Middle East Digest – JULY 1998
In a play for power within the Palestinian Authority, the Palestinian Legislative Council recently threatened Chairman Yasser Arafat with a «no confidence» vote due to stalling in the annual budgeting process. To forestall the vote, Arafat sacked his ministers (then invited Hamas and the anti-Oslo Farouk Kaddoumi to join a new cabinet).
A similar turn of events occurred one year earlier at budget time, when Arafat’s cabinet resigned over an internal report of widespread corruption by PA ministries, including the Office of the Ra’is-Arafat himself. This report, it should be noted, was ordered by Arafat and conducted by a close relative out of Arafat’s own office, and concluded that US$326 million (or 37 per cent of the PA’s budget) was unaccounted for due to fraud, corruption and mismanagement. Since the 1998 PA budget of $1,8 billion is 50 per cent dependent on foreign aid, a brief review of past PLO financial dealings is instructive.
Combining a ruthless leadership style with business sense gained from operating a successful construction company in the Gulf states, Yasser Arafat took over as chairman of the PLO in 1969 and built it into the world’s largest, richest international terrorist group. Some analysts attribute the key to his longevity as head of such a violent, fractious organisation to his strict control over the PLO’s purse-strings.
As the PLO gained notoriety with high-profile terrorist acts against Israeli and other targets, it received donations from Palestinian sources abroad, and voluntary and involuntary contributions, measured in tens of millions of dollars, from the Kremlin and Arab-Muslim world. Even Western states are reported to have paid the PLO «protection money» from time to time for sharing intelligence on other terrorist groups and for keeping terror at bay in their countries.
In 1970, the PLO set up a front company named SAMED as a commercial and manufacturing entity serving as the economic arm of the PLO’s fighting forces. By 1989 it was a global operation with revenues of $70 million per year. SAMED first used cheap labor from Palestinian refugee camps in Lebanon and expanded into Arab and African states and communist Eastern Europe with a diverse portfolio of factories, oil refineries and other businesses. Eventually, it acquired large shares in airlines (such as Maldive Airways, Caledonian Airlines, Air Zimbabwe and Air Kenya) and duty-free shops (at Nairobi’s Kenyatta Airport, for example), thus providing the PLO with the means to move arms and operatives inconspicuously.
Once the PLO was entrenched in Lebanon in the 1970s, Arafat eyed the tremendous profits available from illicit drugs produced in the Beka’a valley, and began exploiting the narcotics trade. Although it is difficult to assess the amounts earned through the PLO’s narco-terrorism activities, it is safely estimated to be in the billions of dollars.
During years of PLO-bred anarchy in what was once the banking hub of the Arab world, Lebanon was looted. In one bank heist alone, the PLO stole more than $600 million in gold from a Lebanese bank by blasting a hole through the back of a church and hiring Sicilian safe-crackers to open the bank’s vault.
Much of this ill-gotten gain was funneled to secret Swiss bank accounts kept under Arafat’s control. When Arafat was missing and presumed dead following an airplane crash in Libya in April 1992, many in the PLO’s hierarchy publicly voiced fears over how his death could affect the whole organisation. According to knowledgeable sources in the US Congress, the real concern within the PLO at that time was whether anyone besides Arafat had been entrusted with the access codes to these private Swiss accounts. Apparently, Arafat kept the codes in a notebook which he carried in the top-left pocket of his trademark military uniform, and the only set of codes was feared to have been irrecoverably lost in the rumoured inferno somewhere in the vast Libyan desert.
With the Oslo breakthrough in September 1993, the PLO-dominated Palestinian Authority began receiving billions of dollars in funds from a number of previously reluctant Western donor countries, including a pledge of $500 million per year from the United States. Since any recipient of US foreign aid must open their books to the US Congress, Ben Gilman, now Chairman of the House International Relations Committee, asked the General Accounting Office (a branch of Congress) to provide a report on PLO assets and sources of income.
The GAO got little co-operation from American and British intelligence and hit a solid stone wall with the PLO. Because of the PLO’s refusal to cooperate and to operate with transparency, Gilman was able to slap a congressional hold on US funds to the PA for the better part of a year. When the GAO finally was able to deliver its report, it was classified «secret», but one source familiar with its contents said it confirmed that Arafat and the PLO held well over $10 billion in assets, even at a time when he was publicly claiming «bankruptcy».
Middle East Digest – JULY 1998