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News Analysis: Plo’s Support for Iraq Carries a Financial and Political Price

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The Palestine Liberation Organization will suffer financially and politically because of its support for Iraq in the Persian Gulf crisis, Middle East experts say.

And it appears that Palestinian residents of the West Bank and Gaza Strip have already begun paying the bill for their enthusiastic backing of Saddam Hussein.

But the pundits say a sudden cutoff of funds from abroad does not necessarily mean there will be a diminution of the Palestinian uprising in the West Bank and Gaza Strip, which has been funded by the PLO and its Arab backers.

The PLO has been distributing a few hundred dollars annually to each Palestinian family in the territories. The money comes from a pool of hundreds of millions of dollars raised in Saudi Arabia, Kuwait and other Persian Gulf states through a 5 to 6 percent “income tax” that benefits the Palestine National Fund.

In addition, Saudi Arabia, Kuwait and other Gulf states make direct contributions to the PLO that have been totaling another hundred million dollars annually.

Of the funds retained by the PLO, two thirds go to Al Fatah, the main branch controlled by Yasir Arafat, and one third go to other PLO constituent groups, said Helena Cobban, an expert on the PLO who is a visiting peace fellow at George Mason University.

Cobban said both the direct aid and the tax proceeds will likely be terminated because of the PLO’s support of Iraq.

As a result, Palestinians in the territories are likely to receive significantly reduced aid from the PLO. In addition, a reduction is expected in contributions from relatives in the Persian Gulf.

Before the Iraqi invasion, at least 250,000 Palestinians worked in Kuwait and used to transfer funds to support their families in the territories. That support was estimated to be between $120 million and $200 million annually.

Now, many of those workers have fled. Cobban said she has heard some “terrible stories” about Palestinians in Kuwait whose businesses have been “wiped out.”

Meanwhile, Saudi Arabia, which is furious with the PLO, has frozen Palestinian assets in its banks. The estimated loss is another $10 million.

IMPACT ON THE INTIFADA UNCLEAR

As a result of these cutbacks, hospitals, development projects and welfare organizations in the administered territories that used to be flush with generous contributions from the Gulf states are now faced with empty cash boxes.

The Mokassed Hospital in East Jerusalem, which had been receiving 75 percent of its income from Kuwaiti sources, must now look elsewhere for funding.

But whether this funding curtailment will snuff out the intifada remains to be seen.

Leaders of the Palestinian uprising have already demonstrated their ability to absorb “strong economic blows,” Cobban pointed out. “I don’t think the economic situation can get a lot worse,” particularly in the Gaza Strip, she said.

Barry Rubin, senior fellow at the Washington Institute for Near East Policy, said the intifada is “very much weakened” in that funding is being cut off for Palestinian institutions, ranging from schools to hospitals.

While he would not say there would be fewer demonstrations or less violence, Rubin did predict Palestinians would be less willing to “go on strike all the time” or quit their jobs.

A Middle East expert at the State Department said financial backing is not a key ingredient for sustaining the intifada. “It’s hard for me to imagine it will fold just because the PLO funds are harder to come by,” the expert said.

The intifada “has developed into a semi-permanent thing,” the expert said. If PLO control over the intifada diminishes, some of the more radical factions, such as the Islamic fundamentalist Hamas movement, will become more powerful, the expert said.

LOOKING ELSEWHERE FOR SUPPORT

The PLO will now have to look elsewhere for its financial support, to countries such as Libya or Iraq, which has only begun providing funds to the PLO in recent months. In doing so, the PLO may be forced to make tradeoffs.

Financial aid from Saudi Arabia and the Gulf states came with “few strings attached, whereas other Arab states that have funded the PLO have added a lot of conditions,” said Cobban.

Douglas Bloomfield, former legislative director of the American Israel Public Affairs Committee, said that unlike the Saudis, any radical Arab state backing the PLO would ask for “special favors,” such as “kill this guy or blow up that building.”

Even so, aid from Libya and Iraq could not possibly compensate for a decline in funds from the Gulf nations, Cobban and Rubin agreed.

With a growing reliance on aid from extremists, the PLO has lost one of its key assets, “the ability of the leadership to steer between all the different splits inside the Arab world,” Cobban said. “This time, I’m afraid that they have abandoned their long-term policy of non-alignment,” she said.

Rubin said the PLO will suffer from “internal fighting over who’s fault this is” for the cut in aid. He implied that the PLO would become more radical, a process already begun by with its tilt toward Iraq.

But Cobban said Palestinians in the territories have shown a greater ability to “overcome splits” in the Arab world “than the Palestinians on the outside.”

The PLO has made a “serious misjudgment,” she said. It has “basically annihilated all of the PLO gains that they’ve made over the years in Europe and the United States, Egypt and the Israeli peace camp, by aligning with a policy that really doesn’t at this stage appear to offer anything to the Palestinians.”

Cobban called PLO’s new closeness to Iraq “a marriage of convenience.”

She said that the PLO is “well aware” that a decade ago, the Iraqis “wiped out huge numbers of Fatah supporters in Beirut and elsewhere. Some of the PLO’s ablest diplomats around the world were killed by Iraqi goons,” she said.

Arafat was driven to support Iraq because of his hatred for Syrian President Hafez Assad, a staunch enemy of Iraq, his “feeling of humiliation at the hands of the United States and Israel,” and his willingness to play “to a kind of lowest common denominator frustration among his people,” Cobban said.

“I think the Palestinians better be positioning themselves for the post-crisis diplomacy, otherwise they will certainly end up like the Kurds and other strong nations that got cut out of big deals,” she said.

(JTA correspondent Gil Sedan in Jerusalem contributed to this report.)

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