believes the delay is just another form of corruption, allowing the privileged few to hang on to power longer.
"Many of the people in power are not qualified," he says. "But all the money and liquidity are going to the same region and the same rulers."
Ever since the Palestinian authority took power in 1994, the region's economy has deteriorated. Despite the inflows of aid, per capita income has dropped from US$1,700 to US$1,300, a situation aggravated by Israel's economic crackdown.
Meanwhile, the masses continue to eke out a living and the privileged stay in power, bound to Mr. Arafat by ties of money and complicity.
"The rest are as corrupt as he is," Mr. Saleh says. "They get money from him. And they are hushed up and keep quiet about all these problems."
Mr. Samara fears if corruption persists, such local commanders as Mr. Rajoub and Mr. Dahlan will take over the Palestinian leadership.
He even speculates they will be put on Israel's payroll, in return for representing Israeli interests.
Hanan Ashrawi, the official Palestinian spokeswoman, believes there is some merit in the corruption accusations, although she distances herself from the Group of 20.
She says she is concerned that corruption hampers effective decision-making in the Palestinian Cabinet -- and bad decisions lead to flawed policies.
"I think we have had many serious problems in decision-making and in policy-making. When an office is beyond accountability and the oversight of the legislative council, there will be internal weakness in decision-making."
The pressing need, say those Palestinians willing to talk about corruption, is the establishment of a proper constitution, to get the Basic Law signed and into practice.
"I think it is absolutely essential to put our own house in order," Dr. Ashrawi says.
"That it be a working, efficient, inclusive system of government, the empowerment of people, the enactment of principles, the building of institutions, the rule of law -- meritocracy, rather than patronage."