The battle for a slice of the $7b aid pie is on

Ramallah: When donors met in Paris last month and awarded $7.4 billion (Dh27 billion) in aid to the Palestinians, a larger-than-expected package to be distributed over the next three years, many in the international community showed a new readiness to support the new Israeli-Palestinian peace push and provide a safety net for it in the form of economic stability.

Avoiding corruption

Now Palestinian and foreign observers alike are keen to see how and where the money is spent, putting senior officials on the spot with questions of how they intend to avoid the corruption and mismanagement that characterised the Palestinian National Authority (PNA) in the past.

But unlike international relief in the past, this aid package - the biggest since the establishment of PNA in 1994 - comes with meticulous oversight mechanisms that make it much more difficult for money to be siphoned off or embezzled, a senior Palestinian official says.

Moreover, various unions representing public employees have gained muscle and stature and are determined to see an appropriate portion of the money go to civil servants, some of whom have gone unpaid for months at a time in the past two years.

Still, the battle for a fair slice of the pie is on. Several sectors - including teachers and medical workers - have recently been on strike against low pay and long hours. Union leaders say hundreds of other workers face being laid off or forced into early retirement, which some here argue would thin out inflated payrolls.

The PNA remains the largest employer in the Palestinian territories, with at least 165,000 workers; some officials say that the PNA could probably function with a third of that.

But on the other hand, the Palestinian private sector has been so stymied by political problems that not enough private sector jobs exist.

Union leader Bassem Hadaydeh says in this period of crisis since early 2006, PNA officials dipped into and spent worker pensions.

Union conflicts

"The PNA has already spent the retirement funds of all employees in order to keep itself going," says Hadaydeh, the spokesman of the Palestinian civil servants' union. "They're trying to retire large numbers of workers, but have no retirement funds to give them. This will be one of the points of conflict between the union and the government," he explains.

At least Palestinians now have a sense that the PNA has become more fiscally responsible, particularly since Salam Fayyad, now prime minister, became the Minister of Finance in 2003.

"The abuse of public money has decreased since Fayyad and monitoring of money has increased drastically," Hadaydeh says.

Samir Barghouthi, who runs a Ramallah investment firm, says that of the amount of aid pledged, approximately 70 per cent of the amount will go to public salaries and 30 per cent will go to development projects and food relief.

The biggest problem, Barghouthi says, is indeed the bloated PNA payroll. "There are many thousands of public sector employees who are not working but still take a salary from the government."

He suggests the PNA offer a retirement programme, perhaps offering loans for people to start businesses.

"The Paris aid is just a mechanism to help people survive, which means after three years, when those monies are spent, we have to face the problem again, and in another three years," he says. "We should use this commitment to push for deep restructuring."