UN aid groups are asking for a record US$450 million to staunch a deepening Palestinian humanitarian crisis, saying on Wednesday that international sanctions on the Hamas-led government and Israeli restrictions on Gaza exports have devastated the Palestinian economy.
Despite that gloomy assessment, a top Hamas government minister offered a rare upbeat economic picture on Wednesday, saying increased aid from Arab countries had allowed the government to stay afloat.
But independent economists and analysts said the government was still deep in crisis.
The huge UN aid appeal came as poverty exploded throughout Gaza and the West Bank. The UN was to officially launch its appeal yesterday.
The UN says 65 percent of Palestinians were living in poverty and 29 percent were unemployed.
The Palestinian health care system was running out of medicine and on the verge of collapse, and nearly 50 percent of Palestinians did not have reliable access to food.
"Under the current circumstances, poverty levels keep continuing to rise," David Shearer of the UN Office for the Coordination of Humanitarian Affairs said.
About three-quarters of the US$453 million being requested is earmarked for job creation, cash assistance and food aid, Shearer said. The UN is also asking for money to support the faltering health and education systems.
Much of the economic damage stems from the international boycott that Israel and Western nations imposed on the Palestinian Authority after the militant Islamic Hamas won parliamentary elections and took office in March.
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 the impoverished Gaza Strip 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. "About a million people who have depended on a PA salary earner cannot do that anymore."
Nine months after taking power, Hamas refuses to accept international demands that it recognize Israel and renounce violence, and negotiations over the formation of a national unity government that could sidestep the sanctions have stalled.
"While humanitarian aid can slow the deterioration, what is really needed is a political settlement to the issue," Shearer said.
Acting Palestinian Finance Minister Samir Abu Aisha said on Wednesday that his government had managed to remain fiscally afloat because Arab and European countries increased their donations to the Palestinians -- though not necessarily to the Hamas government -- to make up for the aid cut.
Abu Aisha said the government has managed to give civil servants 59 percent of their back pay.
He 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 revenues.
That sum now equals US$550 million, he said at a news conference in the West Bank city of Ramallah, "and could immediately solve the financial crisis if we receive it."
Miri Eisin, an Israeli spokeswoman, said Israel would be willing to rethink its seizure of the tax funds once the Palestinian government accepts the international demands and releases Corporal Gilad Shalit, an Israeli soldier captured by Hamas-linked militants in June.