Special to WorldTribune.com

RAMALLAH — The Palestinian Authority, amid a fiscal crisis, has been
unable to pay contractors.

Officials said the PA Finance Ministry has failed to pay numerous
contractors for public works and other projects. They said the ministry has
been undergoing a budget shortfall amid a drop in foreign aid, particularly
from the West.

“The reason for not paying the contractors is not because of any
delays,” PA spokesman Ghassan Khatib said. “It’s because of the PA’s difficult financial conditions.”

Several companies have been forced to shut down because of the PA failure to honor its contracts. In February, the Dar Al Bina
construction company fired all 72 employees amid the PA failure to pay its $6 million debt. The owner of the company, Hassan Abu Hanoud, said he intends to liquidate and resettle in Libya.

“Dar Al Bina is one of 450 contracting companies in the Palestinian
territory suffering from the acute financial crisis that has been facing the Palestinian Authority for the past two years, which is threatening to bring down the entire contracting sector,” the official Palestinian news agency Wafa said on March 1.

Industry sources said the PA began to withhold money from contractors in
2010. Palestinian Contractors Union director Adel Odeh said the PA paid only
30 percent of its obligations in May 2011 and 35 percent the following October.

In all, the PA issued only $40 million to more than 100 contractors over
the last 15 months, many of which decided to relocate to such Arab countries
as Iraq, Libya and Sudan. Odeh said the PA owes at least $100 million for
construction projects alone.

At the same time, the PA’s Palestinian Monetary Authority was refusing
to deal with companies deemed as having insufficient credit. Odeh said many
of these same companies were plunged into a crisis because of the PA’s
failure to pay its debt.

“The government did not pay us and punished us for something that is not
our fault,” Odeh said.

The Palestinian construction sector, the largest employer in the West
Bank, was said to have rapidly shrunk over the last two years. In 2010, the
sector was said to have employed 55,000, and two years later the number
dropped by five-fold.

“The contracting sector employed around 55,000 workers between 2009 and
2010,” Odeh said. “Now, it employs around 10,000 workers, and we expect that
number to decrease to 5,000 if the situation continues.

Odeh said the PA was given a March 4 ultimatum to pay its debt to the
contractors. He said the contractors’ union was prepared to boycott PA
tenders as well as demonstrate at the government center in Ramallah.

“We need an immediate and strategic solution to the problem,” Odeh said.

  Cash-strapped Palestinian Authority can’t pay contractors, Dar Al Bina construction company, PA Finance Ministry, Palestinian Contractors Union, Palestinian Monetary Authority