The EU steps in to save Abbas, but Hamas is still out in the cold, writes Erica Silverman The Palestinian Authority (PA) breathed a sigh of relief Monday after the European Commission -- the European Union's executive body -- offered $143 million in aid to sustain the Palestinian government until power is transferred to a Hamas-led coalition next month. International envoy to the region James Wolfensohn said the PA might face financial collapse within two weeks now that Israel has cut off tax transfers (accounting for well over a third of the monthly PA budget), despite the EU emergency aid package. The PA deficit is $100 million this month and could be as high as $70 million next month, he admonished. The EU assistance provides 20 million euros in direct assistance to the PA budget to pay salaries, 64 million euros through UN agencies to the poorest in the Palestinian territories, mostly refugees, and 40 million euros for Palestinian energy bills -- enough to sustain the PA for about two months. The EU, US, United Nations, and Russia -- known as the Quartet -- pledged 30 January to support President Mahmoud Abbas in the interim while the new PA government is formed, while dictating four conditions to Hamas in order for assistance to continue: disarming, recognising Israel, renouncing "terror," and amending the organisation's charter. After Hamas's victory in the 25 January Palestinian Legislative Council (PLC) elections, Israel decided to punish the Palestinian electorate by refusing to turn over $54 million in customs and tax revenues it is obliged to transfer to the PA each month, violating the Paris Protocol. It is unlikely acting Israeli Prime Minister Ehud Olmert will re-examine Israel's policy until after the 28 March Israeli parliamentary elections. The Paris Protocol, signed in 1994 in conjunction with the Oslo Agreement, created what is referred to as a "customs envelope" in Israel and Palestine, whereby goods entering into the envelope are taxed only once and goods within the envelope are not taxed. Under this regime, Israel has the right to collect all tax revenue for goods coming in and out of the West Bank and Gaza, and in theory should return 97 per cent of the taxes to the PA. This tax revenue barely covers the monthly salaries of the close to 150,000 PA employees, each with an average of six dependents, making 900,000 Palestinians (nearly one third of the population) dependent upon these funds for survival. The PA faces a salary bill of $60-80 million for February, due next week, according to Wolfensohn. Three thousand members of Al-Aqsa Martyrs' Brigades protested before the PA president's office Sunday morning demanding their salaries; only a sample of rising frustrations and continuous protests emanating from unpaid PA security forces, particularly in Gaza. Last year Palestinians received more than $1 billion in assistance from the international community, of which more than a third went directly to the government. President Abbas has sent the Hamas leadership a "letter of designation," outlining the principles Hamas must share to participate in the government, presidential spokesperson Nabil Abu Rudeineh told Al-Ahram Weekly. In the coming weeks, Hamas will publicly accept the terms of the letter, Hamas leader Ghazi Hamad, and editor-in chief of Al-Resalah newspaper -- run by Hamas -- told the Weekly, which he described as "respecting the commitments of the Authority" and "serving the national interests of the Palestinian people." The letter tactfully omits any details regarding recognition of Israel and "inside Hamas there are political developments that present an opportunity to respond positively to Abu Mazen," stated Hamad. At the outgoing PLC meeting 13 February, a law was ratified establishing a constitutional court, whose members are nominated by the president. The court will have the power to rule over disputes between the PLC and the president. Palestinian prime minister elect, Ismail Haniya, claims Hamas will be able to finance the government without American and European support through donations from Arab countries, along with excess funds from ending internal PA corruption. However, PA Minister of Economy and Trade Maher Al-Masri cautioned, "There is no sure evidence that Arab countries will support the budget of the Palestinian Authority." Thus far, "The bulk of Arab countries have not lived up to their pledges to support the [PA] budget, and the gap has been bridged by loans and funds from the European Union," he continued. Spokesperson Abu Rudeineh emphasised that even if Hamas secures funding from Arab nations all transfers must be approved by Israel. "How can they smuggle in $100 million every month?" he questioned. Hamas political leader Khaled Meshal met with Ayatollah Ali Khamenei last week, drawing widespread speculation that Hamas would accept conditional Iranian funding. Hamad explained that "Hamas will not adopt the policy of Iran ... we will not sell our political decisions, this is a fixed policy." There is pressure on Arab nations, including Egypt, not to work with the new Hamas government, although Palestinian election results cannot be reversed, and isolating Hamas within the international community could destabilise the region. US Assistant Secretary of State for Near Eastern Affairs David Welch assured Abbas on Saturday that the US supports the president and his policies, and will not cut off humanitarian aid to the Palestinians. On Sunday, Welch and Israeli Defense Minister Shaul Mofaz discussed a "Hamas bypass route" which will allow the US to channel aid directly to humanitarian organisations, or to Abbas, rather than to a Hamas-led government. Channelling funds directly to the president is a reversal of the Quartet's policy, which had been to invest more power in the prime minister's office and the Ministry of Finance to increase transparency and control over spending, strengthening the Palestinian system in preparation for statehood. According to an Egyptian official from the consulate in Gaza, undoing these changes could weaken the system, hindering its progression. The US has asked the PA to return $50 million dollars in direct budgetary support to the Ministry of Finance. The PA agreed to halt certain projects, asking for a few months' stopgap before returning the aid. There may be a shuffling of funds between parties, as per the US's suggestion, according to the Egyptian official. For example, Israel could turn over the Palestinian tax revenue directly to the US, or the $40-60 million per month private Palestinian companies pay to private Israeli companies for fuel, electricity and other resources, could be taken off the Palestinian tab. If Israel's real concern is over how the revenue will be used by a Hamas-led government, appropriate expenditure could be easily ensured. Meanwhile, Hamas has hinted at terms for recognising Israel. Prime Minister-elect Haniya said the Hamas-led government would establish a gradual peace with Israel should the latter withdraw to 1967 borders. One strategy Hamas may employ is to use the Palestinian Liberation Organisation (PLO) to continue negotiations with Israel. As newly elected PLC members they have automatically become members of the Palestinian National Council, the PLO's legislative body, with representatives in the Central Council and Executive Committee. Hamas will move as long as it sees reciprocity, but today there are no options on the table. "I see no situation in which Haniya enjoys immunity [from Israeli's policy of targeted assassinations] just because he is the prime minister," stated Avi Dichter, former head of the Shin Bet security service, who is line for a senior security portfolio as long as the Kadima Party retains power in the Israeli elections. During his time in office, Hamas leaders Sheikh Ahmed Yassin and Abdel Aziz Al-Rantissi were killed in Israeli air strikes. While Hamas carried out dozens of suicide bombings against Israel during the past five years of the Intifada, it staged none in the past 12 months after signing the Cairo agreement last March -- shortly after announcing their intent to participate in the PLC elections. "Hamas is interested in stopping all attacks in order to form the government and start the process of change and reform," stated Hamad, illustrating Hamas's successful transition to a political party basis. He argues that Hamas's acceptance of a 10-year truce with Israel makes them no longer a threat.
