International aid freezes threaten to strangle the democratically elected Hamas-led government, Khaled Amayreh and Erica Silverman report from the West Bank and Gaza Young engineer Nassar Odwa from the Ministry of Local Government waits patiently for hours to meet Abdul-Aziz Duwaik, the new Hamas parliament speaker. Odwa, in charge of urban planning projects that Norway abruptly cancelled after the Hamas-led government took power, wants to hear the alternatives for desperately needed infrastructure projects that would, for one, ameliorate the raw sewage problem reeking through Gaza. And he's not the only one in search of answers. Indeed, tension is mounting in the Gaza Strip as Palestinians are preparing for an economic freeze after the Untied States and European Union slashed their assistance to the new Palestinian government, stocking up on food supplies and fuel in anticipation of stalled paychecks coupled with commercial borders closures by Israel. Meanwhile, sustained Israeli air raids and artillery bombardments took 15 Palestinian lives and injured dozens just over last weekend. On Friday US Secretary of State Condoleezza Rice announced: "Because the new Hamas-led Palestinian government has failed to accept the Quartet principles of non- violence, recognition of Israel and respect for previous agreements between the parties, the US is suspending assistance to the Palestinian government's cabinet and ministries." The EU followed suit on Monday suspending direct aid to the PA, including crucial budgetary funding used for infrastructure projects and to cover the salaries of over 150,000 PA employees, affecting nearly a third of the population. EU External Relations Commissioner Benita Ferrero-Waldner said Europe will continue to provide funds so that "basic human needs will be met". The EU aid will remain frozen for at least a month. Several EU nations, including Britain, Denmark and the Netherlands have already frozen their aid to the new government and more may follow. Aid from the EU and its 25 member nations averages $615 million per year, about half of which has been suspended. The EU decision to freeze payments affects an immediate instalment of $36.5 million, compounding an already dire financial situation for the Palestinian government. Canada, Norway and other non-EU member nations have also cancelled funding. Hamas has condemned the suspension of American and European assistance. "We are being punished. Is this democracy?" Duwaik told Al-Ahram Weekly. "The results of the 25 January elections showed the world that we are not convinced with this whole process. We would like to change the rules of the game so that our national rights are recognised, our well being is recognised and our basic human rights are recognised. If we give Israel recognition, they will give us a piece a paper, just put it in water and swallow it," he said. Meanwhile the US will increase its basic humanitarian assistance to Palestinians by 57 per cent, bringing it to a total of $245 million. Some $65 million will be reserved for emergency food programmes, mostly distributed by the United Nations World Food Programme, $31 million for health programmes, $14 million for education programmes, and $135 million for the UN Relief and Works Agency (UNRWA). More controversially, $42 million are being allocated to so-called democracy building expansion. Palestinians have largely interpreted this as an effort by the US to create an opposition to Hamas. Assistance will be administered through non-Palestinian Authority entities, including local and international non-governmental organisations. $45 million in direct assistance to the PA has been cancelled, along with the suspension of $359 million worth of other programmes. US Consul-General in Jerusalem Jack Wallace told Palestinian journalists at his residence: "We will not have any contact with the PA or any of its ministries. However we will continue to work closely with President Mahmoud Abbas." Assistant Secretary of State David Welch said the decision of whether to channel fund to Abbas directly or not will be made in the future. Responding to queries as to why the US has made no effort to meet Hamas to find out their intentions, he replied: "You are right. We have had no contact with them, and that is part of the policy we established. It also reflects American law." Hamas, for its part, remains amenable to negations with the US. The annual Palestinian budget is approximately $1.9 billion. Palestinians received $1.3 billion in foreign aid last year, accounting for 32 per cent of the Palestinian GDP, making Palestinians the largest per capita recipients of foreign aid in the world. And nominally at least, Abbas has rejected the American and European decisions to suspend financial assistance. "Any punishment of the Palestinian people for its democratic choice is refused by us," he said after meeting Prime Minister Ismail Haniyeh. Palestinians, and in particular Gazans, were shocked by the EU and US decision. Angry crowds in Gaza hurled eggs at UN offices in protest after the EU's announcement on Monday. "We were hoping that the Europeans would denounce Israeli atrocities against our people. Unfortunately, they have linked aid to the needy and refugees to political considerations," stated government spokesperson Ghazi Hamad. Israel has decided to withhold $54 million in tax revenue to the PA that barely covers the PA employee monthly salaries, in violation of the Paris Protocol signed in 1994 in conjunction with the Oslo Agreement, as punishment for Hamas's electoral victory. Meeting with the US consul- general on Monday Abbas asserted that Israel's decision to prohibit contact with the PA and to withhold Palestinian tax revenue violates all agreements signed with the Palestinians under international law. On Sunday the Israeli Security Cabinet rejected the idea of using Abbas to bypass the Hamas government, further cementing acting Prime Minister Ehud Olmert's plans to impose borders in the West Bank by 2010. Israeli government spokesman Asaf Shariv said relations with Abbas would be limited, and peace talks were out of the question. The recommendations are to be approved by the full Cabinet this Sunday. Meanwhile Israel continues to violate the recent Agreement on Movement and Access between the PA and Israel, brokered by Rice and Quartet envoy James Wolfensohn on 15 November, which stipulates that the "passages will operate continuously." Karni, the only commercial crossing for import and export of goods to and from Gaza, has been closed 60 per cent of the time this year. Gaza residents are facing a sharp humanitarian crisis as supplies of essential food products and medicines have dwindled. "Israel has not even bothered to implement international agreements," said Duwaik. "I call on Israel to take steps to show the Palestinians that it intends to respect Palestinian national rights and to respect international legitimacy, and to put an end to its ugly occupation." With