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Slow Donor Aid Hobbles Palestinians, Delays Budget (REUTERS) By Mohammed Assadi RAMALLAH 02/01/05 12:47 PM ET)Source: http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7501673 Reuters News Service Reuters News Service Articles-Index-TopPublishers-Index-Top
RAMALLAH, West Bank (Reuters) - Foreign donors have been slow to make good on promises of funding to the aid-dependent Palestinian Authority and it is struggling to cope, Finance Minister Salam Fayyad said on Tuesday.

Western donors have said aid could increase if the new leadership after Yasser Arafat´s death makes clear progress toward peace with Israel and continues reforms to end waste and corruption.

But Fayyad said the Palestinians had so far got only $25 million of the $660 million expected for the whole year -- much less than he had hoped for by now -- and it had been impossible to present the annual budget as a result of the delay.

"I do not expect it to continue, but until it improves materially and significantly, our ability to meet obligations will continue to be severely tested," Fayyad told Reuters on the sidelines of a news conference.

"In the last four months our situation was difficult. We could not pay salaries to employees. Even paying salaries has become a real challenge for us," he said.

Fayyad said the only money the Palestinian Authority received so far this year was $20 million from the United States and $5 million from Belgium.

The Palestinian economy collapsed during the past four years of fighting with Israel. It was also hampered by mismanagement and graft during Arafat´s rule, discouraging some donors.


But prospects for the economy have brightened alongside those for peace since Mahmoud Abbas, a former businessman who opposes violent struggle, succeeded Arafat as Palestinian President.

Last month, U.S congressional aides said President Bush was considering a proposal to boost U.S. aid to the Palestinians this year by $200 million to help Abbas prepare for Israel´s planned Gaza withdrawal.

Palestinians estimate aid requirements at up to $1.4 billion and the World Bank has said donors could give that much if conditions of reform and ending violence are met.

Fayyad, tipped to keep his job when a new cabinet is announced in coming weeks, is credited with making a start on financial reform and says annual internal revenues have risen to $70 million from $45 million since 2002 when he took office.

Abbas has coaxed a de-facto truce from militants, leading Israel to cut military operations and a big lull in violence.

Fayyad said Israel now had to remove checkpoints in the occupied West Bank that have helped strangle the economy. Israel says the roadblocks stop suicide bombers, but Palestinians call them collective punishment.

"This is a basic need. What´s the point having money if you cannot move," he said.

Between 1999 and 2003, Palestinian annual per capita income is estimated to have dropped by about one third to little over $1,100. In the same period, unemployment rates rose from 10 percent to 26 percent, according to the World Bank. (© Reuters 2005 02/01/05)

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