New Palestinian funding plan may ease woes

Occupied Jerusalem: A year-old Western embargo on the Palestinian Authority could be eased by Finance Minister Salam Fayyad's plan to use an outside account to collect Arab funds to pay salaries and other bills, diplomats said yesterday.

But the plan, which hinges on the US making clear that banks and donors can send funds into a Palestine Liberation Organisation (PLO) account under Fayyad's control, will not in itself fill the Hamas-led government's funding void nor give it the direct control it seeks over its own finances.

US officials said they were considering Fayyad's request. If approved, it could allow Arab donors to transfer hundreds of millions of dollars in promised funds.

But Washington said underlying financial sanctions against the Authority itself would remain in place, including a ban on bank transfers. Western diplomats and analysts said opening the PLO's taps could be part of a shifting US strategy to bolster Fayyad and others in a month-old Palestinian unity government who come from outside the Hamas Islamist group.