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Palestinian Authority leader Mahmoud "Abu Mazen" Abbas

(Israel Hayom via JNS) The Israeli defense establishment and Finance Ministry are operating a secret, extra-budgetary fund through which money is transferred to the Palestinian Authority. The fund’s existence was revealed in the state’s response to a petition filed with the High Court of Justice by the Kohelet Policy Forum.

State’s attorney Yael Morag Yako-El wrote that Israel had committed to transferring the Palestinians a “loan” of NIS 100 million (approximately $29 million). “The source of this amount is an extra-budgetary fund managed by the Civil Administration and Finance Ministry’s Budgets Department,” she wrote.


Just one month ago, the Knesset’s Foreign Affairs and Defense Committee discussed payments to the Palestinians. The fund was not mentioned despite the attendance of dozens of government representatives, including the Finance Ministry’s Adviser to the Director-General Arava Elfassy, Col. Elad Goren, the head of the Civil Department of the Coordinator of Government Activities in the Territories (COGAT), and legal advisers from various ministries.

They answered questions posed to them by parliamentarians concerned that the government was not being entirely forthright regarding certain expenditures. None of the lawmakers and other participants were told about the existence of such a fund, or that it was used to transfer money to the P.A. It should be noted that an extra-budgetary fund is not a common tool used by the government and that creating and managing one requires special approval from the Finance Ministry’s Accountant General.

Although aid agreements between Israel and the PA are supposedly strictly economic in nature, the state insists on not revealing them to the public.

Attorney Yako-El further wrote in her response to the Kohelet Policy Forum’s petition that the state was prepared to present the agreements to the High Court of Justice, but only “behind closed doors, and only to the court.” According to the state, this information, “if revealed, could harm the country’s national security and its foreign relations.”

Attorney Ariel Erlich, who submitted the petition on behalf of the Kohelet Policy Forum, said in response: “We petitioned the High Court of Justice against the transfer of funds because the Finance Ministry refused to reveal the agreements and affirm that all transfers were in accordance with the law. … As for the existence of this fund,” Erlich continued, “the Finance Ministry never bothered to inform anyone. Theoretically, this is a gross violation of the law. After all, if the law stipulates what and how you are permitted to transfer to the PA, the state cannot create extra-budgetary funds to bypass this prohibition.”

Erlich believes that this entire episode “reeks of a cover-up,” and insisted that Israelis are entitled to know whether public funds are transferred to “fund [Palestinian] terror through the circumvention of the Knesset’s laws.”

For its part, the Finance Ministry said that the fund in question “is sourced from payments pertaining to the use of lands, including quarries, along with media bodies as well. The sums that are deposited in the fund are earmarked for such matters. It should be noted we have answered questions posed by various Knesset members before, within the relevant contexts, about the loan.”

This article first appeared in Israel Hayom.

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Ariel Kahana is a diplomatic correspondent for Israel Hayom.