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Introduction
This position paper has been prepared to support the resolution, pursuant to Article 151 of the Rules of Procedure of the European Parliament, to set up a parliamentary committee of inquiry to investigate the alleged misuse of EU funds transferred to the Palestinian Authority (PA). More specifically, The Prism Group believes that the goal of the inquiry should be to determine whether EU monies are being illegally diverted to fund terrorist activity against Israeli civilians.

In deciding whether the circumstances warrant the convening of such an inquiry, the issue presented before the Parliament is whether there is a sufficient, objective basis upon which to launch a comprehensive audit and investigation of PA finances to determine, definitively, whether funds have been misused. It is not within the purview of this paper to elicit evidence sufficient to “convict” the PA of misuse of funds, nor is it necessary to do so. Neither is it the purpose of the authors to cause the EU to reduce or eliminate its payments to the Palestinians. The ultimate objective of such an inquiry is to decide what controls and monitoring devices need to be established to ensure that EU monies are distributed as intended by the donor countries.

The widespread allegations that PA funds were used to finance terror find strong support in numerous documents and other evidence that recently have come to light—materials that have been deemed sufficiently incriminating to lead one of the world’s leading human rights organizations to conclude that the funds were distributed to support attacks against civilians. It is the view of the authors that a fulsome inquiry is mandated to resolve the veracity of these contentions. Only by conclusively resolving this matter, as is its right and duty as a donor entity, can the EU act to restore the credibility and confidence in a legitimate Palestinian governing body—a critical element needed to revive the Middle East Peace process.

Statement of the Issues
In his statement on 19 June 2002, Christopher Patten, Chairman of the Foreign Affairs Committee of the European Parliament, remarked: “Let me repeat once more that if there is to be a Palestinian State there needs has to be a Palestinian Authority. I cannot see how it could help anybody to destroy the Palestinian Authority’s infrastructure or undermine its financial base.” To this end, he explained that the EU:

It is hard to gainsay Mr. Patten’s central premise that peace between Israel and the Palestinians must be founded on the presence of a credible, transparent and accountable Palestinian governmental authority. It is precisely this premise—against the backdrop of evidence that has come to light as a result of the hostilities over the last 2-½ years - that argues in favor of conducting a comprehensive and independent audit of the PA’s use of EU funds.

Two and a half years of unabated violence have substantially tarnished the credibility and integrity of the PA in the eyes of all pertinent entities—most significantly those of the Palestinians themselves. The magnitude, intensity and complexity of the Palestinian-initiated terror reflect unequivocal complicity by a meticulous and well-organized infrastructure— including the availability of substantial sources of financing and money distribution channels. The objective actions of the PA, including its tacit if not overt support of terror activities1 and the direct involvement of its Fatah and Tanzim branches,2 combined with the admitted absence of financial controls on the PA’s use of funds, give rise to genuine suspicions—if not clear inferences—that the PA’s funds were used to support the terror activities. It is not surprising, therefore, that numerous calls have arisen, including unprecedented criticism from leading Palestinians, for the financial community to impose greater scrutiny.

The Human Rights Watch Report
Various reports have been prepared by organizations, and by Israeli officials and the Israel Defense Forces (IDF), that undertake in depth examination of internal PA documents captured by the IDF, along with related evidentiary materials and testimonials, to reach the conclusion that the PA knowingly financed terror activities.3 The most extensive of these reports was prepared in October 2002 by the Human Rights Watch (HRW), a highlyacclaimed human rights organization with a strong record of sympathies for the plight of the Palestinian people. Erased in a Moment: Suicide Bombing Attacks Against Israeli Civilians, Human Rights Watch, October 2002. The 161-page document carefully analyzes an abundance of available materials and supplements that evidence with direct interviews conducted by HRW.4 While the report finds insufficient evidence to hold President Arafat and the PA criminally liable for what HRW concludes were “war crimes” committed against Israeli civilians by Palestinian terror groups,5 it is unequivocal in its findings that the PA improperly financed terror activities.

