State of Failure

by Jonathan Schanzer

  State of Failure

  Also by Jonathan Schanzer

  Al-Qaeda’s Armies: Middle East Affiliate Groups

  & the Next Generation of Terror

  (SPI 2004)

  Hamas vs. Fatah: The Struggle for Palestine

  (Palgrave Macmillan 2008)

  Palestinian Pulse: What Policymakers

  Can Learn from Palestinian Social Media

  (FDD Press 2010)

  Facebook Fatwa: Saudi Clerics,

  Wahhabi Islam and Social Media

  (FDD Press 2012)

  State of Failure

  Yasser Arafat,

  Mahmoud Abbas, and

  the Unmaking of the Palestinian State

  Jonathan Schanzer

  STATE OF FAILURE

  Copyright © Jonathan Schanzer, 2013.

  All rights reserved.

  First published in 2013 by PALGRAVE MACMILLAN® in the United States—a division of St. Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010.

  Where this book is distributed in the UK, Europe and the rest of the world, this is by Palgrave Macmillan, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS.

  Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world.

  Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries.

  ISBN 978-1-137-27824-1

  Library of Congress Cataloging-in-Publication Data

  Schanzer, Jonathan.

  State of failure : Yasser Arafat, Mahmoud Abbas, and the unmaking of the Palestinian state / by Jonathan Schanzer, Vice President for Research, Foundation for Defense of Democracies.

  pages cm

  1. Palestinian Arabs—Politics and government. 2. Palestinian National Authority. 3. Harakat al-Muqawamma al-Islamiyya. 4. Fath (Organization). 5. Arab-Israeli conflict—1993– I. Title.

  DS119.76.S345 2013

  320.95695’3—dc23

  2013010358

  A catalogue record of the book is available from the British Library.

  Design by Letra Libre, Inc.

  First edition: October 2013

  10 9 8 7 6 5 4 3 2 1

  Printed in the United States of America.

  Contents

  Acknowledgments

  1: Collapse or Statehood?

  2: The United States and the Question of Palestine

  3: Guerrilla Governance

  4: The Oslo Years

  5: The Al-Aqsa Intifada

  6: Fayyadism

  7: The Rise of Abu Mazen

  8: The Rise of Hamas

  9: Civil War

  10: Backslide

  11: Crushing Political Challengers

  12: Quashing Critical Media and Protesters

  13: Unilateralism

  14: Righting the Ship

  Notes

  Index

  Acknowledgments

  The writing of this book has been a journey. It began with a few quiet meetings with Palestinians in Europe, the Middle East, and America. There was a common theme. While Palestinians are universally frustrated about Israel’s policies, they are also frustrated by their own poor leadership. Intrigued, I began to write articles about the Palestinian leadership deficit, as well as the chronic abuses of power and mismanagement that have been all too common across the Arab world. The more I wrote, the more I learned from others who had similar stories to share. I soon realized that the story of failed Palestinian governance and chronic mismanagement is one that every observer of the region implicitly accepts as truth, but few have ever documented. In fact, nobody has ever produced a narrative of the Palestinian struggle for competent governance. This book is a good faith effort to do just that.

  First and foremost, I must thank the Palestinians who helped me gain a better understanding of this issue along the way. Most did not wish to be named as sources, for fear of retribution. But without them, this book would not have been written.

  Similarly, this book would not have been written without the support of my employer, the Foundation for Defense of Democracies. I am particularly grateful for the support of Clifford May, FDD’s president, Mark Dubowitz, FDD’s executive director, Bill McCarthy, FDD’s senior vice president, and Toby Dershowitz, FDD’s vice president for government relations. True to their word, they helped me turn ideas into action. They were also unwavering in their support of my work, even as it came under attack from various quarters.

  For fending off those attacks, I thank Nathan Siegel of Levine, Sullivan, Koch & Schulz. And for their professionalism and patience, I thank Emily Carleton, Donna Cherry, and Lauren Dwyer at Palgrave Macmillan.

  I also owe debt of gratitude to David Barnett, whom I met when he was a promising student of Palestinian history at Johns Hopkins. He is now, thankfully, a full-time employee at FDD. His research and careful fact-checking were crucial to the completion of this book. FDD interns Anna Gordan, Laura Maschler, Nicole Salter, and Ari Weiss also deserve credit for reading chapters of the manuscript. They caught errors that I did not and saved me from myself. Of course, any errors herein are mine and mine alone.

  I must also acknowledge Jim Prince, who has become a trusted friend and guide as my thinking evolved throughout the writing of this book. His commitment to good governance and democracy in the Arab world is incomparable.

  Finally, I wish to thank my wife, Elana. She helped me, substantively and otherwise, at various stages through this journey. More importantly, she has been a steadying hand through countless other journeys along the way.

  1

  Collapse or Statehood?

  The Palestinians are pushing for full recognition of statehood. They call their campaign “Palestine 194,” a reference to their goal of becoming the 194th state in the United Nations. Under the leadership of Palestine Liberation Organization (PLO) chairman Mahmoud Abbas, also known by his kunya (Arabic teknonym) Abu Mazen, the campaign is well under way.

