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Arab Aid to Palestinians Often Doesn't Fulfill Pledges

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By Glenn Kessler
Washington Post Staff Writer
Sunday, July 27, 2008

In 2002, when oil prices were hovering around $21 a barrel, nearly two dozen Arab nations joined to pledge yearly contributions of $660 million to support the Palestinian Authority's annual budget. Now, even with oil prices more than six times higher and the Palestinian Authority bordering on financial ruin, only a handful of Arab countries are sending even a small portion of the money they promised, according to data examined by The Washington Post.

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Out of 22 Arab nations that made pledges, only three -- Algeria, Saudi Arabia and the United Arab Emirates -- have contributed funds this year, while oil-rich countries such as Libya, Kuwait and Qatar have sent nothing and still owe the Palestinian government more than $700 million in past-due pledges.

The Palestinian Authority uses the contributions to help pay salaries for civil servants, health-care specialists and other workers in the Palestinian territories. European governments, the World Bank and the United States have provided more than three times as much money as Arab countries this year to keep the government afloat, but officials said the Europeans and the World Bank have virtually depleted their resources, leaving a funding gap of about $800 million for the rest of 2008.

The situation is deeply frustrating to U.S. and Palestinian officials, especially because the aid spigot appeared to turn off after the collapse of a unity government that had included Hamas, which the United States considers a terrorist organization. The new government is headed by moderate Palestinian leaders who favor peace talks with Israel. After it was formed in June 2007, it received only $73 million from Arab countries in the second half of 2007, compared with $371 million given by the Arabs to the unity government in the first half of the year.

U.S. officials have pressed Arab governments to make good on their pledges, even privately showing State Department calculations to illustrate how little has been received over the years. Secretary of State Condoleezza Rice has publicly scolded Arab countries, telling reporters in May, "Clearly, when you make a pledge, you ought to fulfill it."

One senior U.S. official, speaking on the condition of anonymity because of diplomatic sensitivities, said that Arab nations could be doing much more to support the peace process launched at a conference in Annapolis last year and that "their effort falls short in every category." He said he is puzzled by their failure to meet their pledges in a period of phenomenal oil wealth.

"The one thing I find hard to explain is why they don't contribute more financially," the official said, noting that the Palestinian government is "really operating hand-to-mouth." He added that more than 50 percent of the money goes to the Gaza Strip, which is controlled by Hamas, so even people living under Hamas rule are suffering from the Arab failure to pay pledges.

One country, Qatar, appeared to cut off all funding to the Palestinian Authority once Hamas seized Gaza and the unity government collapsed. Qatar, where some top Hamas officials own homes, had tried to mediate between Hamas and the Fatah faction headed by Palestinian President Mahmoud Abbas. Qatar had dramatically increased its contributions when Hamas was in the government, after years of providing little or no money.

Arab governments provide other financing to help the Palestinians, including aid for refugees and investments in housing developments, but the budget troubles for the Palestinian government are becoming acute, Palestinian and U.S. officials said. The government sought to raise $1.6 billion this year from outside sources to fund salaries, utility payments and benefits, but the amount needed has risen to $1.8 billion, in part because payments must be made in Israeli shekels, a currency that has soared against the dollar, and because the government is repaying past-due salaries at a faster rate to avoid strikes.

Arab diplomats, speaking on the condition of anonymity, said there is little trust that the Palestinian Authority will use their contributions wisely, even though Palestinian Prime Minister Salam Fayyad is a veteran of the International Monetary Fund and, during his time as finance minister, introduced new standards of accountability and financial management. Arab diplomats said they also resent the tight grip that Israel has maintained on the Palestinian territories during the peace talks.

"Most of them make the pledges reluctantly, on the basis that the United States wanted them to do it," said Shibley Telhami, the Anwar Sadat professor for peace and development at the University of Maryland. "There is frustration that nothing is happening in the peace process, and so they would be throwing good money after bad."

Many members of the Arab League that committed to make annual contributions do not have oil riches and have paid on average about 4 percent of what they pledged since 2002, according to U.S. figures. But some of the worst offenders are oil producers. Through the first half of 2008, Bahrain has paid 13 percent of its total pledges, Libya 14 percent, Oman 23 percent, Kuwait 35 percent, Algeria 73 percent and the United Arab Emirates 92 percent. Saudi Arabia has paid just shy of 100 percent, but many experts believe it should be paying four times as much, given the increase in the price of oil since 2002.

Kuwait has repeatedly promised to send a check for $80 million this year, largely by converting aid earmarked for development projects into budget support. But Palestinian sources said the funds have not yet been received.

Figures on monthly contributions from donors in 2007 and 2008 are posted on the Web site of the Palestinian Authority's Finance Ministry, and further information on past years was provided by U.S. government sources. Fayyad's office declined to comment, citing the sensitivity of the issue.

Adel al-Jubeir, the Saudi ambassador to Washington, cited a long list of projects that Saudi Arabia has supported since 2002 in the Palestinian territories -- for ambulances, medications, vaccines, school uniforms, refugee camps, housing projects and other items -- worth hundreds of millions of dollars. "Saudi Arabia has historically lived up to its commitments to support the Palestinians and will continue to do so," he said. "Allegations that Saudi Arabia has not lived up to its commitments are not correct."

The embassy for the United Arab Emirates issued a statement saying that "the UAE is meeting all commitments for financial aid that were made to the Palestinian Authority." The statement noted that the UAE has provided more than $471 million to the Palestinians "in direct and in-kind financial aid through multiple channels."

Mohamed Melad, second secretary for the Libyan Embassy, acknowledged that Libya's own figures showed that it has paid less than 20 percent of its pledges since 2002, but he could not provide a reason for the deficit. Other embassies did not respond to repeated inquiries for comment.


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