Palestinians to pay staff with cash unlocked by Israel

RAMALLAH, West Bank (AFP) - The Palestinian emergency cabinet on Monday prepared to pay thousands of civil servants but none allied to Hamas with nearly 120 million dollars transferred by Israel after a 17-month boycott.

"On Wednesday we will start paying salaries to the public sector, civil and military employees," said information minister Riyad al-Malki, one day after Israel eased an economic boycott and unblocked a portion of owed tax duties.

"We are delighted that the public sector will be paid fully for the first time since February 2006," Malki said, stressing that employees working for Hamas, which seized control of the Gaza Strip last month, would not be paid.

"Whoever decided to reject our existence and ally him or herself with the perpetrators of the coup d'etat in Gaza, they will be exempted from the salaries," he told the news conference.

Malki said the new Western-backed emergency government had "information" that the radical Islamist movement was preparing to attack banks in Gaza to "seize salaries and distribute them to their supporters".

"Hamas will bare full responsibility for the consequences," he warned, after prime minister Salam Fayyad chaired a regular meeting of his cabinet.

On Sunday, Israel started to transfer hundreds of millions of dollars in customs duties denied to Hamas-led Palestinian governments with a first instalment of 118 million dollars paid into West Bank coffers.

The Jewish state is to continue to transfer around 400 million dollars split over the next six months, together with monthly transfers of new duties.

Israel's monthly transfers of 50 to 60 million dollars worth of customs duties, which are levied on goods destined for Palestinian markets that transit through Israeli ports, constitute around a third of the Palestinian budget.

The end of the boycott provides a badly-needed injection of cash to Palestinian president Mahmud Abbas's new government and will allow thousands of civil servants to be paid for the first time in months.

The more than 170,000 employees on the Palestinian Authority books have received only partial salaries since March 2006, owing to Israeli and Western economic boycotts slapped on successive Hamas-led administrations.

Their monthly salary budget amounts to 120 million dollars.

"Israel froze more than 600 million dollars and the money transferred yesterday is less than 20 percent of that money," Palestinian chief negotiator Saeb Erakat told a news conference in Ramallah.

Israel released the money as a centrepiece of Prime Minister Ehud Olmert's policy of boosting Abbas's moderate emergency government, which has received broad international support, while further isolating Hamas in its Gaza bastion.

Abbas appointed internationally respected economist Fayyad as premier last month after sacking the Hamas-led administration as Islamist gunmen seized the Gaza Strip, routing his loyalists and security forces.

Erakat said some of the money would be earmarked to help ease the deteriorating humanitarian situation in the Gaza Strip, cut off from the rest of the world under Hamas-rule and where the UN has warned of looming crisis.

"Gaza will be our priority. Our people there have suffered enough because of the despicable coup d'etat and should not suffer more," Erakat said.

Israel launched its economic boycott in February 2006, freezing the monthly transfers of tax receipts after Hamas won a Palestinian election but refused international demands to renounce violence or recognise the Jewish state.

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