Despite promises of crisis alleviation, the economic situation of thousands of Palestinians remains perilously critical, Erica Silverman reports from Gaza Hassan approached an automated teller machine (ATM) in Gaza City Monday to withdraw cash for the first time in nearly four months. The 25-year-old police officer found 750 NIS in his Palestine Bank account, out of his 1,500 NIS monthly salary. As Palestinians do not have their own currency, they are obliged to use the Israeli Shekel. Hence, if Israeli banks refuse to deal with Palestinian banks there's an immediate and real crisis. "It is not enough to cover my expenses. I have a huge sum of loans to pay, plus what I need for my everyday expenses for my family. I have a wife and two little kids," said Hassan. Although he does not hold the Hamas-led government responsible for the financial crisis, stating, "people should try to support Hamas. Don't forget, the international community isolated Hamas long before they were elected," Hassan is one of hundreds of thousands of Palestinians feeling the pressure. The leading Palestinian bank, the Bank of Palestine, announced Palestinian Authority (PA) employees who hold accounts at its branches and earned 1,500 NIS a month ($325) or less could start withdrawing their money from ATMs on Sunday, asserting that the PA Ministry of Finance had made a deposit to cover payment of one month's salary to about 10,000 employees. PA employees -- over a quarter of the population -- have gone unpaid since February. Rafah El-Helou, an Interior Ministry employee who received a payment from Palestine Bank said, "I will be broke again before the end of the week, I will have to take more loans and will be in a worse situation next month." Twenty banks in the West Bank and Gaza announced Monday they would provide interest-free loans covering a month's salary to the remaining 30,000 PA employees within the low- income wage bracket, using their own funds to alleviate the economic crisis. "We are ready to lose millions of dollars but not to risk our relationship with US banks and risk international sanctions," a banking official said about the arrangement, which avoids dealing directly with the Hamas-led government. One bank declined to take part in the offer. Participating banks decided to offer loans since accepting PA transfers could instigate international sanctions, while unpaid salaries could make their branches likely targets for militant violence in Gaza. On Sunday, four armed Palestinian factions linked to Hamas and Fatah issued a threatening statement to local banks, asserting it is their national duty to help pay the salaries. Thousands of Palestinian security officers, mostly loyal to Fatah, marched through the streets of Gaza City Thursday, firing automatic weapons and smashing windows of the parliament building, protesting against unpaid wages. On Saturday, Finance Minister Omar Abdel-Razeq announced the government would pay the salaries of 40,000 PA employees within the low-income wage bracket by Monday, speaking at a press conference in Ramallah. The wages are estimated to amount to $13 million and include monthly stipends issued to families of prisoners in Israeli jails and martyrs, along with other social hardship cases. Minister Abdel-Razeq said Arab Bank customers would collect their salaries from local post offices, stating: "The Arab Bank is facing a lawsuit in the US, and we appreciate the sensitivity of this issue." He gave no indication as to when the remaining 130,000 employees would be paid. Minster Abdel-Razeq said the government had collected enough money through local taxes to pay the limited salaries. "The majority of funds came from personal donations of people in support of the government," Hamas member and Legislative Council Speaker Abdul-Aziz Duwaik, told Al-Ahram Weekly. Local, regional and international banks, fearful of facing US anti-terrorism sanctions and lawsuits filed in US courts, have refused to deal with the PA, creating a liquidity crisis and leading the Arab Bank to close the PA's "single treasury account". Hence, the PA has been unable to receive funds from abroad and emergency assistance from the Arab League amounting to $70 million. After Minister Abdel-Razeq's announcement, several banks reported that Finance Ministry funds were never deposited into their accounts. The Palestinian Banking Association published an advertisement in local papers on Monday stating the banks had not received funds from the government. The same day crowds of angry PA employees burst into the three Arab Bank branches in Gaza, demanding their salaries that were not available at local post offices as promised. Police came to rescue bank officials and the branches were closed. A Gaza City police officer that holds an Arab Bank account and remains unpaid said, "Arab Bank has signed an agreement with the Americans, and will have to pay a penalty if they pay wages to the Hamas government." The image of betrayal surrounds the Bank, particularly in Gaza. Jordanian banks will close branches in the Palestinian territories if attacked by Hamas members there or inside Jordan, warned a Jordanian government spokesperson Monday. Bank Hapoalim and the Israeli Discount Bank announced several weeks ago they intend to sever all ties with Palestinian banks, fearing they may also be liable to US sanctions. Palestinian banks depend on Israeli banks for check clearances, letters of credit, and other commerce-related services. Severing ties could isolate Palestinian banks from the outside world, while more than 80 per cent of Palestinian commerce is conducted with Israel. Shifting Palestinian transactions to the Jordanian Dinar is one possible solution, although Jordanian banks may be just as leery. The US and the European Union instituted a policy of political and economic isolation after the Hamas-led government rejected the Quartet's principles of eschewing armed struggle, recognising Israel and respecting all previous agreements reached between parties to Israeli-Palestinian conflict. As punishment for Hamas's electoral victory, Israel decided to withhold $54 million in monthly tax revenue owed to the PA, which barely covers the salaries of nearly 160,000 PA employees, in violation of the Paris Protocol signed in 1994 in conjunction with the Oslo Accords. The US State Department has taken a firm position against the payment of PA salaries. The European Union is still crafting an aid mechanism proposed by the Quartet (the EU, the United States, the United Nations and Russia) to stem the ensuing humanitarian crisis. The "mechanism" will bypass the PA, channelling funds directly through President Mahmoud Abbas. The UN and certain NGOs increased their appeal for humanitarian assistance to Palestinians from $215 million to $385 million, aimed at helping children who make up half the population. UNRWA Commissioner-General Karen Abu Zayd reported that, "over 100,000 refugees are waiting in line to get short-term jobs in Gaza." Meanwhile the healthcare system in Gaza has deteriorated rapidly. Jumaa Al-Saqqa, public relations director of the PA- operated Shifa Hospital in Gaza, reported the hospital still faces a shortage of essential drugs, such as anaesthesias. "Only emergency surgery is being performed due to a lack of medical supplies," he stated, and for cancer patients, chemotherapy is no longer an option. Shifa, the largest hospital in Gaza City treats over 2,000 patients per day. On Sunday, Duwaik returned to his Ramallah office exasperated. President Abbas had snubbed another plea to continue the National Dialogue in Gaza. Prime Minister Haniyeh and other factional leadership (from Hamas and Jihad) are denied access to the West Bank, explained speaker Duwaik. Should Gazans participate in a referendum on the way forward, and particularly the future of Hamas? Speaker Duwaik replied: "You shouldn't starve people and then ask them to decide. You should first improve their situation so that you will guarantee the free will of the vote."
