International Christian Embassy Jerusalem, Nov. 27, 2002

As the economic situation deteriorates in the territories with the continuation of the armed conflict, anger is mounting among ordinary Palestinians about the apparent ongoing misuse of funds by their leaders.

A "credible" source close to the Palestinian leadership leaked the story of the PA Treasury picking up the bill for the veterinary treatment of a senior minister's family dogs in Paris, telling Ha'aretz that the PA leaders "are constantly visiting Europe, but have no time to visit the refugee camps and villages that suffer daily from the Israeli occupation."

IDF analysts have discerned a waning of the influence of the Fatah leadership in the territories, which one intelligence officer described as "bordering on disintegration," giving way to the more extreme "Popular Committees" and militant terror groups -which appear to be working more and more closely together.

Meanwhile a campaign by European MPs to persuade the European Commission to investigate the misuse of EU funds by the Palestinian Authority is gaining momentum in Brussels.

Reuters reported Tuesday that 100 MEPS have so far signed a petition backing a full-scale probe, 50 less than needed to automatically trigger an inquiry.

Nevertheless EU Commissioner Chris Patten, who suggested last month that he needed an inquiry into PA funding "like a hold in the head", continues to oppose any investigation, telling the Parliament's Foreign Affairs Committee that, "any inquiry would make it enormously difficult to continue providing aid", indicating that it would undermine the position of PA moderates and thus extend the cycle of violence.

Israel remains concerned not so much about the apparent embezzlement of individual PA leaders for personal gain, but the large-scale transfer of "administrative" funding provided by the EU to terrorist organizations financing suicide attacks against Israeli civilians.

The EU has denied that its own checks have uncovered any such misappropriation. "We have insisted on reform since we began the administrative assistance in 2001," Patten said in a statement, hinting that an instituting an investigation would effectively "sunder relations" with the PA and prevent the EU "playing any kind of role in the Middle East region".