Fiscal Cloud Over the Gaza Strip : World cannot allow PLO administration to fail

Off to a stumbling political start as it seeks to oversee self-rule in the Gaza Strip and Jericho, the Palestine Liberation Organization now faces the staggering prospect of financial collapse within months after assuming authority.

PLO officials on the ground--Chairman Yasser Arafat remains in Tunis--aren’t the only ones frightened by the possibility. Israel, in what some would see as an ironic twist, is pondering ways to channel emergency help to the Palestinian interim government to keep it afloat. This isn’t altruism. It’s prudent self-interest. If the PLO can’t provide for the necessities of life in the territories it now seeks to govern, its already damaged legitimacy could be terminally undermined. That would open the door to at least an attempted seizure of power by Muslim extremists. What could follow concerns Israel enormously. It ought to concern nearly every Arab state, along with Europe and the United States no less.

The World Bank and 40 donor countries that were brought together by the United States last October have pledged a total of $2.4 billion over the next five years to sustain Palestinian self-rule. Much of that is earmarked for specific projects and a lot will consist of equipment and training and other in-kind services.

The Palestinians say that with all these pledges they have up to now seen almost no cash. Without cash, workers in essential services will go unpaid and soon will stop going to work, fueling popular disaffection and weakening the governing authority’s standing even more.

Dilatory donors aren’t wholly to blame, however. Once again responsibility goes to the apex of the Palestinian hierarchy, to Arafat, who has always kept the PLO’s finances--including its extensive investment portfolio--under his own secretive control. An accounting of what the PLO has, or has left after decades of notoriously high living by its top officials, is long overdue. At the same time Arafat can blame only himself--although of course he won’t--for the loss of hundreds of millions in aid from the PLO’s once-generous oil state benefactors, a circumstance he brought about by rushing to approve Iraq’s invasion of Kuwait.

Noting all this, those concerned with stability in the Middle East can still only conclude that the Palestinian experiment in self-rule remains too vital to the security interests of too many countries to let collapse. Donor nations must act quickly to speed up their cash transfers, not to save Arafat from his own folly but to give the Palestinian people a chance to evolve toward the democratic and secular society that the PLO has for so long portrayed as their destiny.