“Individual members of the al-Aqsa Brigades have even been among the beneficiaries of payments approved by Arafat personally at a time when he knew or should have known that such individuals were alleged to have been involved in planning or carrying out attacks on civilians.”6 “Unlike Hamas and Islamic Jihad, the al-Aqsa Martyrs’ Brigades are linked to the ruling faction in the Palestinian Authority, rather than the political rivals of the PA and Fatah.”7 “The al-Aqsa Martyrs’ Brigades appear to have benefited from the routine misuse of PA funds. Arafat and other senior PA officials, as well as many rank-and-file Fatah members, have overlapping identities as employees or officials of the PA, on the one hand, and as members of Fatah on the other. This dual identity appears to have facilitated the use of PA resources to fund Fatah activities directly and indirectly, including payments to individual al- Aqsa Brigades activists....”8 “President Arafat and other senior officials authorized payments, in several cases, to individuals who were known to have participated in attacks on Israeli civilians in the Occupied Territories and, more commonly, without apparent regard for the known or alleged involvement of the recipients in attacks on civilians. As discussed above, President Arafat and the PA also took no steps to ensure that welfare payments from the PA and others did not privilege the families of suicide bombers who attacked civilians. Indeed, one document made public by the Israeli government, hereafter referred to as the ‘memo to Tirawi,’ suggests that at least one senior PA intelligence official may have had a positive view of people who carry out attacks on civilians.”9

The Evidence of PA Misuse of Funds to Support Terror Attacks
HRW delineated the evidence upon which it made its findings about the PA’s illicit funding of terror activities:10

“The available evidence of direct PA financial support for armed activities against Israel consists of some twenty documents made public by the government of Israel. The documents detail multiple requests for financial aid to President Arafat or other Fatah leaders between May 2001 and January 2002. In all, seventeen documents contained requests for financial assistance on behalf of 157 individuals or their families; four contained requests for funding in the name of the al-Aqsa Martyrs’ Brigades. “No requests in the name of the al-Aqsa Martyrs’ Brigades for financial assistance were approved. Six requests on behalf of individuals, totaling sixty-eight individual payments, were approved or authorized. Twenty-seven of these payments were to families of militants who had been killed or jailed, and forty-one were to individuals, many of whom were characterized as ‘brothers’ or ‘wanted.’ The available evidence does not indicate whether such financial assistance was of a one-time nature or routine. Almost all individuals appear to be members or activists within the Fatah movement. During the time period of the payments, in the final months of 2000 and throughout 2001, members of the Fatah-affiliated al-Aqsa Martyrs’ Brigades carried out shooting attacks against civilians in the Occupied Territories as well as against military targets, and in late November 2001 the al-Aqsa Martyrs’ Brigades claimed responsibility for an indiscriminate shooting attack against civilians in the Israeli city of Hadera. “Fatah officials authorized these six requested payments despite widely available evidence that, in at least the cases of two individuals, the named recipients had participated in attacks on civilians in the Occupied Territories. Fourteen of the forty-one individuals for whom payment was authorized were at the time ‘wanted’ by Israel. Twelve of these individuals, in seeking financial assistance, identified themselves as ‘wanted.’ Neither the documents nor the accompanying Israeli commentary indicate whether they were wanted for attacks on civilians or for other alleged offenses. In the cases of Ra’id al- Karmi and Atef Abayat, however, President Arafat and other responsible officials knew or should have known of their widely reported (and in al- Karmi’s case, self- proclaimed) responsibility for perpetrating shooting attacks that targeted Israeli civilians. In both cases, the government of Israel had previously requested their arrest. Other times, Fatah officials had the capacity to check the background of the individuals named on the list, and thus could have ensured that no assistance would go to people who were responsible for attacks against civilians. At least two lists are extensively annotated, and unnamed functionaries are asked to present other names in order of merit.”11

Specific details are provided about several of the most illuminating payments:

