The new Palestinian Prime Minister, Ismail Haniyya, said on Wednesday during the first meeting of his ministers that he would struggle to find a way to be able to pay the government employees despite of the financial crisis the Palestinian Authority (P.A) is facing.

He added that the P.A has no money in its treasury and is sinking in a “whole load of debts”.

The United States and several Western countries said that they will not deal with the Hamas-led government unless it recognizes Israel’s right to exist; Hamas said that it cannot recognize a country that still occupies the Palestinian land, people, and does not recognize the Palestinian right of liberation and independence.   

Palestinian Foreign Minister, Mahmoud Zahhar, sent a letter to Kofi Anan and made  
an unprecedented reference to a "two-state solution" to the Middle East conflict.

Zahhar said in his letter that the Hamas government is looking for independence and freedom side-by-side with its neighboring countries.

“We look forward to live in peace and security and for our people to live a dignified life in freedom and independence”, Zahhar stated in his letter, “We want to live side by side with our neighbors in this sacred part of the world".

The letter was seen as similar to the internationally backed Road Map peace plan which calls for the establishment of a Palestinian state alongside a secure Israel. This plan, when declared, was rejected by Hamas.

Also, Zahhar added that Israel is not abiding by the International Law and continued its plans to annex more Palestinian lands in the occupied West Bank, and is currently seeking to annex lands in the occupied Jordan Valley and to force Palestinians out the area.

The Palestinian Foreign Minister confirmed that Zahhar sent the letter to Anan, but did not mention the phrase regarding the two-state-solution, and the side-by-side neighbors.

Meanwhile, Alvaro de Soto, the UN’s special envoy for the Middle East, confirmed that Anan had received the letter yesterday and that the UN is still studying it. His statements came while talking to reporters in Jerusalem.  

The Israeli foreign ministry spokesman Mark Regev commented on the letter by saying that “Zahhar spoke about cooperation but he did not mention the existence of Israel”.
After Hamas’ overwhelming victory in the Palestinian Legislative elections, Israel froze the tax revenue it was supposed to transfer to the P.A; Israel collects on the behalf of the P.A around 50 million US Dollar a month.

European Union and United States have threatened to slash aid to the already cash-strapped Palestinian Authority unless there is a radical change in the platform of Hamas.

Hamas said that it will not accept to be “blackmailed” by Western countries and Israel and decided to draw alternative funding have so far failed to bear fruit.

The Israeli acting Prime Minister, Ehud Olmert, is planning to unilaterally draw Israel’s borders and refused to recognize the Palestinian Authority as a partner for peace.

His plan is based on retaining large settlement blocks in the occupied West Bank, and to continue the construction of the annexation Wall that rips the Palestinian areas in the West Bank and isolates the residents from each other and from their orchards.

Olmert’s Kadima party won an election last week and is stitching together a new coalition. He is currently stitching together a new coalition for his government.