  Critics of the campaign—notably the United States, Canada, and Israel—said that the move was counterproductive because the Palestinians were shirking their responsibilities, as stipulated in the 1993 Oslo Accords, to negotiate bilaterally with Israel over every aspect of the future two-state solution. This push for the recognition of Palestinian statehood is unilateral, critics argue, and it should therefore be punished with aid cuts and diplomatic downgrades.

  By contrast, proponents of the campaign say that Palestinian statehood is long overdue. They argue that the PLO needs no seal of approval from the United States or Canada or Israel to fulfill its dream of statehood. They further argue that as long as Israel unilaterally builds settlements in the West Bank—land the Palestinians claim for their national project—there is no reason to negotiate. Though diplomacy with Israel resumed in July 2013, the Palestinians made it clear they could return to this strategy at any time.

  The effort officially began in September 2011, when Mahmoud Abbas stood before a buzzing UN General Assembly in New York City and announced his intention to achieve recognition of statehood for the Palestinian people. He forwarded an official request to the UN Security Council, but his bid stalled due to a lack of strategic direction on the part of the Palestinian leadership, coupled with pressure from Washington. The United States, as a permanent member of the Security Council, had vowed to veto the request, but it was unclea
r whether Abbas had even successfully lobbied for the requisite votes needed.

  Following the defeat, the Palestinians appeared to have given up on the strategy. But in early 2012, the PLO announced that the Palestinians were gearing up for another diplomatic push. Only this time they noted that they would not seek official recognition through the UN Security Council. This time, they said, they would merely seek a “diplomatic upgrade” through the UN General Assembly, where an overwhelming majority of the states supported the PLO’s initiative.

  This move, Abbas acknowledged, would not lead to Palestine 194. Rather, it would grant the PLO nonmember observer state status. It would bring the Palestinians one step closer to their dream but also potentially arm Palestinians with new diplomatic weapons—such as accession to the International Criminal Court (ICC), which could enable the Palestinians to sue Israel for war crimes or establish legal claims on West Bank lands where Israel was building.

  Commentators lauded the Palestinians for pursuing a legal rather than a violent approach. To be sure, Abbas deserves credit for eschewing violence after decades of terrorism perpetrated in the name of the Palestinian cause. But the real genius behind his strategy was that it marginalized the United States. No country, not even the United States, can veto a General Assembly measure at the United Nations. And the Palestinians, who had been quietly lobbying in capitals the world over for the better part of seven years, had secured the support of the vast majority of the 193 UN member states.

  However, the timing of the effort was not ideal for the Palestinians, given all of the Middle East drama of 2011 and 2012: the Syrian civil war, the power struggles in Egypt, the race for nuclear weapons in Iran. Nevertheless, the Palestinians were determined to continue their quest. They continued to broadcast their intention to return to the United Nations. The United States threatened to cut off aid. The Israelis threatened to withhold the tens of millions of dollars they collect each month in Palestinian taxes. Yet Abbas was unmoved. On November 29, 2012, with the world watching, the snowy-haired Palestinian leader went back to the United Nations and secured nonmember observer state status for Palestine.

  Abbas returned to a hero’s welcome in Ramallah, the interim Palestinian capital just a few miles east of Jerusalem. But that was only part of the picture. On the international stage, the outpouring of support was overwhelming.

  “We wholeheartedly welcome the recognition of Palestine as an observer state by the United Nations,” said renowned human rights activist Desmond Tutu. “Sixty-five years after the UN recommended the establishment of a Jewish state and an Arab state side by side on former Mandatory Palestine, the world has finally taken an important step on the Palestinian part of its promise.”1

  Former US president Jimmy Carter was no less enthusiastic. “The international community now has a duty to turn this significant step by the UN into lasting peace in the Middle East. . . . The UN vote can be a catalyst for genuine negotiations between Israel and Palestine on a more equal footing,” he said.2

  Even former Israeli prime minister Ehud Olmert endorsed the move. He asserted that it was “congruent with the basic concept of the two-state solution. Therefore, I see no reason to oppose it. Once the United Nations will lay the foundation for this idea, we in Israel will have to engage in a serious process of negotiations, in order to agree on specific borders based on the 1967 lines, and resolve the other issues.”3

  Sitting statesmen also argued that Abbas’s maneuver was a small yet symbolic measure to right a historic wrong. They decried the many reported Israeli injustices against the Palestinians, which have long characterized the Palestinian narrative.

  Turkey’s foreign minister, Ahmet Davutog˘lu, stated, “We have gathered here for correcting a historical injustice against the Palestinian people. We all believe and cherish the vision of a just, peaceful, and harmonious future. For that future we should altogether have to stand behind the Palestinian bid to become a ‘non-member observer state.’ This is a moment of truth for all of us.”4

  China, via a foreign ministry spokesman, also indicated that the move was a way for Palestinians to recover “their national and legitimate rights and interests.”5

  Many also saw Abbas’s UN upgrade as a binary equation. Supporting Palestinian rights, in their view, went hand in hand with challenging Israel or even punishing it.

