The new Hamas-led government is broke and missed the April 1 monthly pay date
for tens of thousands of Palestinian public workers, Prime Minister Ismail
Haniyeh said Wednesday.
It was the Islamic militants' first admission
they will have difficulty running the West Bank and Gaza without massive foreign
aid.
Haniyeh offered no solutions to the cash crunch, pledging only to do his best
to make up for tens of millions of dollars in aid being withheld by
international donors and appealing to the Arab world to send more donations.
The Palestinian Authority is the largest employer in the West Bank and Gaza
Strip, providing salaries for 140,000 people that sustain about one-third of the
Palestinians. Haniyeh said it was unclear how the government will meet its
payroll.
"The Palestinian Finance Ministry has received an entirely empty treasury in
addition to the debt of the government in general," Haniyeh told the first
meeting of his Cabinet.
"We are going to do our utmost as a government to pay the salaries of the
Palestinian Authority employees despite the cash crisis that we are facing."
Finance Minister Omar Abdel Razek said he is waiting for $80 million from
Saudi Arabia, Kuwait and the United Arab Emirates.
"If they pay, and I hope they will, we will be able to pay salaries by the
middle of the month," he told The Associated Press.
A collapse in the Palestinian Authority would devastate an economy where 44
percent of the population lives under the poverty line of about $2 a day and
nearly one-quarter of the work force is unemployed, according to the World Bank.
In a symbolic step, Haniyeh said Cabinet members would not be paid until the
financial crisis is solved.
"We are not going to receive our salaries until everyone from the Palestinian
Authority is paid," he said.
Haniyeh's Cabinet, sworn into office just a week ago, needs to find ways to
make up for foreign aid that Western donors are threatening to withhold, largely
because of the Hamas' refusal to recognize Israel and renounce violence. In the
past, Palestinians received about $1 billion a year in foreign aid.
Israel also froze the transfer of tens of millions of dollars in tax revenues
it collects on behalf of the Palestinians since shortly after Hamas' January
election victory.
The United States and Canada already announced they are severing ties with
the new government, and the European Union is to decide on its aid program next
week.
EU foreign policy chief Javier Solana told the European Parliament on
Wednesday that "talking about business as usual simply isn't possible" until
Hamas renounces violence and recognizes Israel.
Hamas leaders have rejected calls to moderate and until recently claimed they
would be able to cover any shortfall with help from Arab and Muslim countries.
However, Haniyeh conceded Wednesday that Arab pledges are insufficient, and
his ministers soon would embark on a tour of the Arab world to drum up more
support. The Arab League last week resolved to send the Palestinians about $55
million a month, but Arab nations have largely failed to honor such commitments
in the past.
Israel has welcomed Western efforts to continue humanitarian aid to the
Palestinians, as long as the money does not reach Hamas, which it considers a
terrorist group. The United States and EU also classify Hamas as terrorists.
Wednesday's Cabinet meeting was held via videoconference, with simultaneous
sessions taking place in Gaza and the West Bank because Israel does not permit
Hamas ministers to travel between the two territories through Israel. The
Palestinian legislature also meets this way.
The Cabinet voted to freeze decisions made by the more moderate
Fatah-controlled Cabinet just before it left office, including transferring some
powers to Palestinian President Mahmoud Abbas and promoting Fatah functionaries,
Palestinian officials said.
Hamas has softened its statements since taking power last week but stopped
short of meeting the international community's demands.
In the latest mixed message, Palestinian Foreign Minister Mahmoud Zahar wrote
to U.N. Secretary-General Kofi Annan on Tuesday that the new Hamas government
believes its struggle against Israel's military occupation is just, but it wants
to live side-by-side and in peace with its neighbors.
Zahar's letter also referred to Israel's "illegal colonial policies," which
he said "will ultimately diminish any hopes for the achievement of settlement
and peace based on a two-state solution."
Diplomats said the reference to a two-state solution by Hamas, which calls
for Israel's destruction, could be a sign it is moderating. However, Zahar
denied that he in any way recognized Israel's right to exist or a two-state
solution to the Israeli-Palestinian conflict.
The English translation of Zahar's letter to Annan, including the reference
to a possible two-state solution, was sent to the AP by the Palestinian Observer
Mission to the United Nations.
Haniyeh also sent mixed signals on contacts with Israel. He said Hamas has
"no problem to contact the Israelis to discuss issues related to our people's
daily lives." But he ruled out political negotiations.