RAMALLAH, West Bank – Palestinian public employees virtually shut down all Palestinian Authority offices and schools in the West Bank on Wednesday, the first day of a two-day general strike to protest the government's failure to pay their November salaries.
Palestinian Authority Prime Minister Salam Fayyad said his government does not have the money to pay salaries after Israel froze the transfer of more than $100 million in tax funds to the Palestinian Authority.
He called the Israeli measure “an act of piracy” and urged Palestinians to boycott Israeli products if Israel persists in withholding payment of the tax revenue, which it collects from West Bank importers using Israeli ports. Israel plans to use the money to repay part of an outstanding Palestinian debt to its electricity company for power supplied to the West Bank.
Israel took the step after the Palestinians successfully sought an upgrade of their status at the United Nations last month to that of a "nonmember observer state."
Worried that the strike may eventually cripple and could even bring down a bankrupt Palestinian Authority, the minister of finance announced later on Wednesday that he was working with the Palestinian Monetary Authority, or central bank, to borrow from local banks and pay at least a portion of public employees' November salary.
The banks and the Monetary Authority had previously said they cannot lend the Palestinian Authority any more money as it has already reached its ceiling on loans, just over $1.5 billion.
The Palestinian Authority's finance minister hopes the banks will lend the money based on guarantees that a $100-million Arab fund designated to prevent the collapse of the Palestinian government will come through in a short time.
The Arab fund had promised to keep the Palestinian Authority afloat if Israel carried out financial sanctions against it for becoming a non-member observer state in the United Nations. The U.S. also has frozen over $200 million in budget assistance to the Palestinian Authority for 2012, part of an overall $500-million annual aid package.