[No restrictions here on salaries for PA security personnel who have been involved in terror action and no restrictions on funds for incitement activities of PA Education or PA media or PA Ministry of Religious Affairs]

December 10, 2002

Jerusalem (CNSNews.com) – The U.S. Agency for International Development will help monitor the transfer of tax revenues from Israel to the Palestinian Authority to make sure they are not misused.

Israel has withheld the transfer of some $600 million in tax revenues owed the Palestinians for the last two years, charging that the funds would be used to fund hostile attacks against Israel and its citizens.

The U.S. has pressed for the transfer of the funds to the PA, arguing that the money was necessary in order for the PA to carry out critical reforms.

During the summer, Israel agreed in principle to transfer the funds to the PA if a mechanism could be found to ensure the monies were not being used to fund terrorists, terror attacks or weapons.

Since then, 270 million shekels (about $59 million) were transferred to the PA in three installments, but further payments were delayed because of suspicion that some of the money was being misused.

On Friday, 130 million shekels (about $28 million) was transferred to the PA after a deal was worked out between the U.S., Israel and the PA whereby USAID would monitor the money to ensure it was not being used to support terrorism.

According to one source familiar with the deal, those funds included revenues for the month of October and did not include any of the previously frozen monies. The payment was the first of several installments expected to be paid on the previous month’s revenues. It is not clear when or how the backlog would be transferred.

The U.S. Embassy in Tel Aviv welcomed the agreement to transfer funds on Wednesday “as a critical step towards addressing the serious economic and humanitarian situation in the West Bank and Gaza Strip.

“It signals support for the reform of Palestinian finances already underway, and which we hope can lead to an efficient and transparent Palestinian financial system,” the Embassy said.

According to the Embassy, both the U.S. Embassy in Tel Aviv and the U.S. Consulate in Jerusalem, which deals with Palestinian affairs, were very active in helping Israel and the PA reach the agreement.

“We will continue to work with the Palestinian Ministry of Finance to develop its own systems to track and monitor use of the funds it provides to the Palestinian entities,” the Embassy said.

“We note that USAID has agreed to fund experts to assist in the training and auditing program led by the Palestinian Ministry,” it said.

One source, who did not want to be named, emphasized that USAID’s role would combine training and auditing, indicating that the Palestinians preferred to look at the USAID role as “training” while the Israelis saw it as “auditing.”

The source said presumably USAID officials would have access to Palestinian records otherwise there was “no point in doing it.” He added that the systems are in place and the U.S. was not “just going to walk away” from the project.

See Earlier Story, US Tax Money Funding Palestinian Propaganda, Critics Charge (August 27, 2002)

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