Most of the nearly £2bn in aid that the EU has given the Palestinian Authority over the past five years has been squandered through corruption and mismanagement.
The figures appeared in a preliminary report prepared by European Court of Auditors and leaked to the Sunday Times.
According to the report, Europe gave the Palestinians £1.95 billion between 2008 and 2012 in economic aid for the West Bank and Gaza and to support the Palestinian Authority’s institutions.
The auditors found that much of the money had been misplaced through “corruption or funds not being used for their intended purpose”. The auditors said that as much as 80 per cent of the money, much of which was transferred to the Hamas-controlled government in Gaza, was untraceable.
The report emphasised that the EU has no control over the money once it is transferred to the Palestinians.
High-level corruption has been an endemic problem for the PA since its inception. Former president Yasser Arafat and his entourage were accused of amassing huge sums from funds meant for the Palestinian people and in more recent years there have been similar accusations levelled at President Mahmoud Abbas.
Last Friday, Mr Abbas blamed Israel and the occupation for the financial crisis in the PA and said that civil servants and security personnel would not be paid next month if additional international aid is not forthcoming.