In New Problem for Palestinians, Banks Reject Transfers

In New Problem for Palestinians, Banks Reject Transfers - New York Times: "As the Hamas-led government struggles to raise cash after the suspension of Western aid to the Palestinian Authority, it faces a new and unexpected obstacle: banks here are refusing to accept its money transfers from abroad. The United States Treasury last month barred almost all financial dealings with the Palestinian Authority in response to Hamas's rise to power, under a federal law that makes it a crime to provide funds to terrorist groups.

That has rattled local banks, which are tied to the American banking system. The banks abruptly stopped handling even basic wire transfers needed for the authority to receive money donated by foreign countries. In recent weeks Arab countries, coordinated by the Arab League in Cairo, have raised more than $70 million.

The European Union joined the United States in suspending all financial assistance for the authority after Hamas took office in late March as a result of its decisive victory in Palestinian legislative elections. Israel has also frozen the roughly $50 million it collects in tax and customs revenues each month on behalf of the Palestinians.

The Palestinian Authority needs at least $150 million a month just to pay salaries and run essential institutions like schools, hospitals and the police force. On its own the authority raises barely $30 million a month, and it is falling deeper into debt each day.

Since coming to power, the Hamas-dominated government has missed two paydays for the authority's 165,000 employees. Palestinian nurses and teachers, civil servants and security force officers like Muhammad Burbar, 23, are caught in the middle.

Mr. Burbar has not received his monthly $333 paycheck since February. He is out of cash, and his wife needs medical treatment. On Tuesday the couple sold a tiny gold bracelet and a pendant they bought for their daughter when she was born last year. They received $28 from a gold shop in Ramallah."