May 17, 2007.
Donations to the Palestinian Authority almost tripled last year as a result of the
international boycott of the Hamas government, according to a report published
this month by the United Nations Office for the Coordination of Humanitarian
Affairs (OCHA). Aid in 2006 totaled $900 million, up from $349 million a year
earlier.
The boycott meant that most countries refused to channel money directly to the
PA, and Israel refused to transfer the tax revenues it collects on the PA’s
behalf.
However, Arab and Western nations continued and even increased their
donations, channeling them through either a “Hamas bypass” mechanism
known as the Temporary International Mechanism (TIM), or the office of PA
Chairman Mahmoud Abbas. This money, which compensated entirely for the
halt in Israeli tax transfers, partially financed the salaries of PA employees and
was used to make welfare payments to the needy.
According to the report, the biggest contributor to the PA last year was the
Arab League, which gave $448 million.
The European Union gave $219 million and the World Bank gave $42 million. In
addition, the government obtained an estimated $180 million by smuggling in
cash from abroad.
The report noted that, in part because less money was funneled directly to the
PA, the trend toward greater financial transparency was reversed in 2006, even
though the PA’s donors have pushed for transparency for years.
For instance, instead of monthly reports on the utilization of the PA’s budget,
reports were published only semiannually, violating the PA’s budget law.
Abbas’ office issued no comprehensive data on its expenditures or receipts of
money from abroad, while the Palestinian Investment Fund did not fully report
its dealings with either the banks or Abbas’ office.
Overall, TIM meant that the PA Finance Ministry had no control over income
and expenditures and could not draft a budget for 2006, while its 2007 budget
proposal lacked relevant data such as income and expenses for 2006 or the
number of public-sector employees. It also caused other government offices to
lag in payments to suppliers and resulted in the government’s total expenditure
falling 31 percent in 2006 to $1.37 billion. Its payments for salaries in particular
dropped from $1 billion in 2005 to $655 million.
TIM also resulted in bureaucratic duplication and financial uncertainty for the
recipients, the report said. For example, many employees did not receive their
salaries regularly.
The document was written by Dr. Karim Nashashibi, who until two months ago
was the International Monetary Fund’s representative for the West Bank and
Gaza.
