Saudi Arabia, Kuwait, and the United Arab Emirates have promised the Palestinian Authority a grant of $80 million. Palestinian Finance Minister Umar Abdel Razek said that the money would go to pay government employees' salaries. On Wednesday, new Palestinian Prime Minister Ismail Haniyeh told his Hamas-led Cabinet at its first meeting that the PA's coffers are empty and the new government is struggling to find money to pay tens of thousands of its employees. Furthermore, said Haniyeh, a pledge of financial aid to the Palestinians made at last week's Arab Summit is insufficient. "The Arab Summit decision regarding the funding is not sufficient to meet the demands of our people," Haniyeh told a news conference. He said his government is in touch with Arab leaders "to discuss the economic problems we are facing and to propose plans to develop our economy." At the summit, Arab nations had pledged $55 million a month in aid to the Palestinian Authority. However, Arab support in the past has rarely lived up to pledges. Haniyeh added that new ministers need to find ways to make up for tens of millions of dollars in foreign aid the international community is expected to withhold, largely because of Hamas' refusal to recognize Israel and renounce violence. In addition, Israel froze the transfer of tens of millions of dollars in tax revenues it collects on behalf of the Palestinians shortly after Hamas' January election victory. "The Palestinian Finance Ministry has received a completely empty treasury in addition to the debt of the government in general," Haniyeh was quoted by his office as telling the Cabinet at the start of its session. "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," he said. The new Hamas-led government of the Palestinian Authority held its first Cabinet meeting since taking office - two simultaneous sessions taking place in Gaza and the West Bank and hooked up by video conference. The deputy prime minister, Nasser Eddin Shaer, said Hamas has prepared an emergency plan for the first three months of rule, but declined to give details. Hamas' most immediate problem is to find enough money to pay 140,000 government employees, including teachers, health care workers and members of the security forces. The government salaries feed about one-third of the Palestinians, and in the past the money for the wages came in part from foreign aid and tax transfers Israel collected on behalf of the Palestinians. Israel has halted the transfers, and the US and Canada have announced they are severing ties with the new government. The EU was to decide next week whether to cut aid to the Palestinian Authority. Meanwhile, in a letter written to UN Secretary General Kofi Annan, Palestinian Authority Foreign Minister Mahmoud Zahar denied that he had agreed to recognize Israel's right to exist. He wrote that the Palestinians wished to live in peace and security with their neighbors, but claimed that he did not mention Israel. UN officials expressed hope that the letter represented the beginning of a Hamas compliance with international demands to recognize Israel. On the other hand, Hamas spokesman in the West Bank Khaled Suleiman stated in a BBC interview that the movement's willingness to accept a two-state solution was not new. He said that recognizing the 1967 cease-fire lines was not far from the Hamas-led PA government's vision. Still, he added, Hamas would not recognize Israel.