The economy of the PA (which enjoyed high growth rates after 1967 when control passed to the Israelis) stagnated & then went backward. In less than a decade Arafat managed to squander the economic well-being, & moral capital amassed by his people, during the 23 years of Israeli rule.
Some nations are lucky in their leaders. For decades now, academic historians have downplayed the significance of the leader – the “great man” – in the understanding of historical epochs and focused their attention elsewhere.
Still, you cannot study the early American republic without renewed appreciation for the role of George Washington.
How lucky was the U.S. again for Lincoln in his time, FDR in his, England for Churchill at the same time, Israel for David Ben Gurion. The French were not so lucky at the time of their revolution. The Palestinian Arabs, too, have had no Ben Gurion. They had Yassar Arafat.
A couple of weeks ago, Munib R. al-Masri, a storied figure among Palestinians and considered to be the wealthiest of them all, published an Op-Ed in The New York Times. al-Masri is quite a moderate Palestinian, who is currently seeking a third way, beside the Palestinian Authority and Hamas, and trying to construct avenues toward peace with Israeli counterparts.
Still, he must operate in the Palestinian environment created over the past sixty-plus years, and there are party lines he chooses to follow. He claimed, for instance, as the title of his Op-Ed read, in response to the well-publicized comment by Mitt Romney, that “Occupation, Not Culture, Is Holding Palestinians Back.”
My point is not to comment on Romney’s observation, but al-Masri’s – that it is any Israeli “occupation” or other activity that has held Palestinians back. In fact, I don’t need to make that case. Seven years ago, in David Samuels’ lengthy “In a Ruined Country,” for the Atlantic, al-Masri made the case himself.
The money [Arafat] spent to buy the loyalty of his court, al-Masri gently suggests, could easily have paid for a functioning Palestinian state instead.
With three hundred, four hundred million dollars we could have built Palestine in ten years. Waste, waste, waste. I flew over the West Bank in a helicopter with Arafat at the beginning of Oslo, and I told him how easy we could make five, six, seven towns here; we could absorb a lot of people here; and have the right of return for the refugees. If you have good intentions and you say you want to reach a solution, we could do it. I said, if you have money and water, it could be comparable to Israel, this piece of land.
For those at the top of the heap the rewards were much larger and more systematic. The amounts of money stolen from the Palestinian Authority and the Palestinian people through the corrupt practices of Arafat’s inner circle are so staggeringly large that they may exceed one half of the total of $7 billion in foreign aid contributed to the Palestinian Authority. The biggest thief was Arafat himself. The International Monetary Fund has conservatively estimated that from 1995 to 2000 Arafat diverted $900 million from Palestinian Authority coffers, an amount that did not include the money that he and his family siphoned off through such secondary means as no-bid contracts, kickbacks, and rake-offs. A secret report prepared by an official Palestinian Authority committee headed by Arafat’s cousin concluded that in 1996 alone, $326 million, or 43 percent of the state budget, had been embezzled, and that another $94 million, or 12.5 percent of the budget, went to the president’s office, where it was spent at Arafat’s personal discretion. An additional 35 percent of the budget went to pay for the security services, leaving a total of $73 million, or 9.5 percent of the budget, to be spent on the needs of the population of the West Bank and Gaza. The financial resources of the PLO, which may have amounted to somewhere between one and two billion dollars, were never included in the PA budget. Arafat hid his personal stash, estimated at $1 billion to $3 billion, in more than 200 separate bank accounts around the world, the majority of which have been uncovered since his death.
Contrary to the comic-book habits of some Third World leaders, such as President Mobutu Sese Seko, of Zaire, and Saddam Hussein, Arafat eschewed lurid displays of wealth. His corruption was of a more sober-minded type. He was a connoisseur of power, who used the money that he stole to buy influence, to provoke or defuse conspiracies, to pay gunmen, and to collect hangers-on the way other men collect stamps or butterflies. Arafat had several advisers who oversaw the system of patronage and theft, which was convincingly outlined in a series of investigative articles by Ronen Bergman that appeared during the late 1990s in the Israeli newspaper Ha’aretz. The PLO treasurer, Nizar Abu Ghazaleh, ran the company al-Bahr (“the Sea”) for a small number of wealthy shareholders, including Arafat’s wife, Suha. Al-Bahr set the price of a ton of cement in Gaza at $74, of which $17 went into Arafat’s private bank account. One of Arafat’s favorite bagmen, Harbi Sarsour, ran the General Petroleum Company, which established a monopoly over all the gasoline and fuel-oil products sold in the West Bank and Gaza. A company called al-Sakhra (“the Rock”), run by Fuad Shubaki on behalf of Fatah, profited hugely from an exclusive contract to provide all uniforms and other supplies to the Palestinian security forces. Official monopolies on basic goods and services had exclusive suppliers on the Israeli side. These profitable contracts were made available by Arafat to companies associated with former high-ranking members of the Israeli civil administration and the security services in the West Bank and Gaza.
The genius behind this system was Muhammad Rachid, who became Arafat’s closest economic adviser. A onetime protégé of Abu Jihad, Rachid was a former magazine editor who became involved in the diamond business. He came to Arafat’s attention because of his keen talent as a businessman, and because he was an ethnic Kurd—which meant that he was safely removed from the family- and clan-based politics that always threatened to disrupt the division of the spoils.
In their cities and villages Palestinians were subject to the extortion and violence of Arafat’s overlapping security services, which competed among themselves for payoffs, arbitrarily arrested people and seized their land, and forced citizens to pay double or triple the price for everything from flour and gasoline to cigarettes, razor blades, and sheep feed. The fact that nearly everyone in Palestinian political life had taken something directly from Arafat’s hand made it hard to criticize him; it was easier to go along. In 1991, at the low point of Fatah’s finances, Ali Shahin, one of Arafat’s earliest allies, wrote a secret report lambasting Fatah’s “inconceivable moral degradation,” for which he blamed the excesses of a leader whose true interests were “the red carpet, the private plane of the President, free rein to spend money.” Shahin became the minister of supplies in Arafat’s government and was notorious for selling spoiled flour and making truckloads of chocolates sit at the Erez checkpoint in the heat in order to help out a friend who owned the only candy factory in Gaza. The economy of the Palestinian territories, which had enjoyed startlingly high growth rates after 1967, when it passed from Jordanian and Egyptian control into the hands of the Israelis, stagnated and then went backward. In less than a decade Yasir Arafat and his clique managed to squander not only the economic well-being but also the considerable moral capital amassed by the Palestinian people during two and a half decades of Israeli military rule.
Samuels later gives us Gazan human-rights activist Iyad Sarraj.
Palestinians have lost the battle because of their lack of organization and because they have been captives of rhetoric and sloganeering rather than actual work,” he says. “I believe that the conflict between the Israelis and the Palestinians in one way or the other is between development and underdevelopment, civilization and backwardness. Israel was established on the rule of law, on democratization, and certain principles that would advance Israel, while the Arabs and the Palestinians were waiting always for the prophet, for the rescuer, for the savior, the mahdi. Arafat came, and everyone hung their hats on him without realizing that there is a big gap between the rescuer and the actual work that needs to be done. This is where the Palestinians lost again the battle. They lost it in ’48 because of their backwardness, ignorance, and lack of organization in how to confront the Zionist enemy. They lost it when they had the chance to build a state, because the PA was absolutely corrupt and disorganized.
There probably has never been a people more ill-served by a greater lack of leadership, a greater financial and moral corruption of leadership, than the Palestinian people. And there is a lot of competition.
View original CiF Watch publication at: http://cifwatch.com/2012/08/16/the-palestinian-failure/