The Palestinian Authority’s Social and Prisoners’ Affairs Minister
Shawqi al-Ayasa said Sunday that the unity pact signed in June between the PA and Hamas was working with a budget that was “below zero,” signaling deep financial difficulties in running bureaucratic institutions.

The budget trouble was a result of a failure among donors to send funds as scheduled to the PA, which functions largely based on international aid.

“The US has not provided a single penny since January 1, and Europe and Arab states only provided a third of what they were scheduled to give,” al-Ayasa told the Palestinian news agency Ma’an.

“The government’s budget is below zero, and it’s starting to borrow from banks to move forward, because only less than third of donor funds that were scheduled to be received this year arrived,” he said.

The Palestinian Authority and Hamas agreed to form a unity government in late April, prompting Israeli Prime Minister Benjamin Netanyahu to end US-brokered peace negotiations with the PA after a nine-month effort. Netanyahu maintains that he will not resume talks with Palestinian Authority President Mahmoud Abbas while he maintains ties with Hamas, which is considered a terror group by Israel and the US.

The radical Islamist movement, which continued to control Gaza even after the reconciliation deal, has insisted that the PA pay the salaries of Hamas’s 42,000 civil servants.

The PA refused to pay the officials in June because they were appointed after Hamas ousted bitter rivals Fatah — which dominates the PLO — from Gaza in 2007 and therefore were not registered as its employees.

The pay row was the first challenge to the new Palestinian unity government, formed to try to end years of Palestinian rivalry, and Qatar stepped in to cover the costs to former Hamas employees.

On Saturday, the Palestinian Authority said it would pay its employees’ August salaries on time and Hamas civil servants in Gaza “as soon as possible,” a spokesman for the unity government said.

“The salaries of the civil servants with the Authority will be paid next week and the government is trying to pay those of Hamas as soon as possible,” government spokesman Ihab Bseiso told AFP.

A Palestinian official speaking on condition of anonymity said the PA will have to ensure the payments do not jeopardize international aid.

“Hamas is regarded as a terrorist organization by many abroad,” the source said. “The government wants to obtain guarantees that it is allowed to pay these wages.”

The Islamist movement has been crippled by an Israeli blockade of Gaza and the destruction of tunnels to Egypt and was unable to pay thousands of officials for months.

After Hamas civil servants failed to receive their salaries in June, gunmen attacked banks in Gaza, forcing Hamas to close them for six days.

It was then that Qatar — a main Hamas ally — intervened, saying it would contribute a total of $60 million (€44 million).

The payments from Doha were then hit by the seven-week conflict between Hamas and Israel that broke out on July 8. Last week, Hamas and Israel agreed to an Egypt-mediated ceasefire to end a deadly 50-day war that killed more than 2,100 Palestinians (1,000 of them gunmen, according to Israel), and 72 Israelis, including a four-year-old child.

Bseiso said 177,000 civil servants were registered with the Authority — 70,000 in Gaza and 107,000 in the West Bank.

Each month, their salaries cost around $200 million, $120 million of which is covered by taxes collected by Israel on behalf of the Palestinian territories, he said.

Some $57 million comes from the Palestinian budget and $35 million from international aid, the spokesman added.