• “The clearest case in which President Arafat authorized payment despite the recipient’s widely reported links to attacks on civilians was that of Ra’id al- Karmi, the al-Aqsa Brigades leader in Tulkarem. An undated request from Ramallah-based Fatah leader Hussein al-Sheikh asked Arafat to provide al- Karmi and two others with $2,500 each; Arafat apparently authorized payments of $600 each on September 19, 2001.”12
• “In another captured document, al-Karmi approached Arafat via Marwan Barghouti, requesting payments to twelve ‘fighter brethren,’ not including himself. Despite al-Karmi’s own self-proclaimed responsibility for attacks on civilians, Arafat granted a payment of $350 to each individual on al-Karmi’s list, again without making any apparent effort to ensure that these fighters were not responsible for attacks on civilians.”13
• “A July 9, 2001, request by Kamal Hmeid, the head of Fatah in Bethlehem, for assistance of $2,000 each to twenty-four local activists, including Abayat, apparently led to Arafat’s authorization of $350 to each. In early August 2001, before Arafat authorized the payment, Abayat had allegedly killed at least one Israeli civilian. . . . Five weeks after the payment was authorized, Abayat allegedly killed another civilian.”14
• “Another person on the list of three for whom President Arafat authorized a $600 payment in September 2001 was Ziad Da`as, a member of the al-Aqsa Brigades in Tulkarem and reportedly the successor to al-Karmi as leader of the group there. . . . [T]he February 2002 ‘memo to Tirawi’ . . . named Da`as as the leader of one of three al-Aqsa Brigades ‘squads’ in Tulkarem and attributed to him a leading role in the deadly shooting attack on civilians claimed by the al-Aqsa Brigades in the Israeli city of Hadera on January 17, 2002. Da`as’s name also appears among twenty-five activists listed on a memorandum from Marwan Barghouti requesting President Arafat’s approval of financial assistance.”15
• “In addition to Da’as, al-Karmi, and Abayat, two individuals listed in the various requests for financial assistance are alleged by the Israeli authorities to have participated in attacks against civilians. Of these two requests, Arafat authorized one: a payment of $800 to Bilal Abu `Amsha on April 5, 2001. Israeli authorities allege that Abu `Amsha was responsible for the shooting of a sixty-three-year-old man on May 31, 2001, seven weeks after the payment was authorized.”16

The Report then summarized the payment scheme utilized by Arafat and the PA to distribute the funds:

The Need for a Comprehensive Financial Inquiry
Signally, this paper is not being submitted as a petition to “convict” the PA of any improprieties, nor do the authors have access to anything but a small fraction of pertinent documents or witnesses. Many vital documents and statements of witnesses who have been interviewed have not been made public. These facts render all the more significant the value of the limited evidence summarized above that points definitively to the blatant misuse of funds, albeit limited in amount and number, for the most illicit of purposes - murder of innocent civilians.

Apart from informed speculation about what else might be discovered by a full, professional audit, there is also other hard evidence that compels further inquiry. For example, HRW refers to many other documents in which requests were made to Arafat for financial assistance by persons participating in terror attacks; it discounts those materials because it had no available proof to demonstrate conclusively that such requests were approved.18 Further inquiry could discover such proof.

In addition, HRW cited press reports that “President Bush was shown Israeli intelligence reports of a direct payment of $20,000 made or authorized by President Arafat to the al-Aqsa Martyrs’ Brigades shortly after two suicide attacks against civilians claimed by the Brigades.”19 Again, such proof has not been made public—but could be ascertained through formal inquiry.

Moreover, HRW discusses “two documents on al-Aqsa Brigades letterhead [that] were allegedly discovered by the IDF in the main PA compound,” which the IDF claims reveal that “‘the Al-Aqsa Brigades is an established organization, which holds official correspondence with Fu’ad Shubaki's office in order for it to finance its planned operations. This money does not go merely to finance propaganda concerning terrorists involved in attacks, but also to control the planning of future attacks.’”20

