"The Palestinian people should not be punished for their democratic choice," said Abbas. (Reuters)

GAZA CITY, April 8, 2006 (IslamOnline.net & News Agencies) - Palestinian President Mahmoud Abbas and Prime Minister Ismail Haniya denounced on Friday, April 7, the European Union and the United States for suspending direct aid payments, warning the move punished ordinary people.

"The Palestinian people should not be punished for their democratic choice," Abbas told reporters at a press conference, reported Agence France-Presse (AFP).

By cutting the aid, the United States and EU were "punishing all the people, workers and families," Abbas added.

A spokeswoman for EU External Relations Commissioner Benita Ferrero-Waldner confirmed in Brussels that aid payments had been suspended "for the time being".

The European Commission, the executive arm of the EU, had approved the payment of 120 million euros in February to a caretaker Palestinian government following the Palestinian elections of January 25.

The EU sends around 500 million euros ($600 million) a year to the cash-strapped Palestinian Authority, making it the largest donor.

The United States also announced it would suspend direct aid to the Hamas-led government but said it would boost funding for humanitarian aid distributed to Palestinians through the United Nations.

As part of a series of sanctions, Israel has since February stopped transferring customs duties worth around $50 million a month and previously collected for the Palestinian Authority.

"The Palestinian people should not be punished for their democratic choice," said Abbas. (Reuters)

Haniya said in a press conference following his meeting with Abbas that these decisions were "hasty and unjust."

"The world should respect the choice of the Palestinian people," said Haniya.

On Wednesday, April 5, Haniya told the first regular meeting of his ministers that his government was in a financial crisis and that he would struggle to find the money to pay government employees.

"We inherited a situation in which we not only have no money in the treasury but a whole load of debts," he said.

Finance Minister Omar Abdel Razek said Thursday, April 6, that his ministry was working on a package of austerity measures in a bid to slash public spending and shoring up efforts to secure alternative sources of foreign funds.

"The finance ministry is working on a plan to find alternative aid and to reduce public spending. We have started to reduce the number of civil service cars, housing and travel expenses," he said.

The minister said the Palestinian Authority employs around 140,000 civil servants and security service personnel, together accounting for a staggering monthly salary cheque of $118 million.

"We are expecting aid from Arab and Islamic countries, and friends. We have had promises of aid worth nearly $80 million and I hope they will reach us quickly because we don't have money to pay the salaries."