The victory of Hamas in the recent Palestinian elections should force a wholesale reappraisal of U.S. and international funding for the Palestinian Authority (PA). Hamas is one of the most brutal and barbaric terrorist movements in modern history, being responsible for the murder of hundreds of Israeli, Palestinian, and American civilians and the maiming of thousands more. The United States and the European Union should refuse to fund a Palestinian regime that does not recognize the state of Israel and that actively supports the use of terrorism.[1]

The U.S. and EU should also withhold all funding from the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) and call for an immediate inquiry into how it has been spending donors' money as well as allegations that it has hired members of terrorist organizations and stoked anti-Semitism among Palestinian refugees. Without this step, there is a major risk that a Hamas-led PA will exploit UNRWA to further its anti-Israel agenda.

U.S. Funding for the Palestinian Authority and UNRWA

The Palestinian Authority is hugely dependent upon foreign assistance, which accounts for about 66 percent of its annual budget. European Union funding for the PA amounted to $600 million in 2005.[2] The United States gives $70 million directly to the PA each year, as well as $225 million for humanitarian projects through the U.S. Agency for International Development (USAID).[3] Between 1993 and 2004, the Palestinian Authority received $6.93 billion in aid from the international community.[4]

In addition to this direct funding of the PA, the U.S. and other nations give generously to UNRWA. In 2004, the U.S. pledged a total of $127 million.[5] The U.S. provides roughly a quarter of UNRWA's regular annual budget and is the agency's biggest donor. The State Department's Bureau of Population, Refugees, and Migration has given over $300 million to UNRWA since 2001.[6] According to the Palestinian Authority Ministry of Finance, UNRWA received an astonishing $3.95 billion in international funding between 1993 and 2004.[7]

New legislation put forward in the House of Representatives by Rep. Ileana Ros-Lehtinen (R-Fl) would de-fund the Palestinian Authority, an important step in the right direction. Her bill designates the PA as a "terrorist sanctuary" and would "prohibit direct assistance to the PA, the Palestinian Legislative Council, municipalities, and other constituent elements that are 'governed' by individuals associated with Hamas or other terrorist entities."[8] Rep. Ros-Lehtinen's leadership on this issue sends a powerful signal from Capitol Hill that the United States will not allow its funds to be appropriated by terrorist groups.

Congress must also insist that international agencies that rely so heavily on U.S. funding and that will interact with the new Hamas regime be free of the taint of terrorist infiltration and operate in an accountable and transparent manner. Hamas has a long history of diverting funds from charitable organizations and abusing humanitarian fundraising to support its terrorist agenda.[9] It should not be allowed to subvert UNRWA or other groups to advance its radical Islamic goals.

The United States should send a clear message to UNRWA and other international bodies that their operations in Hamas-held territory and Palestinian refugee camps outside the Palestinian territories will be subject to intense scrutiny. In light of the Hamas election win, Congress and the Bush Administration should withhold U.S. funding for UNRWA while the agency's finances are audited and alleged links between the agency and Hamas terrorists are thoroughly investigated.[10] Washington must make every effort to ensure that taxpayer money is not being used for terrorist operations or political purposes. To this end, the amended 1961 Foreign Assistance Act directs that:

No contributions by the United States should be made to [UNRWA] except on the condition that [UNRWA] take all possible measures to assure that no part of the United States contribution shall be used to furnish assistance to any refugee who is receiving military training as a member of the so-called Palestine Liberation Army or any other guerrilla type organization or who has engaged in any act of terrorism.[11]

In addition to withholding funds, the United States should also state publicly that UNRWA, founded in 1949, is a costly anachronism that must be shut down in the near future, leaving its operations to the United Nations High Commissioner for Refugees (UNHCR). It is striking that UNRWA, with a staff of 24,300, had a regular budget in 2005 of $339 million to support 4.1 million refugees in just five territories[12] (or $83 per refugee),[13] while UNHCR, with a staff of 6,450, had a 2005 regular budget of $992 million to support 19.2 million refugees and asylum seekers in 116 countries (or $52 per refugee).[14] UNRWA cannot justify its long-term existence as a separate entity on grounds of fairness, cost, or efficiency.

UNRWA and Hamas

Like most UN agencies, UNRWA is subject to little external oversight and minimal public scrutiny. For an agency that receives over a third of a billion dollars in public funding every year, it is extraordinarily opaque. Its website provides few specific details as to where the money goes and how it is spent. The agency is not externally or publicly audited. This is particularly troubling for an organization that has been so dogged by controversy.

