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Last Updated: Tuesday, 19 June 2007, 19:48 GMT 20:48 UK
Q&A: Palestinian embargo
By Martin Patience
BBC News, Jerusalem

Hamas militants on Gaza street
The boycott has brought Gaza and the West Bank to a standstill

Following the Hamas military takeover of Gaza last week, there are now effectively two governments in the Palestinian territories.

Palestinian President Mahmoud Abbas (Fatah) sacked the Hamas Prime Minister Ismail Haniya and his government and replaced it with an emergency government of mainly technocrats.

In Hamas-controlled Gaza, Mr Haniya insists that he is still prime minister, while in the West Bank, a Fatah stronghold, President Abbas says that the emergency government is legitimate - something that Israel, the Arab League and the West agree upon.

The US and the EU are to normalise ties with the new Palestinian government and lift the economic embargo to support an administration without Hamas.

What was the embargo's effect and how did it work?

When Hamas entered government in March 2006, Israel and the Quartet powers - the US, EU, UN and Russia - imposed an economic embargo on the administration because of its refusal to recognise Israel's right to exist.

The embargo had a devastating impact on the Palestinian economy and meant that many of the Palestinian Authority's 160,000 employees have not received their full pay in over a year.

To circumvent the Hamas-led administration, the international community deposited money in the bank account of President Abbas. The Fatah movement, which recognises Israel, is regarded as moderate by the West.

Western countries started to make payments to the Palestinians through a scheme called Tim - the temporary international mechanism.

Again, this bypassed the Hamas-led administration by depositing money into the accounts of individual Palestinians meaning that some salaries - particularly of key workers, such as doctors and nurses - could be paid.

In March, Hamas and Fatah formed a government of national unity which they hoped would get the economic embargo lifted - it was not.

But the events in Gaza last week - and the creation of two governments - have changed this position.

What happens now in the West Bank?

The US, the EU, and Israel have all said they will lift the economic embargo on the emergency government.

This means that money will go directly to the Palestinian ministries, although how much is not clear.

The West will continue to fund individual Palestinians through the Tim.

International organisations - such as the UN - will continue to provide humanitarian assistance to ordinary Palestinians.

Israel says that it will handover about $800m (400m) of custom taxes it collects on behalf of the Palestinians to the emergency government.

According to an Israeli official this will be done in several stages but it is not clear how quickly that will happen.

What happens now in Gaza?

In Gaza, the Hamas-led administration will still be subject to the economic embargo by the Quartet powers.

No money will go directly to the any of the ministries in the territory.

Israel refuses to hand over any of the tax customs it collects on behalf of the Palestinians to the Hamas administration.

How will aid reach Gaza?

International organisations - such as the UN - will continue to provide humanitarian assistance to ordinary Palestinians.

Both the international community and Israel insist that they do not want a humanitarian crisis in Gaza.

The US also announced $40m of emergency aid to the UN Relief and Works Agency (Unrwa), which runs relief efforts in Gaza.

Last week, all the crossings into the territory were closed by Israel.

But on Tuesday, eight truckloads of humanitarian aid was permitted to enter the territory. On Monday, some medical supplies were delivered.

The EU will continue to pay some Gazans through the Tim.

Israel has said that it will continue to supply electricity, fuel and water to the impoverished territory.

But it will not hand over the tax customs it collects on behalf of the Palestinians to any Hamas administration.

There is a strong possibility that President Abbas will want to help the Palestinians in Gaza.

But it is unclear how the West and Israel would view the emergency government if it passed money to any Hamas administration.

They may want to re-impose the economic embargo.

Hamas members have brought sums of cash into Gaza donated from the Arab and Muslim world in the past. They may try to do this again.

But it is difficult to see how the Hamas administration can function effectively with the economic embargo still imposed.

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