Fayyad, a former World Bank official who served as finance minister until 2006, said PA financial records have fallen into disarray. Designated to become the next PA finance minister in a Fatah-Hamas government, Fayyad said officials could no longer be certain that donor aid was being spent in accordance with its stated purpose. The Palestinian Legislative Council was scheduled to vote on the proposed Cabinet on March 17.

On March 10, the World Bank released a 197-page report that pointed to significant deficiencies in the PA budget. The report said 66 percent of all spending has gone to pay salaries, with an annual 11 percent increase in civil service jobs.

Donors have provided about $700 million to PA in 2006. But Iran and Arab donors were said to have given close to $1 billion to the Hamas-led government.

[On Wednesday, the Fatah-Hamas war underwent another escalation as Hamas fighters targeted the home of a leading Fatah-aligned PA security commander in Gaza City. The commander was identified as Col. Nasser Abu Shawar, operations director of the National Security Force.]

Officials said despite PA pledges, the government has failed to monitor its budget, track spending, control absenteeism and complete projects. They acknowledged a huge budget deficit in 2006.

Israeli officials said nearly 20,000 jobs were generated in the Gaza Strip since November 2006. They said most of the jobs were in the agricultural sector in the northern Gaza Strip.

Officials said donor money has either gone directly to PA Chairman Mahmoud Abbas or to Prime Minister Ismail Haniyeh. They said that in either case there was no accounting of the money.

In an interview with the London-based Sunday Telegraph, Fayyad, who has been threatened by both Fatah and Hamas militias, said the PA needed five years to gain control of its finances. He said this would include an effort to terminate salaries to absentee employees.

Fayyad has been provided protection by officers from the Presidential Guard, loyal to Abbas. He pledged to try to clear up the chaos at the Finance Ministry, but added, "it's virtually impossible."