Israel freezes funds destined for Palestinians

ISRAEL’S cabinet yesterday approved an immediate freeze on the transfer of hundreds of millions of dollars to the Palestinian Authority, in a first response to Hamas militants’ takeover of the Palestinian parliament.

With the Hamas-dominated parliament sworn in on Saturday, and the group tipped to form the next Palestinian government, the Palestinian Authority has become “a terrorist authority”, and all funds to it must be halted, acting Israeli Prime Minister Ehud Olmert told the cabinet.

Israel, he added, “won’t have contacts with a government in which Hamas takes part.”

The cabinet rejected even more drastic economic measures recommended by security officials, mindful of possible international reaction, but the withholding of funds Israel collects on behalf of the Palestinians still threatens to make life wretched for many Palestinians.

Hamas’s new parliament speaker, Abdel Aziz Duaik, denounced the decision as a ploy motivated by Israel’s March 28 elections. “This is a wrong decision, and the Israelis must reconsider it.”Hamas is sworn to Israel’s destruction and has killed hundreds of Israelis in suicide bombings.

Yesterday, Hamas nominated the pragmatic Ismail Haniyeh to be its prime minister, a move that could be intended to put a more moderate face on the group as it readies to take power.

Palestinian leader Mahmoud Abbas was expected formally to charge Mr Haniyeh with the task of putting together a new cabinet.

Mr Haniyeh said a Hamas delegation would begin consultations with possible coalition partners today.

The Israeli cabinet’s decision means Israel will halt the transfer of about €58 million in taxes it collects monthly on behalf of the Palestinians under a 1994 economic accord.

That money accounts for nearly half of the Palestinian Authority’s payroll, and could compromise the ability of the Palestinian government - the largest employers in the Gaza Strip and West Bank - to pay salaries.

Should the government find itself unable to meet its payroll, it could be forced to fire tens of thousands of people, creating even greater volatility and desperation in areas already flush with guns and mired in poverty.

Israel has withheld the tax payments in the past following Palestinian attacks on Israeli targets, putting the money in escrow and eventually transferring it.

“The next payment is to be made in early March, and it won’t take place,” said government spokesman Asaf Shariv. Hamas has said it would try to make up any shortfall by recruiting money from the Arab and Muslim world.