Financial Pressures Increasing on New Palestinian Government

Palestinian Authority Prime Minister Ismail Haniyeh, presiding Wednesday over the first meeting of his Hamas-dominated Cabinet, declared that the government’s coffers were empty and appealed for international assistance.

But on a note of continuing defiance, Haniyeh, a senior Hamas official, denounced Israeli “aggression” and vowed that he and his ministers would forgo salaries until money was found to pay nearly 150,000 civil servants.

As much as a third of the Palestinian population is supported by government paychecks, and international organizations, including the World Bank, have warned that chaos could result if the Palestinian government is unable to pay its bureaucrats and security forces.

The Palestinian Authority faces a precipitous drop in international assistance unless Hamas, a militant group recently voted into power, agrees to renounce its stated aim of Israel’s destruction. Government paychecks, until recently funded mainly by foreign aid, were to have gone out the first of the month.

Haniyeh’s comments were also interpreted as a slap at the Palestinian Authority, which was rife with corruption in the past.

“The Ministry of Finance has inherited an entirely empty treasury, in addition to the debts of the ministry and the government in general,” Haniyeh told the Cabinet.

Because Israel will not allow Hamas ministers to travel between the West Bank and the Gaza Strip, the gathering, held simultaneously in Gaza City and the West Bank town of Ramallah, was linked by videoconference.

Israel Radio Arab affairs commentator Avi Issacharoff said Haniyeh appeared to be trying to bolster Hamas’ popularity at a crucial time by underlining the clean-government message that helped sweep the militant group to power in January parliamentary elections.

With financial pressure on Hamas increasing, several senior members of the group have recently made conciliatory statements toward Israel and then backtracked -- a pattern that repeated itself Wednesday when hard-line new Foreign Minister Mahmoud Zahar insisted that he had not meant to imply, in a letter to United Nations Secretary-General Kofi Annan, that Hamas was willing to accept a two-state solution.

Zahar told the BBC that after the letter was drafted by an aide, he had ordered the reference stricken, but that it was mistakenly included.

Even the most dovish Israeli politicians have expressed doubts that Hamas will transform itself sufficiently to meet the international community’s demands.

“I do not believe that Hamas will change and accept Israel’s conditions for negotiations,” former Israeli Prime Minister Shimon Peres said in a speech delivered at a college in the northern town of Netanya and carried on Israel Radio.

“Hamas is an extreme religious movement, and such a change would demand its becoming a secular political movement, and this occurring is very dubious,” Peres said.

While Hamas moved to establish itself as a ruling power, acting Israeli Prime Minister Ehud Olmert was to receive formal instructions today to form a coalition government -- something of a formality, because sometimes contentious party negotiations have been underway since last week’s parliamentary elections.

Olmert’s centrist Kadima party won 29 of the seats in the 120-member parliament, or Knesset -- the largest share, but not enough to rule alone. He is expected to ally himself with the Labor Party, which won 19 seats, along with several smaller parties.

Addressing a closed-door meeting of Kadima’s Knesset faction, Olmert stressed that no party would be allowed to join his government without accepting his principle of convergence -- the consolidation of Jewish settlements in the West Bank into a few large blocks, and the uprooting of dozens of remote communities.

Once he receives formal instructions from Israeli President Moshe Katsav, Olmert has 42 days to present his new government.

Olmert stepped in as Israeli leader Jan. 4, when Prime Minister Ariel Sharon suffered a catastrophic stroke that left him in a coma. Sharon was reported in stable condition Wednesday after surgery to reattach a piece of his skull that was removed during lifesaving surgery.

The operation, the eighth that Sharon has undergone since being stricken, was reportedly in preparation for a move to a long-term care facility -- a tacit acknowledgment that any significant degree of recovery is unlikely for the 78-year-old leader.

Since the stroke, Sharon has been in the intensive care unit of Hadassah University Medical Center at Ein Kerem, one of the country’s premier hospitals.