By David Bedein

Next week, while the US Congress deliberates over whether or not to comply with the request of President Clinton and to indeed grant an additional $400 Million to the Palestinian Authority, a team of Palestinian and Israeli journalists have prepared a comprehensive report concerning Palestinian Authority fiscal accountability. Our news agency will present that report to Congressional staffers next week.

This carefully researched Palestinian-Israeli analysis reports severe issues of financial mismanagement of the PA which cast doubts on the ability of the PA to be at all responsive to the health, education, welfare or even the business needs of the Palestinian Arab population. The principle problems documented by the report:

* At least two private bank accounts of the Palestinian Authority operate under the exclusive control of Arafat, and the monies that go through those accounts are by no means invested in any concerns of the Palestinian Arab people. Half a billion dollars remains in these private accounts.

* The Palestinian Authority recklessly and brutally domineers the business affairs of the Palestinian Arab population through monopolies in industries such as cement-mixing and gasoline, which kick back all profits to private coffers of PA officials. The US state department estimates that there are 27 PA-controlled monopolies.

* Fourteen PA security services collect taxes from the Palestinian Arab population, with little coordination by the PA treasury. These militias all claim loyalty to Arafat under the aegis of the various arms of the

Palestinian Liberation Army

* Assets of the PLO abroad not simply being transferred to the Palestinian Authority.

* Laxity of supervision from donor-nations has given Arafat the free and arbitrary control over the 2.75 billion dollars received so far from donor nations.

* Proliferation of thousands of unnecessary employees in public service of the Palestinian Authority

Meanwhile, however, the report notes that agreements signed between Arafat and all donor nations to the PA require total supervision of the PALESTINIAN AUTHORITY's bank accounts along with knowledge and certification of exactly what money was used for. For that reason, the International Monetary Fund was brought in as a "consultant" to the Palestinian staff to prepare the Authority's annual budget.

Well, the report points out, the PALESTINIAN AUTHORITY gladly accepts foreign donations but its is less than happy about the supervision that comes with it. Instead, two budgetary systems actually operate within the PA ; one ruled by Arafat with the little or no accountability to the World Bank, the IMF, and the contributing countries. The other, which is under the total supervision of the contributing countries and which serves wholly for development of PA infrastructure.

The World Bank and the IMF which represent the contributing countries have repeatedly demanded that the Authority close the secret set of accounts that remain under Arafat's personal control, and whose assets run in excess of half a billion dollars. Yet Arafat has simply ignored those requests - and gotten away with it.

At the conference of donor nations to the PA that was held this past week in Japan, the Palestinian Authority made promises to clean up the arbitrary accounts and to make various economic reforms. In private discussions, however, Palestinian Authority representatives joked in the corridors of conference that they will continue to do whatever they like with the money that they receive.

A theory propagated by Oslo peace architect and former Israeli Prime Minister Shimon Peres was that the flow of capital to the Palestinian Arab community would foster peace and a "new middle east". Instead, the billions of dollars of cash-flow in Palestinian society has led to rampant corruption and a seething population that may turn to violence - not only against Arafat's PA, but also against Israel and the US, whom the Palestinian people blame for imposing a corrupt PA upon them.


David Bedein is a Media Research Analyst and Bureau Chief ISRAEL RESOURCE NEWS AGENCY

BEIT AGRON INTERNATIONAL PRESS CENTER Jerusalem, Israel. Full Report posted at:

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