Cash has run out, but Hamas chief optimistic

To Ismail Haniyeh, the Palestinians' first-ever Hamas prime minister, the decision of Western countries to stop aid to the Palestinian Authority (PA) is hypocritical: The long push for free and fair elections hasn't been accompanied by support - particularly in financial terms - for the vote's outcome.

But Mr. Haniyeh shies away from belligerence, instead preferring businesslike calm with which he hopes to persuade donors to replace some of the $1 billion in annual foreign aid in jeopardy now that militant Hamas is in power.

"This decision [to cut aid] could increase the suffering of the Palestinians, and it also contradicts the rules of democracy when they link the bread of assistance with political issues," he says.

Hardly a week into his job, Haniyeh is facing the cash-flow crisis of a lifetime. The PA cannot pay salaries for its 140,000 employees, and needs about $170 million a month to stay in business. Some $50 million a month has been promised to Hamas by the Arab League, Haniyeh says, but doesn't come close to meeting operating expenses. The US, Canada, and the European Union have all said they will stop direct financial assistance to Palestinian institutions run by Hamas, which they deem a terrorist organization. But the EU's foreign policy chief said Wednesday that he would like to give Hamas some time to change. The organization's charter calls for Israel's destruction.

With his measured answers in an interview Thursday, Haniyeh hardly broadcasts the sense of extremism that much of the world has come to associate with Hamas. Instead of fiery rhetoric, he says he is open to dialogue. But the kind of change the international community is asking for - whether forgoing violence or recognizing Israel - does not appear to be on his agenda.

For example, Hamas made headlines early this week when hard-liner Mahmoud Zahar, now the PA's foreign minister, said in a letter to UN Secretary-General Kofi Annan that Hamas was interested in a two-state solution.

The very mention of there being room for two states here - one Arab and one Jewish - was read as a turning point for Hamas. It also implied an apparent willingness to consider reconvening peace talks, a de facto recognition of Israel.

But Haniyeh says there was a misunderstanding: the draft of an incomplete letter to Annan was faxed by accident, without the changes Mr. Zahar had suggested and without his authorization. "Somebody faxed the wrong version," he says. "It was a technical mistake."

Hamas as a whole is experiencing technical difficulties. Haniyeh inherits a PA that was already staggering during Mr. Arafat's last years.

Palestinian Finance Minister Omar Abdel Razeq told reporters this week he was surprised to find that the PA is at least $1.2 billion in debt to private creditors. Now, the Hamas-led government is having difficulties finding a bank to handle its finances, Reuters reported, because institutions such as the Amman-based Arab Bank are under pressure to stop working with the group.

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