Hamas: Palestinian Government Is Broke
The Palestinian Authority's coffers are empty and the new government is struggling to find money to pay tens of thousands of its employees, new Palestinian Prime Minister Ismail Haniyeh told his Hamas-led Cabinet at its first meeting Wednesday.
The United States, Europe and Israel are withholding aid to the Hamas-led Palestinian Authority, because the group refuses to renounce violence and recognize the Jewish state.
Meanwhile, Israel's president will ask Ehud Olmert to form a new government, an official said Wednesday, tapping him to be the next prime minister and putting him in a position to carry out his plan to withdraw from parts of the West Bank and draw Israel's final borders by 2010.
But Olmert's Kadima and the liberal Labor Party command only 47 seats in the 120-member parliament, reports CBS News correspondent Robert Berger, so Olmert will need to bring religious parties into the government that are lukewarm to the pullout. That means it will probably be a couple of years before the withdrawal plan gets into high gear.
In other developments:
"The Palestinian Finance Ministry has received an entirely 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."
A pledge of financial aid to the Palestinians, made at last week's Arab Summit, is insufficient, Haniyeh said at a news conference after the cabinet meeting.
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.
Hamas held its first Cabinet meeting via videoconference, with simultaneous sessions taking place in Gaza and the West Bank. Israel doesn't permit Hamas ministers to travel between the two territories.
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 has softened its statements since taking power last week, but stopped short of meeting the international community's demands.
Zahar's "conciliatory" letter was ambiguous, and he did not clarify if he considered Israel among the neighbors to which he referred.
The letter also referred to Israel's "illegal colonial policies" which he said "will ultimately diminish any hopes for the achievement of settlement and peace based on a two-state solution." Diplomats said that the reference to a two-state solution by Hamas, which calls for Israel's destruction, could be a sign that it is moderating.
However, Zahar denied that he in any way recognized Israel's right to exist or a two-state solution to the Israeli-Palestinian conflict in his letter to Annan, according to a statement from Zahar's office. An official in Zahar's office said there was "not even a hint" of such a statement in the letter.
As a government, 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.
A quarter of a million chickens have been culled in Gaza, and another 250,000 are due to be exterminated shortly. The exposed birds account for 20 percent of the poultry industry in Gaza.
At a joint news conference, U.N. officials warned that bird flu will have a devastating effect on Gaza's already weak economy.
Ambrogio Manenti of the World Health Organization estimated that at least 200,000 people — poultry workers and their families — will be affected by a loss in income.
"Since poultry is the primary source of protein for people in Gaza, we are also very concerned about the nutritional consequences, especially with the frequent closings of the Karni crossing," said Luigi Damiani of the U.N. Food and Agricultural Organization.
The United Nations warned in a recent report that Israel's frequent closures of the Karni cargo crossing — the main commercial crossing point between Israel and Gaza — has resulted in food shortages. Israel has frequently closed the crossing since January, saying that militants are planning attacks.
"The bird flu crisis highlights the importance of having a regular border opening," said Alvaro de Soto, the U.N. Mideast envoy.
Israeli President Moshe Katsav and Olmert will meet Thursday, the president's spokeswoman, Hagit Cohen, said Wednesday. Olmert's centrist Kadima Party won an election last week, but does not have enough power in parliament to rule alone.
Olmert said Tuesday he considers the center-left Labor Party a senior partner in any future ruling coalition, giving Olmert the momentum he needs to carry out his withdrawal plan.
However, Olmert is also reaching out to the right-wing Israel Beitenu party, which advocates drawing Israel's borders by excluding Israeli Arab communities and bringing in West Bank settlers. Olmert has said he would only sign up parties that support his West Bank plan.