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Palestinian fury at Israeli refusal to unblock funds

RAMALLAH —The cash-strapped Palestinian Authority accused Israel yesterday of practising collective punishment after it snubbed US calls to unblock funds owed to the Palestinians.

Outgoing prime minister Ahmed Qorei said he was hopeful of finding alternative funding to meet the budget shortfall of around $50 million, needed to pay the wages of public sector workers, and which should have been handed over by Israel on the first of the month.

The Israeli government however has insisted that it will take its time to screen the customs duties in order that the cash does not end up in the hands of “terrorists”, a reference to the radical Islamists of Hamas who are to form the next government after their shock victory in last week’s general election.

Western powers such as the United States and European Union have warned they may curtail funding unless Hamas renounces violence and recognises Israel’s right to exist before entering government, but they have also acknowledged the need to prop up the donor dependent economy in the interim period.

The pressing need to ensure continued cash flow was highlighted in a new World Bank report which said the Palestinian Authority’s financial situation was becoming increasingly untenable as a result of ballooning public spending. The Washington-based institution said the budget deficit reached 800 million in 2005, threatening to destabilise government operations. Nearly half the deficit was financed by donors, according to the report.

“For Israel to freeze this money, is a form of collective punishment. We hope that Israel will release this money because it’s our right,” Qorei told reporters at the start of a cabinet meeting.

“We are now trying to get money from other sources -- we are in contact with Saudi Arabia, Qatar and the Gulf states. We hope we will soon get the necessary funds to pay the public workers as this money is not for factions but for the Palestinian Authority.” A State Department spokesman made clear that Washington wants Israel to unblock the funds owed to the Palestinian Authority whose moderate president Mahmud Abbas is highly regarded in the United States.

“The issue here is: How do you support President Abbas in his efforts in this interim period, which... could last anywhere from two to three months?” spokesman Sean McCormack said. “The Palestinian Authority has certain needs in terms of budget support, paying salaries.” A senior Israeli government official however maintained its refusal to hand over the cash immediately.