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Corruption in Palestine: A Self-Enforcing System

By Tariq Dana

According to a recent survey, as many as eighty-one per cent of Palestinians living in the Occupied Palestinian Territory (OPT) believe there is corruption in Palestinian Authority institutions. These perceptions are reinforced by the recently-launched annual report of the Palestinian Coalition for Accountability and Integrity (AMAN), Transparency International’s Palestinian chapter. These perceptions persist despite much-touted state-building efforts by former Prime Minister Salam Fayyad to root out corruption, and are at variance with international reports that suggest there is animprovement in governance.
Corruption has become structural to the Palestinian body politic, and pre-dates the establishment of the Palestinian Authority (PA). The problem needs to be tackled at its roots, and cannot be addressed through conventional measures used in other countries, particularly against the background of prolonged Israeli colonisation and occupation and the way in which Israel both reinforces and exploits corruption.[i]

Deconstructing corruption: The patron-client system

Corruption in PA institutions should not be perceived as merely a matter of administrative and financial wrongdoing committed by irresponsible individuals whose behaviour is driven by greed and personal interests.[ii] The scandals that Palestinians hotly debate from time to time – such as embezzlement of public funds, misappropriation of resources, and nepotism – are an outcome of long-standing corruption embedded in the underlying power structure that governs the Palestinian political system, and that were rooted in the Palestine Liberation Organization (PLO) before the Oslo process.
Recent efforts to fight corruption have largely been ‘technical’ in nature, and have focused on such actions as drafting codes of conduct, improving recruitment procedures, and developing preventive measures to deal with specific violations. While such measures are necessary they cannot be sufficient if the political root causes of corruption are ignored. The nature of PA-specific corruption needs to be understood in order to tackle it effectively.
PA corruption is, in effect, a self-enforcing system. Perhaps the primary factor in reproducing and maintaining the corrupt nature of the Palestinian polity is ‘patron-clientelism’.[iii] In Palestine, patron-clientelism is rooted in the social values of kinship and familial ties, which are in turn shaped by factional politics. These social and political ties provide the ruling elite with a strategic tool to control constituents and expand the network of supporters by redistributing public resources in order to buy political loyalties, which in turn helps the ruling elite to preserve the status quo and maintain its dominance over political and economic assets.
Patron-clientelism also contributes to the climate of corruption by arbitrarily favouring incompetent loyal political constituents and excluding skilful people. It thus fosters rivalry among clients who compete to demonstrate their loyalty to the ruling elite. Corruption is further reinforced because one way in which patrons reward loyal clients is by tolerating their financial malfeasance.[iv]
Patron-clientelism has historically characterised the relations between the PLO executive and national institutions and political constituents.[v] The inner circle of the PLO leadership used patron-client networks systematically for multiple purposes: to extend influence over political constituents, to exclude other political forces, and to implement its political agenda unopposed.
For example, during the 1980s, the PLO leadership used the Sumud (steadfastness) Fund in the OPT – which was formally channelled through the Palestinian-Jordanian joint committee – to reward their supporters and exclude others.[vi] This approach encouraged manipulation and monopolies and introduced corrupt practices and duplication of development projects. It also contributed to expanded client networks to serve the political projects of Fatah and the Jordanian leadership. While the Sumud Fund’s stated objective was to support education, agriculture, health and housing, in reality the main beneficiaries were ‘the big landlords of the Jordan Valley, the industrialists, the Jordanian civil service (in the West Bank), and professional groups who received generous housing loans’.[vii]
After the Oslo Accords, the patron-client regime was unsurprisingly inherited by the PA and constituted the backbone of its institutional base. Instead of carrying out a merit-based institution-building process, patron-clientelism became a defining feature of the PA institutional structure, and a powerful tool of exclusion and inclusion. This was associated with the personalised and unaccountable style of governance of the late PLO chair, Yasser Arafat, and the Palestinian political leadership.[viii]
The PA has managed to secure loyalties among constituents largely by offering access to resources for economic survival rather than by persuasion for its political, economic and social programmes. In particular, the large PA public sector has been a vital instrument for creating dependency and securing loyalties. This contributed to the institutionalisation of corruption in the PA public sector, playing into the hands of the Israeli government whose intention in signing the Oslo accords was to create a client state that it could control through rents distributed to the PA via international donors, coupled with a strategy of territorial fragmentation and containment.[ix]
The PA public sector currently employs over 165 000 civil servants who are fully dependent on salaries guaranteed by international aid to the PA. The security sector is the largest with 44 per cent of total PA employment, absorbing between 30 and 35 per cent of the annual PA budget, thus receiving a bigger share than vital sectors such as education (16 per cent), health (9 per cent) and agriculture (1 per cent).
The dysfunction of the Palestinian Legislative Council (PLC) and the complete absence of legislative monitoring of the governmental budget have freed the presidency and the executive from institutional checks and balances and public accountability. This has bolstered executive control over public spending and the executive’s ability to control constituents by using the stick and carrot strategy. This has, consequently, enhanced irregularities and violations of employment rights.
Indeed, employment in the PA public sector does not necessarily imply job security. If employees criticise PA policies they are likely to be forced into early retirement,denied salary payments, or arbitrarily removed from their posts. They may also face a series of punitive measures, including denial of promotions or transfers to distant areas.
Furthermore, given that much of Palestinian society is based on tribal/clan/family social relations, the PA has sought to accommodate large families in order to ensure their loyalty. When the PA established its Ministry of Local Government, it included a special department concerned with tribal/clan affairs. The Ministry recognises mukhtars (heads of tribes or clans) and authorises them to speak on behalf of their families. Whereas tribalism had been marginalised by the rise of the national movement, in the 1990s the PA appointed some representatives of prominent families to ministerial posts based on tribal considerations. These ministries were subsequently largely staffed by the ministers’ relatives and friends. After recent ‘state-building’ reforms, employment based on family considerations was reduced. Instead, some ministers have surrounded themselves with cronies.[x]
The patron-client system has also been used to co-opt and neutralise political opposition. Several political leaders – independents, leftists and Islamists – were incorporated into the PA project that they initially claimed to reject. They were offered privileges, advantages, and access to prestigious public posts in exchange for political loyalty. Some of those co-opted personalities subsequently became key actors in PA politics.

