2-Jul-12: The truth behind why the Palestinian Arabs face "worst financial crisis", Israel's role in it and what it could mean to the financing of Palestinian terrorism

Government leaders from across the Arab world meet to pledge
vast sums to help their Palestinian brothers while delivering impassioned
speeches of undying support. Getting the kleptocrats to actually
part with their money? That's a different story.

The background to the revealing piece of analysis by Elder of Ziyon that follows can be found in an al-Arabiya news report headlined "Palestinian authority faces ‘worst funds crisis since founding’" 

EoZ's posting starts with the AFP version of essentially the same story:

The Palestinian Authority government in the West Bank is facing its “worst financial crisis” since its 1994 establishment, the Palestinian labor minister told AFP on Sunday. Ahmed Majdalani warned that a shortfall in the delivery of aid from Arab donor nations means the PA will be unable to pay employees their July salaries or pay off debts it owes to private businesses across the West Bank. “It is the worst financial crisis experienced by the Palestinian Authority since its founding,” he told AFP... The Palestinian Authority has frequently warned it faces a massive financial shortfall that threatens its ability to pay thousands of government employees on time, or even at all. A delay in salary payments would be particularly sensitive this month, as the Muslim fasting month of Ramadan begins in mid-July. Muslims often break their daily fast at large communal meals, stocking up ahead of time on plenty of food. Last July, Palestinian prime minister Salam Fayyad said the government would pay workers half-salaries because it faced a shortfall of hundreds of millions of dollars. He attended a special meeting of the Arab League to urge Arab donor nations to make good on aid pledges.

EoZ says: 

Arab nations have been reneging on promised aid to the Palestinian Arabs for years. What is fascinating is that while their Arab "brethren" have treated the Palestinians like dirt, Israel went to the International Monetary Fund in order to take out a billion dollar loan on the PA's behalf - and to guarantee it for them! Israel sought a $1 billion IMF bridging loan for the Palestinian Authority earlier this year, but was turned down, an Israeli newspaper said Monday in a report confirmed to AFP by a senior Israeli official. Haaretz reported that Israel's central bank chief Stanley Fischer approached the International Monetary Fund for the money after discussing the Palestinian Authority's financial crisis with Palestinian prime minister Salam Fayyad. Sometime after the IMF's annual conference in mid-April, Fischer asked the body for the loan, which Israel would have taken on the Palestinians' behalf. Israel would then have transferred the money to the Palestinian Authority (PA) headed by president Mahmud Abbas, which would have repaid the money to the Israeli government. Israel would have remained responsible for repaying the loan to the IMF, under the deal, but the institution eventually declined to make the loan available. Haaretz said it turned the proposal down because it feared setting a precedent of making IMF money available to non-state entities, like the Palestinian Authority, which as a non-state cannot directly request or receive IMF funding. A senior Israeli official who spoke to AFP on condition of anonymity confirmed that the details contained in the Haaretz report were accurate.

Israel is willing to go into debt to help the Palestinian Arab leaders while their fellow Arabs promise lots and deliver little. EoZ adds that one aspect of this story that no one talks about, of course, is who exactly is getting paid a salary by the PA. 

Some $5 million a month is spent on the terrorists in Israeli prison themselves. Arab car thieves don't get this stipend - only terrorists. And in 2005, it was estimated that some 10% of the PA budget went towards terrorists and their families. Moreover, over 60% of the PA budget goes towards Gaza, much of it in salaries for PA workers who aren't working in a vain hope that maybe the PA will one day return to power there. Some 80,000 people in Gaza are being paid to stay home, and the PA has spent over $7 billion on Gaza since Hamas took over.  So the financial crisis can be solved fairly easily, if the PA only paid people who really work and forced Hamas to spend its own money governing Gaza rather than indirectly funding Hamas purchase of weapons.

Again, a respectful hat-tip to EOZ.