Arafat's Stash

The guy's a billionaire. Where does his money come from?

by Rachel Ehrenfeld

National Review Online
August 15, 2002, 11:00 a.m

Yesterday's news that Yasser Arafat has a $1.3 billion personal slush fund is no surprise. The information disclosed by Israel's military-intelligence chief emphasized that the stash was not skimmed from aid intended for the Palestinian people (donated by the likes of USAID and the EU), but he refrained from identifying the actual sources.

So questions abound: Is that the sum of all the money Arafat controls? Is it actually stolen from international aid money? How long have we known about it?

A member of the Palestinian Legislative Council from Nablus, Muawiya Al-Masri, was interviewed earlier this month by a Jordanian publication about Arafat's regime. When Al-Masri went public about PA corruption back in 1999 he was nearly killed in retaliation. Undeterred, he again spoke at length about the endemic corruption of the PA and Arafat. "No minister can appoint a driver or a delivery boy in his ministry without the president's consent," said Al-Masri. "There is no institutional process. There is only one institution - the presidency, which has no law and order and is based on bribing top officials."

Following the Oslo Accords, Arafat overtook even PEDCAR (the Palestinian Economic Council for Development and Reconstruction), founded under strict European conditions, as soon as it began operating. "His [Arafat's] became the authorized signature. Today, no amount, no matter how small, leaves the PEDCAR funds without the president's signature."

Experts estimate that the $1.3 billion Arafat controls could feed three million Palestinians for a year, buy 1,000 mobile intensive-care units, fund ten hospitals for a decade, and still leave $585 million to fund other social projects.

But firsthand testimonies by disaffected Palestinians, and volumes of documents found in his headquarters in Ramallah, leave no doubt that Arafat controls all PA money. And since this goes back to the 1960s, the amount of money that passed through his hands is staggering.

Over the years, the PA has had multiple funding sources. Every Palestinian "contributes" taxes. Arab nations send money. International organizations donate with poor Palestinians in mind. At the time the PA was created in 1993-4, the British National Crime Intelligence Service estimated that the PLO's ill-gotten gains totaled $8-10 billion. In addition, the PLO enjoyed an annual income of about $1.5-2 billion from "nations, extortion, payoffs, illegal arms dealing, drug trafficking, money laundering, fraud, etc." Since then, they've gotten even more. So where is that money?

Only Arafat, his wife Suha, and his "economic adviser" Mohammed Rashid know where the loot is hidden. Few others are in the know, but all of Arafat's 34 ministers have managed to get very wealthy over a short period of time, thanks to monopolies, gifts, and tens of thousands of dollars in regular payments from Arafat.

How much money is under Arafat's control? In addition to the $1.3 billion that he keeps to himself, he also controls all the money that is in the PA budget, money intended for development, businesses, education, health, etc. He decides who gets what and when - and that's how he controls his gang.

Arafat also controls a growing criminal industry - a blooming counterfeit industry that includes hundreds of thousands of CDs and DVDs, movies, designer cloths, schoolbooks, and even cosmetics. It's a cash cow for funding terrorist activities - but not before Arafat and his gang get their cut.

Arafat is not unusual. His corruption is similar to that of his neighbors in a region full of autocratic regimes. Expecting him to fight corruption is like ridding the Vatican of Catholicism, Abd Al-Wahhab Al-Effendi, a Sudanese scholar, said in a recent article about corruption in the Arab regimes published in the London-based Arabic daily Al Hayat. And somehow the U.S. and EU expect Arafat and his cronies to lead reform in the region. I wonder: Will they ask him to return all their money?

- Rachel Ehrenfeld is director of the New York-based Center for the Study of Corruption and the Rule of Law, and the author of the forthcoming book Funding Evil.