Make money, not war: Can a trust fund make Israel-Hamas ceasefire last?

There are many issues regarding Gaza, but they might be summarized as lack of transparency. The IDF claims it destroyed around 100 kilometers (62 miles) of underground tunnels used to plan hostile activities, store munitions and launch missiles. It is assumed that foreign aid was siphoned off, including cash, cement and missile fuel.

Such siphoning off might amount to corruption. According to Wikipedia, forms of corruption can include bribery, money laundering and misuse of government power for other purposes such as police brutality. Can it also missile brutality?

History teaches us that a financial solution may be the best way of reaching a political agreement that ends intractable issues: Make money not war. Examples include the Marshall Plan, the formation of the EU’s predecessor after World War II, the Irish Good Friday agreement and UK financial support in 1998, and even the Oslo Accords of 1993 between Israel and the Palestinian Authority. It also includes the Paris Agreement economic annex still applied today.

The White House issued a statement on May 20 saying the United States is committed to working with the United Nations and other international stakeholders to provide rapid humanitarian assistance and to marshal international support for the people of Gaza and the Gaza reconstruction efforts. The US will do this in partnership with the Palestinian Authority – not Hamas – in a manner that does not permit Hamas to simply restock its military arsenal.

How can aid be disbursed without siphoning off and corruption? The US has the Foreign Corrupt Practices act, and the UK, UN, OECD and EU have published various pronouncements on addressing corruption.

Essentially, they call for proper accounting, internal controls, internal audits, external audits and due diligence.

The EU says that individuals and groups should not advance their political aims by using terror. And the EU Treaty on the Functioning of the EU recognizes corruption as a “euro-crime.”

Nevertheless, such self-governance isn’t always effective.

The World Bank and others advocate the use of trust funds for development programs, especially in fragile states. 

What is a trust? A trust is not just a tax planning device. The Hague Convention on the Law Applicable to Trusts and on their Recognition defines a trust as: the legal relationship created by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose.

An economic development plan for Gaza would be transparently drawn up and implemented. The goals would include improving infrastructure, housing, education, healthcare and economic activity. Aid would be donated into the trust fund. The trust fund bank account might be in Israel, Wall Street or the City of London. The public should be granted read-only access to the bank statements.

Engineers and appraisers would evaluate quantities needed and the cost. Engineers and inspectors would monitor the construction/implementation process for each project like any other construction/installation project. Accountants would maintain full accounting records. Carefully selected professionals would administer it all using procurement, strict inventory control and enterprise resource management systems (ERM). Lawyers would assist with public tender documents, procurement contracts, etc. Multiple signatories would sign off on disbursements. There would be internal checks, internal audit and measures to protect against corruption or conflict of interest. The trustees would publish quarterly audited financial statements and closing valuation statements.

Donors should also have a role to play beyond putting up the cash. One possibility is securitization, which means each donor’s money would be tracked all the way to a specific project or property (like university endowment funds). If a project fails to materialize, there may be criminal sanctions at the point the audit trail goes dry.

An insurance policy might also be considered e.g. putting say 10% of cash into a pool to finance repairs following hostilities.

Last but not least, a better land registry may be needed.

The aim is prosperity and maximum transparency – physically and financially – unlike previous, less-determined attempts. Hopefully, all this would spur full peace negotiations, not just another short-lived ceasefire or armistice.