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David Frankfurter brought his family to Ra'anana, Israel from their native Sydney, Australia in 1992. He is a business consultant, corporate executive and writer who frequently comments on the Middle East conflict.
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By David Frankfurter
October 7, 2005
This article initially appear in The Sprout - October 2005.
Amnesty International's film, taken secretly in Zimbabwe, was released in August 2005. The Mugabe regime has brutally driven 700,000 people from their homes into immediate poverty and towards the threat of starvation. The EU reaction has been promising. Aid to central government has been replaced due to corruption and lack of transparency in Harare. Instead, Brussels has shifted almost $100 million to direct support for the locals.
The EU's contribution in Darfur appears to be a drop in a very dry bucket, but is better than nothing. Two million are already dead, and twice that number have been chased from their homes. Against this background, the EU contributed $100 million in October 2004 to maintain an enlarged African Union observer mission to Darfur. Another $20 million was allocated in September 2005.
Now pan the camera to the Middle East. Of course, the amounts of aid are far larger, both absolutely and certainly per capita. The problem is that nobody can give an account as to where the donations are going.
Since 2002, Europe has spent or promised a huge $4.5 billion in Afghanistan. Late September 2005 saw tangible returns: the first elections after decades of gunpoint rule by drug kings, warlords and the Taliban. Only 1,200 Afghanis were killed in the six-month election run up -- with a mere 15 dead on poll day. The UNDP delicately reports: "Corruption in Afghanistan is widespread".
The EU has also promised around $250 million for the reconstruction of Iraq. Germany has committed a similar amount on its own. Najaf, touted by the US military as its 'success story', shows what really has been achieved. An $8m 'immediate' hospital reconstruction created 80 new jobs. The workers sign on each morning, and then punctually disappear. In the words of an American officer, the country "is filled with projects that have never been completed or were completed and have never been used.
In the Israeli-Palestinian dispute, the end of the summer saw dramatic developments. Israel suddenly ended its 38-year occupation of Gaza. The world was left to wonder how to exploit Sharon's offer at the UN to recognise Palestinian rights in exchange for an end to terror.
Mr. James Wolfensohn, ex World Bank chief and now special advisor to the Quartet, produced an interim report for his employers on just this topic. Wolfey's cunning advice to the EU and others is simple. No more aid transfers to the Palestinians. The next steps must be reform: political; financial; judicial. Much needed and long resisted, these are the adjustments required to make a significant difference to the average resident of Gaza.
This cold-water-in-the-face approach is backed up from an unexpected quarter. George Abed, respected international economist and recently appointed Governor of the Palestinian Monetary Authority, went on record as saying that Palestinian bank accounts are "overflowing". Investors are sitting on their cash. Corruption and violence make stimulating the economy through business loans just too risky. Extra aid would "not be very effective", says Abed -- the Palestinians' highest-ranking financial civil servant.
He also emphasises fundamental reforms. "We can produce high single-digit growth in the first year or two of our administration if we can make those changes in things like the judiciary, education and the government."
So given the counsel of both their chosen foreign expert and of the highest ranking financial Palestinian civil servant, how do the Barons of Brussels plan to avoid wasting (yet again) the funds entrusted to them by EU voters?
Well, for a start, we can compare two approaches taken by the G8. For the starving and cash-poor of Africa, an aid package that concentrates on debt elimination. For the Palestinians, debt-free after more than $4 billion in European largesse since 1993 and awash in corruption, another $3 billion, largely in cash.
But debt write-offs can usefully form part of a future European strategy for the Palestinians. When the EU finance ministers met in Manchester this month, Britain?s ambitious Chancellor proposed an international loan guarantee scheme to boost business investment in Gaza. Even ex-officio Billy Clinton concurs. He wants to set up a private sector loan guarantee fund - creating jobs outside the charity dependent PA and UNRWA administrations. The problem is that the Palestinian leadership prefers anything rather than reform. For example, they are adamant that Europe?s contributions to UNRWA, totaling hundreds of millions, must continue. Cash in hand has always been a more attractive option than accepting fiscal and social responsibilities.
Fortunately for the PA, they have the ear of the mandarins at the European Commission. A September 19 announcement gloated that 2005 aid will break all expectations at ?280 million -- with nary a wink at the control recommendations of OLAF. So much for the demands of accountability and of continuous monitoring.
European taxpayers, confused by the dissonance of ongoing Palestinian poverty and the huge sums that have flowed through the Palestinian territories, may be interested in this little tidbit. The PA recently failed to honour an American judicial compensation order for its role in the murder of a US citizen by terrorists. Its American cash assets were frozen. The court had no access to assets outside the US, and ignored non-liquid assets (like real estate), as well as those of other Palestinian organizations. Yet this small portion of the PA's overall holdings is estimated at a cool $1.3 billion.
All in all, an interesting, rainy-day stash for a regime whose people live in abject poverty in refugee camps.
Wolfey may have another reason for looking closely at future gifts to the Palestinians. He single-handedly engineered a very constructive last-minute deal; convincing private donors to buy the hothouses left behind by the Israelis in Gaza, and handing them to the Palestinians.
The Israelis had created a thriving $100 million vegetable industry out of those plastic-sheathed structures on empty sand dunes. Unfortunately, in the first three days of PA control, much of the endowment was literally ripped to pieces by mobs. They stripped away every movable part, while PA security officials stood idly on the sidelines.
The EU has learnt its lesson in Zimbabwe. Brussels now must pay attention to its own advisors on the Middle East, before Captain Hook sails away to Neverland with more of their gold bullion.
Views expressed by the author do not
necessarily reflect those of israelinsider.
 
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