Cash-poor Palestinian Authority cant pay its workers

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JERUSALEM — The Palestinian Authority, plagued by funding cutbacks and delays, has told officials that salaries for August will be delayed indefinitely, Palestinian sources said.

"Many people have not received salaries for July and now we've been told that our paycheck for August won't arrive," a Palestinian Authority official said. "We don't know when they will come."

The funding crisis has resulted in the current tour of Planning and International Cooperation Minister Nabil Sha'ath to Western European nations to request emergency cash and a schedule for pledged money to arrive to refill the coffers of the Palestininan Authority. Officials said that until June, the Palestinian Authority had received $60 million out of $1.35 billion earmarked for new and existing programs.

Officials said the donor nations have been reducing their aid steadily. In 1995, the nations gave the Palestinian Authority $400 million. Last year, they dispersed $260 million.

The cash crisis became acute after the Mahane Yehuda suicide bombings on July 30 when Israel, to protest the lack of Palestinian Authority cooperation in the investigation, held back tax revenues meant for the Palestinian Authority. The following month, the U.S. Congress held back aid as well. And Israel, no doubt, will continue to withhold aid in retaliation for the Sept. 4 bombing at Ben Yehuda mall.

Anis al-Qaq, deputy minister of planning and international cooperation, told the Jerusalem Post that the Palestinian Authority's financial crisis has affected all levels of government.

"This has led to severe deterioration in the economic situation and standard of living, along with a severe cut in public expenditure," he said. "Most of Palestinian institutions and governmental offices are living on the most minimum expenses daily. Most ministers have no newspapers, no money for gasoline. There is mounting debt to the sector."

Al-Qaq said the holdback in funding as well as the Israeli closure has prompted a revision of the Palestinian Authority's expected budget deficit, set at $50 million. He said the most dramatic change can be seen in hospitals and schools.

"We are starting the school year," Al-Qaq said. "In Gaza, we run three shifts a day. To sustain education, we need 60 new schools each year. This is to sustain the same services. We appealed to donor countries and asked them to come to our help either in material or funds."

Al-Qaq said his July salary was two weeks late and he has not received his wages for August. Other officials said that they were given salary slips but the money was not deposited in the bank. They said many civil servants still have not received their July salaries.

A European diplomat who oversees aid to the Palestinian Authority said the key reasons for the denial of funds are reports of Palestinian human-rights violations, as well as budget problems among the donor nations.