Reforms and aspects of good governance in general have always been relevant to the Palestinian-Israeli conflict and the relations Palestinians and to some extent Israelis have with the outside world.

The Palestinian Authority was created in 1994 by the PLO leadership, which to a certain extent also filled its bureaucracy. In that way, the PLO leadership brought its own experience of running the PLO within an Arab context to its new task of running the affairs of the Palestinian people in the occupied Palestinian territories.

From the very beginning there was thus tension between the Palestinians of the occupied territories, who perceived elections as the source of legitimacy and were committed to the public good, including good governance, and the incoming PLO leadership.

The elected Legislative Council, through its many special committees, exerted plenty of effort to criticize and try to correct what turned out to be the very controversial approach of the executive authority. But this came too late to avoid the association of bad governance with certain political positions and practices, namely those that were too accommodating to Israeli political demands during the peace process.

It was only during the Aqsa Intifada, when the hardliners within Palestinian politics were empowered by their significant role in the resistance to the occupation, that we started to hear powerful voices criticizing bad governance and corruption and calling for reform.

The reformists called for an end to corruption and combined this with the aim to strengthen the Palestinian negotiating position and avoid unnecessary concessions. Together with their resistance this ensured their popularity.

This internal shift in the balance of power coincided with an increase in pressure from the international community led by the United States against the Palestinian leadership under late President Yasser Arafat. One way of exerting of this pressure was to exploit the need for reforms. But it had different motives. Some of the international players, notably the US, wanted to reduce the powers of the president by creating the post of prime minister. Others, like the European Union, were pushing for reforms to make their financial contributions more effective.

The Palestinian experience has thus shown that reforms and good governance are heavily politically loaded concepts. Reformists were generally politicians and political movements with less willingness to compromise with Israel, especially on political rights that are guaranteed by the stipulations of international legality. Officials, politicians and political movements associated with corruption were also those more willing to compromise the basic rights of Palestinians and accommodate unjustified Israeli demands.

Nevertheless, the Palestinian public was always, and is still, skeptical when the call for reform comes from abroad, in particular from members of the international community that are, on the political level, willing to close an eye to Israeli violations of the political and human rights of the Palestinians, including the right of independence through an end to the occupation.

In other words, Palestinians rarely believe calls for reform from countries like the US, which at one and the same time say they want good governance from the PA and yet support Israel's continued occupation and settlement program almost blindly. Regardless of incompetence and corruption it is, after all, the occupation that remains the biggest obstacle to Palestinian governance of any kind.- Published 23/4/2007 © bitterlemons.org

Ghassan Khatib is coeditor of the bitterlemons family of internet publications. He is vice-president of Birzeit University and a former Palestinian Authority minister of planning.

AN ISRAELI VIEW Conflict perpetuates corruption

by Saul Singer

The connection between corruption and the conflict is an insidious one, even when it seems to produce "good" outcomes.

It is hard to escape the conclusion, for example, that there was some relationship between the announcement by Ariel Sharon of his revolutionary unilateral disengagement plan in late 2003 and the corruption charges that swirled around him at that time. The desire to create a political distraction, however, could just as easily have manifested itself in the form of military action. Desperate leaders do desperate things, and we should not be surprised when policies colored by such ulterior motives turn out badly.

Corruption can be a catalyst for good or bad policies. The more common and powerful arrow of causality, however, goes in the other direction: conflict perpetuates corruption.

Since Israel's founding, to a greater or lesser degree our existential struggle has dominated our politics. At times of relative peace or confidence on this front, domestic issues have come to the fore, but this has tended to be the exception that proves the rule.

"Corruption" falls in the general basket of domestic issues, along with the economy, education, the environment, and many other matters that are the main stuff of politics in most other democracies. Sharon's case was a classic one of a debate over diplomatic strategy completely trumping concerns over a leader's political hygiene.

In essence, the Israeli public has behaved as if concerns over corruption, along with many other "domestic" issues, are a luxury that it can only afford to address if more important things are not at stake. The neglect of many domestic issues, therefore, is an additional cost imposed by our unsettled security situation and the lack of consensus over how to address it.

The same might be said about the Palestinian side and about Arab countries, only more so. Throughout the Arab world, the main use of perpetuating the conflict with Israel is to distract from dictatorial rule. And dictatorships, in addition to depriving peoples of both freedom and prosperity, are naturally and irredeemably corrupt.

Dictatorships combine excessive power with insufficient accountability, so it should be no surprise that "corrupt" is the word that is perhaps most often used to describe "dictatorship". In the long run, it is impossible to address corruption and many other problems in dictatorships without changing the system of government. Clean government can only exist on a foundation of the rule of law; not the law of a police state, but one that holds the government accountable to the people.

It so happens that the sort of governments that are needed to root out corruption are also those that are needed to make peace. This is so because dictatorships will always need conflict to distract from corruption and other failures.

Though in democracies the opposite might occur, namely peace initiatives used to mask corruption, the Sharon case is misleading. The current situation is more the norm, where weak leadership and corruption go together.

A major component of leadership is adeptness at both earning and spending political capital. Most leaders under a cloud of corruption are unable to accumulate political capital and therefore have no capital to spend when it is needed most, such as when trying to build support for either diplomatic or military initiatives.

Peace, however, does not await another Israeli initiative. It should be more evident than usual after disengagement and the rise of Hamas that peace depends not on Israeli initiatives but on an international realization that the Arab side must abandon the dream of Israel's destruction. The weakness of the current Israeli government, partly due to corruption, decreases its ability to make this case, and is therefore bad for peace.

