PA 'faces financial crisis'

2006-02-19 20:29

Gaza City - The Palestinian Authority faces a "serious financial crisis" following Israel's slapping economic sanctions on the beleaguered body, Palestinian leader Mahmud Abbas told reporters on Sunday night.

"The Palestinian Authority has faced a serious financial crisis since the start of the month," Abbas told reporters, while he announced he would meet leaders of the radical Hamas movement on Monday.

The meeting originally scheduled for Sunday night is expected to centre on the forming of the new Hamas-led government after the party's upset victory in parliamentary elections on January 25.

"We hope we can surmount this crisis month by month."

Abbas once more defended Hamas's victory as "the free choice of the population" amid widespread displeasure from the European Union and the United States, which classify the Islamist party as a terrorist organisation.

Abbas also confirmed the United States wants $50m returned by the Palestinians in light of Hamas's control of the government, but Abbas added "talks" were continuing on the subject.

Israel voted on Sunday to suspend payment of monthly tax duties, estimated at $50m, in anticipation of the formation of a government by Hamas, whose members were sworn into parliament on Saturday.

Acting prime minister Ehud Olmert made clear that Israel considered any Hamas-led government as little more than "a terrorist regime" and would immediately halt any transfer of funds, which make up roughly one-third of the Palestinian budget.

Hamas, which refuses to recognise Israel's right to exist, has so far rebuffed calls by Abbas to recognise past agreements signed with Israel.

- AFP