There are serious allegations that UNRWA has been infiltrated by Hamas terrorists. According to the U.S. Government Accountability Office (GAO), as of November 2003 at least 16 UNRWA staff had been detained by Israeli authorities for security-related crimes, and three had been convicted in military courts of terrorism-related activities.[15]

UNRWA's leadership has admitted in the past that Hamas has people working inside the UN agency. Peter Hansen, then-Commissioner-General of UNRWA, sparked a political storm in 2004 when he remarked in an interview with the Canadian Broadcasting Corporation: "I am sure that there are Hamas members on the UNRWA payroll, and I don't see that as a crime. Hamas, as a political organization, does not mean that every member is a militant, and we do not do political vetting and exclude people from one persuasion as against another."[16] (Hansen left the agency in March 2005 and was replaced by Karen Koning Abuzayd.)

Following Hansen's remarks, a bipartisan group of 37 Members of Congress led by Representative Eliot Engel (D-NY) called on the U.S. government to pull funding for UNRWA "until all members of terrorist organizations are removed from the Agency's staff." In a letter to then-Secretary of State Colin Powell, the Members noted: "[N]ot only have many of the suicide bombers of Hamas and other Palestinian terror organizations come from UNRWA refugee camps, but students in UNRWA schools have received a steady diet of hatred and anti-Semitism in their textbooks. Furthermore, reports widely indicate that terrorists have taken advantage of the limited restrictions Israel places on humanitarian vehicles, including the use of ambulances and other UN vans for illicit purposes."[17]

That letter is no less relevant today, especially in light of Hamas's election win. Congress must increase its pressure on UNRWA funding, and the Bush Administration should use that threat to push for immediate reform and improved oversight of one of the UN's biggest agencies.

Key Recommendations

• Push for a full audit of UNRWA. The United States should withhold all funding to UNRWA and insist on a comprehensive external audit of its finances and expenditures. The U.S. should also call for an independent investigation of links between UNRWA employees and Hamas or other terrorist groups, as well as allegations regarding the misuse of funds and the promotion of anti-Semitism. In addition, Congress should direct the GAO to conduct a new inquiry into how UNRWA is spending U.S. funds.
   
• End the UNRWA dependency culture. Long-term U.S. policy in the West Bank and Gaza should aim to encourage individual empowerment, private investment, and free enterprise. Agencies such as UNRWA perpetuate a culture of welfare dependency among impoverished Palestinians, who largely depend upon handouts from international organizations. The United States should support the downsizing, streamlining, and eventual closure of the 56-year old UNRWA, setting a clear sunset date for any future U.S. funding for the agency.
  
  UNRWA was established to aid Palestinian refugees pending a solution to the Israeli-Palestinian conflict. If the new Palestinian regime rules out a negotiated solution to that conflict, then the international community should insist that the new government take full responsibility for the refugees, whom it dooms to continued misery by blocking a peaceful solution. Maintaining international funding for the refugees while the Hamas-controlled Palestinian Authority rejects peace would amount to an international subsidy for a jihad against Israel.
   
• Call for the EU to end its support of the Palestinian Authority. The United States should call on the European Union to end its support of the Palestinian Authority, which would otherwise provide a lifeline to a terrorist regime that appears unwilling to drop its vicious ideology. Washington should also call for a joint U.S.-EU inquiry into the fate of the billions of dollars of Western aid money that has been pumped into the PA over the past decade.

No U.S. Money for Terrorists

As a major UN body with a huge budget, the United Nations Relief and Works Agency for Palestine Refugees should operate in a transparent and accountable manner. It must also remain politically neutral and must not aid terrorist groups and their supporters. There is a real danger that Hamas will exploit UNRWA as a lucrative cash cow to advance its anti-Israeli agenda.

Until it can be absolutely verified that UNRWA is being run in an effective, neutral, and accountable manner and that it will not be used by the new Hamas regime to pursue terrorism or spread anti-Semitism, the United States should withhold funds from the organization.

With the impetus from Congress, the Bush Administration should state clearly that UNRWA's operations must ultimately be taken over by UNHCR and that UNRWA should cease to exist as an independent agency within a few years.

Nile Gardiner, Ph.D., is the Bernard and Barbara Lomas Fellow in the Margaret Thatcher Center for Freedom, and James Phillips is Research Fellow in Middle Eastern Affairs in the Douglas and Sarah Allison Center for Foreign Policy Studies in the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. The authors are grateful to Brett Schaefer, Research Fellow in International Organization Affairs, and James Dean, Deputy Director of Government Relations for Foreign and Defense Policy, at The Heritage Foundation, for their advice and suggestions. Ewan Watt assisted with research for this paper.