The money and power of elites

The corruption embedded within the Palestinian political system is best exemplified in the interplay between power and money at the highest level of political authority. This is the most prevalent form of corruption, and yet it is the most difficult to trace because the elites often enjoy social, political or legal immunity. Moreover, the complexity of the way in which money changes hands, and its transnational character – which can involve money laundering, black markets and foreign bank accounts – also makes this form of corruption particularly hard to trace.
Elite corruption generally comes to light only in times of internal conflicts within elite circles, and mutual accusations of large-scale embezzlement then dominate news headlines. For example, former Gaza security strongman Mohammed Dahlan accumulated much of his wealth from monopolies over key imports to Gaza during the 1990s. After he was expelled from the Fatah Central Committee due to allegations that he was planning to oust PA President Mahmoud Abbas, more accusations of corrupt practices were levelled against him, such as creaming off tax revenues used for his businesses in London and Dubai.
Similarly, Mohammad Rashid, former economic advisor to Arafat and a key Dahlan ally, was sentenced in absentia fortransferring millions of dollars out of the Palestinian Investment Fund and setting up fake companies. In response, Rashid revealed that Fatah had a secret bank account in Jordan that was run by Abbas and two of his associates. In each case, revelations of corruption are the result of a power struggle rather than serious efforts to combat corruption.
The misuse of official positions for personal gain is another facet of elite corruption. Cases that were exposed included unauthorised personal use of public resources, illegal public-private deals, and theft of public property. Such practices were a regular occurrence during the 1990s and negatively impacted local and international perceptions of the PA. According to the first Palestinian audit conducted in 1997, nearly 40 per centof the PA budget – approximately US$326 million – had been misappropriated.
Despite attempts at PA reform in recent years, there does not appear to have been substantial improvement in fighting this phenomenon. According to the 2008 AMAN report, the abuse of public positions for the misappropriation and waste of public property can be clearly seen in the allocation of state lands to individuals or firms. The AMAN 2011 report reveals the continuation of this trend, with the waste of public funds remaining the most prominent visible form of corruption.
Another means of self-enrichment by the political elite at the expense of the rest of the population can be seen in the excessive income inequality in Palestine. The Global Gini Index pointed to extensive inequality in income levels between high-ranking officials and other PA employees in 2013. According to recent reports, some public sector officials earn a monthly salary of more than $10 000, and enjoy other privileges. By contrast, two-thirds of PA public sector employees earn between $515 and $640 monthly.

