RAMALLAH, April 20: A massive fiscal squeeze on the Hamas-led government has led to warnings that the Palestinian people could become residents of a failed state even before they achieve independence.
The Palestinian Authority is debt-ridden. The European Union and United States have frozen direct aid. The government can no longer pay salaries, affecting the incomes of one million people or a quarter of the population.
Teachers have begun to stay away from school. Hospitals have reported that nurses have been also been absent. Masked gunmen frequently storm public buildings to protest against non-payment of salaries.
The extent of the crisis was underlined in a new UN report into the impact of a freeze in direct US aid and EU receipts of 607 million dollars a year, which said the Palestinian Authority (PA)could end up a ‘failed state’.
With Israel already having frozen payments of customs duties it once collected for the Authority, the United Nations said there would now be a shortfall in the monthly budget of 90 million dollars.
“Unless this shortfall is made up on some other way, a functioning state apparatus risks being seriously undermined,” said the report.
“Over 152,000 people are employed by the PA, their salaries support approximately one million people or 25 per cent of the Palestinian population.”
Although the government has received pledges from other Muslim countries, the cash has yet to materialise and represents a fraction of the sums required.
Battered by funding cuts and huge foreign pressure to ‘renounce violence’ and recognise Israel less than a month after taking office, Hamas prime minister Ismail Haniya on Sunday urged the creation of a unity Palestinian government.
His finance minister, Omar Abdelrazeq, admits he is in no position to say when or if government employees will receive their next pay cheque and banks have stopped lending after the PA ran up debts of 640 million dollars.
In a recent newspaper interview, Mr Abdelrazeq said the collapse of the government would mean ‘there is another Somalia in the world’.
Political opponents may have held off Hamas’s entreaties to join a coalition, but share its concerns about the end result of the international pressure.
Saeb Erakat, a veteran MP of the former ruling Fatah, also evoked the plight of Somalia, which has had no effective central government for the last 15 years, with militia loyal to warlords vying for control of a patchwork of regions.
Such a situation was in no one’s interests and only fuels resentment towards the West and Israel, he said.
“I really believe that collective punishment against the Palestinian government will backfire and be counterproductive,” he said.
Despite widespread pledges to avoid a humanitarian crisis in the West Bank and Gaza, the United Nations said ‘the extent of the collapse should not be underestimated’ and its impact felt more keenly than in other parts of the world.
“While some humanitarian lessons might apply from other failed states, such as in Africa... in the case of the (Palestinian territories) the likely decline of services will be more acutely felt because it affects an urbanised, former middle income society with a highly developed system of service provision on which the population has come to heavily rely.”
Mr Abdelrazeq’s predecessor Salam Fayad, who turned down Haniya’s offer to remain at the finance ministry, said the freeze in aid had scared banks off.
“It’s not so much the level of indebtedness. In terms of GDP, it is still moderate to low... (but) all of a sudden the banks have become nervous,” Fayad said. “If you skip a payment, they are not going to ask for what they are due, they are just not going to give you any more.”
Mr Fayad, the favoured son of Washington, said the fate of the Hamas government was unimportant, but rather the people it had been elected to serve.
“All the measures combined are likely to have a very harsh impact on the Palestinian economy and the living conditions of the people in Palestine.”—AFP
