Hamas tightens purse strings

RAMALLAH — No mobile phones, no international calls, no fuel coupons and no “excessive” hospitality for senior employees. Hamas is tightening the purse strings.

Struggling under six months of international sanctions imposed because of its refusal to recognise Israel and renounce violence, the Islamic group that heads the Palestinian government is saving money as best it can.

And the austerity drive appears to be bearing fruit.

Acting Finance Minister Samir Abu Eisha said running expenses had been cut from $30 million a month to less than $20 million, with the aim to get them down to $15 million.

“We’re even reviewing the whole use of vehicles in the public sector,” Abu Eisha, who has stood in for Finance Minister Omar Abdel-Razeq since he was jailed by Israel in June, told Reuters.

“Hopefully we’ll be able to cut other expenses so we can maximise the money we collect locally,” he said.

Since the United States and the European Union imposed sanctions in March, the Hamas-led government has been unable to pay full salaries to its 165,000 employees, a situation which has led to sweeping public sector strikes in the past two weeks.

Paying salaries and other operating costs alone costs the government about $150 million a month, a large part of which has traditionally been financed through foreign aid and assistance.

The government also relies on about $55 million a month in tax revenues that Israel collects on its behalf, but since Hamas’ rise to power, those payments have been withheld. The United States and EU regard Hamas as a terrorist group.

‘Unsuccessful sanctions’

Abu Eisha, a US-educated professor who also acts as planning minister, said the inability to pay salaries had had an impact on other revenues because the 3.8 million Palestinians in the West Bank and Gaza were spending less.

Those local revenues had dropped from over $30 million to some $20 million per month, he said.

“The factories, the companies are not running as expected. Because of that, their income is down and the revenues we collect of course are reduced,” he said.

The World Bank said on Wednesday that the embargo, which Palestinian leaders are hoping might be lifted if a new unity government is formed in the coming days, could make 2006 the worst year in the Palestinian Authority’s 13-year history.

The international lending agency said the average Palestinian’s personal income was likely to fall by 40 per  cent this year, while the rate of poverty would rise to around two-thirds of the population.

Abu Eisha, 46, hopes a new unity government, which would see Hamas joined in power by the more moderate Fateh group, led by Palestinian President Mahmoud Abbas, would prompt some European states to restore aid.

“We’re hoping to see a better atmosphere,” he said.

“We don’t think the sanctions will continue because they’re not meeting their objectives,” he added, pointing out that the intention had been to bring the Hamas-led government down.

“They were expecting that within a few weeks, two or three months, the Palestinian government would collapse,” he said.

“But it was exactly the other way around: The Palestinians became united. The Palestinians became stronger.”

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