Fatah legacy puts Hamas under financial pressure

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The Hamas-led Palestinian Authority, already facing a tightening diplomatic and economic squeeze, is having to decide whether to confirm the recruitment of 18,000 security service personnel enacted in the three months before it took office.

The outgoing Fatah Minister of the Interior, Nasser Yusef, bequeathed the new Hamas administration a volatile new problem by approving a 25 per cent manpower increase in the much-criticised security services between January and March of this year.

Jihad al-Wazir, the PA's previous acting finance minister, refused to pay the newly recruited personnel. But General Yusef's approval leaves the Hamas administration with a choice between adding to the PA's already soaring deficit or a confrontation with the new recruits, many of whom are thought to be members of Fatah-linked armed groups.

The dilemma is one of a series of fresh problems which includes a likely decision by the Israeli Bank Hapoalim to sever its account links with the Arab Bank and other banks serving Palestinian businesses in the West Bank and Gaza over the next three months.

Hapoalim's move in the wake of Hamas's election victory ­ which is believed to have been recommended by the bank's US lawyers ­ threatens to halt trade between Palestinian businesses with Israeli suppliers.

The Palestinian Prime Minister, Ismail Haniyeh, told the first full meeting yesterday of his Hamas-led cabinet from Gaza City by video link that the new Ministry of Finance had "inherited an entirely empty treasury in addition to the debts of the ministry and the government in general".

Mr Haniyeh added that cabinet members would not be paid until the financial crisis had been resolved and pledged that the PA would do its best to pay salaries of the 140,000 civil servants, despite Israel withholding $60m (£35m) a month in duties owed to the PA.

General Yusef's approval for the recruitment of an extra 17,926 security personnel came on top of 14,000 recruited and paid with a series of social security benefits in the previous six months. The swelling of the security service payroll, which willincrease to 90,000 if the recruitment is approved, is believed to have been one of the factors which led to the resignation of the previous PA's internationally respected finance minister, Salaam Fayad.

The new proposed additions to the payroll during and after the January election campaign came to light in an internal Interior Ministry memo ­ from a senior ministry official to General Yusef ­ leaked in Gaza to Wissam Afifa, a senior journalist on the pro-Hamas newspaper Al Risala.

Mr Afifa said the gradual increases in the security service payroll had originally been to buy off demands by armed groups for jobs with salaries. There have been a series of kidnappings in Gaza and raids on PA premises blamed on such motives. He claimed the practice had then been extended as a deliberate attempt to embarrass the Hamas administration. "It is a grenade thrown into the middle of Hamas," he said.

Said Siyam, the Hamas Interior minister, has already ordered a halt to new recruitment of security personnel and issued orders to stop fuel and maintenance payments for cars presented to various PA officials, in most cases by the late Palestinian president, Yasser Arafat. Mr Afifa said that one former minister was allotted four cars.

EU foreign ministers will decide next week whether to cut off further aid from the Hamas-led authority. Hamas says it needs a minimum $130m a month to keep afloat and has been promised only $50m by Arab governments. Javier Solana, the EU foreign policy chief, said that until Hamas renounced violence and recognised Israel, "talking about business as usual simply isn't possible".