Arafat’s Money Sieve

The U.S.-organized conference to solicit international financial support for Palestinians in the Gaza Strip and West Bank has produced more than $3 billion in pledges, exceeding expectations and reflecting the sense of the more than 40 donor nations that without a sound economic base there can be little hope for political stability in the emerging Palestinian entity. The new round of aid promised over the next five years, including an additional $400 million from the United States, follows on the $2.1 billion in outside donations disbursed since 1993, when the Oslo accords between Israel and the Palestinians set in motion a peace process that, in fits and starts, continues to move toward the goal of a final settlement.

The unhappy fact is that despite earlier aid, the Palestinian economy has regressed. Unemployment has risen and an increasing number of families--totaling 23% in the West Bank and Gaza Strip, according to Palestinian figures--now live below the poverty line. Palestinian Authority Chairman Yasser Arafat blames Israel, citing its habit of banning tens of thousands of Palestinian workers from entering Israel whenever a terrorist act occurs. The border closings, along with terrorism, have undoubtedly contributed to the Palestinians’ woes. But Arafat is being disingenuous when he ignores the toll that rampant corruption and incompetence within his own government have exacted. According to a Palestinian internal audit, hundreds of millions of dollars have been stolen or squandered. Most foreign aid, including American, is now earmarked for specific needs and monitored closely by donor countries. But the Palestinian Authority still has a lot of cleaning up to do.

A productive economy is essential to political stability, and Congress should not hesitate to approve the new aid pledged to the Palestinians. But even if reason and conciliation eventually prevail in the Israeli-Palestinian negotiations, the long-term economic viability of a Palestinian entity remains in question.

Demographers now project a tripling of the Palestinian population in the narrow confines of the West Bank and Gaza Strip over the next quarter-century, to 7.4 million. Barring some unexpected discoveries, the region simply does not have the vital resources--beginning with water--to sustain such an increase. Egypt is a nearby example of population growth eating up economic gain. It would be a grim irony if Palestinians finally achieve the state they seek, only to soon find there is no room in it for all who call themselves Palestinians.