Palestinian PM: ”Treasury is empty”

Palestinian Prime Minister Ismail Haniyeh told the first full meeting of his Hamas-led government Wednesday that the Palestinian Authority's treasury was empty.

"The Ministry of Finance has inherited an entirely empty treasury in addition to the debts of the ministry and the government in general," Haniyeh said.

He said the government would do its best to pay salaries to the Authority's 140,000 employees despite a cash crunch caused in large part by cuts in tax revenues transferred by Israel since Hamas won elections in January.

Speaking from Gaza by video-link with ministers in the West Bank city of Ramallah because of Israeli travel curbs on senior Hamas officials, Haniyeh said government employees might get their salaries before ministers in the cabinet.

Later on Wednesday he added that the entire PA cabinet will forgo their salaries until the financial crisis is resolved.

The PA employees' March salaries were supposed to be paid earlier this week.

The deputy Palestinian prime minister, Nasser Eddin Shaer, said earlier Wednesday that new government has prepared an emergency plan for its first three months of rule, and would discuss it at Wednesday's cabinet meeting.

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The Palestinian prime minister has told the first meeting of his Hamas-led cabinet that the government is facing a deep financial crisis.

Ismail Haniya says his administration inherited a finance ministry that had no money left, yet had mounting debts.

He said the new leadership would do its best to pay the wages of more than 100,0000 Palestinian Authority workers.

Aid donors have threatened to cut funds to the PA if Hamas does not change its doctrine of non-recognition of Israel.

"We are making every effort to pay the government employees despite the financial crisis," Mr Haniya said.

"We inherited a situation in which we not only have no money in the treasury but a whole load of debts."

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The Hamas-led Palestinian Authority, already facing a tightening diplomatic and economic squeeze, is having to decide whether to confirm the recruitment of 18,000 security service personnel enacted in the three months before it took office.

The outgoing Fatah Minister of the Interior, Nasser Yusef, bequeathed the new Hamas administration a volatile new problem by approving a 25 per cent manpower increase in the much-criticised security services between January and March of this year.

Jihad al-Wazir, the PA's previous acting finance minister, refused to pay the newly recruited personnel. But General Yusef's approval leaves the Hamas administration with a choice between adding to the PA's already soaring deficit or a confrontation with the new recruits, many of whom are thought to be members of Fatah-linked armed groups.

The dilemma is one of a series of fresh problems which includes a likely decision by the Israeli Bank Hapoalim to sever its account links with the Arab Bank and other banks serving Palestinian businesses in the West Bank and Gaza over the next three months.

Hapoalim's move in the wake of Hamas's election victory ­ which is believed to have been recommended by the bank's US lawyers ­ threatens to halt trade between Palestinian businesses with Israeli suppliers.

The Palestinian Prime Minister, Ismail Haniyeh, told the first full meeting yesterday of his Hamas-led cabinet from Gaza City by video link that the new Ministry of Finance had "inherited an entirely empty treasury in addition to the debts of the ministry and the government in general".

Mr Haniyeh added that cabinet members would not be paid until the financial crisis had been resolved and pledged that the PA would do its best to pay salaries of the 140,000 civil servants, despite Israel withholding $60m (£35m) a month in duties owed to the PA.

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http://news.independent.co.uk/world/middle_east/article356023.ece