Palestinian firms give food coupons to govt workers

RAMALLAH, West Bank, Sep 13 (Reuters) Two Palestinian firms began handing out food coupons to tens of thousands of unpaid government workers today, underscoring the dire economic situation facing the Hamas-led administration.

The government has been unable to pay full wages to 165,000 employees since March after the West imposed an aid embargo over Hamas's refusal to recognise Israel and renounce violence.

Israel has also been withholding some 55 million dollarin tax and customs revenues collected on behalf of the Palestinians each month.

Distribution of the coupons comes after Prime Minister Ismail Haniyeh of the Hamas Islamist movement and President Mahmoud Abbas reached a deal this week on forming a unity government to try to lift the sanctions.

The coupons, to be distributed over the coming days, are worth 114 dollar each and are being given to more than 40,000 lowly paid government workers.

Some 9,000 families of Palestinian prisoners in Israeli jails who normally receive stipends from the government will also get coupons.

The total cost is 5.7 million dollar.

''It's a very small amount but better than nothing,'' Munib al-Masri, head of the Palestine Development and Investment Ltd (PADICO) conglomerate, said in the West Bank city of Ramallah.

The other firm involved is telecoms entity PalTel.

Masri said he hoped Western countries would resume aid in response to the planned national unity government, which is expected to take shape later this month.

But the United States has indicated it will not be able to deal with it. Israel has also been sceptical.

Hamas, formally sworn to destroy Israel, has said it would maintain its refusal to recognise Israel.

The coupons can be used to buy food from 700 shops across the Gaza Strip and the occupied West Bank.

REUTERS PB SSC1505