Palestinians worry amid Authority woes

Gazans tighten belts, await government pay


GAZA CITY, Gaza Strip -- Ashraf Manama, a Palestinian police officer, doesn't have money to pay his phone bill, so the telephone company cut off service last week. His wife, Rana, a high school English teacher, is buying only food and basic necessities for their four children. His father, Abdullah, a school headmaster, wonders where he will find the $150 needed to pay for gas and insurance on the family sedan, or the money for a daughter's college tuition.

And things could get worse if the Manama family's primary employer, the Palestinian Authority, does not quickly solve its financial problems. Starved for money and increasingly isolated by Israel and the international community since the victory by Hamas in parliamentary elections, the Palestinian Authority is on the brink of financial collapse, struggling to meet basic commitments, from supplying electricity to paying salaries.

The authority is more than a week late in paying wages owed to its 150,000 employees.

Six of them - two police officers, a teacher, a high school headmaster, a biologist for the Ministry of Agriculture and a social worker in the Ministry of Social Affairs - are members of the Manama family.

Together, they have income of about $3,000 a month, money that keeps four generations of their family - 32 people in all - fed, clothed, educated, and comfortably in the middle class. But with Hamas in control and donors threatening to reduce aid, the Manamas are afraid that the Palestinian Authority's financial crisis will become their own.

"It's not going to be just one month like this. This is what it is going to be like for the next four years," says Abdullah Manama, 51. "What's going to happen in a month? I have no idea."

The Palestinian Authority suffered a serious blow when Israel decided last month to suspend monthly transfers of about $55 million in tax revenue, money it collects on the authority's behalf on imports and from Palestinian businesses and laborers in Israel. The Jewish state, which considers Hamas a terrorist organization, has vowed to have no contact with a Hamas-run government.

The budget shortfall has made it impossible for the authority to pay its $115 million payroll, leaving Palestinian leaders scrambling to open new credit lines, restructure loans and seek international assistance.

"It's very hard times," says Jihad Al Wazir, acting finance minister for the Palestinian Authority. "We are now at the end of the tether."

He expects to collect enough money by mid-March to pay the salaries that were due March 1, but says the problem will return next month. Even before Israel withheld the tax revenue, the Palestinian Authority faced a deficit of about $1 billion in 2006.

"We are playing the credit card game till all the credit cards are maxed out, which is where we've got this month," says Al Wazir.

The effects are being felt in the West Bank, but in the Gaza Strip, where there are few private industries and the Palestinian Authority is by far the largest employer, the sting from a delay of even a week or two in paying salaries is deeper.

Ali Badwan, an economic consultant in Gaza, says the Palestinian Authority accounts for more than one-third of the economy. When paychecks don't arrive, business screeches to a halt.

"When you walk down the street, you see shop owners sitting in front of their shops watching people walk by," Badwan says. "You can look at the restaurants and they are empty."

Adding to Gazans' woes, Israel has closed the main crossing for cargo for most of the past two months, citing security concerns. Gaza's farmers, unable to export their crops to Israel, have lost thousands of dollars.

Six months ago, optimism was in the air. Israel had evacuated the Jewish settlements in Gaza and withdrawn its troops. Clashes between Palestinians and Israelis were rare. The developments promised to open the door to a new era of progress. Prices soared on the Palestinian stock exchange.

But Hamas' surprising victory in parliamentary elections damaged investors' confidence, sending stocks plunging.

"People felt we were getting into a new era and they would prosper," says Badwan. "But all of a sudden it crumbled like a sand castle on a beach."

The unexpected turn has left the Manamas feeling abandoned by the world and confused about the future. "People want to be confident that life with be stable," says Abdullah, the headmaster, seated in a lounge chair in the family's living room.

Stability is what his family has been seeking for more than a half-century. His father, a farmer in what is now the Israeli city of Ashdod, fled to Gaza along with thousands of Palestinian families during the 1948 Arab-Israeli war.

The Manamas lived in a refugee camp for nearly 40 years before Abdullah saved enough money to build the ground floor of a house in 1989. In 1995, they added a second floor. In 1999, a third. In 2002, a fourth.

Abdullah brushes his hands together in a gesture of completion. "No more floors," he says proudly.

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