Palestinians Making Do With Less in Crisis

2 hours, 30 minutes ago

NABLUS, West Bank - Buying on credit. Selling gold dowries. Giving up tobacco and other small pleasures.

With their salaries weeks overdue and savings depleted, Palestinian families are finding creative ways to survive the Hamas-led government's deepening financial crisis. Even banks and utilities are helping out by allowing customers to overdraw accounts or pay bills late.

Experts warn that a dire economic crisis is looming.

"This month, no one paid me," said Kifayeh al-Ashkar, 40, who cleans houses for government workers in Nablus. "The government can't pay the salaries of its workers, and the workers can't pay me."

She said she now feeds her four children plain rice, and has been forced to beg for handouts of milk.

The financial crunch follows the January legislative election victory of Hamas, an Islamic militant group sworn to Israel's destruction. After the new government was sworn in last month, the Palestinian economy, already battered by five years of fighting with Israel, took a turn for the worse.

Western donors who accuse Hamas of supporting terrorism cut off hundreds of millions of dollars in aid, and Israel suspended monthly payments of tax money it collects for the Palestinians.

Without these funds the government is broke and unable to pay its 165,000 salaried workers. No one got paid April 1, and the next pay day is less than a week away.

"Life has changed drastically. I don't know how to manage," said Elham Yassin, 48, a teacher in Asira, a village near Nablus.

Yassin, a mother of seven, earns $500 a month, while her husband, also a teacher, makes about $550. She said the family got a loan from her sister and is subsisting on bread, hummus, yogurt and other inexpensive staples.

"I don't know where things are going. We don't have any savings. I'm afraid for the future of my family," she said.

The Palestinian Authority is the largest employer in the West Bank and Gaza Strip, and the loss of these salaries has rippled throughout society.

"This money has played the role of a lifeline to the economy," said Samir Abdullah, a Palestinian economist.

With so many people living on credit, he said, "We will see people on the streets very soon." He also predicted increased hostility toward the West, public unrest and even renewed fighting with Israel if the situation continues much longer.

In an area where unemployment hovers around 25 percent, people with government jobs typically support extended families, and many private businesses rely on customers who work for the government.

Hamas officials have refused to cave in to Western pressure to renounce violence and recognize Israel's right to exist. Instead, it has turned to Arab and Muslim countries for help.

It has raised about $70 million, enough to cover about half of the salary payments, but has been unable to transfer the money to the Palestinian areas. It claims local banks are afraid to handle the money, fearing U.S. financial sanctions.

Hamas officials say the Palestinians would rather face starvation than give up their principles. "All of the Palestinians are standing together," said government spokesman Ghazi Hamad. "The government has repeatedly affirmed that we are not going to compromise."

But the people are growing weary.

Sami Abu Atta, 33, a driver for the Public Works Ministry in Gaza, said he has quit his pack-a-day smoking habit to save money. He also has put off clothing purchases for his five children, and has to turn down their requests for candy.

"I don't know what to do. Even if I want to start working as a thief, there is no one to rob," he said.

Palestinian businesses have eased the pain by extending loans and allowing customers to delay payments. Banks are allowing government employees to run up overdrafts, the phone company has given customers an extra month to pay their bills, and small businesses have allowed people to buy on credit.

Maher Abdel Hadi, a grocer in Gaza, said that after extending more than $5,000 in credit to his customers, he can no longer afford the practice.

"Ten days ago, I told my customers that nothing is for free. I know they are facing a hard time, but I am too. All my suppliers need their money to continue giving me my supplies," he said.

In another sign of desperation, gold dealers throughout the West Bank and Gaza said there has been a flood of women selling their dowries. It is common for Palestinians to stash their savings in gold.

Bassam Zaid, who owns a jewelry store in Gaza, said five women came in on a recent morning to sell gold. He said he has run out of money to buy gold himself, and can't find any other buyers.

"I have been in this business for 30 years and this is the worst month I ever saw," he said.

The feeling of desperation in Gaza is palpable, said Christer Nordahl, deputy director of the United Nations Relief and Works Agency.

He said the agency, which provides food, education and medical services to thousands of families, has experienced a "huge increase" in requests for services.

In Gaza's Jabaliya refugee camp, for instance, UNRWA typically hands out cash assistance to 200 to 300 families per month, he said. The agency is now receiving requests for aid from 200 families a day - a level the agency cannot afford, he said.

"The coping mechanism, like borrowing from relatives or buying on credit, is almost exhausted," Nordahl said. "It's very serious that people are not getting their salaries. The little that was left of the economy in Gaza was depending on these funds."

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Josef Federman contributed to this story from Jerusalem, with additional reporting by Ibrahim Barzak in Gaza City.

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