What has taken OLAF so long? The PA’s own documents demonstrate how the PA and Arafat used EU funds to pay for terrorism were discovered by the Israel Defence Forces (IDF) and have been available for over a year.

Demand of full parliamentary investigation

Volumes of the Palestinian Authority’s own documents, including many graced by Yasser Arafat’s own signature, ordering the Palestinian Ministry of Finance – the recipient of hundreds of millions of dollars in EU budgetary aid, and additional 950 million euro in humanitarian aid just for the year 2002 – to pay members of the al Aqsa Martyrs Brigade for killing Israeli citizens, or to pay for the procurement of explosives and illegal weapons.

These and similar documents motivated Ilke Schroeder (MEP, GUE/NGL, Germany) and a small group of like-minded ethically conscious European Parliamentarians to demand a full parliamentary investigation.

Finally, on February 13, the Conference of Presidents of the European Parliament parties decided that instead of a full investigation, setting up a "Working Group" to look into the matter is enough. This "Working Group" is made up of the very same members of the Budgetary and Foreign Affairs Committees who were supposed to monitor how the PA was spending the EU’s tax payers’ money.

Demands for accountability

EU donations to the PA since the Oslo Accords included demands for accountability. Similar demands have been attached to the EU’s direct budgetary assistance since the PA began attacking Israel in September 2000. However, despite EU claims to the contrary, no real effort to monitor how the money it provided to the PA was spent has ever taken place.

The EU claims that the International Monetary Fund (IMF) monitors the PA budget, and European Commissioner for External Affairs Chris Patten maintains that "EU assistance has clear conditions attached to it and is closely monitored… by the IMF at the Commission's request." His office has also stated that, " the IMF conducts a close review of monthly fiscal information covering the whole of the PA budget, including …the wage bill".

In stark contrast however, IMF staff members have contradicted Patten’s claim on several occasions; the Director of the IMF’s Middle Eastern Department, George T. Abed, acknowledged on September 2002 that "with weak institutions and a budget of nearly 1 billion dollars, there has, no doubt, been some abuse. And he added that even "the Palestinian Legislative Council itself has complained about this," he said, and finally that "the IMF does not and cannot control downstream spending by the various Palestinian agencies." Nevertheless, the IMF, much like the EU does not want to be held accountable: "This matter remains between the Palestinian Authority and the donors," said Abed.

EU’s lack of accountability and transparency

The EU has been arguing that it will only accept the fact that the money it sends has been funding terrorism if there are mechanisms to identify how each individual Euro is spent.

Indeed, money is fungible; but since the EU gave direct funding toward PA salaries, and additional money to the PA Ministry of Finance for various projects; and since the PA’s own records prove that it used the Ministry of Finance to pay for terror activities, what other evidence in needed to show that the PA allocated money received from the EU to fund terrorism?

In June 2002, after international condemnation of the PA’s corruption, Yasser Arafat appointed a new Minster of Finance, Salam Fayyad a former IMF official who, assisted by outside experts, began an attempt to overhaul the corrupt system.

As a result, Israel agreed to renew its transfer of payments for Palestinian tax funds, which it had withheld fearing the money will go to fund terrorism. This money, unlike the EU’s, is being monitored by a special group of accountants brought in by the US.

However, there are already reports that Arafat ignores and circumvents Fayyad, by ordering the Ministry of Finance to pay to known terrorists. Despite all this, the EU decided to continue its financial aid to the PA on the grounds that it is not convinced that Israel will continue to transfer the money to the PA.

This decision follows the EU’s unwillingness to account for the whereabouts of monies it gave to the Palestinians. This reaction is in line with the EU’s lack of accountability and transparency. After all it "can only guarantee that 5% of taxpayers’ money - over 101 billion euro - of its budget is being spent properly," according to the EU’s Court of Auditors last November.

Instead of coming clean, the EU Commission headed by Patten, and the Conference of Presidents thought it was better to sweep the investigation under the carpet. Only this time the red on the carpet is the blood of innocent civilians.

DR RACHEL EHRENFELD - is the Director of the NYC based American Center for Democracy and the author of "Narcoterrorism" and "Evil Money" as well as the forthcoming "Funding Evil". She contributes regularly to the Wall Street Journal and the National Review.