As Mr. Sharon undertakes a military response to the Palestinian Arab attack on a bus at Jerusalem, the European Parliament is today considering reinstating the European Union’s aid to the Palestinian Authority. The aid was temporarily suspended, through today, after Mr. Sharon handed over a 100-page “Arafat File” with powerful proof that European funds were being misused to support terrorism. Now, however, the external affairs commissioner of the E.U., Christopher Patten of Britain, will try to allay the fears of the parliament’s foreign affairs committee so as to resume the flow of money. On the eve of this little drama, the German newspaper Die Zeit published a devastating article following up on information in the Arafat File.

Looking at where the money came from for the Karine A cargo of weapons shipped from Iran, and intended for the Gaza Strip, Die Zeit tries to track exactly how the E.U.’s money flows to and through the P.A. According to Mr. Patten, the money is well-monitored by the International Monetary Fund, which sends a monthly “declaration of no objection.” But the person who performs the monitoring for the IMF, Karim Nashashibi, lives in Jerusalem and is a Palestinian Arab who shares a last name and a clan with Yasser Arafat’s long-time finance minister. Mr. Nashashibi was also once in contention to become the P.A.’s finance minister himself. Thus it is clear that the Palestinians, under the guise of the IMF, have been left to monitor themselves. All the IMF does is make sure the money is deposited in the correct accounts. From there, everything is fungible.

Die Zeit also looks at the funding of Mr. Arafat’s terror operations. Using materials captured by Israel, the German intelligence service has studied how Mr. Arafat skims money out of the E.U. payments, determining that he receives funds from the E.U. in dollars, for the salaries of teachers, doctors, and police (though many in this last group double as members of his de facto armies), and converts them to shekels at a discount of 25%. He also takes a 3.7% tax withheld from the salaries of civil servants. German intelligence, known as the BND, knows this, according to Dei Zeit, because it has been training and equipping Mr. Arafat’s intelligence service since the 1993 Oslo accords, though the BND is now realizing that its work has been turned against its initial purpose of fighting terrorism.

“Europe’s politicians,” says Die Zeit, “have overlooked every indication of the misuse of funds.” And it notes that back in 1994, the Europeans were in good company. The Americans and the Israelis did the same thing, it says. “They ignored Arafat’s shadow budgets with the hope that in the end they would buy peace.” Once Mr. Arafat launched his terror attacks, Israel sounded the alarm. “But Europe wasn’t listening.” Die Zeit says that Europe is “proud of its policy of equidistance between the Israelis and the Palestinians.” But, it says, while they criticize Prime Minister Sharon’s occupation policy and the settlements and his reluctance for peace, “they ignore Arafat’s turnaround.” The outcome, Die Zeit says, is “the refusal to supply spare parts for Israeli tanks, and at the same time the months-long refusal to reconsider Arafat’s budgetary support.” All in all, it’s going to be a spectacle to see how Mr. Patten seeks to dodge the questions today.