Int'l donors: No payday for PA

World Bank study shows PA could go bankrupt if it doesn't curb salary spending.

By HILARY LEILA KRIEGER
PA flag 298.88 (photo credit: )
PA flag 298.88
(photo credit: )
The Palestinian Authority was denied extra funds at Wednesday's donor conference in London because it failed to adhere to spending limitations, according to Israeli and international sources at the meeting. The PA had hoped to use the meeting of international goverments, called the Ad-Hoc Liason Committee, to secure additional money, but the donors expressed concern that the Palestinians had exceeded their budget on payroll and weren't inclined to provide more funds. The request was outside the scope of the gathering, which was not a formal pledging conference but was intended to establish a policy position for the spring when pledges will be made. A World Bank study released ahead of the conference reported that the PA could go bankrupt if it didn't curb its salary spending. The PA has been running a monthly deficit of $57.1 million, accumulating a total deficit of $542 million through September, according to the report. The document produced at the conclusion of the meeting cited, among other concerns, that "The PA has not managed to maintain budget discipline, and the situation has become untenable." The summation also stated that "neither party has done enough to establish a solid platform for Palestinian economic revival," and criticized Israel for not allowing sufficient Palestinian free movement. Of particular concern among the international representatives gathered, including the US, EU, UN, Russia, Japan, Egypt, Jordan, and Tunisia, was Israel's refusal to run bus convoys between the Gaza Strip and West Bank as agreed in an American-brokered deal. On Wednesday, however, the Defense Ministry said a plan would be presented Thursday, the day the convoys were supposed to begin, outlining a pilot convoy to start in the coming days. The move changes the policy imposed by Israel in the wake of last week's suicide bombing in Netanya. Israeli officials denied Wednesday that international pressure had contributed to the reversal. An aide to Defense Minister Shaul Mofaz instead pointed to improvements in transferring information from the Rafah border to Israeli monitors, a key point of contention since the Palestinians assumed control of the Egypt crossing point. However, members of the international community expressed concerns about Israel not fulfilling its obligation regarding the convoys ahead of the donor conference, because donors might feel wary about soaking more funds into an already precarious investment prospect. At the London conference, an aide quoted US Assistant Secretary of State David Welch as saying, "We fully expect Israel and the Palestinians to implement all aspects of the movement agreement on schedule and we will help them to do so." The official statement provided by the conference, however, did include a paragraph praising Israel for the "historic milestone" of its withdrawal from Gaza and parts of the West Bank. It continued, "Ariel Sharon and his government should be congratulated for their political courage, and the Israeli armed forces and police for the smooth and professional execution of the operation." It also lauded the Palestinians for "helping to maintain a peaceful environment during the evacuation." Shuli Davidovich, spokeswoman of Israel's embassy in London, welcomed the declaration and its compliments to Israel. "This is something you don't see on a daily basis in the international arena. I think this is an extremely important achievement." Representatives of the PA team in London couldn't be reached for comment, though one observer at the conference described them as "disappointed." Saida Hamad, communications officer for the World Bank's Gaza and West Bank office, stressed that the purpose of the gathering had not been to provide specific funds to the Palestinians but to lay the groundwork for the spring meeting. "There were not pledges for the Palestinian Authority. It was a policy-forming meeting more than a pledging meeting," she said, "though the Palestinian Authority asked for addition [money] so they can really get over their budget crisis." She added that, at the London meeting, it was decided that the pledge conference would be postponed from March to May because of the upcoming Palestinian elections in January. Tovah Lazaroff and the Associated Press contributed to this report.