Palestinians mourn fall of their hero Saddam after flow of dollars for 'martyrs' dries up

With the fall of Saddam Hussein's regime in Iraq, the flow of millions of dollars that the Iraqi leader sent to support the Palestinian intifada has abruptly ended.

The man who used to distribute Saddam's money, Ibrahim Za'anin, lives in Beit Hanoun, in the Gaza Strip near the border with Israel. You would not think from his humble bungalow that $12.5m (£7.7m) passed through his hands. But appearances can be deceptive in the Gaza Strip.

In the hot sun, Beit Hanoun is a sleepy place but at night there are regular gun battles between Israeli soldiers and Palestinian militants, and residents have taken to sleeping outside the town at night to avoid the violence.

The $12.5m is just Saddam's donations to the Gaza Strip since the intifada broke out in September 2000. Mr Za'anin said he thought as much again had been sent to Palestinians in the West Bank.

Saddam set aside about 20 per cent of Iraqi revenue under the oil-for-food programme for the Palestinians, according to Mr Za'anin. Contrary to the claims of the US and the Israelis, not all the money was sent to support suicide bombing.

Although a considerable proportion did go to the families of Palestinian suicide bombers, millions were also sent to the families of innocent Palestinian civilians killed in Israeli military operations – something that happens almost daily in the occupied territories.

It is not clear whether Saddam also sent money to the Palestinian militant groups which carry out suicide bombings. If he did, Mr Za'anin did not handle that money.

"The last time we distributed the money was on 21 March," said Mr Za'anin. The Iraqi regime placed the money in a bank account controlled by Mr Za'anin and he personally distributed it. That account is empty now.

He said: "No more money is coming from Iraq. The situation there is very difficult, the money came from Saddam Hussein and the Iraqi Baath party. Now the US wants to help Israel to end the intifada."

The money was distributed by the Arab Liberation Front (ALF), a pro-Iraqi Palestinian Baathist group, which has not been involved in carrying out any suicide bombings or other militant attacks. Mr Za'anin is the representative in Gaza.

He explained a simple tariff used by the Iraqis. The family of a suicide bomber would get $25,000. The family of a "martyr" – that is any Palestinian killed in the fighting, whether they were armed militants or innocent civilians – got $10,000. Saddam also sent money to Palestinians whose houses were demolished by the Israeli army; the amount was calculated based on the value of the house.

Many observers condemned Saddam for sending money to the Palestinians while Iraqis starved. Not Mr Za'anin. "Saddam Hussein felt he had a responsibility to help the Palestinians," he said. "That is exactly why the Americans acted against Iraq and Saddam.

"Saddam's support was also moral support: the message was 'You are not alone in fighting'. Now the Palestinian people will continue fighting without Iraq's money."

Mr Za'anin also explained how Palestinians were selected to receive Saddam's money. He drew up a list of candidates that was then vetted by the ALF and representatives of Fatah, the dominant Palestinian faction, led by Yasser Arafat.

The whole operation, from drawing up the list to distributing the money, was mirrored in West Bank cities by Mr Za'anin's ALF colleagues.

Getting the money to the ALF bank accounts past the tight sanctions against Saddam's Iraq was difficult. Sometimes Jordanian banks broke the sanctions and transferred the money from Iraq. On other occasions, private businessmen based in Western countries visited Iraq and picked up the money, depositing it in a bank outside the country to be then transferred to the Palestinian accounts.

The ALF also relied on those visiting Iraq to communicate with Saddam's regime, Mr Za'anin said. The telephones in Gaza are connected to the Israeli exchange. They could be easily monitored and it was not always possible to get a connection.

Like many Palestinians, Saddam drew no distinction between the innocent Palestinian victims killed in Israeli military operations and the suicide bombers: all were "martyrs" for the Palestinian cause. That left a moral question mark over the recipients of Saddam's money. US soldiers in Baghdad condemned the ALF for distributing money to Palestinian "terrorists".

But few people could be less deserving of the description "terrorists" than the Matar family in Gaza City, who received $70,000 from Saddam's regime. Their house lies in the packed warren of civilian houses where, last July, the Israeli military dropped a one-ton bomb at night. The target of the bomb – a Hamas leader – was killed. So were nine Palestinian children. The Israeli Prime Minister, Ariel Sharon, described the bombing as a "success".

Five of those children were members of the Matar family. The youngest, Rami, was two months old. Two women from the family died too, one of them aged 70. Their home was completely destroyed. The head of the family, Mohammed Matar, is still grieving, though the bombing was almost a year ago. It was his grandchildren who were killed.

At first, when asked about Saddam's money, all he could say was: "Saddam Hussein is gone." There was a note of despair in his voice and he sat staring at the ground.

To these people, the deposed dictator was a hero. In their hour of greatest need, it was Saddam who helped them. "Of course I'm not happy about what happened to Saddam Hussein in Iraq," he said. "He did something good for us."

His daughter Maher, 22, added: "He was a friend to the Palestinians and to all the Arabs. If a Palestinian family lose their house now there will be no money. The Palestinian Authority cannot pay."

The Matar family house was rebuilt with international donations, but to furnish it and replace their possessions, they used Saddam's money. They also lived off the money while the house was rebuilt, using it to pay rent in temporary accommodation.

But some of Saddam's money also went to the families of suicide bombers. Some also went to the families of militants like Abdul Karim Shabaat. The group Shabaat belonged to, Hamas, has killed scores of innocent Israelis in suicide bombings, although Shabaat himself did not kill any civilians. He died in an attack on members of the Israeli Border Police, a military-style unit, at the Gaza Strip border.

His family received $10,000 from the Iraqi regime. They were among the last recipients: they were paid in the hand-out on 21 March.

Now Shabaat's father, an officer in the Palestinian security forces, dedicates much of his time to maintaining the memory of his son in a house a few blocks from Mr Za'anin's bungalow in Beit Hanoun. The living room is decorated with murals of the dead 18-year-old, an assault rifle cradled in his arms, backed with aluminum foil and fairy lights.

Mr Shabaat is also making a video of his son, with excerpts from his funeral. In the depressed Gaza Strip, with its economy all but destroyed and with the repeated Israeli army incursions, there is little to do with your free time but dwell on the memory of the dead.

"What happened to Saddam is a tragedy for the Palestinian people and for the Arab nation," said Mr Shabaat.

"Saddam was a good Arab leader because he was supporting the Palestinians. You could see the Iraqis on the television hitting his face with a shoe. That is not a good thing." He shook his head.

But one thing is clear. The millions have stopped coming now, and, after the Shabaats, there will be no more recipients of Saddam's money.