This Perspective originally appeared as an op-ed in the November 12, 2004 edition of The Boston Globe.
The death of Yasser Arafat puts new pressure on the Palestinian leadership to quickly sort out the transition and distribute power among the various claimants to Arafat's chair. The debate has been going on for months now as various factions and individuals have sought leverage in the struggle for power. But this public struggle has another, relatively hidden, aspect that may play an important role in determining the winners and losers. What has only been hinted at behind the scenes is another transition battle -- to control the reported billions of dollars that Arafat had stashed away in his private accounts.
Arafat ran the finances of his main political faction, Fatah, as a personal bank account. With funds donated by Arab governments, payroll taxes, and individuals, Arafat rewarded his allies and bought the loyalty of his opponents.
In the early days of the Palestinian movement, Arafat sought to protect PLO and Fatah resources from the eyes of countries and opponents that might freeze or capture the assets and call into question the future of the organization. It was a covert operation working in a dangerous environment, and it was on this basis that he was able to gain personal control and maintain secrecy.
In the mid 1980s Arafat was estimated to control some $7 billion in numerous secret bank accounts and in widespread commercial investments. By 2003 the estimate had been lowered to about $1.3 billion. Even at that level, the funds could feed the Palestinian population for over a year and leave a considerable amount left over for social welfare projects.
There is no doubt that in the last three years, under combined pressure from donor Arab countries, the EU, and the United States, Palestinian Authority finances have been brought under greater control by the Authority Finance Minister Salam Fayyad. But that control has not been extended to Fatah, PLO finances, or Arafat's private accounts. It is certain that the flow of cash to Arafat has been constricted over the past few years by his isolation, growing demands for reform and his weakening position of authority. But the truth is that no one except Arafat himself knew the full extent or the whereabouts of all the money he personally controlled. It is not unreasonable to conclude that up until his death, Arafat continued to hold well in excess of a billion dollars -- and perhaps even more -- that had been donated for the good of the Palestinian people and that he had diverted to his personal accounts to cement his authority.
This is the money that helped finance the Al Aqsa Martyrs organization and its terrorist activities. It is also, no doubt, the money that Arafat used from time to time to buy off other hostile organizations like Hamas. His wife, Suha, profited. His family profited, and his financial advisers and close allies profited.
While Arafat bought stability and shored up his own position of leadership, he also bought terrorism, corruption, and a continuing struggle against Israel. According to Palestinians who sat in on decisive meetings with Arafat, it was Arafat's design and money that triggered and sustained the intifada after the Camp David failure, not the visit of Ariel Sharon to the Temple Mount. The money that was used by Arafat to corrupt and bypass the system and to sustain the conflict is now up for grabs.
In the wrong hands, these secret funds will continue to support terrorism and will be used to undercut any effort to moderate the Palestinian position, isolate the rejectionists, or begin to restore the Palestinian economy. Even in the hands of moderate leaders, this money, insofar as it is uncontrolled, will continue to corrupt the system and prevent the transparency and democratic process that most Palestinians crave.
The Palestinian people are suffering greatly and the gap between the rich leadership and poor refugees is growing amid continuing charges of corruption. This is a situation that threatens stability and works to the advantage of radical elements and against a peaceful transition to a moderate leadership.
Therefore, it is in our interest and, indeed, imperative for the US administration, to take leadership of an international effort through our combined intelligence and financial resources, working with responsible Palestinians, to trace this money, identify it, freeze it, and safeguard it for the Palestinian people.
Edward S. Walker, Jr. is President of the Middle East Institute. He previously served as Assistant Secretary of State for Near Eastern Affairs, and as US Ambassador to Israel, the Arab Republic of Egypt, and the United Arab Emirates, and Deputy Permanent US Representative to the United Nations.
Disclaimer: Assertions and opinions in this Commentary are solely those of the above-mentioned author(s) and do not reflect necessarily the views of the Middle East Institute, which expressly does not take positions on Middle East policy.
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This Perspective originally appeared as an op-ed in the November 12, 2004 edition of The Boston Globe.
The death of Yasser Arafat puts new pressure on the Palestinian leadership to quickly sort out the transition and distribute power among the various claimants to Arafat's chair. The debate has been going on for months now as various factions and individuals have sought leverage in the struggle for power. But this public struggle has another, relatively hidden, aspect that may play an important role in determining the winners and losers. What has only been hinted at behind the scenes is another transition battle -- to control the reported billions of dollars that Arafat had stashed away in his private accounts.
Arafat ran the finances of his main political faction, Fatah, as a personal bank account. With funds donated by Arab governments, payroll taxes, and individuals, Arafat rewarded his allies and bought the loyalty of his opponents.
In the early days of the Palestinian movement, Arafat sought to protect PLO and Fatah resources from the eyes of countries and opponents that might freeze or capture the assets and call into question the future of the organization. It was a covert operation working in a dangerous environment, and it was on this basis that he was able to gain personal control and maintain secrecy.
In the mid 1980s Arafat was estimated to control some $7 billion in numerous secret bank accounts and in widespread commercial investments. By 2003 the estimate had been lowered to about $1.3 billion. Even at that level, the funds could feed the Palestinian population for over a year and leave a considerable amount left over for social welfare projects.
There is no doubt that in the last three years, under combined pressure from donor Arab countries, the EU, and the United States, Palestinian Authority finances have been brought under greater control by the Authority Finance Minister Salam Fayyad. But that control has not been extended to Fatah, PLO finances, or Arafat's private accounts. It is certain that the flow of cash to Arafat has been constricted over the past few years by his isolation, growing demands for reform and his weakening position of authority. But the truth is that no one except Arafat himself knew the full extent or the whereabouts of all the money he personally controlled. It is not unreasonable to conclude that up until his death, Arafat continued to hold well in excess of a billion dollars -- and perhaps even more -- that had been donated for the good of the Palestinian people and that he had diverted to his personal accounts to cement his authority.
This is the money that helped finance the Al Aqsa Martyrs organization and its terrorist activities. It is also, no doubt, the money that Arafat used from time to time to buy off other hostile organizations like Hamas. His wife, Suha, profited. His family profited, and his financial advisers and close allies profited.
While Arafat bought stability and shored up his own position of leadership, he also bought terrorism, corruption, and a continuing struggle against Israel. According to Palestinians who sat in on decisive meetings with Arafat, it was Arafat's design and money that triggered and sustained the intifada after the Camp David failure, not the visit of Ariel Sharon to the Temple Mount. The money that was used by Arafat to corrupt and bypass the system and to sustain the conflict is now up for grabs.
In the wrong hands, these secret funds will continue to support terrorism and will be used to undercut any effort to moderate the Palestinian position, isolate the rejectionists, or begin to restore the Palestinian economy. Even in the hands of moderate leaders, this money, insofar as it is uncontrolled, will continue to corrupt the system and prevent the transparency and democratic process that most Palestinians crave.
The Palestinian people are suffering greatly and the gap between the rich leadership and poor refugees is growing amid continuing charges of corruption. This is a situation that threatens stability and works to the advantage of radical elements and against a peaceful transition to a moderate leadership.
Therefore, it is in our interest and, indeed, imperative for the US administration, to take leadership of an international effort through our combined intelligence and financial resources, working with responsible Palestinians, to trace this money, identify it, freeze it, and safeguard it for the Palestinian people.
Edward S. Walker, Jr. is President of the Middle East Institute. He previously served as Assistant Secretary of State for Near Eastern Affairs, and as US Ambassador to Israel, the Arab Republic of Egypt, and the United Arab Emirates, and Deputy Permanent US Representative to the United Nations.