Reining in Abbas: How America Should Punish the Palestinian Leader

Abbas shouldn't get a free pass for presiding over corruption and inviting a diplomatic train wreck. But cutting American aid isn't the answer.

A new budget battle is brewing between the Republican-led Congress and the Obama White House. This time it’s not about trimming domestic spending. It’s about the $600 million in annual financial assistance the United States provides the Palestinian Authority.

The House of Representatives, led by Foreign Affairs Committee chairman Ileana Ros-Lehtinen (R-FL), wants to hammer president Mahmoud Abbas and the Palestinian Authority for snubbing American-led diplomacy and applying for statehood at the United Nations late last month. Some legislators want to reduce U.S. aid to Ramallah, while others want to slash it entirely. The White House wants to keep aid flowing so that Washington retains leverage to bring the Palestinians back to the negotiating table.

With the 2012 campaign season heating up, partisan acrimony is on the rise, but the Republican House and Democratic White House have a rare opportunity to cooperate and simultaneously bolster America’s standing in the world. Together, they can zero in on Palestinian corruption and shape a new aid regime that accomplishes U.S. objectives more effectively.

Lost in the debate over whether the Palestinians deserve American money is what would happen if Washington left a gaping hole in the Palestinian Authority budget. In short, it would eliminate America’s leverage in Ramallah, leaving the door open for Iran, Saudi Arabia or other malevolent regional actors to influence the PA in ways that could threaten Israel and disrupt Middle Eastern stability.

Of course, Arab states have been notoriously awful about fulfilling their pledges to the Palestinians. According to one estimate, the Palestinians have received less than 10 percent of what the Arab world has pledged over the last fifteen years. But according to a Palestinian official, some consensus-seeking European Union states—including Norway and France—now see an opportunity to buy global influence by becoming the new sponsors of the Palestinian-Israeli peace process.

If America wishes to keep ill-intentioned Middle East influences at bay and prevent a European diplomatic train wreck, it would be well advised to maintain aid in some shape or form.

But this doesn’t mean the Palestinians should get a free pass. Specifically, Abbas’s recent diplomatic adventurism should not go unpunished. He manufactured the recent crisis at the UN. He also has presided over a corrupt political and economic system.

Until now, fear of an ascendant Hamas has prevented Washington from challenging Abbas. Because the Obama White House cannot identify a legitimate and moderate successor to Abbas, and because Hamas appears to be the only alternative, the PLO journeyman has been free to consolidate power—and, according to some, abuse it.

One egregious example is the Palestine Investment Fund, a sovereign wealth fund that Abbas controls through a board he handpicked and whose by-laws he rewrote. Since 2006, the PIF has awarded contracts exclusively to Abbas’s cronies, including his sons, Yasser and Tareq. The PIF-backed Wataniya cellular phone company, which drew on international-donor funding, inked a lucrative advertising contract with Tareq, while his brother Yasser sat on its board.

The Abbas family is now said to be worth millions, with lavish property holdings and investments throughout the Middle East.

Moreover, the Abbas machine quietly enriches Hamas as it enriches itself. According to a former Palestinian Authority adviser, Yasser Abbas staffed the Karni Crossing cargo terminal in the Hamas-controlled Gaza Strip with the stated purpose of ensuring that goods and aid reached Gaza without reaching Hamas. But the customs and border unit at the crossing is not on the Palestinian Authority payroll, and it abuses its monopoly on Gaza’s only cargo terminal to pocket fees and kick them back to Hamas.

The PA also funds an electric power plant in Gaza but allows Hamas to collect the bills. In other words, Hamas raises funds for its operations by billing Gazans for electricity generated by the PA.

What’s needed here is not a wholesale cut in aid, which would punish the Palestinians who have been powerless under Abbas, but a concerted effort to root out PA corruption. This would include U.S. Government Accountability Office audits of Abbas’s presidential budget, international oversight of the PIF, and a much closer look at the troubling financial relationship between the Abbas machine and Hamas in Gaza.

Such an effort would not necessarily mean the end of Abbas’s rule—though his term ended in 2009—but it would entail curtailing his personal power while excising the cancerous parts of Palestinian aid. It would also put Washington back in the driver’s seat during an era of waning American power, keeping Europeans and other regional actors at bay.

Most importantly, it would give the White House and Congress what they both seek: new leverage over the wayward Palestinian leadership.

Jonathan Schanzer is vice president for research at the Foundation for Defense of Democracies and author of Hamas vs Fatah: The Struggle for Palestine (Palgrave Macmillan, 2008).