Palestinians Say Banks Afraid of U.S.

04/25/2006

RAMALLAH, West Bank (AP) - Millions of dollars in foreign aid for the Palestinians is stuck in Arab banks that won’t release it for fear of U.S. retribution, the Palestinian finance minister acknowledged Tuesday.

Since a Cabinet run by the militant Islamic Hamas was sworn into office last month, financial pressure by Israel and Western countries has left the government broke. It was unable to pay 165,000 workers on April 1 and paychecks are due again in less than a week.

Hamas turned to Arab and Muslim countries for help. But the money raised remains stuck in an account in Egypt, said Finance Minister Omar Abdel Razek of Hamas. Arab banks that do business in the Palestinian territories fear that by transferring the money they will run afoul of U.S. anti-terrorism laws, he said.

“The money is available. The problem is getting it here,” Abdel Razek said.


The funds have been converted to euros to lessen the possible American connection, Abdel Razek, a U.S.-educated economist, said. The government is discussing possible next steps with the banks. “We hope to find a solution in the near future,” he said.

The Palestinian government needs about $160 million a month to break even, more than half of it from foreign aid. Hamas has raised about $70 million so far from Iran and Saudi Arabia, he said. The Saudis have promised an additional $70 million, while Iran has offered another $50 million.

The U.S. has labeled Hamas, which is committed to Israel’s destruction, a terrorist group. Based on that assessment, it has barred Americans from most business dealings with the new Palestinian government.

American officials have not said whether these restrictions apply to transfers by non-American banks. But Hamas says lenders operating in the West Bank and Gaza Strip aren’t taking any chances.

“We hope that the banks that don’t deal with the United States will transfer this money for us,” Abdel Razek said.

The Jordan-based Arab Bank, the largest bank in the Palestinian areas, declined comment.

Palestinian President Mahmoud Abbas, on a visit to Turkey, said the international financial pressure on Hamas is hurting all Palestinians. The Palestinian government is the biggest employer in the West Bank and Gaza.

“The burden is on the Palestinian people,” he said, adding that officials are looking for a “new mechanism” to deliver the aid. He did not elaborate.

Israeli security commanders have expressed concern that suitcases of cash could be spirited into Gaza through tunnels from Egypt that are used for arms smuggling, according to Israeli officials who spoke on condition of anonymity because they were not authorized to give details to the media.

Even if the money reaches Palestine, it won’t solve Hamas’ long-term problems. The U.S. and European Union have cut off hundreds of millions of dollars in aid. And Israel has suspended monthly transfers of about $55 million in taxes it collects for the Palestinians.

Israel and the Western donors have said they will restore the flow of money only if Hamas renounces violence, recognizes Israel’s right to exist and accepts past peace agreements. Hamas has rejected the demands.

Hamas has been locked in an increasingly contentious power struggle with the rival Fatah movement, which is led by Abbas. The dispute over control of government security forces has escalated into armed clashes in recent days.

Abbas said Tuesday that he won’t allow the situation to spin out of control. “We will never let a civil war occur,” he said.

In Gaza, Prime Minister Ismail Haniyeh of Hamas said he appreciated Abbas’ efforts to reduce tensions.

“Thank God that we contained and stopped these incidents. My message to our people is that we should maintain and protect the national unity,” he told reporters before a Palestinian cabinet meeting.

Abbas and Haniyeh both have claimed authority over the security forces. Most of the security personnel are Fatah loyalists.

Last week, Hamas announced formation of a security agency to be headed by a militant on Israel’s most-wanted list. Abbas vetoed the appointment, drawing condemnation from Hamas’ top leader that sparked days of unrest.