PA crisis 'worse than expected'

Finance minister says he doesn't know when government salaries will be paid.

By
April 9, 2006 16:09
2 minute read.
gaza food 298.88

gaza food 298.88. (photo credit: Associated Press)

 
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Palestinian Finance Minister Omar Abdel Razek said in interviews published Sunday that the Hamas-led government's financial crisis is worse than he thought and that he did not know when he would be able to pay salaries for the government's 140,000 workers. The admission was the latest sign that international pressure on Hamas was taking a heavy toll on the government, less than two weeks after it was sworn into office. Prime Minister Ismail Haniyeh acknowledged last week that his government was broke and had missed its April 1 pay date. At the time, Abdel Razek said Hamas was in touch with Gulf Arab countries to raise money and expected to pay the salaries by April 15. But in interviews to Palestinian newspapers Sunday, Abdel Razek said he no longer expected to meet even that target. "I did not have a full picture of the magnitude of the problem," he was quoted as saying. Last week, the European Union and United States, which list Hamas as a terror group, cut off tens of millions of dollars in aid to the Palestinian Authority. Israel also has suspended about $55 million (€45 million) in monthly transfers of tax duties collected for the Palestinians, and at least one Israeli bank is in the process of severing ties with the Palestinian Authority. Palestinian officials said the Arab Bank, the largest financial institution in the Palestinian areas, had also asked the government to withdraw its money, fearing it could be sanctioned for dealing with Hamas. The Arab Bank did not return messages seeking comment. "We'll have a big crisis," said a senior Palestinian official. The official spoke on condition of anonymity out of fear of disrupting sensitive talks with local Palestinian banks, and even Israeli officials, to resolve the problem. Hamas remains hopeful it can solve its financial woes with help from Arab and Muslim countries. But the money has been slow in coming. Even if Hamas raises the cash, it is unclear how it can pay the bills without bank accounts. Israeli banks were also reviewing their ties with Palestinians. Bank Hapoalim, the country's largest bank, said last week it is ending relations with the Palestinians, and Israel's Discount Bank said it is consulting the country's central bank and may follow suit. Abdel Razek said officials were in contact with Israel's central bank over the issue. Hamas officials were not involved in the talks, and Bank of Israel officials did not return messages seeking comment. Yoram Gabbay, a former Israeli economic negotiator, said Israeli businesses would be hesitant to trade with the Palestinians because they won't know how they will be paid. The suspended tax transfers also were handled through the Israeli banks. "If there is no banking process, it could lead to chaos on the Palestinian side," he said.

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