Hamas leader to form new Palestinian government
(AP)
Updated: 2006-02-20 14:28

Ismail Haniyeh was to receive the official appointment to become the first-ever Hamas prime minister of a Palestinian government, but Israel was not waiting for the formalities - cutting off vital funds and branding the new regime a "terrorist authority."

Ismail Haniyeh, a senior Hamas leader, gestures during a news conference at his house in Shati refugee camp in Gaza February 19, 2006. [Reuters]

Palestinian leader Mahmoud Abbas said he would meet Hamas leaders on Monday to choose a premier, and Hamas said their man would be Haniyeh, a relative moderate in the hierarchy of the violent Islamic movement that has sent dozens of suicide bombers into Israel.

Early Monday, Israeli forces operating in the Old City of Nablus shot and killed a senior member of Islamic Jihad, Palestinians said.

The Israeli military said it according to initial reports, Israeli soldiers opened fire on armed Palestinians, killing a Fatah militant. The army also said it had made 12 overnight arrests in the West Bank.

The Islamic Jihad in Nablus said its top commander in the region, Ahmad Abu Sharik, 30, was killed in a gunbattle and two others were injured. Five militants were arrested by the army in the Nablus region, Palestinians said.

On Sunday, four Palestinians were killed in two Israeli military operations in the West Bank and Gaza.

Haniyeh would have five weeks to form a government. Hamas won an absolute majority in the parliament and could rule on its own, but he prefers a broad-based coalition, partially to deflect international criticism.

In its first official move Sunday, Israel halted a monthly transfer of funds but did not adopt a tougher package of restrictions proposed by the defense establishment.
Israel and Western countries demanded the group renounce violence and recognize Israel's right to exist, but Hamas resisted pressure to moderate. The group took control of the Palestinian legislature when the new parliament was sworn in Saturday.
"The PA is _ in practice _ becoming a terrorist authority," acting Israeli Prime Minister Ehud Olmert told his Cabinet at the beginning of its meeting Sunday. "Israel will not hold contacts with a government in which Hamas takes part."

The Cabinet decided to stop the transfer of the roughly US$55 million (euro46 million) a month it collects in taxes and tariffs on behalf of the Palestinian Authority. The order did not specify when the payments would stop, but government spokesman Asaf Shariv said the next payment, scheduled for early March, "won't take place."

Army Radio quoted Defense Minister Shaul Mofaz saying the cutoff would be reviewed each month.

The cash-strapped Palestinian Authority relies on that money to help pay the salaries of roughly 140,000 government employees, including about 57,000 in the security forces.

Abbas said cuts in aid are already being felt. "We are in real financial crisis," he told reporters in Gaza. "We hope we can overcome it month by month."

Should the government, the Palestinians' largest employer, be forced to lay off tens of thousands of workers, it would lead to increased chaos and poverty in Palestinian towns throughout the West Bank and Gaza.

Palestinian experts estimate that the Palestinian budget shortfall is about US$1 billion a year, and the Israel-collected funds would cover about half of that.

However, the Cabinet held back from adopting far harsher proposals made by Israeli security officials, including a recommendation to seal off the Gaza Strip from Israel, barring thousands of Palestinian laborers from entering Israel and eliminating all trade with the impoverished area.

Israel's acting foreign minister, Tzipi Livni, said the government did not want to worsen the daily lives of Palestinians, a move she said would cause an international backlash against Israel.

On Sunday, veteran peacemaker Shimon Peres, an Olmert ally, told a visiting U.S. delegation, "We must see to it that not a single shekel reaches Hamas and terrorism, and that not a single innocent Palestinian suffers from an economic boycott."

Hamas is listed as a terror organization by the United States and the European Union, and many Western countries have threatened to cut off hundreds of millions of dollars in funding for the Palestinian Authority if the group does not moderate.

Abbas said Sunday he agreed to return US$50 million in special aid given by the US government. The US asked for the money after Hamas won parliamentary elections.
However, the actual transfer of funds has not taken place, Palestinian officials said.

On Friday, US State Department spokesman Sean McCormack said Washington requested return of the money to ensure that "these funds not potentially make their way into the coffers of a future Palestinian government that might not recognize the right of Israel to exist."

Abbas said he would discuss the matter with US envoys in the coming days.