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Arafat, the World's "Blind Spot"

Rachel Ehrenfeld
Policy Paper No. 17, 1997


On the eve of the famous "hand shake" on the White House lawn which rewarded Rabin and Arafat with the Nobel Prize for Peace, the PLO made Britain's most dangerous terrorist/criminal organizations list. The British National Criminal Intelligence Service (NCIS) also reported that the PLO had world-wide assets approaching $10 billion and an additional annual income of about $1.5 to 2 billion, generated from illegal activities. Surprisingly, the report was not picked up by the media. Instead, it was Arafat's claim that the PLO was broke, in need of massive financial aid, that made the headlines. Yet, it was no secret that Arafat and the PLO had money. Already in 1990, the CIA estimated that the PLO had between eight and fourteen billion dollars worth of assets.

Instead of donors demanding that the PLO account for the hundreds of millions of dollars they extorted, were given, or otherwise acquired, legally or illegally, throughout the years, Arafat and his organizations were given more, which they have spent: at least one billion dollars since signing the "Peace Accord". Even now, the PLO's unwillingness to account for the money and the available documentation of their widespread corruption and misappropriation of funds, does not deter the donor countries and organizations. In an inexplicable manner, they keep throwing money at the PLO.

It is not as if there have been no warnings that the protestations of lack of funds should not be believed (for example the Saxton Report, the Wall Street Journal Europe, December 2, 1993). Off the record law enforcement sources in Britain have stated that since 1993 PLO illegal activities have all but increased. Following the 1993 Wall Street Journal Op-ed, the Chairman of the Committee on International Relations at the House of Representatives requested a review of the PLO’s finances by the General Accounting Office (GAO). The GAO, despite very little help from the CIA and the State Department, and the British suddenly refusing to meet with their investigator while he was in London, completed their report which was submitted in November, 1995. It is, for secret reasons, secret. There has been a serious cover-up, despite the appalling criminality of the PLO – and its documentation. The sums involved from illegal activities are clearly vast.

Historically, the PLO has had eight principal sources of income: 1. Official contributions from Arab states; 2. The Palestinian Liberation Tax Fund – a 3.5-to-7% tax on Palestinian workers in Arab states; 3. Income from investments; 4. Donations from wealthy Palestinians and various philanthropic organizations; 5. Extortion ("protection" charges for companies or states from terrorist operations); 6. Illegal arms deals; 7. Drug trafficking; 8. Fraud and other criminal activities.

The PLO has a long, sordid, and continuing involvement in narcoterrorism. Its official decision to use the drug trade to its advantage was made six months after its expulsion from Beirut. Faced with a growing financial crisis stemming from the Lebanon war, the PLO convened its Finance Committee in a secret emergency session in Algiers on February 20, 1983. Under the chairmanship of Yasir Arafat, the committee decided to broaden the PLO's activities in international drug trafficking in order to raise badly needed funds. As stated by Sallah Dabbagh, then PLO treasury chief, "...the entire future of the PLO operation for liberation, may hinge on our exporting more drugs throughout the world". The PLO's drug connection was documented especially by British reporters like Brian Freemantle (former Foreign Editor of the Daily Mail in "Inside the World Drug Trade" (1985), and James Adams (Sunday Times) in "The Financing of Terror" (1986).

The traffic in arms and drugs has been assisted by airport investments. The PLO owned duty-free stores at the Jomo Kenyatta Airport in Nairobi and the infamous Murtala Mohammad International Airport in Lagos, Nigeria. It purchased interests in airlines from the Maldives to Nicaragua. These holdings gave it a base for forged travel documents and airline tickets as was documented in the Task Force and Unconventional Warfare, US House of Representatives' Republican Resource Committee (October 4, 1991).

Whatever measures the World Bank and IMF have undertaken to ensure transparency, proper accounting and auditing (through PECDAR for example), they have failed to break the pre 1993 modus operandi which has been maintained by Arafat for his gain at the expense of relieving the poverty of ‘his’ people. His own accounts are subject to no scrutiny. Opportunities for personal enrichment have actually increased. According to a World Bank source, requesting anonymity, "Arafat wants the world to pick up the tab for whatever he claims the expense to be, yet refuses to submit a detailed account." Yet he controls personally the PA funds. A letter dated November 23, 1996, from Dr. Ahmad Yazagi, the Executive Director of Youth and Sports Activities for the PA, to Arafat, requested $10,000 for his offices ongoing activities. On the letter, Arafat scribbled "Treasury, pay $7,000 (Dec. 13, 1996)." This letter is an example of how the PLO is running the PA. Neither the World Bank nor the IMF dictates the fiscal activities of the Palestinian authorities. The World bank was side-stepped by the opening of an unaudited Fund B. It is Arafat who makes the decisions.

Huge commissions often topping 50% are raised for Arafat on Palestinian orders for goods. The monopoly system has been well documented in the Israeli press. The civil and military elites are bribed to preserve Arafat’s control over the territories. A company called "Behar", run by his "Economic Advisor", Muhammad Rashid, controls over 65% of the charitable organizations, including the biggest in Gaza. A further unscrutinized account has been found in Bank Leumi in Tel Aviv. NGOs’ receipts have declined since the PA has taken over.

The international media, organizations, and donor governments all seem to have been struck by "wilful blindness". The silence around it appears to emanate from some irrational anxiety that cleaning house will signify the end of the PA and Arafat's leadership, which in turn will cause a breakdown in the "peace talks" in the Middle East. Instead of helping the Palestinian people to build democratic institutions and develop a free market system, the West continues to promote Arafat's Kleptocracy which continuously extorts money and violates agreements.

Thus the world has continued to shower Arafat and his corrupt leadership with money to the detriment of his people (at least a billion dollars out of a projected $2.4 have already been donated) and so the question that looms large is: why does it do so, despite the condemning evidence?