Dr Charles Tannock

Member of the European Parliament for London

EU $270m funded Palestinian intifada against Israel

The Business - 11 April 2004

This week, fresh allegations have surfaced that money intended for use by the Palestinian Authority for legitimate purposes has been siphoned off by corrupt officials, ostensibly to pay the wages of 7,000 non-existent staff. But rather than prosecutions and the recovery of misappropriated funds, the investigation has concluded with a whimper, petering out in two conflicting reports and an inconclusive debate.

What it is has provided, however, is a salutary lesson in the labyrinthine workings of the EU and the possibility that future donations may be subject to rather more scrutiny than that which applied to the $246 million (£134 million) handed over without question to the Palestinian Authority.

Ilka Schröder and François Zimeray’s determination uncovered a murky world where money from the EU’s constituent states was channelled into the pockets of dubious figures in the Palestinian Authority, and from there into the pockets of Palestinian terrorist groups.

They were unlikely champions of such a cause: Mr Zimeray was a French socialist MEP; Ms Schröder, a German Green MEP and later an associated member of the Group of the European United Left/Nordic Green Left. What they shared was a frustration with what they regarded as the EU’s implicit support for the Palestinian Authority, regardless of whether it was right or wrong.

Ms Schröder was in no doubt about what had happened to the money. In an open letter, she wrote: "It is a well known fact that the EU-funding for the Palestinian Authority was channelled to a black budget. It is also well known that the Palestinian Authority has financed a murderous anti-Semitic terrorist war against Israel. Israel provided the European Commission with proof of this use of EU-funding in May 2002. Since then, the commission denies having any knowledge of this specific use of the money and the Conference of Presidents successfully stalled an inquiry committee on this issue."

But from the start, it was an uphill battle. Chris Patten, the EU foreign affairs commissioner, was against any investigation, arguing it amounted to ignoring Palestinian suffering. Ms Schroeder could not stomach that argument: she accused Mr Patten of "winking approval of terrorist attacks funded by the EU". Zimeray and Schröder pressed ahead; after four months they had the 157 signatures they needed for a vote on the issue.

Patten's attempts to persuade MEPs to drop the matter were rejected and the European parliament set up a working group to look into the claims. Officials in Brussels were already admitting they could not account for every penny spent by the PA.

When Patten protested that there was no need for further investigation because the International Monetary Fund (IMF) supervised the EU's funding arrangements, Thomas Dawson, the director of the IMF's external relations department, made clear it could not monitor or control every item. Even Salam Fayyad, the Palestinian finance minister, admitted the system was open to corruption.

The parliamentary working group found indications that EU money paid to the PA may have found its way to the al-Aqsa Martyrs Brigades, a group responsible for hundreds of attacks on Israeli targets. There was evidence to show that Arafat had signed payment orders for people directly involved in terrorist activity.

But when it came to their conclusions, seven members believed evidence was not of sufficient quality to stand up in court; six were prepared to accept it. Schröder wrote in a letter to the group: "The working group was established in order to downplay the importance of the issue."

Charles Tannock, the UK Conservative Party's foreign affairs spokesman in the European Parliament and one of the authors of the minority group's report, called it a whitewash. The majority report, he said, had chosen to ignore signed payment orders by Arafat "to people linked to terrorist activities or their families" on the basis that they amounted to circumstantial evidence only and did not prove that payments had been made.

Tannock said he believed up to $270m has been paid to the PA over a two-year period, with the money going into a single account. "It was all paid into a pot to finance a variety of things, some of them legitimate and some dubious," he said. He demanded a committee of inquiry into the payments but his request was vetoed; it is unlikely further parliamentary investigations will take place.

Zimeray and Schröder have persuaded OLAF to begin its own investigation into what has happened to the money. An examination of the payroll of the PA's national security force, under the command of General Haj Ismail Jabber, shows that about $2m a month was paid to General Jabber to pay for a security force of 37,000 ; but the payroll showed there were only 30,000 people on the staff.