RAMALLAH, West Bank -- Faced with a deepening budget crisis since Hamas's election victory, the Palestinian Authority put off paying the January salaries of 137,000 government employees yesterday for at least two weeks as it struggles to find new sources of funding.
The delay in salaries, which were due yesterday, could foreshadow a far more serious government breakdown, with foreign nations threatening to freeze aid to the Palestinian Authority if the Islamic militant group takes power without renouncing violence or recognizing Israel.
The Palestinian Authority needs $116 million to cover its monthly payroll. It was already in danger of falling short on payday before Israel announced Wednesday it would hold up $45 million in January taxes it was to transfer to the Palestinian Authority.
The Palestinian government is withholding the salaries while it seeks alternative funding, a top government official said, speaking on condition of anonymity because of the ongoing funding negotiations.
US and European threats to cut off aid put further pressure on a budget in constant crisis. European donors and the World Bank stopped forwarding salary money in December after the government gave raises of up to 40 percent to its employees and added people to its already bloated payroll ahead of the Jan. 25 elections.
But permanent aid cuts would force the government to lay off as many as 30,000 workers and could plunge Palestinian areas, already beset by violence and disorder, deeper into chaos.
Mohammed Ishtayeh, a Palestinian Cabinet minister, said the government was trying to persuade Israel to release the tax money. It was also hoping to receive aid from Saudi Arabia and Qatar and to persuade the World Bank to release $60 million in frozen aid.
''We are working on more than one level to provide salaries this month," Ishtayeh said.
Western donors, led by the United States and the European Union, funnel about $900 million to the Palestinians each year, most of it designated for reconstruction projects in the impoverished Gaza Strip and West Bank.