• “One undated memo, on letterhead emblazoned in Arabic and English ‘al- Aqsa Martyres [sic] Troops Palestine,’ consists of a handwritten costing of salaries, rent, and tools such as lathes and milling machines, totaling some $80,000. The IDF analysis asserts that the items indicate ‘an ambitious plan . . . to establish a heavy arms production workshop,’ including mortars.”21
• “The second document is a financial report, typed on similar letterhead and dated September 16, 2001. It reports debts of 38,000 Israeli shekels ($8,800 US dollars), indicating, at a minimum, that the al-Aqsa Brigades considered they had a reporting relationship with the recipient. The breakdown of expenses includes the production of martyrs posters, memorial ceremonies,‘electrical parts and various chemical materials’ for manufacturing explosives, and ammunition. The report also requests an immediate transfer of funds to purchase Kalashnikov bullets.”22

These documents led HRW to conclude that “[i]f it can be verified that the two documents were addressed to high-ranking PA officials, they would represent the clearest available evidence of some level of financial and hence operational relationship between officials of the PA and the al-Aqsa Martyrs’ Brigades.”23 Further investigation here undoubtedly would be highly beneficial and informative.

Finally, HRW discusses the above-referenced “memo to Tirawi,” which it says “indicates that in Tulkarem a funding relationship existed between Fatah and some local al-Aqsa Brigades groups. The memo notes that ‘the Tanzim secretariat provides . . . sums of money from the Tanzim and emergency budgets as allocations to the armed brothers.’ . . . Elsewhere the memo states that while most of the militants owned their own rifles, contributions from Tanzim and ‘financial assistance collected from his excellency the president’ helped to defray the cost of three additional rifles.”24 This document cries out for further scrutiny.

Conclusion
The available evidence compelled HRW to the reach the inevitable conclusion that:

Only a comprehensive audit, with full access to all relevant materials and witnesses, will yield the true picture. The hard evidence recited above, combined with the reasonable inferences that may fairly be drawn from the prolonged terror activities that indisputably have been sustained by substantial sources of funding, lead to the inescapable conclusion that—for the sake of preserving the peace effort and resurrecting the integrity of the PA—a full and comprehensive audit be undertaken.

Endnotes

1 Imad Al-Faluji, the PA communications minister, was reported on more than one occasion as saying that the intifada was a premeditated response to the Palestinians’ failure to achieve their goals at Camp David. In his words excerpted from a speech he gave at the ‘Ein Al- Hilweh Palestinian refugee camp in Lebanon: “This Intifada was planned in advance, ever since President Arafat’s return from the Camp David negotiations, where he turned the table upside down on President Clinton. [Arafat] remained steadfast and challenged [Clinton]. He rejected the American terms and he did it in the heart of the US.” Al-Safir (Lebanon), 3 March 2001. In the words of Sakhr Habash, a Fatah official, in a December 2000 interview with the PA daily Al-Hayat Al-Jadida: “The leadership of the PA remained the source of the authority, and it alone was the factor capable of leading the operations of the intifada throughout the homeland. I can say for certain that brother Abu-Ammar [Arafat] is the ultimate authority for all operations, and whoever thinks otherwise does not know what is going on . . . . In light of the information, [after] analyzing the political positions following the Camp David summit, and in accordance with what brother Abu Ammar [Arafat] said, it became clear to the Fatah movement that the next stage necessitates preparation for confrontation . . . .” Al-Hayat Al-Jadida (PA), 7 December 2000.
Arafat himself was brutally blunt when addressing his people in their mother tongue. In his own words (in Arabic) speaking publicly in July 2001, he decreed: “Kill a settler every day . . . . Shoot at settlers everywhere... Woe to you if you let them reach their homes safely or travel safely on the roads.... I want you to kill as many settlers as possible. . . . Do not pay attention to what I say to the media, the television or public appearances. Pay attention only to the written instructions that you receive from me.” Yasser Arafat, addressing his people at a public event, July 2001 (as reported in Ma’ariv, 12 July 2001). Those “instructions” were to fight. The Palestinian Information Ministry Director-General, Hassan Al-Kashef, explained why in the PA daily, Al-Hayat Al-Jadida: “Today’s most effective negotiator is the fighter active in the West Bank, Gaza Strip, and Jerusalem. It is he who consciously and courageously targets soldiers and settlers. . . . The fighting negotiator, who opens fire [with] his national consciousness, with great accuracy and to great effect in the area to be liberated, demands our complete support.” Al-Hayat Al-Jadida, “A Chance for the Fighting Negotiator,” 20 February 2002.