Corruption under occupation

Israel has repeatedly contributed to and exploited corruption in the PA in order to blame Palestinians for their economic ills, and to distract attention from the devastating impact of its colonial policies on Palestinian social and economic development. Although PA corruption is undoubtedly harmful economically, it is worth noting that its effects are a distant second to the impact of systemic Israeli destruction of the Palestinian economy.
There are many ways in which Israel is a key actor in fostering corruption and protecting the corrupt. The public-private monopolies controlled by individuals high in the PA bureaucracy and their partners in the private sector would not have been possible without the collusion and collaboration of Israeli businesses and the consent of the Israeli political and security establishment.
Another example is Israel’s direct involvement in the so called ‘secret accounts’ established in the 1990s by some Palestinian officials around the world, including accounts held in the Bank Leumi in Israel. Much of the money came from taxes on Palestinian imports that Israel had collected, which it directly transferred to these accounts. Between 1994 and 1997, Israel transferred $125 million into these accounts; in 1997 alone, Israel reportedly transferred $400 million into Palestinian accounts in Israeli banks.[xi] While Israel’s role has become less visible in recent years, it still offers a safe haven for the corrupt.
At the same time, Israeli propagandists actively exploit PA corruption, and uses accusations of Palestinian corruption for political gain. During the Second Intifada that began in September 2000, Israel used the corruption card as part of a broader strategy to remove Arafat and impose an externally sponsored ‘reform’ process to suit its own agenda. In particular, Israel exploited the international preoccupation with ‘terrorism’ by accusing Arafat of using PA resources to finance terrorism. It successfully pushed an internationally-sponsored restructuring of PA institutions, weakening Arafat through the creation of the new position of prime minister, and the restructuring of the ministry of finance.

How Palestinians respond to corruption

Palestinians living under Israeli occupation believe that corruption is one of the most serious problems they face, second only to the occupation itself. A 2014 opinion poll found that 25 per cent of Palestinians surveyed believed corruption was a serious problem, second after the problem of occupation and settlements, which stood at 29 per cent of those surveyed. This is unsurprising, given that corruption siphons off scarce Palestinian resources and breeds a wide range of social problems, contributes to inequality and harms the social fabric, and corrupts the struggle for national liberation and the pursuit of Palestinian rights.
The first domestic challenge to PA corruption was in 1997 when the PLC released a report in the wake of the first audit cited above. The report revealed widespread corruption in PA institutions and contained a damning indictment of all ministries.
The report was crucial as it opened the Palestinian public’s eye to the existence of systemic corrupt networks within the PA. In response, Palestinians mobilised and demanded reforms and transparency. In 1999, twenty prominent figures – including academics, intellectuals and members of the PLC – signed the ‘The Nation Calls Us’ manifesto, which accused Arafat of ‘opening the doors to the opportunists to spread corruption through the Palestinian streets’. PA security forces arrested many signatories and accused them of threatening national unity.
By 2004, growing popular dissatisfaction with PA corruption erupted in street protests over government appointments of some notoriously corrupt personalities. Due to the increasing internal and external pressure on the PA, Arafat acknowledged that there was corruption and promised that the culprits would be prosecuted.
Popular anger at corruption was also a main factor in Hamas’s overwhelming electoral victory in the 2006 parliamentary elections. For many people Hamas offered an alternative, and had earned respect for its efficient service delivery, particularly among the poorer people. However, after the formation of the Hamas-led government in 2006, it began to establish its own brand of clientelism by appointing and promoting supporters in various government posts. This contributed to the power struggle and political rivalry between Hamas and Fatah. To this day, Hamas-Fatah competition over appointmentsconstitutes a significant impediment to the reconciliation process between the two factions. Meanwhile, Hamas’s years in power in Gaza have led the public to level similar allegations of corruption against Hamas as they have against Fatah, especially after Hamas began making massive profits from thetunnel economy between 2007 and 2014 together with a lack of transparency in dealing with the receipts.
Partially in response to public dissatisfaction, the PA founded the Palestinian Anti-Corruption Commission (PACC) in 2010, which was tasked with receiving public complaints and ensuring that corruption cases were dealt with speedily and effectively. Although the PACC is portrayed as an independent commission, financially and administratively, its chairperson was appointed by presidential decree, and many of its advisory board members include former ministers, ambassadors and presidential advisers. Some cases of corruption have reportedly been brought to justice, but press reports as well as interviews I conducted indicate that the investigations are selective. Furthermore, public opinion polls indicate increased public mistrust in the PACC, and a perception of systematic interference in its work by the presidency, security services and political parties.
Popular campaigns against corruption have largely diminished in recent years due in part to growing PA authoritarianism and increasing repression by its security services. This has includedblocking websites that reveal stories of PA corruption.

