Associated Press
Thursday, April 6, 2006

GAZA CITY, April 5 -- The new Hamas-led government is broke and failed to pay tens of thousands of Palestinian public workers on Saturday, Prime Minister Ismail Haniyeh said Wednesday.

It was the first time the radical Islamic group had admitted that it would have difficulty running the West Bank and Gaza Strip without massive foreign aid.

Haniyeh offered no solutions to the cash crunch, pledging only to do his best to make up for tens of millions of dollars in aid being withheld by international donors. He also appealed to the Arab world to send more donations.

The Palestinian Authority is the largest employer in the West Bank and Gaza, providing salaries for 140,000 people. The money sustains about one-third of the population. Haniyeh said it was unclear how the government would meet its payroll.

"The Palestinian Finance Ministry has received an entirely empty treasury in addition to the debt of the government in general," he told the first meeting of his cabinet.

Finance Minister Omar Abdel Razek said he was waiting for $80 million from Saudi Arabia, Kuwait and the United Arab Emirates.

Haniyeh's cabinet, sworn into office a week ago, must find ways to make up for foreign aid that Western donors are threatening to withhold, largely because of Hamas's refusal to recognize Israel. In the past, Palestinians received about $1 billion a year in foreign aid.

Israel has welcomed Western efforts to continue humanitarian aid to the Palestinians, as long as the money does not reach Hamas, which Israel and the United States consider a terrorist group.