2 Founded in the early 1960s by Yasser Arafat, Fatah has been the Palestinian Liberation Organization’s largest and most prominent faction. In 1995, the Fatah leadership instituted its own armed militia called the Tanzim. See www.iris.org.il/whofatah.htm. In 2000, the al-Aqsa Martyrs’ Brigades emerged as a militant group affiliated with Fatah; it is formally blacklisted by both the US and the EU as a “terrorist organization.”

3 See, e.g., Dr. R. Ehrenfeld, “Where Does the Money Go? A Study of the Palestinian Authority,” American Center for Democracy, October 2002; “Follow the Money: Where Do International Contributions to the Palestinian Authority Really Go,” Office of the Spokesperson of the Israel Defense Forces, August 2002. The U.S. Congress reached the same conclusion in a resolution adopted by its House of Representatives on 2 May 2002, H. Res. 392: “[T]he Israeli government has documents found in the offices of the Palestinian Authority that demonstrate the crucial financial support the Palestinian Authority continues to provide for terrorist acts, including suicide bombers.”

4 In the preface entitled “About This Report,” the authors explain that: “This report is based on field research, expert and witness interviews, and examination of public documents. Field research was carried out during two Human Rights Watch investigative missions to Israel, the West Bank, and the Gaza Strip in May-June 2002. During these visits, Human Rights Watch interviewed members of armed groups, victims, families of perpetrators, PA officials, current and former PA security officers, Israeli and Palestinian analysts and security experts, diplomats and other foreign officials, and Palestinian activists and militants. Documents consulted included those that Israel says were seized by the Israel Defense Forces (IDF) from Palestinian Authority offices in April-May 2002 and at other times, and made public on the websites of the IDF and the Israeli Ministry of Foreign Affairs, along with extensive commentary by official Israeli analysts. In addition, Human Rights Watch asked Israeli government officials to provide any additional evidence or documentation to support the government’s charges concerning Palestinian Authority complicity in suicide bombings against civilians.”

5 This conclusion was based on the fact that “Human Rights Watch did not find evidence demonstrating that President Arafat or other senior PA officials ordered, planned, or carried out suicide bombings or other attacks against civilians.” HRW Report, at 110. This conclusion has no bearing on the necessity or value of auditing the PA finances.

6 HRW Report, at 2-3. “The al-Aqsa Martyrs’ Brigades emerged following the outbreak of Israeli-Palestinian clashes in September 2000 and consists of local clusters of armed activists, most of whom are apparently affiliated with Fatah. . . . The al-Aqsa Martyrs’ Brigades have claimed responsibility for attacks against Israeli military targets and also for several major indiscriminate shooting attacks against Israeli civilians inside Israel, including one in Afula in November 2001 and a second at a bat mitzvah in Hadera in January 2002, as well as multiple shooting attacks against Israeli settlers. The al-Aqsa Brigades claimed responsibility for at least twelve of the thirty-eight suicide bombing attacks against Israeli civilians in the January-August 2002 period.” Ibid. at 77

7 Ibid.

8 Ibid. at 95.

9 Ibid. at 109.

10 HRW Report, at 125-26.

11 HRW observes that “[s]ome typical handwritten annotations next to individual names on the memo are ‘good fighter’ and ‘we know him.’” Ibid. at 126 n. 374.

12 Ibid. at 126. Al-Karmi was on the IDF “most wanted “ list, he had boasted of his “executions” of two Israeli restaurateurs, he had been arrested (and released) by the PA, he had survived a well-publicized Israeli assassination attempt, and he had spoken openly of his intention to continue attacks against Israelis. Ibid.

13 Ibid. at 127.

14 Ibid. at 127-28.

15 Ibid. at 128.

16 Ibid. at 129.

17 Ibid.

18 See, e.g., ibid. at 125, 128-29.

19 Ibid. at 130.

20 Ibid. at 130.

21 Ibid.

22 Ibid. at 130-31.

23 Ibid. at 131.

24 Ibid.

25 Ibid. at 132.