Dr Charles Tannock

Member of the European Parliament for London

Controversy in EU over probe of funding to PA

Haaretz (English edition) - 13 February 2003

By Sharon Sadeh

LONDON - The announcement by the European Commission's anti-fraud office (OLAF) last week, regarding its intention to investigate claims of irregular use of aid funds transferred to the Palestinian Authority by the European Union, including claims that monies transferred from Europe were used to finance terror activities, received mixed responses from the EU's various institutions.

The Commission, the EU's executive arm, which has so far dismissed out of hand any such investigation, breathed a sigh of relief following the announcement. Chris Patten, head of external relations for the Commission, who has so far contended that there was no need to examine the Palestinian aid process, hastened to announce that he "welcomes" the investigation and that "it is natural that OLAF should itself choose to investigate allegations of improper use of EU money.

The European Parliament, on the other hand, was both critical and suspicious of the announcement. Members of the parliament (MEPs), who had established a parliamentary committee in 2002 to examine the transfer of funds during the current intifada, claim that it is unacceptable for the probe to be conducted by a body that is part of the EU and operates covertly, instead of by an external body. Patten's enthusiasm following his previous objections only increased the parliament's suspicions of the planned inquiry.

The investigation committee's initiators - MEPs from Germany, Belgium, France, Britain, Holland and Italy - are also suspicious of the timing of the Commission's announcement: one day after the Commission's announcement, the MEPs announced that 170 MEPs had signed a petition backing the probe, more than the minimum 25 percent of the parliament's membership of 626 required for calling for a parliamentary discussion of the proposal.

Since June 2001 the European Union, which is the PA's largest foreign donor, has been transferring some 10 million euro per month to the PA. This sum, which is about 10-20 percent of the authority's monthly budget, is used to pay the salaries of public sector employees and to finance the administrative system. Since 1994, the EU has transferred over 1.4 billion euro to the PA for infrastructure projects and the education system.

"We are not for Israel or for the Palestinians," emphasized the committee's initiators. "Neither are we against Israel nor against the Palestinians. Our sole objective is to find the truth, which comes from transparency." They explained that transparency can be achieved only through proper control over expenditures and by ensuring that the funds are not misused, including misappropriation of funds for propaganda and terrorism. The observers note that the initiative itself attests to the EU's desire to show that it is treating Israel and the PA equally, particularly in the wake of the EU proposal about a year ago to suspend the preferred trade agreement with Israel.

In response to the initiative, Patten claimed that the Commission has found no evidence that the EU's monies were used for purposes other than those for which they were designated. He dismissed outright the contention that EU funds had been used to finance terrorism.

One of the proposal's initiators, German MEP Ilka Schroeder, 25 (the youngest member of the European Parliament), explained why they felt it was necessary to conduct an inquiry. "Funding from European taxpayers has been used to fund anti-Semitic terror. Since no investigations can be expected from Mr. Patten or from Commission President Mr. Prodi, the parliament will have to take action."

Another MEP, Dr. Charles Tannock of Britain, also one of the initiators, said he was "astonished by the hostility and resentment," shown by the Commission toward the parliament's initiative, which it viewed as a competing body.

The MEPs now fear that the Commission has found an elegant and legitimate way to stymie the parliament's initiative. They say that Patten will be able to point to OLAF's investigation and claim that there is no need for a parliamentary inquiry.

Lobbyists in Brussels who support the promotion of the committee of inquiry defined OLAF's announcement of the investigation as "permissible but odious." They added that OLAF's investigation would be less rigorous and effective because OLAF has less investigative authority than the parliament. "The fact that the process will be shrouded in secrecy, with no external supervision," said the lobbyists, " will save the Commission a lot of unpleasantness." They noted that the Commission's inquiry could also theoretically take years - and at least until the end of Patten's term of office, in 2004.

Supporters of the investigation committee added that the Commission's attempt to investigate itself and to mask this under the guise of an independent investigation is no more than "a cynical and sophisticated attempt to bury the parliamentary initiative after all their claims regarding the justification of the transfers of funding to the PA failed."

This refers specifically to two of the Commission's claims found to be incorrect. One is that the International Monetary Fund (IMF) is conducting an audit of the European aid to the Palestinians. The IMF's response, published in the Wall Street Journal, was unequivocal: "We are not conducting an audit of the foreign aid given to the PA."

The second claim, according to which Israel is using the same bank account as the Commission to transfer funds to the PA, was proved false. Tannock says that Israel resumed its transfers of funds to the PA just last month, after agreeing on a special transfer method, while the EU has been making direct payments, without full supervision, since June 2001.

The MEPs announced last weekend that they will not back down from their initiative to set up a committee of inquiry. Schroeder noted that the investigation by OLAF would be unable to deliver the political evaluation that the MEP's are seeking. "Olaf can only look at whether funds were misused," she said, "and not whether the Commission could or should have evaluated in advance that the money would be used to finance terror."

Patten's office rejected the claims of a "plot theory" designed to foil the parliamentary investigation, and insinuated Israeli involvement in the parliament's moves. "OLAF has all the tools and the authority for a fair investigation," said Patten's spokesperson, noting that unlike a parliamentary probe, the Commission's investigation will be "apolitical" and conducted by professionals. "Anyway, we have nothing to hide," said Patten's spokesperson. "The proximity of the announcement regarding the investigation and that of the collection of signatures in parliament is merely coincidental.

"The European Parliament is a free sovereign body and can do as it pleases," added the spokesperson. "We have lately held discussions with the initiators of the proposal and have clarified our position. We feel that in the absence of evidence of misuse of the funds there is no need for such an extreme step as the establishment of an investigative committee.

"Instead," proposed the spokesperson, "it would be enough for there to be one supervisory group sponsored by the parliament's three main committees - the budget committee, the budget supervisory committee and the foreign affairs committee. That group could examine and follow the transfer of funds to the PA. This idea has been discussed recently and we announced that the Commission will cooperate with such a group."

The OLAF office refused to answer Haaretz's questions on the matter, saying that it would respond to the investigation after it has been completed.