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Palestine Facing Money Crisis

February 17, 2001

UNITED NATIONS (AP) _ A financial crisis facing the Palestinian Authority could cause its collapse and possibly lead to ``chaos and anarchy″ in Palestinian areas, the U.N. Mideast envoy warned Friday.

Terje Roed-Larsen is embarking on a U.S. and European tour seeking money to support the Palestinian Authority’s budget for the next two months, and is urging Arab governments to redirect their pledges to budgetary aid.

He said $50 million is needed per month from donors.

``The Palestinian Authority will within just a few weeks not be able to pay its salaries which as an effect may lead to a collapse of key Palestinian institutions, which again might lead to chaos and anarchy in the Palestinian areas,″ Roed-Larsen said.

The Norwegian government has contributed $10 million, but to get through February and March, the Palestinian Authority needs $54 million being withheld by Israel from tax collections and a significant contribution from the European Union, he said.

An Israeli blockade imposed on Palestinian areas in October after the current wave of fighting broke out has cost the Palestinian economy $1.5 billion because thousands of Palestinian workers have been prevented from reaching their jobs in Israel.

Roed-Larsen said unemployment in the West Bank and Gaza Strip is now 38 percent and rising, and 30 percent of the people are now living below the poverty line, earning less than $2.10 a day. In some areas of Gaza, more than half the people live in poverty.

The envoy said the economic troubles and dropping living standards have aggravated the relations between Israel and the Palestinians.

Before the latest violence erupted in late September, 70 percent of the Palestinians supported the peace process, but now fewer than half believe negotiations can lead to peace, he said.

``There is a growing support for extremist organizations searching to solve the issue at hand through violence,″ he said.

Violence is now rampant, Roed-Larsen said, and ``our opinion is that the situation very easily can get out of hand with violence and counter-violence maybe on a massive scale.″

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