Chaos Could Doom Palestinian Authority Leadership Void in Territories Would Put Onus Back on , Thwart Withdrawal Plan

By GUY CHAZAN

August 11, 2006; Page A4

RAMALLAH, -- Israel's war with Hezbollah has overshadowed a looming crisis in the West Bank and the , where conditions have deteriorated to the point that some in the are exploring the prospect of its self- dissolution.

The economic and political breakdown has put new stresses on a population already racked by falling incomes and high unemployment. But the unraveling of the Palestinian Authority, starved of cash and with several of its ministers in Israeli jails, could have disastrous consequences for Israel as well: International law dictates that as an occupying force, it would have to take over full responsibility for the well-being of 3.9 million .

An aid freeze by donors, initiated when won January elections in Gaza, has left the PA virtually penniless. More than 150,000 public-sector workers have gone unpaid for the past five months, and some ministries have ceased to function.

That has prompted an increasing number of Palestinians to call for the dismantling of the PA and a transfer of its powers back to Israel, which continues to occupy the West Bank and controls Gaza's borders despite last year's military pullout.

Even Palestinian Prime Minister Ismail Haniyeh has hinted at the idea. Following Israel's arrest of parliament speaker Abdel last weekend, Mr. Haniyeh on Wednesday said, "All political elites, the presidency, the factions and the government are invited to discuss the future of the Palestinian Authority following this...attack. Can [the PA] function under the occupation, kidnappings and assassination?"

Established in 1994 under a peace deal with Israel, the PA was conceived of as an interim self-governing body and steppingstone to full statehood. But that prospect has receded since Hamas took control in March after a stunning election victory over rival , the party of Yasser Arafat that had dominated Palestinian politics up to that point.

After Hamas, an Islamist organization with political, social-services and militant wings, won a dominant majority in January elections, international donors led by the U.S. -- which deems Hamas a terrorist organization -- froze aid and demanded that the group recognize Israel, renounce violence and accept existing peace deals with Israel. So far, Hamas has refused.

The idea of dismantling the PA was once a marginal idea, championed in the 1990s by left-wing intellectuals such as Edward Said, who advocated civil disobedience against Israeli occupation and a campaign for "one person, one vote." The model was the antiapartheid protests in South Africa that paved the way for black-majority rule there. Self-dissolution was also raised by Fatah supporters in the aftermath of their election defeat.

But there also is now some support for the idea among Hamas activists, who in the past few months have become disillusioned by political power and may prefer to return to their armed struggle against Israel.

Israel says it isn't its policy -- nor in its interest -- to see the PA go out of business. "Those that should disappear from the political arena are Hamas, not the PA," said government spokesman Avi Pazner.

Any breakdown in government could also thwart Israeli Prime Minister 's plan to withdraw unilaterally from large parts of the West Bank. "The existence of a political entity in the West Bank and Gaza is essential for Israel to achieve its objective of ending its control of the Palestinian population," said Gidi Grinstein, head of the Reut Institute, an Israeli think tank. "That's why dismantling the PA could severely compromise Israel's interests."

Yet the idea is gaining traction among Palestinians of many shades. One is Hafez Barghouti, the influential editor in chief of the Palestinian newspaper Al-Hayat Al- Jadida. "We should just accept that we are under military rule," he said. "We should turn to civil disobedience, burn our ID cards and struggle until we get our rights."

In recent months, there had been hopes of a lifeline to rescue the PA from its international isolation. In late June, Palestinian political factions reached an agreement to create a unity government that implied recognition of Israel by Hamas. The deal could have paved the way for a release of donor aid to the PA.

But then the Israel-Hezbollah war broke out, knocking the Palestinian issue off all radar screens. " has hijacked Palestine," says Mohammed Shtayye, the PA's former housing minister and the head of Pecdar, a big Ramallah-based aid and investment organization.

The fighting in Lebanon has also largely eclipsed the continuing violence in Palestinian areas. Gaza has been reeling from an Israeli ground and air offensive unleashed after militants captured an Israeli soldier in a cross-border raid on June 25. The fighting has left more than 170 Palestinians dead, more than half of them civilians. Even more disruptive was Israel's arrest in late June of 64 Hamas officials, including eight government ministers -- a third of the cabinet -- on charges of "belonging to a terrorist organization."

Wasfi Izzat Kabaha, the PA prison-affairs minister and one of two Hamas officials released by the Israelis in the past few days, is trying to get his department back up and running after a monthlong stint behind bars. Every day brings new complications: He waves a letter from Mr. Haniyeh requesting that he take over the Labor portfolio, replacing the present labor minister, who remains in Israeli custody.

His ministry used to disburse about $4.5 million in monthly allowances to the roughly 10,300 Palestinian prisoners held in Israeli jails and their families. But for three months, it has had no budget. The ministry's civil servants and lawyers aren't being paid, either.

"Will the PA collapse?" he asks. "I don't know. But if they don't recognize our rights and our government, then the situation can only get worse."

The European Commission has tried to avert the collapse of essential services, allocating $135 million over three months under a "temporary mechanism" that bypasses the Hamas government. It includes "social allowances" for about 13,000 health workers and will be paid directly into their bank accounts. But considering the PA's basic wage bill is nearly $100 million a month, it hardly solves the problem.

Meanwhile, Israel still refuses to transfer the roughly $55 million a month of value- added tax and customs duties it collects on behalf of the PA -- about half of the Palestinians' monthly budget.

For Mr. Shtayye, the outlook for the PA is bleak. "The PA is not a supermarket which can just go bust and close down," he says. "But the people are saying if it can't protect the lives of its citizens, deliver services or pay salaries, then what's the point of it?"