The new Hamas-led Palestinian Cabinet, squeezed financially by Israel, said on Wednesday it faced a cash crisis as its foreign minister made unprecedented peace overtures to the United Nations.
With Israel refusing to hand over customs duties to a Palestinian Authority led by the Islamists and the West threatening to cut funding, new Prime Minister Ismail Haniya told the first regular meeting of his ministers that he would struggle to find the money to pay government employees.
“We are making every effort to pay the government employees despite the financial crisis,” Haniya said. “We inherited a situation in which we not only have no money in the treasury, but a whole load of debts.”
The financial plight of the new administration has underlined the need for it to reverse its diplomatic standing.
Western powers have said they will have no dealings with a Hamas-led administration unless it recognises Israel’s right to exist and commits itself to non-violence after carrying out dozens of suicide attacks.
In a letter to UN Secretary General Kofi Annan on Tuesday, Foreign Minister Mahmud al-Zahar made an unprecedented reference to a “two-state solution” to the Middle East conflict while stopping short of endorsing such a vision.
In his letter, copies of which were obtained by Agence France-Presse (AFP), Zahar said the new Islamist government was looking for freedom and independence side-by-side with its neighbours.
“We look forward to living in peace and security and for our people to live a dignified life in freedom and independence, side by side with our neighbours in this sacred part of the world,” the text said.
The language was similar to an internationally backed roadmap peace plan which calls for the establishment of a Palestinian state alongside a secure Israel, and which has been rejected by Hamas.
The letter’s most eye-catching reference was to hopes for the realisation of a two-state solution, albeit mixed with blame for Israel, accusing it of seeking to annex the occupied Jordan Valley and force Palestinians to leave the area.
“This will ultimately diminish any hopes for the achievement of settlement and peace based on a two-state solution,” it said.
The foreign ministry issued a statement to the local media confirming that Zahar had sent a letter to Annan but made no mention of the phrase the “two-state solution” or the term “side-by-side with our neighbours”.
Zahar later told the BBC that reference to the two-state solution had been included as a result of a bureaucratic error by a colleague who had sent the letter.
“I asked him please cancel this, but they didn’t. That’s the mistake,” he said.
Alvaro de Soto, the UN’s special envoy for the Middle East, confirmed Annan had received the letter. “We only received the letter at headquarters yesterday [Tuesday] and we are still studying it, so I have no comment,” he told reporters in Jerusalem.
Initial reaction from the Israeli government was cool.
“In this letter, the Palestinian foreign minister talks about cooperation and peace in the region, but unfortunately he talks of the region without Israel,” foreign ministry spokesperson Mark Regev told AFP. “In no part of this letter does he mention the existence of Israel.”
Hamas’s victory in January’s Palestinian election over the moderate Palestinian Authority president Mahmud Abbas’s formerly dominant Fatah faction, and subsequent entry into government last week, has led to a complete freezing in contacts with Israel.
As part of a series of sanctions, Israel has stopped handing over customs duties that it traditionally collects on behalf of the Palestinian Authority and that are worth around $50-million a month.
The European Union and United States have threatened to slash aid to the already cash-strapped Palestinian Authority unless there is a radical change in the platform of Hamas, which is considered by both as a terrorist organisation.
Although Hamas has insisted it will not be “blackmailed” by the West and Israel, efforts to draw alternative funding have so far failed to bear fruit.
Last week’s summit in Sudan of the Arab League — which counts some of the world’s richest countries among its members — did not accede to Palestinian requests for a funding boost.
Israel’s acting Premier, Ehud Olmert, is planning to fix the Jewish state’s permanent borders on a unilateral basis in the continued absence of what he regards as a partner in the peace process.
Olmert’s Kadima party won an election last week and is stitching together a new coalition. — AFP