Palestinian Authority Confirms It Cannot Pay March Salaries

Finance Minister Omar Abdel-Razeq: Widening int'l boycott of Hamas-led government means money has dried up.

The Palestinian Authority confirmed on Sunday it could not pay March salaries to public employees because a widening international boycott of the Hamas-led government meant money had dried up.

"The financial situation is very difficult and there is no way to give a specific date for paying salaries," Finance Minister Omar Abdel-Razeq told al-Ayyam newspaper.

The PA has faced the threat of an economic collapse because the United States, Europe and Israel have cut off funds since elections brought in a government last month led by the Islamic militants whose charter seeks to destroy Israel.

Abdel-Razeq had earlier said he hoped to pay the salaries of 140,000 government employees by mid-April, after promised aid from Saudi Arabia, Kuwait and the United Arab Emirates.

But even the pledged sum of $80 million may not be enough to cover salaries and benefits that come to about e118 million.

Abdel-Razeq said the mid-April estimate had been "given without having a clear picture of the size of the financial problem suffered" by the Palestinian government and an ensuing refusal by banks to lend it any money.

The Palestinian Authority "could not get loans because of the difficult financial situation it is going through", he said. Its debts now total $1.3 billion, including $640 million to regional and local banks, he added.

Norway freezes aid to Palestinian AuthorityNorway has frozen aid to the Palestinian Authority, officials said on Sunday, joining a growing list of countries halting assistance to pressure the new Hamas government to restart negotiations with Israel.

Foreign Minister Jonas Gahr Stoere said that Norway wanted to help bring Israel and the Palestinians back to the negotiating table "so that we can achieve our goal and the international community's goal -- namely two states that can live side by side in peace."

"It is worrisome that we now see that both Israel and the Palestinian side are turning inward and disregarding the need to negotiate with one another," Stoere told Norwegian radio.

Stoere said that Norway did not aim to punish Palestinians for their choice of government but that it could not support an administration regardless of its policies.

Norway currently gives around e57 million a year in aid to the Palestinian Authority.

The United States and the European Commission suspended aid to the new Hamas-led Palestinian government on Friday, pushing the Palestinian Authority closer to financial collapse.

U.S. slashes aid to PAThe United States has decided to slash hundreds of millions of dollars from its aid package to the Palestinian Authority, after the administration completed its review of the matter on Thursday.

The cut in aid will amount to some $300 million, according to a fact sheet distributed by the State Department.

"Because the new Hamas-led government has failed to accept the Quartet principles of non-violence, recognition of Israel and respect for previous agreements between the parties, the United States is suspending assistance to the Palestinian government's cabinet and ministries," U.S. Secretary of State Condoleezza Rice said in a statement on Friday.

Under the decision, the administration will cut or suspend $45 million in direct assistance to the PA; $130 million in infrastructure projects; $20 million in private enterprise development and revitalization, financial markets reform, trade programs and information technology sector support; $17 million in electoral, political party, local government and legislative support programs; $13 million in civil society development; $10 million in rule of law and judicial programs; $7 million in technical assistance and vocational training; $4 million in community policing; and $165 million in ongoing and planned projects subject to further review.

The total cut will be a little bit more than $400 million, but the administration is planning to use $105 million in available funds from the canceled projects to "augment ongoing humanitarian and democracy-building programs," such that the real cut will be around $300 million.

Hamas, meanwhile, has condemned a decision by the EU to freeze aid to its newly formed government and said the move would only make Hamas more popular.

"They are punishing the Palestinian people for practicing their [democratic] choice," Palestinian Prime Minister Ismail Haniyeh said on Friday.

The EU Commission said it had halted payments to the Hamas government because the new cabinet had not recognized Israel's right to exist or renounced violence.

EU diplomats said the aid freeze covered all direct aid to the Palestinian government and payment of public employees' salaries with EU funds through the World Bank, but not humanitarian aid through international and nongovernmental organizations.