The European Commission praised the Palestinian Authority’s efforts to crack down on financial irregularities yesterday, despite claims from Israel that the organisation funded suicide bombers.
Representatives of the Israeli government attending a conference on Palestinian reform in London repeated allegations on Tuesday that the PA used international money to pay for the bombers.
But Salam Fayyad, the Palestinian Finance Minister, has garnered widespread approval for his book-keeping.
“I wish that all the countries in this region had a finance minister like that,” the Commission’s representative in Jerusalem, Jean Breteche, said. “Even the Israelis are backing him.”
When he presented the first-ever full budget to the Palestinian parliament in December, the International Monetary Fund (IMF) officials called it “the most transparent budget in the world”.
Speaking from his office in Ramallah yesterday, Mr Fayyad told how he started a quiet revolution at his ministry.
Only a few months ago, it was reported that $50m (#30m) of official PA funds were put in a Swiss bank account and then disappeared without trace.
Everyone was amazed in December when Mr Fayyad managed to publish a full budget, despite working under appalling conditions. Israeli military closures that mean officials cannot go from one town to another without special permission and frequent curfews.
The budget is important, according to Mr Fayyad, a former IMF official, because for the first time foreign aid donors can see where their money is being spent. He has consolidated all the PA’s bank accounts into a single account that can be easily scrutinised.
But tracking down all the investments made on behalf of the PA - some using foreign donors’ money - before he took over at the Finance Ministry proved a harder task.
Mr Fayyad commissioned Standard and Poor’s, the international agency, to draw up a complete list of the PA’s investments.
Yasser Arafat is used to dispensing PA money as and when it is asked for, and those close to him still control huge investments. Even they have had to turn over their books, Mr Fayyad says. “I am conceding something is wrong,” he says of the corruption that flourished until now. “It gave us a bad name. It greatly undermined our credibility.” The men who grew rich in Mr Arafat’s circle may be handing over the accounts but for much of the money, there is no paper trail.
Mr Fayyad has won respect - but he only controls funds at the PA. Mr Arafat controls the funds of his Fatah and PLO organisations, and controversy over how they are spent is likely to continue.