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Israel halts tax payments to hamas palestinians

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   http://www.alertnet.org/thenews/newsdesk/L01598033.htm

http://www.alertnet.org/thenews/newsdesk/L01598033.htm

Israel halts tax payments to Palestinians
01 Feb 2006 15:48:21 GMT

Source: Reuters
(Updates with Palestinian Authority proposals on aid)

By Adam Entous

JERUSALEM, Feb 1 (Reuters) - Israel halted monthly tax payments on Wednesday to the cash-strapped Palestinian Authority one week after the election victory of Hamas, but the militant group said it would seek financial support from the Arab world.

The customs revenue collected by Israel on behalf of the Palestinians is the main source of funding for their budget and is used to pay an estimated 140,000 government workers.

Palestinian Economy Minister Mazen Sonnoqrot decried what he called Israel's "illegal decision", saying it amounted to "collective punishment" and estimated that as many as 1 million Palestinians would be affected. "This may cause chaos," he said.

Top Hamas leader Ismail Haniyeh, in a Reuters interview, called it "an attack on Palestinian rights".

The United States and the European Union have also threatened to cut off future funding if Hamas does not reject violence and recognise Israel.

Hamas has urged foreign donors to maintain aid but says it could still find alternative sources of funding in the Arab world. It dispatched a delegation on a tour of Arab countries to urge them to keep the money flowing.

"The tour will aim to clarify Hamas's position based on its election agenda and to press Arab countries to continue with financial aid to the Palestinian people," said Sami Abu Zuhri, a Hamas leader in Gaza.

Egyptian intelligence chief Omar Suleiman predicted that Iran would step in to fill any financial gap.

In a bid to reassure anxious donors, the Palestinian Authority proposed bringing in an outside auditor or a foreign government to monitor the use of aid money.

Sonnoqrot said talks were also under way with the World Bank and Saudi Arabia about covering the authority's payroll.

PAYMENTS HALTED

Israeli Foreign Ministry spokesman Mark Regev said Israel did not make its scheduled Feb. 1 payment, estimated by the Palestinian Authority at $55 million.

Regev said future payments were also suspended pending a policy review ordered by Prime Minister Ehud Olmert, who took over after Ariel Sharon was incapacitated by a stroke on Jan 4.

Olmert has called for a boycott of any Palestinian government that includes Hamas, which is sworn to Israel's destruction and has led a campaign of suicide bombings and attacks against Israel.

Hamas, which has largely held to a year-long ceasefire, trounced Palestinian President Mahmoud Abbas's long-dominant Fatah movement in the Jan 25 parliamentary election.

In Washington, U.S. President George W. Bush demanded that Hamas "recognise Israel, disarm, reject terrorism and work for lasting peace" in his State of the Union address.

Hamas leaders said the group would stick to its guns. "Our resistance is legitimate self-defence in the face of aggression," said Zuhri.

An official close to Abbas denied a report from Egypt that he would demand Hamas formally recognise Israel for it join the next government. But the official, who declined to be identified, said the president would insist the new government commit to implementing past agreements with Israel.

CASH-CRUNCH

The Palestinian Authority faces a financial crunch if Israel continues to withhold the tax money.

Unemployment in the Palestinian territories stands at 22 percent and half the Palestinian population lives in poverty. In Gaza, many Palestinians live on an average of $2 a day.

Israel has long collected customs revenue on behalf of the Palestinians. It is supposed to hand the money over to the governing Palestinian Authority on the first of each month.

The decision to cut off funding came as Olmert sent riot police into the West Bank to remove part of an unauthorized Jewish settler outpost .

In scenes of violence reminiscent of Israel's Gaza pullout last year, ultranationalists at the Amona outpost barricaded themselves in houses and on rooftops, throwing stones at police on horseback who responded with clubs and water cannon.

More than 160 protesters and police were injured.

(Additional reporting by Mohammed Assadi in Ramallah; Megan Goldin and Jeffrey Heller in Jerusalem, Jonathan Saul at the Amona outpost, and Matt Spetalnick and Nidal al-Mughrabi in Gaza)


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