GAZA'S TEETERING TOWER OF DEBT

Abu Khamis's credit book is seeing a lot of use these days. The scribbled notes account for 45,000 shekels ($10,000) owed for goods he has advanced to his penniless customers.

"I have two credit books full of debt. I'm getting women coming in and offering to sell their jewellery, even their wedding rings. People simply have no money," the clothes trader, who works in the central market of Gaza's teeming Jabalia refugee camp, said.

After nine months of an international trade embargo on the Palestinian National Authority (PNA), which has seen international aid cut off to the Hamas-led government because it has not recognized Israel or renounced violence, the economy of the occupied Palestinian territories is verging on collapse.

The 160,000 employees of the PNA have received hardly any pay since March, after Hamas won a democratic election in January. Their families have coped by buying fewer goods, cutting back on expensive food such as meat, and by borrowing.

But Khamis's credit line has almost run out. "I can carry on like this for about another month -- and then I will have to stop lending," he said. "And it's not just me -- it's every shop in Jabalia."

Jameela Khalil's local supermarket has already shut its books. "I sold all my jewels after 22 years of marriage so my family could live in dignity," said the 45-year-old PNA employee.

"That was bad enough. But worse, the owner of the supermarket we have always bought from has stopped giving us goods because our liability has exceeded 4,500 shekels [$1,000]."

Saeb Bamia, former deputy minister of the National Economy Ministry, said the Palestinian economy was close to collapse. "The constant financial and economic crisis in the PNA will, in a short period, lead to the Palestinian economy collapsing," he said.

Increasing poverty has led to a rise in theft and petty crime, according to Gaza police. Between 45 and 70 percent of the population, depending on the measure used, live in poverty, according to the United Nations.

"Petty crime, such as stealing mobile phones or taking goods from shops, has been increasing for the past eight months," said Police Captain Mansour Al Mokayed.

Palestinians are relying increasingly on handouts from aid agencies, in effect rendering them dependent once again, Bamia said. "The crisis has an impact on a political level. It leads to the creation of a new stage, where the United Nations Relief Works Agency [UNRWA] again plays a central role to meet humanitarian issues and deal with all Palestinians as refugees, but on their land," he said.

UNRWA and the World Food Program say that together they now feed more than a million of Gaza's 1.4 million inhabitants, including the PNA employees.

Ameera Aroun from Israel's Ministry of Foreign Affairs admitted the harsh economic situation in the occupied territories -- but blamed Hamas.

"We realize that there is difficulty in the economy," she said. "But the Hamas-led government shoulders first responsibility for the deterioration in the situation. Hamas has perpetrated hostile acts against Israel, including launching homemade missiles. So Israel has to adthe occupied territories measures to protect its people."