Israel transfers US$119 million in tax funds to new Palestinian government

Palestinians wait in line in front of a cash machine to check if their salaries had been deposited in the West Bank city of Ramallah on Sunday. PHOTO: AP

Israel transferred millions of dollars in tax funds to the new Palestinian government, allowing it to pay its workers in full for the first time in a year -- while skipping the ones who work for the Islamic Hamas in Gaza.

Transfer of the funds on Sunday marked the first concrete gesture of Israeli support for moderate Palestinian President Mahmoud Abbas since the Islamic militant Hamas took control of Gaza by force in the middle of last month.

The Israeli government said in a statement that 500 million shekels (US$119 million) were handed over, and Palestinian officials confirmed that they received it. The Israelis said a further transfer would be made in a few days.

The salaries will be paid by Abbas' Western-backed government, except for government employees hired by Hamas, like members of the 6,000-strong Hamas security force. Under Hamas, the 165,000 government employees had only received irregular, partial payments because of an international aid boycott imposed on the government headed by the Islamic militants.

In dispensing the salaries, the West Bank-based moderate government of Prime Minister Salam Fayyad was asserting its claim to legitimacy, which has been disputed by the Hamas rulers of Gaza. For example, members of security forces in Gaza were told they would be paid only if they stayed home and refused to work under Hamas command.

The Fayyad government is also switching the weekend for the public sector from Thursday to Friday to Friday to Saturday, apparently to make it more compatible with the West's work schedules. In Hamas-ruled Gaza, some government employees were told they should stick to the old weekend and warned they would be punished if they take off Saturdays.

Bilal Qureshali, who works in the Communications Ministry in Gaza, said he would stay home Thursday through Saturday to avoid problems. He said he was told by his Hamas-allied boss to ignore the orders coming from the West Bank and warned he would be punished if he took off Saturday. If forced to take sides, he'll pick the West Bank government, Qureshali said.

Since Hamas came to power in March last year, Israel had frozen roughly US$600 million, mostly customs duties that it collects on behalf of the Palestinians under interim peace accords.

Israel explained that Hamas, which is sworn to Israel's destruction and has killed hundreds of Israelis in suicide bombings, could use the money to fund attacks.

After Abbas expelled Hamas from the Palestinian government last month, Israeli Prime Minister Ehud Olmert said the financial transfers would resume. The tax funds account for roughly half of the Palestinian government's operating budget. Palestinian Cabinet Secretary Saadi Krunz said the first payment was received on Sunday.

Commenting on the transfer Sunday, Olmert spokeswoman Miri Eisin said, "Israel is committed to help strengthening the new [Palestinian] government and to cooperate fully both in the financial and security realms.''

It costs about US$120 million a month to cover the payroll, and Krunz said the government had enough money now to pay full salaries in the coming two days.