That said, the Arab side should know that even a weak Israeli government is in many ways stronger than the fragile dictatorships that typify the Arab world. This is not just true militarily and economically, but in terms of ability to respond to an authentic Arab peace initiative, if one were to emerge.

Arab states such as Saudi Arabia and Egypt could jump-start a real peace process any time they want. Just as it is almost impossible for dictatorships to offer real peace, it is almost impossible for a democracy to refuse one.

Arab leaders should know that the basic willingness to set foot in Jerusalem, as Anwar Sadat did, would create a popular Israeli tsunami that no Israeli leader could resist, even if he/she wanted to. If the Arab world truly wanted to end its rejection of Israel, the popularity of the current leadership would be irrelevant to Israel's ability to reciprocate, which would be grounded in a popular consensus stronger than any government and would be automatic and irresistible.- Published 23/4/2007 © bitterlemons.org

Saul Singer is editorial page editor of and a columnist for The Jerusalem Post.

A PALESTINIAN VIEW International sanctions are destroying reforms

an interview with Samir Abdullah

bitterlemons: Many people said corruption was the main reason Hamas won parliamentary elections. Would you agree with that?

Abdullah: I think it was the second main reason. The main reason was the crisis in the peace process. Of course corruption and the whole attitude and behavior of the Palestinian Authority, where a lot of mistakes--incompetence, general misbehavior--were made in addition to corruption, were major issues. The PA did not keep an eye out for what people wanted and what they needed.

bitterlemons: You seem to be saying that there are two things to distinguish, the problem in people's minds and the real problem. How big is the real problem?

Abdullah: In terms of the number of corrupt officials it is actually very little. In terms of amounts, if you compare with other countries around us or in the world, it is nothing. But taking into account the psyche of the people and the situation we are living in, any amount of corruption at any level is unacceptable.

Overall, revenues and expenditures in the Palestinian budget were known. Maybe they were not expended in the most efficient way, maybe revenue was not collected in the proper manner and, yes, there were a lot of accounts where revenue accrued, but most of it is accounted for. Some was not audited and that was a problem.

bitterlemons: In that respect, the reforms of 2000 and 2003, and especially the creation of the Single Treasury Account, were very important. To what extent would you credit the STA and those reforms with cleaning up the budget?

Abdullah: Those reforms were crucial steps. The STA was not the only step; it was one of several major improvements. There was also budget reform, which created a budget to be approved by the Legislative Council and then adhered to by ministries.

Before that, there was no adherence. There was some discussion about a so-called budget. But the budget wasn't a financial and economic plan for the government. There was no relationship between the budget and what the government was doing. The budget was just a statement that was never adhered to or honored. But with those reforms we got the STA and steps to formulate a proper budget that responded to needs and priorities and so on.

bitterlemons: Now, and for a year, with international sanctions against the government, the STA lies dormant. What effect has this had?

Abdullah: The STA is dormant because of the restrictions imposed on banks. Banks cannot deal with the government, accept revenues from the government or pay any checks to anybody from the government to fulfill its obligations. So banks had to close the STA and that was it. The government has to use different channels and donors have to use different mechanisms.

This is a major blow to reforms. There is now no transparency and costs are up. In 2006, for example, the money coming through the Temporary International Mechanism was coming from donors straight to recipients but at a high cost, with each transaction at eight euros. This is expensive for both donors and us. In addition, while the money coming to the Office of the President is earmarked for specific projects, there is no statement to indicate where this money is going.

bitterlemons: Does this not create the problem that in this situation the public's understanding of where the money is spent is limited and it is possible that the money is misappropriated?

Abdullah: Of course. The rumors are already starting. And yes, the money could be used for corruption, as could the money that came in bags and from various sources. There is no oversight mechanism and this is a major blow to good governance.

bitterlemons: Do you see a parallel with Israel, where there are plenty of corruption scandals at the moment?

Abdullah: Every year Israel has corruption scandals. But the system there is set up so as to be able to catch and check such cases. On our side, unfortunately, and in spite of all that has been said about the previous era in the years before the STA, no one has been caught for corruption and faced trial. This is a major difference. We need several reforms. In addition to a strong judiciary and the re-establishment of the STA and other such reforms we need reform of the security sector. This is a major problem. Even with a functioning court system and economic reforms, these cannot be implemented if there is no competence in the security apparatuses. Security and judiciary reforms are a priority for corruption to be stamped out properly. There is also a lot of corruption in the security sector, where people used to be paid in cash.

Overall, I think the corruption problem is not as big as it used to be, and it is certainly bigger in the public mind than in reality. With the new political competition in the PLC and in government, we have a system of checks and balances that will make it difficult for corrupt officials to get away with it. So there is a difference, but this difference still needs to be reinforced by real reform in the judiciary and security sectors. What we have now is still only an environment that makes corruption difficult.- Published 23/4/2007 © bitterlemons.org

Samir Abdullah is a Ramallah-based economist and the director of the Palestine Economic Policy Research Institute, MAS.

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Editors Ghassan Khatib and Yossi Alpher can be reached at ghassan@bitterlemons.org and yossi@bitterlemons.org, respectively.

Bitterlemons.org is an internet newsletter that presents Palestinian and Israeli viewpoints on prominent issues of concern. Each edition addresses a specific issue of controversy. Bitterlemons.org maintains complete organizational and institutional symmetry between its Palestinian and Israeli sides.