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Gulf Arab States Prepare a Bailout to Assist Palestine
Persian Gulf oil states are tossing a lifeline to the financially foundering Palestinian Authority in the form of a $300 million aid package. This will make Arab donors the Authority's chief source of budgetary support for the first time.
Under a plan devised with the support of the International Monetary Fund and endorsed by Arab League finance ministers, the Islamic Development Bank is preparing to provide up to $40 million a month for six months from a new "intifada fund," Palestinian officials and foreign diplomats say.
Most of the money is coming from Saudi Arabia, the United Arab Emirates and Kuwait, countries that until recently refused to provide direct aid to Yasir Arafat's semiautonomous government. The European Union and the United States have been the biggest donors until now.
The six months of payments are in addition to the unpublicized transfer of $80 million in Arab grants and loans to the Authority since December, exceeding the $65 million it received from European governments.
The Authority administers the Palestinian-controlled areas of the West Bank and the Gaza Strip, running schools, hospitals and security forces.
Its revenues have been slashed by the current conflict with Israel ¡ª a crisis that has halved Palestinian incomes, tripled unemployment and fueled popular anger not just at Israel but at the Authority itself. Without new financial support, American diplomats and United Nations envoys have warned in recent weeks, the Authority faces imminent bankruptcy.
Now, the wealthy Arab states will have "an investment" in the Authority for the first time. For Mr. Arafat, the aid provides an institutional lease on life while reducing his dependence on Western Europe and the United States.
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