Is Fatah crumbling?: Ha'aretz report on PA corruption
February 27, 2004

In order to retain that youthful look, Yasser Arafat reportedly enjoys eating yogurt and taking naps every afternoon. But even such a regimen will do little to help in the trials ahead. “Yasser Arafat’s revolutionary movement…is crumbling around him,” argues Ha’aretz in the below report. The proximate cause is that years of graft and corruption -- combined with autocratic and ineffective rule -- have finally caught up with top Fatah leaders.

Fatah – Arafat’s revolutionary organization – was formed as an armed militia in 1959, with the express purpose of liberating Palestine using the Algeria independence struggle as a model. Fatah began border raids in 1965 – notice, before Israel took control of the West Bank or Gaza Strip – and the first Fatah “martyr” was actually killed by Jordanian border guards. Angered by the non-support of Arab governments, Fatah set out to instigate a second Arab-Israeli war. This was met with outrage by Arab governments, leading to the following outrageous fact: Egypt initially denounced Fatah as a Western-Zionist plot to provide Israel with a pretext to attack Arab states (for those interested, most of the above is from Anton LaGuardia’s book; he is a British journalist).

Since the 1993 Oslo Accords, the U.S. has given offered around $1.3 billion in economic assistance to the West Bank and Gaza Strip. Arab states transfer now about $55 million monthly, and the EU sends $9 million monthly. If the PA has received $5.5 billion, and it rules over 3 million Palestinians, my calculations come out to $1,833 per person. By comparison, the Marshall Plan provided $272 per European in today's dollars. Where has all this money gone?

Well, remember that fifty-ton shipment of weapons purchases from Iran in January 2002? That’s part of the problem. And next time you see a picture of the Palestinian Authority headquarters in Ramallah, take a careful look at the types of cars parked out in front. Land Rovers? Mercedes-Benzes? Generous gifts from leading European automakers, perhaps? See this CBS report that documents how Arafat has become a billionaire. In fact, Arafat made Forbes’ list of world billionaires, under the heading of “Kings, Queens and Despots.”

This is nothing special, however: the Palestinian Authority behaves in the same way as all authoritarian systems, which are, by definition, non-accountable and non-transparent. They take money that they are entrusted with and squirrel it away in Caribbean and Swiss bank accounts. Top Fatah leaders live in mansions, drive luxury cars, and send their families to Europe. They offer cronies lucrative business deals, like ownership in profitable businesses or juicy contracts, all as part of larger patronage networks.

Suha Arafat, Yasir’s wife, has been living in Paris for years – reportedly, she occupies an entire floor at the lovely Bristol Hotel, and receives a disbursement of $100,000 monthly, courtesy of the PA, to support her shopping habit. It is in Paris that she also has been known to regale those who will listen about the carcinogenic gases Israeli soldiers deploy against Palestinian civilians. At present, she is under investigation by the Bank of France, which is trying to figure out what nine million euros in EU aid meant for impoverished Palestinians is doing in a personal bank account.

The Palestinian public is well aware of the shameless corruption of PA officials, and polls reveal widespread frustration with it. This is part of the reason why Hamas – and fundamentalists groups across Islamic lands – have become popular: they criticize the barefaced corruption of the ruling elites, while presenting themselves as an honest alternative that doesn’t steal and provides limited social and health services. On February 7, three hundred and fifty-six members of Fatah collectively resigned from the movement, citing autocracy and endless corruption.

Corruption is one of the world’s leading impediments to growth and development. It always accompanies clientele networks, cronyism and nepotism, and resulting in the inefficient allocation of wealth – taking money that was, say, intended to educate the youth, collect trash, fund courts, equip hospitals – and instead sinking it into silly investments or transferred into hidden bank accounts. Salam Fayad, the PA Finance Minister with a degree from the University of Texas, bravely undertook to expose this pervasive corruption, but it is too entrenched and he was unsuccessful.

The Palestinian economy, contrary to what some may believe, actually flourished under occupation. According the World Bank, in 1999 the Palestinian per capita income was amongst the very highest of Arab states; double that of Syria and four times that of Yemen. This was due to integration with the Israeli economy – the region’s richest. This has largely come to an end with the Second Intifada, where border closures cannot allow the 30% of the Palestinian work force that did so in Israel.

As a related point, continuous economic decline is a dangerous phenomenon for dictatorships like the PA, while it is not for democracies like Israel. Non-democratic regimes derive their legitimacy from their performance – if they maintain order, provide minimal development, win wars, and so on – people can tolerate them in lieu of representation. But when they fail even in this, making the lives of those they rule worse and worse, they break the informal social contract, which calls their legitimacy into question. This doesn’t happen in Israel because the prospect of throwing out unpopular leaders through elections is always on the horizon. Sometimes leads to violence, and Hamas and Fatah militiamen have had gun battles in the streets of the West Ban on occasion. Mahmoud Abbas – the first Palestinian prime minister, now replaced – spoke on occasion of civil war.

Read "Background: Graft, cement and Arafat's crumbling empire, " by Bradley Burstonon, in Ha'aretz.