ARAB AFFAIRS - March 13 - League FMs Give PA $40m/Month.

Meeting in Cairo to set the agenda for the Arab summit to be held in Amman on March 27-28, the Arab League FMs recommended granting the PA $40m/month. This is to be approved by the summit. (The recommendation follows PA complaints that Arafat's administration has received little of the $1 bn in aid promised by Arab governments in October 2000 to support the Palestinian uprising against Israel. Since that pledge, Arab governments have contributed funds earmarked for the Palestinians to the Islamic Development Bank but have failed to come up with rules for using the money in the West Bank and Gaza. With $230m on deposit ostensibly to support the Palestinian cause, the PA was nonetheless unable to pay its workers last month, prompting UN and Western officials to warn that Arafat's government was at risk of disintegrating. "We told them frankly that you have to immediately help the authority", says Palestinian ambassador to the Arab League Mohammed Sobieh, adding: "The Israeli are trying to destroy the authority, and they didn't give money without restrictions, everything will be collapse". Along with shoring up the PA, the payments will undercut the economic pressure Israel has attempted to apply during six months of clashes. Airport closures, road blockades and other measures have cost the Palestinian economy an estimated $1 bn, and Israel is withholding about $56m in taxes, customs duties and other money it collects on PA's behalf. The proposed monthly payments, nearly half of PA's monthly budget, would come from the $1 bn pledged by the Arab League in October, a commitment led by Saudi Arabia's promise to pay a fourth of the money itself. The pledge was made as anger peaked throughout the Arab World over the Israeli-Palestinian violence. While the offer of financial help was regarded as the most important concrete step taken by Arab governments in support of the Palestinians, there was little follow-up. Less than a quarter of the promised money has materialised, and Sobieh says bank officials have treated it as a sort of investment fund, holding it until plans were presented for its use in development projects. He says: "It was as if it was the bank's money, so they took all of these procedures as if we were an investment company or something. They were looking for plans and financial regulations". In the months that followed, the economic crisis caused by the uprising deepened. The economic plight of the PA has become so serious that UN and other diplomats have begun warning that it threatens to weaken the peace process itself. "We think it would be extremely bad for the prospects of peace if the Palestinian administration here was simply knocked to smithereens over the next few months", said the EU External Relations Commissioner Chris Patten, travelling in the region with FM Anna Lindh of Sweden, which holds the rotating EU presidency).