Israeli government 'holds up' Arab money because of PLO contact

The sight of traveling bags stuffed with tens of thousands of dollars in Jordanian dinars has long been commonplace to Israeli border guards checking Arabs crossing the Jordan River bridges into the occupied West Bank from Jordan.

The carriers, who have been waved through by the guards without interference, were emissaries from municipalities and other Arab institutions on the West Bank and Gaza Strip. They have carried budget allocations from the Arab world.

The passage of these "bag men" was part of a unique financing arrangement involving the cooperation, active or passive, of virtually all antagonists in the Arab-Israel conflict. This arrangement is apparently coming to an end because of a new hard-line policy adopted by Israel toward PLO connections in the occupied territories.

The money passing over the Jordan came from the Arab states. At a conference in Baghdad in 1978, they pledged to furnish $100 million annually for municipalities and institutions, such as the Red Crescent Medical Organization, in the territories occupied by Israel in the six-day war in June 1967.

For the Arab world, it was a way of asserting a continuing link with these territories and their population. The Israelis had no objection to the Arab financing since it spared them the burden of pumping in money for these purposes. The Arab municipalities, which impose negligible taxes on their own residents, were the principal beneficiaries of this arrangement.

What Israel has now taken exception to is the channeling of these funds through the Joint Committee for the Occupied Territories in Amman. The committee consists of four Jordanian and four PLO officials.

In the past few weeks, military government officials have met with West Bank and Gaza Strip leaders to inform them that Israel is now enforcing the longstanding, but long-ignored, order banning contacts between residents of the occupied territories and the PLO.

A military government source told a reporter last week that the ban on receipt of money from the joint committee was a natural outgrowth of the ban on contacts with the PLO. "Any contact with the joint committee is contact with the PLO," he said. Asked whether the municipalities might turn to Jordan for financial help, he said, "We haven't banned acceptance of money from Jordan."

As for the possibility that the military government might itself provide the money needed by the municipalities, the source said, "That's one of the things we are examining. We must look after the population."

A West Bank mayor requesting anonymity warned that the ban would be disastrous for the municipalities. "Services will be totally paralyzed," he said. "Some municipalities won't have money to clean streets."

Until now, the West Bank and Gaza municipal budgets have in effect been approved by Israel, the PLO, and Jordan. The itemized budget requests are initially submitted to the military government. The source of financing has been given as "Arab sources" -- the military government authorities knowing full well whom this meant. After Israeli approval, the budget requests were dispatched across the Jordan bridges to the joint committee in Amman.

In addition to banning contacts with the joint committee, the military government has warned mayors and other Arab public figures from contacting any PLO representatives during their visits abroad. They were also warned against any public statements of support for the PLO.

Ramallah Mayor Karim Khalaf was recently detained for questioning in connection with an interview in an Arab newspaper in east Jerusalem in which he expressed support for PLO leader Yasser Arafat. Khalaf was released on bail.