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US, EU threaten cut-off of funds to Palestine

US, EU threaten cut-off of funds to Palestinian Authority following Hamas victory

By Chris Marsden – World Socialist Web Site
30 January 2006

The election of Hamas has been met with threats by the United States, Europe and Israel to cut off funds to the Palestinian Authority (PA).

The US, the United Nations, the European Union (EU) and Russia—which make up the quartet backing President Bush’s so-called “Road Map to Peace in the Middle East”—issued a statement calling on Hamas to renounce violence and accept Israel’s right to exist. The Arab League has also insisted that Hamas recognise Israel.

Israeli interim Prime Minister Ehud Olmert, in power following Ariel Sharon’s stroke until the March elections, said there would be no talks with “an armed terror organisation that calls for Israel’s destruction,” while Foreign Minister Tsipi Livni called on the European Union to oppose the creation of a “terrorist government.” She was asking specifically for the EU to end funding to the Palestinian Authority.

The US has already stated that funding to the PA will now be reviewed. Most US aid—$300 million last year—goes through NGOs. European aid to Palestinian institutions totalled around $330 million last year, but this does not include figures at least twice as high donated by individual governments.

James Wolfensohn, the former head of the World Bank and the quartet’s special envoy, has warned that cutting off aid would push the Palestinian territories into chaos. “The crunch time is next week,” he said, when the wages of 135,000 security personnel and civil servants are due. Mazen Sinokrot, the present Palestinian economy minister, said the PA’s 135,000 employees were the main breadwinners for 30 percent of Palestinian families: “If these salaries do not come in, this is a message for violence.”

Though immediate action has been rejected, Israel by itself could threaten the continued existence of the PA. Joseph Bachar, the director-general of Israel’s finance ministry, said the PA relies on customs and VAT tax transfers from Israel and money from Saudi Arabia, and warned that it was very difficult to see how his ministry could continue to work with a government committed to the destruction of Israel. If Israel closed all borders, this would deprive the Palestinians of their major markets and their ability to export, as well as deny incomes to many Palestinians who work in Israel. The PA depends on Israel for its electricity and water supply.
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