Frustrations Mount as PLO Leadership Begins Paying the Price for Autonomy : Mideast: Lack of cash provokes anger, infighting among some officials. Arafat remains the only real decision maker.

To understand some of the seeds of the looming crisis in Palestinian lands, one need go no farther than a few sunny villas in this North African seaside city that is the headquarters of the Palestine Liberation Organization.

In the suburb of Menzah, a new office for the Palestinian Economic Council for Development and Reconstruction is being installed behind the PLO political department.

New chairs and desks are being hauled in, and the head of the political department, Farouk Kaddoumi, is insisting on signing every check, every contract.

Across town, in the suburb of Mutuelleville, the general manager of PECDAR, Ahmed Suleiman Khoury, who is also the PLO’s new economy minister, sits in the main office of the PLO economic department. No checks or contracts here: Khoury, feuding with the political department, has not had anything to do with PECDAR--which he created--in two months.

Down the street, PLO Chairman Yasser Arafat is meeting with a delegation of U.S. senators. Looking pale and tired, Arafat angrily proclaims that he is not going home to Palestine if he does not start getting some money from the international community.

Threatened with a cash crisis that has left officials urgently begging the world for donations to keep the new autonomous areas afloat, PLO headquarters slips alternately into gloom, infighting, euphoria and desperation as Arafat prepares to launch his historic trip to Jericho and as the PLO, in exile for a generation, careens toward its rendezvous with destiny in the West Bank.

The surrealistic landscape was perhaps best illustrated in the office of one of Arafat’s top advisers, who exploded in irritation recently when shown a newspaper headline about a Palestinian civil servant in Jericho, so far unpaid, who said he was eating by gathering bananas.

“So what?” he boomed. “There are 350 kinds of bananas in Jericho. If you go to Indonesia, it is the main food of the population. So why is it strange if a Palestinian eats bananas?”

To believe that there is a hint of the let-them-eat-bananas motif to all of this--many Palestinians in the occupied territories, frustrated at Tunis’ slowness in getting the new administration working, are sure of it--is to miss the air of mounting rage here among PLO officials.

Many believe that they made the dance-with-the-devil step toward peace with Israel, only to be left twisting in the wind when it came time to pay for it.

“Nobody will pay. What can we do? Sit here and cry?” a frustrated Khoury, popularly known as Abu Alaa, asked in his office recently.

“A Palestinian policeman who is in Gaza, and his family in Jordan, how will he continue to serve the interests of the people while he is not sure his family will be able to have their dinner?” Khoury asked. “I wonder. I’m afraid. If this situation continues . . . it will be a catastrophe.”

International donors at a meeting Friday in Paris pledged $42 million in start-up costs for Palestinian self-rule, an amount the World Bank said will keep the new Palestinian Authority afloat at least through August. But it was only a little more than half what the PLO had sought.

Donors have channeled much of their early aid toward specific projects and have held back on flexible cash aid in the face of questions over PECDAR’s accountability.

With the PLO’s history of corruption, Arafat’s iron grip at the helm of PECDAR has worried some. So has the feuding between Abu Alaa and Kaddoumi, who is the deputy chairman of PECDAR but who has no connections to the economic department or credentials as an economist.

Critics say it is a conflict of interest to have a political official signing checks and overseeing the authority at the same time. And coordinating financial institutions have been slow to get off the ground.

“I’ve been nominated as minister of economy and commerce. For this portfolio, I don’t know how to run it,” Khoury complained. “I should employ some expert people. I should rent an office place in the occupied territories. But from where? I don’t know how. There is no money. I look to the sky, and nothing comes from it.

“Even more, I don’t know what will be the relationship between the Palestinian Authority and the PECDAR. I can’t imagine that we will have an economic department and a PECDAR and a finance department too? There will be three administrations, and there is danger in such a situation.”

Companies seeking contracts with the new Palestinian administration have been bypassing the PECDAR office in the occupied territories in droves and doing what they have always done: flocking to the Tunisian capital to meet with Arafat, who remains the only real decision maker.

