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Palestinian Authority hit by cash crisis

Chris McGreal

PA unable to pay salary for employees

Jerusalem: The Palestinian territories are facing a financial and political crisis as Israel and its allies bring pressure to bear on Hamas to renounce its past if it wants to translate last week's crushing election victory into acceptance as a Palestinian government.

The Palestinian Authority is unable to pay its 137,000 workers their monthly salary, in part because Israel has refused to hand over $45 million in monthly tax revenues because of the Hamas victory but also because foreign donors are withholding some aid over the issue of the PA's financial mismanagement.

After the election, Western Governments, led by the U.S., swiftly lined up behind Israel in demanding Hamas retreat from its longstanding goal of destroying the Jewish state, renounce violence and commit itself to existing agreements, including the Oslo peace accords, if it wants international recognition.

Israel was pleased about threats from Washington and the E.U. to cut most of the $1 billion a year that keeps the PA afloat. ``I think Israel is in an excellent position to generate a crisis that will bring a change in the attitude of the leaders of Hamas,'' said Gidi Grinstein, a former peace negotiator for the Israeli Government.

Hamas has fought back by repeating what it has said for several years - that it is prepared to agree a long-term ceasefire with Israel if it withdraws to the 1967 borders.

Israel stands firm

Hamas says it will let the ``next generation'' decide whether to turn that into a permanent peace agreement.

But Israel is pressing foreign Governments to remain firm.

``Why should we go into an interim agreement with a partner who says that the purpose of the agreement is to gather strength in order to destroy us?'' asked Yossi Alpher, a former adviser to Ehud Barak when he was Prime Minister.

Israel has said it will not talk to any Palestinian administration that includes ``an armed terrorist organisation''. —

© Guardian Newspapers Limited 2004

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