Abbas Takes Bank Loans to Pay Overdue Salaries

The government of the Western-backed Palestinian President Mahmoud Abbas said Monday it had taken bank loans to pay its workers overdue salaries after diverting funds from the West Bank to pay Palestinians in war-torn Gaza.

The Palestinian Prime Minister Salam Fayyad did not pay salaries on time this month after his government diverted funds to compensate Palestinians in the Gaza Strip who lost their homes in last month’s Israeli war on the strip.

Abbas’s social affairs minister, Mahmoud al-Habbash, told Reuters that employees’ salaries would be paid on Tuesday and that the government would pay back the bank loans with cash from international donors.

"Salaries will be paid tomorrow. We received financial assistance from local banks and we hope that financial aid from donors will be transferred soon to pay back the loans," al-Habbash said.

Government workers had declared a strike, citing Fayyad’s inability to pay wages, at the beginning of the month.
Rebuilding Gaza

Fayyad, who runs a government largely dependent on foreign aid, wants to take the lead in costly reconstruction efforts in Gaza to sideline Hamas.

He announced a few days earlier a $600 million aid program financed by donors to help with reconstruction efforts.

“This program will include donations to contribute to repairing or rebuilding destroyed houses. Banks will also offer loans at advantageous conditions for the owners who need additional sums," Fayyad said.

He added that 90,000 people were left without homes and forced to live in tents pitched amid the ruins.

The Palestinian Authority has given $50 million to the United Nations to be distributed in cash to allow families to find temporary lodgings until their homes are rebuilt, he said.

Fayyad received the money to begin paying Palestinians in Gaza earlier this month when Israeli Prime Minister Ehud Olmert approved the transfer of 175 million shekels ($43 million) from the West Bank to the Gaza Strip.

But the PA has faced major difficulties in getting cash into the impoverished territory because of the Israeli blockade imposed on Gaza.

Hamas, which won a 2006 Palestinian election and seized control of Gaza from Abbas’s secular Fatah forces 18 months later, has also started making partial payments to Palestinians who lost their homes in the war.

Washington wants credit for reconstruction to accrue to Abbas’s government rather than Hamas’s administration in the Gaza Strip.

(Agencies via

(The Palestine Chronicle is a registered 501(c)3 organization, thus, all donations are tax deductible.)
Our Vision For Liberation: Engaged Palestinian Leaders & Intellectuals Speak Out