Uprooting corruption

Effectively ending corruption requires a structural response that involves the entire political system, including an effective legislative monitoring system, institutional checks and balances, and an independent and well-functioning judiciary. Immunity would be withdrawn from any person, regardless of position, in case of direct or indirect misuse of political power and public resources. Civil society representatives would play an effective role in monitoring public institutions and resources. Because the international aid industry provides fertile ground for corruption and lacks accountability, the existing aid system would need to be reformed to ensure it does not assist to foster corruption.
However, it is difficult to see a situation in the near future where these measures are agreed upon and implemented. Palestine has no sovereignty, and its people are barely surviving under a prolonged occupation of nearly fifty years, and a siege of nearly a decade. Most Palestinian people are outside the OPT, living as exiles and refugees in very difficult conditions, or as second-class citizens of Israel. Corruption is a major contributing factor to the Palestinian national movement’s inability to achieve its objectives, and also serves the objectives of Israel’s occupation. Yet corruption will remain endemic within the PA as long as Palestinians themselves do not begin restructuring their national institutions according to democratic principles and standards of accountability as part of a broader strategy to pursue self-determination and Palestinian national rights, including freedom from occupation.
 Tariq Dana is a Senior Research Fellow at the Ibrahim Abu-Lughod Institute of International Studies, Birzeit University. He also teaches courses on global political economy.


[i] I thank Al-Shabaka Program Director Alaa Tartir for his insights, feedback, and support in the preparation of this brief, and the Heinrich-Böll-Foundation’s Palestine/Jordan Office for their partnership and collaboration with Al-Shabaka in Palestine. The views expressed in this policy brief are those of the author and do not necessarily reflect the opinion of the Heinrich-Böll-Foundation.
[ii] It should be noted that while neither the private nor the non-governmental sectors are immune to corruption, they are not the focus of this paper. In addition, it should be noted that this paper does not cover Gaza and Hamas, although this is an important area for future study.
[iii] Patron-client relations are based on inequality whereby a patron monopolises the centres of power and resources to contain the client within his sphere of influence. See Shmuel N Eisenstadt and Luis Roniger (1984). Patrons, clients and friends: Interpersonal relations and the structures of trust in society,Cambridge University Press.
[iv] Rex ‪Brynen (1995). ‘The Neopatrimonial Dimension of Palestinian Politics’, in Journal of Palestine Studies, Vol. 25, No. 1, 23-36.
[v] As’ad Ghanem (2010). Palestinian Politics After Arafat: A Failed National Movement, Indiana University Press.
[vi] The Sumud Fund is different from Samed, the economic institution of the PLO established in 1970.
[vii] Salim Tamari (1991). ‘The Palestinian Movement in Transition: Historical Reversals and the Uprising’, Journal of Palestine Studies, Vol 20, No 2, 63. See also: Khalil Nakhleh (2004). ‘The Myth of Palestinian Development: Political Aid and Sustainable Deceit’, Jerusalem: Passia.
[viii] Ghanem (2010).
[ix] Mushtaq Husain Khan, George Giacaman and Inge Amundsen (eds) (2004). State Formation in Palestine: Viability and Governance during a Social Transformation, Routledge.
[x] Information collected in author’s interviews in Palestine in 2015.
[xi] For further information, see: Cheryl A Rubenberg (2003).The Palestinians: In Search of a Just Peace, Lynne Rienner Publishers, 256. See also: Jamil Hilal and Mushtaq Khan, ‘State Formation under the PNA: Potential Outcomes and their Viability’ in Khan, Mushtaq, et al (2004). 64-119.
Last modified on Friday, 09 October 2015 22:49