August 1, 2002	Thursday	Jamadi-ul-Awwal 21,1423

AL QUDS, July 31: In what it termed a “test of credibility” for the new Palestinian finance minister, Israel unblocked a first tranche of hundreds of millions of dollars of frozen Palestinian funds on Wednesday, which it says aims to alleviate the dire plight in the re-occupied territories.

Palestinian finance minister Salam Fayad said in a statement that Israel had handed over a first tranche of frozen Palestinian funds without any conditions attached, despite an earlier Israeli claim he had refused to accept the money.

Fayad said the Palestinian Authority had received 70 million shekels (14.7 million dollars) from the customs duties and taxes withheld from the Palestinians by Israel since November 2000, two months after the start of the Palestinian uprising.

Israel said for its part that it would transfer, in three tranches, a tenth of the frozen 430 million dollars. But International Monetary Fund’s (IMF) estimates have recently put this figure at over 600 million dollars.

Fayad, formerly head of the IMF in the West Bank and Gaza, told AFP that the discrepancy “is not a big problem ... no monthly clearance meeting has taken place since March, we’ll sit down and compare notes soon.”

“As far as I am concerned this is the first transfer in line with what (Israel’s Foreign Affairs minister) Shimon Peres told me. I don’t know about this one tenth,” he also said.

Earlier Wednesday, a senior Israeli official said Fayad had refused to accept the money because Israel had stipulated it not be used for paying security forces who may be compromised by links to attacks on Israelis.

But another official later said the transfer of funds was a “test of credibility” for Fayad.

“For us it’s a test of credibility for him. We will monitor where the money is going. If Fayad doesn’t respect his promise and these finances go to terrorist organisations we will not transfer any more,” the senior official said.

Palestinian Yasser Arafat’s top aide Nabil Abu Rudeina told AFP “the international community had to pressure Israeli to disburse this sum.”

This transfer came at a time when the Israeli government has declared its willingness to alleviate the plight of Palestinian civilians faced by skyrocketing unemployment, poverty and deteriorating humanitarian conditions.

“We are ready to unblock the money only to provide humanitarian and economic aid to the Palestinian population,” an Israeli official said.

A report by the US Agency for International Development (USAID), to be released on August 5 but already widely distributed in diplomatic and media circles, has provided disturbing figures.

Thirty percent of Palestinian children under five who were screened suffered from chronic malnutrition and 21 percent from acute malnutrition, up from 7.5 and 2.5 percent respectively in 2000, the report said.

It said that 45 percent of the young children and 48 percent of women of childbearing age suffered from moderate to mild anemia, and the poor state of sanitation posed a risk of communicable diseases.

More than 30 percent of the 3.5 million Palestinians living on the West Bank and Gaza depend on food handouts, USAID said. Half the population needed outside help to meet their minimal food needs.

Meanwhile, the World Bank recently estimated that 60 to 65 percent of Palestinians in the West Bank and Gaza are living in poverty, or with less than 2.1 dollars per day.

The unemployment rate has also tripled since the beginning of the intifada, according to the Palestinian Central Bureau of Statistics.

It is unlikely that this sum will jumpstart the bankrupt Palestinian economy, which depended on clearance revenues for up to 60 percent of its total revenues prior to the intifada.

“We have lost two third of our sources of income since the intifada with a monthly budget deficit of 20 to 30 million dollars. We have not earmarked the funds transferred today in our single treasury account ... our priority is to make ends meet,” said Fayad.

“Our resources are limited and our needs are great,” he added.—AFP