  The Muslim Brotherhood government in Egypt, for example, lauded the UN maneuver because it “provides the Palestinian people with the appropriate legal tools to deter and confront the crimes committed by the occupying power, and hold the perpetrators of those crimes accountable before international justice.”6

  Roger Waters, the famed vocalist for the rock band Pink Floyd and now a political activist, implored the international community to “[s]eize this historic moment. Support the vote today for Palestinian enhanced observer statehood status as a step towards full membership. And declare Israel’s continued membership of the UN to be dependent on reform of its illegal apartheid regime.”7

  Lost in all of the hoopla was one crucial question: Are the Palestinians prepared for this next step? Is the Palestinian Authority (PA), the interim body created in 1994 to govern the West Bank and Gaza Strip, an efficient, transparent, or financially viable authority that is prepared to function as a government for the Palestinian people? This book will explain why the answer, unfortunately, is “no.” The reason: the PA and its antecedents have been beset by bad governance.

  Many critics point to the consistent use of terrorism and political violence as a black mark on the Palestinian cause. This, of course, is a valid concern. Violent groups continue to litter the Palestinian political landscape. But let us for a moment suppose that the use of violence is now a thing of the past. How do the Palestinians function on a political level?

  The Palestinian government, as it is currently configured, is mired in dysfunction. Not only are the Palestinian territories (West Bank and Gaza Strip) divided between two warring factions (Fatah and Hamas), it is also undeniable that both cantons have failed to function well as governments.

  For the purposes of this book, we will not address the political and economic challenges associated with the Hamas government in Gaza. Hamas won the 2006 legislative elections, earning the terrorist group the right to forge a government. With Western support, the PLO and Fatah faction leaders refused to allow this to happen, ultimately prompting a civil war in 2007 that led to Hamas’s violent takeover of Gaza, where Hamas has remained firmly entrenched. Although Hamas maintains an iron grip on Gaza, an Israeli and Western embargo on the tiny coastal enclave has hindered Hamas’s political and economic prospects greatly. But it would be disingenuous to blame Hamas’s failures on the embargo alone. Report after report indicates that the de facto government in Gaza is ruled by draconian laws, while outside actors such as Iran, Turkey, and Qatar continue to try to heavily influence decision making.

  Hamas may yet declare independence for the Gaza Strip.8 But it is unlikely to do so through diplomacy or the United Nations. The West Bank regime, by contrast, seeks to speak for all Palestinians and to press for full Palestinian independence. This book is an attempt to explain why the Palestinian government run by Mahmoud Abbas will very likely become steeped in crisis, if not fail, if and when such a state is created.

  To better understand the problem, one must first look back at how the PA was born. Created as a civilian caretaker government in 1994, the PA was the unlikely offspring of a terrorist organization, the PLO. The PLO, in turn, had emerged from Fatah, a terrorist group founded in Kuwait in the 1950s. Yasser Arafat, perhaps the most famous Palestinian the world has ever known, controlled both groups.

  The road to the PA was not an easy one. Arafat made the reluctant strategic decision to renounce terrorism in the late 1980s, which ultimately paved the way for him to become the leader of the nascent Palestinian self-rule polity, the PA.

  But even af
ter Fatah and the PLO transitioned from terrorism to politics, Arafat obstructed outside efforts to bring transparency to Palestinian institutions as they changed shape. Under Arafat, in fact, the PA funneled untold amounts of international donor funding to a select group of insiders and did little to forge economic solutions that would create jobs or new opportunities for Palestinians in the West Bank and Gaza. As a result, the PA failed to inspire confidence among the people.

  Despite all of this, the PA made some strides in the 1990s. Thanks to the determined efforts of stakeholders in the peace process, the Palestinian self-rule project gained ground in fits and starts. The PA took on increased responsibility for daily governance. But this all came to a jarring halt in September 2000 with the outbreak of the second intifada, a low-level Palestinian war marked by suicide bombings and other guerrilla tactics. While the uprising originally targeted Israel and was a response to the lack of progress toward a final status peace agreement to end all grievances with the Jewish state, it also exposed some critical fissures within Palestinian society. The most glaring of these was the lack of transparency and accountability in governance.

  If there was any silver lining to the PA’s challenges after the collapse of the peace process, it was the growing public support to address these problems. This paved the way for the rise of Salam Fayyad, the institution-building finance minister who succeeded in shaping a more transparent financial system and established, for the first time, a single treasury account through which all taxes and donor funds would pass.

  This is not to say that Fayyad’s job was easy. All along the way, the PLO and Fatah, the traditional loyalists from the two most powerful Palestinian institutions, worked assiduously to torpedo his efforts. In many ways, Fayyad was dismantling the system that had sustained these groups since 1968.

  Fayyad also inspired the creation of the Palestine Investment Fund (PIF), a sovereign wealth fund intended to enrich and empower the Palestinian people. Fayyad’s unenviable job was to identify, with the help of a team of accountants, the assets Arafat had amassed over years of militant activity across the Middle East and Europe and to bring them up to Western accounting standards. This was a herculean task. Fayyad’s team painstakingly investigated secret holdings around the world and integrated them into the Palestinian treasury.