World

Bloody Infighting Among Palestinians

May 8, 2006 / 10:52 AM EDT / CBS/AP

Rival gunmen from Hamas and Fatah fought with assault rifles and missiles Monday, killing three militants in the bloodiest internal fighting since Hamas took power six weeks ago.

The confrontations began after midnight with a spate of kidnappings and peaked at daybreak when Hamas fired a shoulder-held missile into a jeep with government license plates, killing two Fatah gunmen who were also members of the security forces, reports .

They came as the World Bank warned that the Palestinian economic crisis is shaping up to be more alarming than projected, and is liable to provoke a humanitarian crisis, increased violence and the collapse of the Palestinian Authority.

Western powers and Israel have cut off hundreds of millions of dollars in aid and transfer payments to the Palestinian government to pressure the Islamic Hamas group, which rose to power in January parliamentary elections, to renounce violence and recognize Israel.

In other developments:

Israel, having stalled for three years on its promise to the U.S. to take down wildcat settlement outposts, is in the process of mapping unauthorized construction in the West Bank, according to a court document The Associated Press obtained Monday.

The Israeli army could soon be getting a new look. An Israeli military committee will recommend discarding the colored berets that soldiers have sported for close to six decades and replacing them with visored baseball caps, the Israeli daily Maariv reported Monday. Baseball hats would provide more shade from the fierce Middle Eastern sun.

Legendary American investor Warren Buffett has bought an Israel Metalworking Company for a whopping $4 billion, reports

. It is the biggest deal in Israel's history, Buffett's biggest investment outside the U.S., and set the Tel Aviv stock market soaring to a record high. Israeli officials are thrilled because after five years of bloody fighting with the Palestinians, foreign investment is back. "Buffet is not Jewish and he's not a Zionist," said Prime Minister Ehud Olmert, "but he believes in the Israeli economy."

The fighting began when Hamas militants tried to kidnap a Fatah member, and peaked when Hamas launched a shoulder-fired missile into a jeep carrying Fatah gunmen. It's part of a deepening power struggle that has raised fears of a Palestinian civil war, reports Berger.

It was the latest sign the two sides could be sliding toward large-scale clashes. Each group has been training its gunmen for possible confrontation, and Hamas recently outbid Fatah in buying a black market shipment of 100,000 bullets.

Prime Minister Ismail Haniyeh of Hamas called on both sides to pull back from the brink, saying he had asked Interior Minister Said Siyam to impose order. He did not elaborate.

"We are calling on everybody to exercise self restraint," Haniyeh told reporters in Gaza City. "I have contacted the interior minister to take all necessary security measures to spare Palestinian blood. I call on the leaders of Hamas and Fatah to take the fullest responsibility in order to cease these incidents, which have created ill feelings."

Tensions have been rising since the Islamic militant Hamas ended Fatah's four-decade control of Palestinian politics with a victory in January parliament elections.

Hamas and moderate Palestinian President Mahmoud Abbas of Fatah have been wrangling over power, particularly over control of the security forces, and the friction has been compounded by a growing financial crisis, a result of Western economic sanctions against the Hamas-led government.

Abbas and Haniyeh failed to resolve their differences in weekend meetings.

The salaries of 165,000 government employees are two months overdue, reports , and some Western diplomats have warned that starving the Palestinians will lead to a fresh outbreak of violence and terror.

The government is the biggest employer in the Palestinian territories, and the cash crunch is reverberating throughout the West Bank and Gaza.

Frustrations rose to the surface over the weekend, when hundreds of Palestinians staged strikes and demonstrations in the West Bank and Gaza to demand payment of the overdue salaries, the first public signs of discontent with Hamas' handling of the international financial squeeze.

While the unrest wasn't widespread, it marked a turning point. The Palestinian public has largely backed Hamas' contention that the crisis is the result of Western hostility and previously heeded calls to remain patient.

Additionally, banks in the West Bank and Gaza Strip, afraid of running afoul of U.S. anti-terror laws, have stopped dealing with the Palestinian government, hindering its ability to receive money from Arab states.

In March, the World Bank had predicted that by the end of 2006, average personal income would sink by 30 percent, unemployment would jump from a pre-election level of 23 percent to about 40 percent, and the proportion of people living in poverty would climb from 44 percent in 2005 to 67 percent.

In a report released ahead of a meeting of Mideast negotiators and major donors on Tuesday, the bank concluded that "these projections now appear too rosy." Revised projections will be issued next month, it said.

Donor assistance has dropped more sharply than anticipated, and Israeli restrictions on the movement of Palestinian people and goods have been tightened, the World Bank said. Further pressure has come from banks that have withheld services to the Palestinian government, including The Arab Bank, which has informed the Palestinian Authority that it will no longer host its Central Treasury Account, the report said.

In light of evolving developments, 2006 is shaping up to be "the worst year in the West Bank and Gaza's dismal recent economic history," it added.

The interrupted cash flows have implications for the economy, security and governance, the World Bank said.