Use Of Funds By Palestinian Authority Probed

by Julio Godoy

(IPS) PARIS -- New investigations have been ordered into complaints over use of EU money by the Palestinian Authority.

A team of European auditors is in Jerusalem to go through records and to investigate any misuse of aid given to the Palestinian Authority by the European Union (EU).

In Paris, prosecutors are investigating transfer of money into two accounts held by Suha Arafat, wife of Palestinian Authority (PA) leader Yasser Arafat. Suha Arafat lives in Paris and Geneva.

Investigation into Mrs Arafat's accounts is at a preliminary stage and no evidence of wrongdoing has been found so far, judicial sources told IPS.

A French state agency that conducts inquiries into money laundering is leading the investigation into Arafat's bank accounts.

The Bank of France alerted prosecutors last October to transfer of money from Switzerland to Suha Arafat's accounts in two Paris-based banks.

PA representative in Paris Leila Chahid called the allegations of corruption and money laundering against the Arafats "scandalous and unacceptable."

The investigations follow allegations of corruption aimed at the PA for more than two years by Israeli agencies and some right-wing political groups.

Several members of the European Parliament had asked last year for investigation into the use of financial aid to the PA. The move gained 147 votes, ten short of the number required to hold a debate.

The EU gives the PA about $400 million a year, a third of the PA's total budget. It has given the Palestinian Authority about $4.5 billion in aid so far.

The demand for an EU inquiry followed a strong campaign by the Israeli and the U.S. governments to keep Arafat out of negotiations to end Israeli occupation of Palestinian territories.

Israeli authorities have given the EU several documents that allegedly link Arafat to corruption scandals. The Israelis say the documents prove that the PA has been financing suicide attacks.

The European Commission, the executive arm of the EU, dismissed those allegations. EU commissioner for external affairs Chris Patten accused groups demanding investigation of "flogging a dead horse." He told members of the European parliament that any misuse of money would have been detected by "especially strict mechanisms for ex-ante and ex-post controls."

The anti-Arafat campaign has sought also to blame money mismanagement by the PA for the economic difficulties in the Palestinian areas. The moves seek to diminish Israel's responsibility.

About three-quarters of Palestinians live on less than two dollars a day. The numbers living in poverty at this level have risen threefold since the outbreak of the Intifadah in September 2000.

Two-thirds of the workforce in Gaza, and half the workforce in the West Bank is unemployed. Palestinians are now more dependent on food aid than ever before.

An independent report holds the Israelis largely responsible for deterioration in Palestinian living standards.

Israeli policies in the Palestinian territories "have deprived large segments of the population of job opportunities and income," says a report by the United Nations Development Programme (UNDP).

The report says that since September 2000 the gross national product in Palestinian areas has fallen to less than half. The report says losses to the Palestinian economy are between $3.2 billion and $10 billion.

In the two years up to September 2002 Israeli incursions had caused damage worth $728 million, the UN report says. It points also to human and economic losses suffered by the Israelis.

But within Palestinian areas too, many blame corruption within the Palestinian Authority for the poverty and the difficulties people face. Many Palestinian leaders have been demanding inquiries into allegations of corruption within the PA.

The new allegations of corruption against Yasser Arafat coincide with allegations against Israeli Prime Minister Ariel Sharon.

Israeli prosecutors have accused businessman David Appel of paying hundreds of thousands of dollars to Sharon's son Gilad in a property deal in Greece.

Sharon also faces a second investigation over accusations that he violated election financing regulations.