oPt + 1 more

Aid flows into Palestinian account after US shift

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By Adam Entous

JERUSALEM, May 28 (Reuters) - With U.S. backing, donor funds have started flowing into an account controlled by Palestinian Finance Minister Salam Fayyad to pay partial government salaries, Palestinian and Western officials said on Monday.

Fayyad was expected to receive enough money through the Palestine Liberation Organisation (PLO) account to pay government workers, including members of the security forces, at least half of their normal monthly wages later this week.

With the Palestinian unity government paralysed by infighting, Israeli forces arresting cabinet ministers and workers threatening an open-ended strike, it is unclear what impact the payments will have and how long they will continue.

A crippling Western aid embargo has been in place on the Palestinian Authority since Hamas came to power in March 2006, preventing the government led by the Islamist group from bringing in enough money to pay full salaries to workers.

The embargo on the government remains in place even though it now includes members of President Mahmoud Abbas's once dominant Fatah faction. But in a May 14 letter to the European Union, the U.S. government said donor funds can be channelled to Palestinians through the PLO account controlled by Fayyad.

Some Israeli officials decried what they saw as a shift in U.S. policy that would reduce pressure on Hamas to recognise Israel, renounce violence and accept interim peace deals.

U.S. officials said the objective of providing the assurances was to ensure that banks felt comfortable transferring funds to the PLO and, in turn, to strengthen Palestinians like Fayyad and Abbas who favour a negotiated two-state solution to the conflict.

Considered a "terrorist" organisation by the United States, European Union and Israel, Hamas's founding charter calls for the destruction of the Jewish state but its leaders have offered a long-term truce with Israel in return for a viable Palestinian state in the West Bank and Gaza Strip.

FUNDS ARRIVING

Since getting the green light from the Bush administration, the PLO account has received at least $22 million from Qatar, Palestinian and Western officials said.

Saudi Arabia is sending another $50 million. Norway is sending $10 million, the first non-Arab contribution.

Together, the $82 million could cover up to 71 percent of next month's wage bill, though Fayyad was expected to spread the funds out to ensure he has enough for subsequent payments and to cover other expenses.

"We have started using the PLO account ... This is an important step to lift the siege," Palestinian Information Minister Mustafa al-Barghouthi said.

Fayyad had promised government workers they would receive at least half their normal salaries at the beginning of each month through the PLO account and the European Union's so-called Temporary International Mechanism.

European officials said the EU programme plans to pay about $30 million a month to public employees and pensioners in coordination with Fayyad. The EU payments go directly to beneficiaries, sidestepping the Hamas-led government, and include all workers except those in the security services.

Bassam Zakarneh, who heads the government workers' union, rejected partial payments as insufficient, saying workers were promised full wages plus back pay. "We're ... moving towards an open strike," he said. "The employees have been deceived."

Fayyad and the European aid programme made nearly half payments to workers in early May. Fayyad used funds initially transferred to an account controlled by Abbas, diplomats said. (Additional reporting by Mohammed Assadi and Wafa Amr in Ramallah)

Reuters - Thomson Reuters Foundation
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