the United States, Israel and the European Union apparently hell-bent on aborting the first genuine Palestinian democratic experiment, and with Arab states reluctant to pay their promised financial contributions on time, the two-week- old Hamas-led government is already facing the prospect of early paralysis and collapse. Indeed, with empty coffers inherited from the previous Fatah-dominated and corruption- ridden administration, the new government is struggling to find the badly-needed resources to pay at least 150,000 state employees and civil servants their salaries for the month of March, many of who have large families to feed and cater for. Indeed it appears that the government's success or failure to meet pay-day will be the benchmark by which its survival will be determined. One Palestinian political scientist has predicted that the government will "most certainly collapse" if it fails to pay its civil servants for three consecutive months. So far, efforts to secure the money have failed as promised Arab aid has not been forthcoming while the US, EU and Israel continue to relentlessly tighten their noose, in the hope that the government will fall sooner rather than later. Israel and the US hope that such a collapse of the government -- which they refer to as Hamas-led but never as Palestinian -- will lead a large segment of Palestinians, including many of those who voted for Hamas in the landmark 25 January elections, to reconsider their convictions. However, the realisation of this goal would be far from certain given the Palestinian people's animosity towards Israel and its guardian- ally. Nonetheless, it is conspicuously clear that continuously narrowing horizons are facing the government, placing it on disaster-management footage. Indeed, the acute predicament is likely to exacerbate further in the coming days and weeks as the US has warned banks operating in the West Bank and Gaza Strip against dealing with the government lest they be the target of American sanctions, since Hamas is viewed by Washington as a "terrorist" organisation for its history resisting the Israeli military occupation. This week, the Jordan-based Arab Bank succumbed to pressure and decided to freeze all Palestinian government accounts. Other banks are expected to follow suit, proving the age-old adage that capitalists are cowards. Needless to say, the closure of Palestinian government bank accounts would make it next to impossible for the government to receive financial aid from abroad, even if such aid were available -- hence, the dire predicament. It also goes without saying that the present situation can't be sustained for long and that Hamas will have to do something about it fast. For if it fails to respond, there is a real possibility that the Palestinian Authority leadership, headed by President Mahmoud Abbas, will take matters into its own hands. However, it is also unlikely that Hamas will allow its enemies and opponents to rob it in broad daylight of its massive electoral victory, which it deservedly swept only a few weeks ago, without resistance. In fact, Hamas leaders have already warned that the collapse of the government would bring with it the disintegration of the PA itself, with all the prospective repercussions and ramifications, both inside Palestine and in the region at large. Ali Al-Jerbawi, political science professor at Bir Zeit University and former chairman of the Palestinian Elections Committee, predicted that if Palestinians are pushed to an even tighter spot than that which they are in, the whole region may well suffer the consequences. "We know quite well that bombings are the byproducts of despair," he added. Meanwhile, Hamas leaders are hoping that the international community, especially the EU, will reconsider decisions to sever financial aid to the Palestinians. Foreign Minister Mahmoud Al-Zahhar appealed to the EU to enter into a dialogue with the Palestinian government instead of acting in concert with Israel against "a helpless people suffering the daily crimes of a Nazi-like military occupation, as well as starvation and blockade." He added: "I can't understand why the Europeans are punishing us so callously without even talking with us. Is this how problems between peoples and nations resolved?" But for now Europe appears unlikely to pay much attention to Al-Zahhar's lamentations. Hamas leaders seem to have failed to recognise that moralism has little, if any, impact on American and European political decision-making. The time of reckoning for Hamas is fast approaching and the movement will have to face one of the following scenarios. First, they could opt for the dissolution of the present government and the formation of a new one composed of professionals and independents who are not affiliated with any political or resistance factions. This may well be the safest track for Hamas to take since the movement would still be able to control the Palestinian Legislative Council (PLC). Second, the all-out collapse of the PA on the ground that the world is not willing to accept the outcome of democracy in Palestine, and that Palestinians refuse to act as pliant quislings for the Israeli occupation and its American supporters, guarantors and bankrollers. Israel and the US dread this prospect since they are interested in seeing a weak, but not dead, PA, headed by weak leaders whose very political survival depends more on Israeli-American acceptance and less on the Palestinian people's support. Third, there is a strong likelihood that Abbas will himself seek to dissolve the government and parliament and declare a state of emergency on the grounds that the Palestinians are facing a national crisis which requires the adoption of exceptional measures to safeguard paramount national interests. Such a prospect would be viewed by Hamas and many Palestinians as a de facto coup. However, it is likely that Abbas will wait until the overall situation has deteriorated so badly that the Palestinian masses would welcome any step or measure, however stringent, to restore a semblance of normality. But declaring a state of emergency would by no means magically resolve the Palestinians' problems. Indeed, in the absence of any modicum of sovereignty and authority, such a step would be little more than an exercise in futility that would only worsen collective frustration, and might again lead to the ultimate disintegration of the PA. One of the gravest blunders Hamas has made, which is about to cost the movement a real embarrassment, to say the least, is the inherently false assumption that a government can function properly under such an intensely oppressive military occupation. Indeed, experience garnered over the past two weeks has convinced many Palestinians that a government functioning under the Israeli occupation has to choose between becoming either a quisling entity or putting itself on a collision course with the occupying power and its supporters -- in this case the US and EU.