Access to Arafat has become a growth industry. Faced with a growing number of Palestinians demanding “commissions” for winning contracts with the new Palestinian Authority, Arafat finally cracked down last month, ordering the arrest of his wife’s uncle, London businessman George Hawa, and his associate, Moiad Sabah.

PLO officials say Hawa, who was released a few days later, would sit in the lobby of the Hilton Hotel in Tunis and promise contract approvals from Arafat for a 5% cut.

“He had a big mouth, and he had no power to back it up,” one senior PLO official scoffed. “The only power he had was he was Suha’s (Arafat’s wife) uncle. And that is nothing.”

For the West, wondering what this episode means about the PLO’s determination to keep its finances clean, there are two possibilities.

“It has brought the smell of corruption rather close to Arafat himself,” one European envoy said. “But it also means someone is trying to crack down on it.”

“If Arafat didn’t know, it’s a disaster,” one PLO official said of Hawa’s alleged activities. “If he did know, it’s a typhoon.”

The fiscal uncertainty of the last few weeks has spelled a cash crisis in Gaza and Jericho. Before Friday’s donor meeting, Khoury said the PLO had no idea where it would get the $6 million it needs for next month’s police payroll and $7 million for the civil administration.

Khoury has insisted that the international community owes the fledgling Palestinian government a commitment for a full year’s budget.

“We cannot wait like other states. We are facing severe problems. It’s a problem of whether there will be peace or not,” he said.

In his meeting earlier this month with a U.S. Senate delegation headed by Sen. Paul Simon (D-Ill.), Arafat threatened to cancel his return to Jericho unless the cash started flowing.

“He said, ‘I won’t participate in a puppet show,’ ” recounted one of those at the meeting. “He was upset, but sort of more in sorrow than in anger. He was depressed.”

Privately, PLO officials say they have growing fears that the donor shortfall is an attempt on the part of the international community to control the PLO--to trickle out the money, month by month, “as a point of pressure on the Palestinian Authority, to make sure we do what they want,” one official said.

But with the recent hiring of an outside audit firm and the passage of a new set of bylaws for PECDAR, at least assuring minimum accountability, the United States has begun urging donors to turn on the financial tap. Friday’s meeting was an indication that the taps, though slow, may finally be opening up.

After the meeting, Palestinian chief delegate Nabil Shaath said the $42 million would be enough to get things moving.

“Of course we did not cover all our requirements, but you can’t get everything you want at one go. We were looking for $70 million, but that’s a good batting average,” Shaath said.

“I told them it costs so much less to make a success story than to bail people out of a catastrophe,” Shaath added.

A Western diplomat in Tunis said: “I think everyone realizes the guy (Arafat) has got to be helped. Because if he goes and the whole thing falls apart, then everybody loses.”

There is a mood of irritation at Arafat’s headquarters, where advisers say they are frankly sick of people wringing their hands over cash crises and blaming the PLO for incompetent administration.

“What crisis?” one senior Arafat adviser shouted. “So we are penniless? We have had a cash crisis for the past three years, and who was paying any attention? There are people here who already haven’t received their salaries for months. It’s high time the donors start sending money if they want to solve the crisis instead of always talking.”

Arafat has tentatively set his departure for Jericho for the second half of June and has ordered the closing of most PLO offices in Tunis by Wednesday.

Privately, PLO officials say the key question remains the issue of security. And they wonder if the safety of Arafat and his accompanying ministers can be guaranteed by the new Palestinian police force.

“I don’t know if he will be able to go back,” one PLO official said. “The man has been sentenced to death in Gaza and Jericho.”

The official added: “Arafat, when he goes back, will be face to face with his people and his police at the same time. I remember (former Egyptian President Anwar) Sadat, one of his soldiers killed him. So I don’t know, a Palestinian policeman who hasn’t got his salary for five months, how is he going to behave? And his family back in Algiers with nothing? Not even money to buy food?”

Arafat’s top aides exude confidence about the return.

“This mentality of lamentation must be stopped,” one senior adviser said. “Security shouldn’t play any role. This is our country. Whether security is good or bad, this is our country, and he has to deal with it. When he goes back, there will be three months of festivities. At least. And after the three months, there is hard labor.”