The Guardian- 21/06/2006

In the last few days, the Quartet have finalized the details for the new emergency aid mechanism to the Palestinian territories. According to its remit, the mechanism is to provide “needs-based assistance directly to the Palestinian people, including essential equipment, supplies and support for health services, support for the uninterrupted supply of fuel and utilities, and basic needs allowances to poor Palestinians.”

If the mechanism manages to alleviate hardships suffered by innocent Palestinians–as a result, of course, of their government’s refusal to accept Israel’s right to exist, commit to existing agreements and so on–then it is surely to be welcomed. One can’t help noticing, however, that the introduction of the aid mechanism creates a strange, two-tier structure of financing for the Palestinian authority (PA). According to this structure, the international community will agree to pick up the tab on mundane daily matters. This, in turn, will leave the elected Islamist rulers of the authority free to pursue matters that they find of greater interest. They will be in the enviable situation among governing authorities of being free to pursue higher, historic tasks, safe in the knowledge that someone else–in this case the generous taxpayer of Europe and North America–has taken on the job of preventing famine and societal collapse in the areas under their control.

What, then, are the other interests which the Hamas rulers of the PA are likely to use their increased leisure time to engage in? Well, recent events offer a series of clues. On May 19, Hamas spokesman Sami Abu-Zahri was apprehended at the Rafah Crossing by PA security forces, while trying to smuggle in between 650-900,000 euros in cash. Abu-Zahri, one of the senior Hamas leaders in Gaza, at first refused to leave without the cash, and a tense stand-off ensued between PA (Fatah-controlled) security forces and Hamas gunmen at the scene. Abu-Zahri’s indiscretion was only the first of a number to have come to light. Thus, on June 15, the PA foreign minister, Mahmoud al-Zahar, was caught trying to smuggle in the sum of $20m in cash, in 12 separate suitcases.

Now if these were two occasions when the intrepid smugglers were caught, there were probably other occasions when they or their colleagues were not. Israel considers that the smuggling tunnels between Gaza and Egypt, a favored route for bringing in weapons to the Strip, are also being used to bring in cash.

But since Hamas dominates the elected government of the PA, why, then, is there a need to smuggle these funds past the PA’s own security forces? Why, in fact, was the PA foreign minister, al-Zahar, trying to bring money past security guards who, at least nominally, are under his own command?

There’s a simple answer. It’s the two-tier funding structure. The official coffers–meant for all the boring stuff like doctors’ and nurses’ salaries and medical equipment and drugs–were empty at the same moment that Hamas officials were smuggling in bagfuls of cash. And the fact that the money wasn’t to be declared to the PA indicates that those official coffers were going to stay empty. This, of course, could be blamed on the wicked Israelis, and could wait until the Quartet chose to intervene. No hurry. Not the PA government’s problem. The bagfuls of cash, meanwhile, were going to be spent on the exciting, important stuff. Like feeding, training and equipping a brand new 3,000 strong militia to face off against the parallel militias founded by one’s political opponents. And financing the production and launching of rockets at the towns of the western Negev.

What is interesting about this process is that it captures in miniature one of the basic developmental problems of many of the states of the Arabic-speaking world. It casts light on one of the processes that has kept well-funded countries poor and lagging behind in development. For as long as the ruling elites–nationalist and Islamist–of the Arab world consider that marching about in military uniforms and producing blood-curdling rhetoric are the real business of politics–with health care and living standards a minor concern unworthy of serious attention–the Arab world is going to stay poor and undeveloped–and real democratization remain a distant, receding hope. Alleviating hardship is of course a worthy goal. But the current system of aid to the PA plays the additional role of propping up dysfunctionality.