PALESTINIAN TERRITORIES: Financial crisis causing public concern

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The Palestinian Authority has until July 26 to come up with a plan on how it intends to pay salaries, without interruption, to more than 150,000 of its civil and military personnel. Otherwise, the employees may go on an open-ended general strike.

This was the warning the Union of Public Employees conveyed to the Palestinian Authority on Monday following a meeting of its board members to discuss the authority’s financial crisis and its claim that it may not be able to pay salaries anymore.

And the members of public employees union, who have lately been receiving late or half salaries and who took bank loans during a preceding period of relative financial stability, are also up in arms, worried about whether next month’s salary will be paid and if they will be able to make the loan payments.

After four years in office during which he was able to pay salaries on time, Salam Fayyad, the Palestinian Authority prime minister and finance minister, has publicly declared that he may not be able to pay salaries. Last week, President Mahmoud Abbas made a similar announcement.

The Palestinian Authority’s financial crisis surfaced at the start of the year and has gotten worse in the following months. Yet, Fayyad continued to pay salaries regularly until May, when the April salary payments were delayed for several days. The same thing happened the following month.

When it came to paying the June salaries, the Palestinian Authority had enough money to pay only half of the amount, with a promise it would pay the rest when money arrives. Three weeks into the new month, it has not yet been able to pay the other half, and there is talk that the it will not be able to pay any more salaries.

The head of the public employees union, Bassam Zakarneh, has regularly accused Fayyad of not being totally honest about the financial situation. He charges that Fayyad has been able to pay for projects and trips abroad for his ministers, but that when it comes to salaries, Fayyad says he does not have the money.

Zakarneh even went as far as to say that if Fayyad does not have the money and is unable to pay salaries, how he can claim that the Palestine Authority will be ready for statehood in September when it plans to ask the United Nations General Assembly to such recognition.

These questions and many more have forced Fayyad to talk extensively about the financial crisis in briefings with the Palestinian media corps. Although criticizing those who had questioned the readiness of the Palestinian Authority for statehood, he admitted that it has a budget deficit in the millions of dollars, caused by from borrowing to pay previous salaries and other expenses when donor countries had failed to provide their promised financial aid on time.

But this did not seem to convince the employees union, which on Monday gave the government a taste of what it is planning to do if salaries are not paid. The union suggested that employees who live far from their workplace do not have to make the trip to their office, in order to save on transportation costs. It said these employees can report to work in government offices in their own towns.

The union’s tone in this case was more mellow, mainly due to an intervention by Abbas, but it did give Abbas and Fayyad a deadline of July 26 to come up with a clear plan on how the Palestinian Authority plans to keep on paying salaries in the future.

All the government can do now is appeal for help from the donors, mainly the Arab countries whose aid has dropped from $500 million in 2009 to half that amount in 2010 and less than a fifth so far this year.

Some analysts, however, believe that the donors are using the aid to pressure the Palestinian Authority to drop plans to ask for U.N. recognition, a move strongly opposed by the U.S., Israel and their European allies, and possibly to also shelve plans to reconcile with Hamas, which the West considers as a terrorist organization.

-- Maher Abukhater in Ramallah, West Bank