U.N. seeks record $450 million in aid for Palestinians next year

JERUSALEM -- The United Nations will ask donor countries to contribute a record $450 million in aid to the Palestinians, whose economy has been devastated by international economic sanctions on the Hamas-led government, U.N. officials said Wednesday.

The huge aid request comes as poverty and unemployment have exploded throughout Gaza and the West Bank, and the Palestinian health and education systems have been badly weakened by the shortage of funds, the United Nations said.

About three quarters of the $453 million being requested is earmarked for job creation, cash assistance and food aid, said David Shearer, head of the U.N. Office for the Coordination of Humanitarian Affairs.

The U.N., which plans to officially launch its appeal Thursday, is also asking for money to support the Palestinian's health and education system.

Much of the damage to the Palestinian economy has come from the international economic boycott that Israel and Western nations imposed on the Palestinian Authority after the radical Hamas group won parliamentary elections in January. The boycott has left the Palestinian government unable to pay full salaries to its 165,000 workers, who make up the backbone of the Palestinian economy.

Israeli limits on exports from Gaza and increased restrictions on movement across the West Bank have also damaged the economy, Shearer said.

"Coming on top of the problems with access of movement, (the economic boycott) has had a massive impact on poverty levels within the West Bank and Gaza," he said, adding that the 165,000 workers supported around 1 million people.

But while the U.N. emphasized the Palestinians' economic distress, the Palestinian finance minister played it down Wednesday, saying the boycott had failed to bankrupt the Hamas-led government.

Samir Abu Aisha, the acting Palestinian finance minister and a Hamas official, said his government has managed to remain fiscally afloat because Arab and European countries increased their donations to the Palestinians after the Hamas victory.

Abu Aisha said the government has managed to pay civil servants 59 percent of their back pay, and charged that government workers still on strike were motivated by political considerations -- a broad hint that the rival Fatah movement, headed by moderate President Mahmoud Abbas, was using the strikes to undermine the Hamas government.

Abu Aisha blamed the financial hardship still afflicting Palestinians not on the international boycott, but on Israel's seizure of hundreds of millions of dollars in tax revenue.

That sum now came to $550 million, he said at a news conference in the West Bank town of Ramallah, "and could immediately solve the financial crisis if we receive it."

Abu Aisha said that Arab governments had upped their direct payments to the Hamas government from $20 million a month before Hamas came to power to $45 million. He said that another $60 million in cash had been carried into the Gaza Strip by Hamas officials returning through the Rafah crossing on the Egyptian border, and the government would continue using this tactic to get around the boycott.

"We are going to keep going this way if Israel and the U.S. don't lift the embargo," Abu Aisha said.

Referring to a European Union announcement Tuesday, he noted that European aid to the Palestinians had increased by 27 percent this year.

But that money goes directly to Palestinians civilians, in keeping with the embargo, and Abu Aisha criticized the EU for bypassing the government. "The European money goes in ways we don't want it to go," he said.

Miri Eisin, a spokeswoman for Israeli Prime Minister Ehud Olmert, said Israel would be willing to rethink its seizure of the tax funds once the Palestinians meet the international demands for the resumption of aid and release Cpl. Gilad Shalit, an Israeli soldier captured by Hamas-linked militants in June.

Israel has no objection to aid going to Palestinian civilians, she said, but insists that the money not be channeled through the Hamas government.

The Western donors have called on Hamas to renounce violence, recognize Israel and accept past peace agreements as conditions for restoring aid. Hamas has rejected the international conditions.