RAMALLAH, West Bank -- The Hamas-led government, crushed by Israeli and Western financial sanctions, is looking to pay long-overdue government salaries by moving frozen Arab League money directly into employees' bank accounts, a Palestinian official said yesterday.
The Palestinian Authority has not had money to pay March and April salaries since the West and Israel began withholding hundreds of millions of dollars in aid and transfer payments to protest the new Hamas rulers' refusal to renounce violence and recognize Israel.
The Palestinian Authority is the largest employer in the West Bank and Gaza Strip, and the loss of these salaries has rippled through society.
Many of the 165,000 Palestinians on the government's payroll have been reduced to subsistence living. Some have been selling off valuables and living off credit to scrape by.
The deepening poverty in an area rife with guns could prove a combustible combination.
Some Arab states have donated about $70 million into an Arab League account to help plug the gaping hole. But that money has not budged because Arab banks operating in the Palestinian territories have balked at letting it through their channels, afraid of running afoul of US antiterrorism laws.
So the Palestinian government, working in connection with the banks, has proposed the money be deposited directly into government workers' accounts, the official said on condition of anonymity because the proposal is still being worked out.
The Palestinian Finance Ministry has already given the Arab banks lists of individual accounts, the official said.
The US Embassy spokesman in Tel Aviv declined to comment.
Even if this process makes its way past US watchdogs, it was not clear how effective a remedy it would be. The Palestinian Authority needs $116 million each month to pay salaries, and the Arab League -- which has a history of shortchanging the Palestinians on aid pledges -- has only committed to deliver $55 million a month.
This proposal comes on the heels of French President Jacques Chirac's suggestion Friday to create a World Bank fund to pay Palestinian Authority employees, a solution intended to help needy Palestinians without rewarding their militant government.
Hamas said it would consider the idea, and moderate Palestinian leader Mahmoud Abbas welcomed it. But officials in the donor community fear that the Americans may object and that it might take months to set up -- a crucial drawback as the plight of the Palestinians rapidly worsens.