November 11, 2003

MEMORANDUM TO: OPINION LEADERS

FROM: DANIEL McKIVERGAN, Deputy Director

SUBJECT: Arafat -- Three Billion Dollar Man

Three billion dollars. That’s what Yasser Arafat may be worth after years of running a criminal enterprise on a scale that would make Al Capone blush.

Sunday, CBS’s 60 Minutes (“Arafat’s Billions”) attempted to unravel the personal finances of Arafat. One secret portfolio Arafat controls has about $1 billion in investments in companies and venture funds across the globe. And where did Arafat get this money given his modest salary? Well, according to 60 Minutes, the “money for the portfolio came from public funds like Palestinian taxes” but “virtually none of it was used for the Palestinian people.” Also, Arafat added to his fortune by diverting money raised from sales taxes on goods purchased by Palestinians into his personal bank accounts. Finally, he got a “hefty kickback” on the revenue made by the General Petroleum Corporation, a notoriously corrupt monopoly that ripped-off ordinary Palestinians by watering down gas and diesel fuel and selling it to them at inflated prices.

Arafat uses this money to maintain control of the Palestinian Authority by financing “a vast patronage system” and so-called “rent-a-rallies” where Palestinians are paid to rally in support of Arafat when needed. He also has spent millions to buy weapons and support terrorists. In fact, according to the BBC (“Palestinian Authority Funds Go To Militants,” 11/7/03), Arafat spends “up to $50,000 a month” to support the al-Aqsa Martyrs Brigades, which still engages in terrorist operations against Israelis.

Given this pattern of behavior, it was no surprise that, over the weekend, Arafat revealed that he has no intention of relinquishing his iron-grip on the Palestinian Authority security forces to the newly appointed Prime Minister Ahmed Qurei. Although transfer of control is an indispensable element in real reform of the Palestinian Authority, Arafat made sure he alone retained control of the security forces.

In light of all this, what more evidence do proponents of involving Arafat in the peace process need to know before concluding that the process cannot move forward until Arafat is out of the picture?