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PA Financial Woes Fueling Unity Crisis

Despite claims to the contrary, the PA economy is in crisis and cannot sustain a PA state; unity government deadline missed.
By Gabe Kahn.
First Publish: 6/9/2011, 6:02 PM / Last Update: 6/9/2011, 6:37 PM

Despite Prime Minister Binyamin Netanyahu's claims that the economy in Palestinian Authority administered areas is booming and ripe for statehood, the PA cabinet has cited financial woes as the reason it missed its deadline for creating a unified executive as mandated in the accords signed by Fatah and Hamas in Cairo.

The PA government in Ramallah held its weekly cabinet meeting Tuesday as the deadline set for the announcement of a unified executive passed.

A new executive of independent figures was mandated by the unity deal signed in Cairo on May 4 between former rival factions Hamas and Fatah. Officials from both factions had promised the new executive's members would be revealed on June 6.

The June 6 deadline passed without notice, except by PA civil servants who are still waiting for their May salaries, and who announced a partial strike in protest for Thursday.

In a release from the meeting, the cabinet said a government financial crisis had made it difficult for it "to meet its obligations on time."

Hamas on Thursday announced it wanted out of the governance business entirely

Budgeting Foreign Charity

The PA government employee's strike began Thursday depite promises by PA treasurer Yusef Al-Zumar on Wednesday that all public sector employees' salaries would be paid by Thursday evening.

Al-Zumar assured PA workers Thursday morning that the PA has received the Algerian donation of 26.4-million US dollars and would therefore be able to pay May's salaries. Al-Zumar did not explain how the PA planned to pay its June salaries.

In response to Al-Zumar's statement, Bassam Zakarna, head of the PA public employees' union, said employees would still strike on Thursday from 11:00 a.m. local time until the end of the work day. Zakarna explained they strike was to protest the lack of transparency in the PA finance ministry.

According to Zakarna aid money intended to pay the employees' salaries had been received by the treasury and salaries had still not been paid.

24% Unemployment; 30% Salary Drop

PA financial woes comes as the UN Relief and Works Agency released a report Wednesday questioning the view the PA economy is flourishing. Contrary to media reports, the UNRWA report stated that in the first half of 2010 the unemployment rate rose.

Researcher Salem Al-Ajluni, author of the report, said, "while there was a humble increase of employment, this growth minimized during 2010 as unemployment rates increased in the second half of the same year. The participation of Palestinian refugees in the working force continued to fall back, probably because of despair from finding new jobs which caused lower rates of employment among the refugees at that time."

Al-Ajluni added, "there was a rise in the average unemployment rate among refugees that in the first half of 2010 reached 27.9 percent in comparison with 2009, while it was 24.9 percent for non-refugees."

According to Al-Ajluni workers in PA administered areas have seen a 30 percent decrease in actual earned salary since the PA took responsibility for the local economy from Israel.