Slow Donor Aid Hobbles Palestinians, Delays Budget (REUTERS) By Mohammed Assadi RAMALLAH 02/01/05 12:47 PM ET)
Reuters News Service
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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
"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
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
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
"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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