PA PAYS EMPLOYEE SALARIES; HAMAS BLOCKS ENTRY TO

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001411

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS;
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON

E.O. 12958: DECL: 07/09/2017
TAGS: ECON EFIN PGOV KWBG
SUBJECT: PA PAYS EMPLOYEE SALARIES; HAMAS BLOCKS ENTRY TO
PA OFFICES

Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d).


1. (SBU) Summary. The Palestinian Authority (PA) paid full
salaries to public employees July 4 for the first time in 15
months, according to local press reports and Ministry of
Finance officials. In accordance with an earlier PA cabinet
decision nullifying appointments and promotions after
December 31, 2005, about 31,000 people received either no
salary or a reduced payment. The Head of the Union of Public
Employees announced that 25 percent of those denied payment
are affiliated with Fatah and 30 percent with Hamas,
countering accusations that only Hamas appointees are subject
to salary loss or reduction. Banks in Gaza are operating
normally and report no incidents related to non-payment of
salaries or bank deductions from salaries paid. Hamas
security forces seeking to maintain a Hamas-declared
Thursday-Friday weekend for PA employees blocked access to PA
offices in Gaza July 5. End Summary.

PA Pays
--------------


2. (C) PA Ministry of Finance Director General of Customs
Hatem Yousef told that the PA began paying full PA salaries
for June on July 4. He said the payments totaled NIS 290
million (USD 68.4 million),of which NIS 143.5 million went
to security personnel and NIS 147 million to civil servants.
He added that, of the 31,000 people adversely affected by the
cabinet decision on salary payments, 29,1895 received no
salary and 1,815 received a lower payment based on their
pre-promotion rank. Yousef said the list of 31,000 included
23,000 security personnel and 8,000 civil servants.

Right of Appeal
--------------


3. (C) Yousef confirmed press reports that individuals who
received no pay or a smaller sum than expected can appeal to
a committee established to review salary-related grievances.
Head of the Union of Public Employees Bassam Zakarneh
indicated to local press July 5 that appeals will be handled
expeditiously, and successful claimants may receive funds
next week.

Not Just Hamas
--------------


4. (C) Zakarneh said 25 percent of those denied their
salaries are affiliated with Fatah, 30 percent with Hamas,
and 45 percent with other groups or independents. PLC
Director General Firas Yaghi told Polchief July 4 that PM
Salam Fayyad's decision to reduce the wage bill was a good
one because it protects him from accusations that he is
targeting only those employees hired under the Hamas and
National Unity governments. He similarly welcomed the
tribunal process as good and transparent governance.

Gaza Banks OK
--------------


5. (SBU) Representatives of several Gaza banks told Econoff
July 5 that salary payments had been dispersed without
incident. Recent cash deliveries from Israel were sufficient
to cover these payments. Banks continue to deduct between 15
- 35 percent from some salary payments to help reduce PA
employee debt to the banks. Bank managers noted that the
resumption of PA salary payments will strengthen the banking
sector by reducing their current load of non-performing
loans.

Weekend Dispute
--------------


6. (SBU) Hamas Executive Forces took up positions at PA
ministries and public offices in Gaza on July 5 to prevent PA
employees from entering their offices. (Note: The PA
recently established a Friday-Saturday weekend for PA
employees, but Hamas seeks to maintain the Thursday-Friday
weekend it implemented while leading the government. End
note.) Zakarneh publicly condemned Hamas attempts to close
PA offices. Several employees barred from their offices told
local media that they will abide by the PA
government-mandated weekend and refuse to go to work on
Saturday, July 7.


JERUSALEM 00001411 002 OF 002


WALLES