New Finance Minister Omar Abdel-Razeq has said the cash-strapped Palestinian Authority cannot pay salaries, at least for now.  The suspension of direct aid to the Palestinian Authority by the European Union (EU) and the US is adding an insult to an already ailing economy, say Palestinian ministers.

And theInternational Committee of the Red Cross issued a report Monday expressing the extreme danger of a humanitarian crisis in the West Bank and the Gaza Strip.

"My pockets are empty. I borrowed from all the people I know and they cannot lend to me again," Maroof Rawashdeh, a father of seven, told Reuters.  Rawashdeh, a technician with the Palestinian national broadcasting agency, stopped going to work when the money ran out to pay his bus fare.

He needs 20 shekels ($4.30) a day, about a third of his salary, to pay the fare in a minibus from his village of Bitin to his workplace in Ramallah.  Rawashdeh has no idea when he might get another paycheck as the Hamas-led government has no cash and little prospect of essential donor funding.

European foreign ministers, meeting in Luxembourg Monday, verified that they would freeze aid money to the Palestinian Authority.  This freeze is in addition to a freeze in US-funding made last week, but is more severe in that the European Union is the biggest donor to the Palestinian Authority, providing nearly half of its budget ($600 million a year).

Israel has also illegally seized Palestinian tax money, worth $50 million a month, beginning in February.

The new crisis is forcing Palestinians to tighten their belts and concentrate on essentials.  "No more candy, no more meat. Lentils and beans are fine," said civil servant Majdi Sharour, a father of four.

The 140,000 government employees put bread on the table for around 23 percent of the 3.5 million Palestinians living in the Gaza Strip and West Bank.  Salary payments of about $118 million a month are an important engine for the Palestinian economy, dependent on aid and government spending.

Normally, shops and markets are packed during the first two weeks of the month. There was little sign of shoppers early this week.

Payments for mortgages and loans are also usually made at the start of the month.

"All these cheques bounced," said a bank official in Ramallah, waving a bundle of paper.

"People’s pockets are empty."

Thousands of Palestinians poured into Gaza streets to protest both aid cuts by Western powers and mounting Israeli aggressions, which claimed the lives of 19 Palestinians in the last week.

Palestinian officials said that if money did come available, priority would be given to low-ranking employees who find it harder to endure long salary delays.

The International Committee of the Red Cross (ICRC) said Monday it was ready to scale up aid to the PA.  "The ICRC is very concerned about possible consequences on the ground," Pierre Kraehenbuehl, the ICRC’s director of operations, told journalists in Geneva after a week-long visit to Israel and the occupied territories.

The Swiss-based ICRC has budgeted 42 million Swiss francs ($32 million) for programs in Israel and the Palestinian territories this year.

Much of that goes for food and income assistance for Palestinians in the West Bank and Gaza.

"Humanitarian organizations cannot replace the range of services that the Palestinian Authority has been providing to the population," Kraehenbuehl aid.

"It is neither our role, nor do we have that range of capacity."

Andrew Hill, the head of the charity Oxfam’s operations in the territories, agreed that NGOs could not be expected to step in to fill the void.

"We are not in a position to replace the EU or US."

The ICRC official warned that international aid freeze would trigger a humanitarian, economic and security crisis.

"Any decline in the overall economic situation … may lead to a deteriorating security environment," Kraehenbuehl said.

UN agencies voiced similar fears Monday of the humanitarian impact of the aid suspension.

"The Gazan population is extremely dependent on donor aid so, when it is reduced, it has an immediate consequences on the ground," said John Ging, head of the UN agency for Palestinian refugees (UNRWA) in Gaza.

"We are concerned about the consequences on the security side. If the security forces are not paid, how will they express that frustration, what will that mean for the general security in Gaza?"

Ging said he understood the political arguments but said they could not be used to mask the consequences of the aid suspension.

"Solutions must be found which will not result in the Palestinian people, the refugees in particular who are the most vulnerable, being without the basic services and necessities of life."

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