By Robert Berger
Jerusalem
30 March 2006

The new Palestinian government led by the Islamic militant group Hamas has begun its first day of work amid a looming political and financial crisis.  Hamas is holding fast to its radical ideology despite mounting international pressure.

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Palestinian Authority President Mahmoud Abbas and Prime Minister Ismail Haniya, second from right, look on as Palestinian Minister for Public Utilities, Ziad Zaza, is sworn in
  

The new Hamas government is already facing major challenges: namely, western isolation and a shortage of cash. As soon as the government was sworn in on Wednesday, the U.S. cut off contacts with the Palestinian Authority, and Canada suspended aid. The international community is threatening more sanctions, after Hamas rejected demands to renounce violence and recognize Israel.

For its part, Israel has cut off $50 million in monthly tax payments to the Palestinians. Former Israeli Prime Minister Benjamin Netanyahu says that with Hamas in power, it cannot be business as usual.

Former Israeli Prime Minister Benjamin Netanyahu   
  
"The government that has been created is so extreme that it must be kept separate, it must be isolated, it must be weakened, and ultimately, it must be replaced," he said.

Former Palestinian Cabinet Minister Ghassan Khattib says sanctions by Israel and the international community are counterproductive.

"That is going to further humiliate the Palestinian people and will cause an increase in the process of radicalization as a result of the economic deterioration that these measures will bring," he said.

Hamas is feeling the crunch. It needs to find the money to pay the March salaries of 140,000 government employees that are due next week. Arab states have promised to provide $55 million a month to the Palestinian Authority, but they have rarely met their pledges of aid in the past.

Nevertheless, Hamas says it will not succumb to international pressure to change its Islamic ideology. Hamas leader Khaled Mashaal said the new government cannot promise economic prosperity to the Palestinians. But he said it will promise dignity and pride as they fight the Israeli occupation.