Hamas is trying to ease a crisis over the salaries of Palestinian government workers by paying them directly with funds donated by the Arab League.

Arab funds sent to ease the crisis have so far not reached workers because of banks' fears that the US will punish them for doing business with Hamas.

 

The US and EU have frozen donations to the Palestinians, demanding Hamas drops calls for the destruction of Israel.

 

Many Palestinian government workers have not been paid since March.

 

The Palestinian Authority employs some 165,000 people and the UN estimates a quarter of the Palestinian population relies on government salaries.

 

The world body has warned that the humanitarian and security situation will deteriorate rapidly if Palestinian salaries go unpaid for much longer.

 

Western donations to the Palestinian Authority have been largely suspended since Hamas militants - branded terrorists by the US and Israel - came to power in elections earlier this year.

 

French proposal

 

The plan to transfer Arab League funds directly to public sector workers' accounts - without filtering them through the government - is designed to sidestep US threats against banks that do business with Hamas.

 

Palestinian officials told the Reuters news agency the Hamas-run Finance Ministry had sent a list of government employees' names and bank details to the Arab League.

 

"I can say that very, very soon we will have begun ending the crisis of the salaries," Palestinian Prime Minister Ismail Haniya told the agency.

 

But BBC Gaza correspondent Alan Johnston says that it is not clear if the strategy will work. The Arab League has said only that it is considering the plan, and there are reports that the Americans are working to block it.

 

The Palestinian Authority's monthly wage bill runs to about $116m.

 

The Arab League has so far committed to delivering $55m monthly. Even this has not been shifted by banks fearful of possible US sanctions.

 

Israeli Foreign Ministry spokesman Mark Regev said any new funding strategy should ensure that those implicated in terrorism did not benefit.

 

The US has not formally responded to the plan to pay Palestinian employees directly.

 

French President Jacques Chirac has meanwhile argued for the creation of a World Bank fund to pay Palestinian Authority workers.

 

The proposal has been welcomed by Palestinian leader Mahmoud Abbas of the Fatah faction. Hamas has said it would consider the idea.

 

'No starvation policy'

 

In another development, former World Bank President James Wolfensohn has stepped down from his role as economic co-ordinator for Gaza.

 

Tasked with overseeing the development of Gaza's economy after Israel withdrew from the territory last year, Mr Wolfensohn said he had made "quite a lot of progress".

 

But, he added, the election of a Hamas government in January had made it very difficult to "to be able to try and negotiate any independent type of arrangements".

 

He said "the political events are such that I think the issues are above my pay grade".

 

According to the AFP news agency, he also said the West was not trying to force the Palestinians into submission by starving them of funds.

 

"I don't think anyone... believes that to be the policy - although, sometimes, it is made to appear that that is what it is," he said.

 

http://www.bbc.co.uk

Terrorist group is running out of money. It breaks my heart.

Its the ordinary people working for the Palestinian government who haven't received any wages since March. The people of Palestine democratically voted Hamas in to government, and now those people are suffering because some of the world doesn't agree with their choice.