GAZA CITY, Gaza Strip: The Palestinian Authority's coffers are empty and the new government is struggling to find money to pay tens of thousands of its employees, new Palestinian Prime Minister Ismail Haniyeh told his cabinet at its first meeting yesterday.

Haniyeh also said that he and the rest of the cabinet would not be paid until the rest of the 140,000 employees of the Palestinian Authority are paid.

The new Hamas ministers need to find ways to make up for tens of millions of dollars in foreign aid the international community is expected to withhold, largely because of the Islamic group's refusal to recognize Israel and renounce violence.

Israel also has frozen the transfer of tens of millions of dollars in tax revenues it collects on behalf of the Palestinians since shortly after Hamas' January election victory.

International aid and the monthly Israeli tax transfers are major sources of funds for the Palestinian operating budget.

"The Palestinian Finance Ministry has received an entirely empty treasury in addition to the debt of the government in general," Haniyeh was quoted by his office as telling the cabinet at the start of its session.

"We are going to do our utmost as a government to pay the salaries of the Palestinian Authority employees despite the cash crisis that we are facing," he said.

Facing a Western cut-off in aid, Hamas has turned to Arab and Muslim countries for help. But it's unclear how much money these countries are ready to provide.

Hamas's first cabinet meeting was held via videoconference, with simultaneous sessions taking place in Gaza and the West Bank. Israel doesn't permit Hamas ministers to travel between the two territories. The Palestinian legislature also meets this way.

The Deputy Prime Minister, Nasser Eddin Shaer, said Hamas has prepared an emergency plan for the first three months of rule, but declined to give details.

Hamas denies two-state solution

Palestinian Foreign Minister Mahmoud Zahar wrote to UN Secretary-General Kofi Annan on Tuesday that the new Hamas government believes its struggle against Israel's military occupation is just, but that it wants to live side-by-side and in peace with its neighbours.

However, Zahar denied that he in any way recognized Israel's right to exist or a two-state solution to the Israeli-Palestinian conflict.

Source: China Daily