Palestinian leader says coffers are empty

GAZA -- Prime Minister Ismail Haniyeh told the first full meeting of his Hamas-led Cabinet yesterday that the Palestinian government is broke, and he urged the international community not to slash aid.

''The Ministry of Finance has inherited an entirely empty treasury, in addition to the debts of the ministry and the government in general," said Haniyeh, also a senior leader of the Islamic militant group.

The new Palestinian government is facing Western isolation and cuts in aid to its administration unless it recognizes Israel, renounces violence, and accepts interim peace accords.

There is also domestic discord. President Mahmoud Abbas, whose long-dominant Fatah faction was ousted by Hamas in January legislative elections, announced late yesterday that he was assuming security control of crossing points out of Gaza, which Israel quit last year after 38 years of occupation.

Hamas denounced the move as a reversal of the status quo and a blow to government authority.

The key crossing is at Rafah, on the Gaza-Egypt border, where the future presence of European Union monitors has been in doubt since Hamas's rise to power. Israel has also curbed movement through Karni, a crucial commercial crossing on its border with Gaza.

Officials close to Abbas, who remains the Palestinian chief executive with constitutional veto powers, said he has been under pressure from the EU, which threatened to withdraw its monitors from the Rafah crossing. ''Administration of the crossing points and borders will fall directly under the jurisdiction of the president," said a statement from Abbas's office. ''It is an independent administration in terms of finance, commerce, and in security."

But Cabinet spokesman Ghazi Hamad said, ''Any attempt to reduce the authorities of the government will harm its performance and its ability to carry out its duties."

At the Cabinet meeting, Haniyeh said the government would do its best to pay salaries to the Palestinian Authority's 140,000 employees despite a cash crunch caused in large part by cuts in Israeli tax revenue transfers after Hamas's election win in January.

Hamas has previously expressed confidence it would make up for any cash shortfalls with aid from Iran and other Muslim nations. Haniyeh gave no figures on the Authority's debts.

The Palestinian finance minister, Omar Abdel-Razeq, said the government expected to receive $80 million from Saudi Arabia, Kuwait, and the United Arab Emirates to help pay March salaries.

But he said it was unclear when the Palestinian Authority would secure the funds. March salaries totaling about $118 million were to be paid this week.

''We have promises, but efforts are needed to make the promises real," Haniyeh said.

Israel, like the European Union and United States, calls Hamas a terrorist group.

Hamas has offered a long-term truce if Israel was to withdraw fully from land occupied in the 1967 Middle East war. But the group has vowed never to recognize the Jewish state.

Middle East mediators say they will cut direct aid to the Palestinian Authority unless Hamas abandons its charter call for Israel's destruction.