Palestinian Authority begins paying salaries

RAMALLAH, West Bank, Mar 15 (Reuters) The Palestinian Authority today said it started paying overdue salaries to an estimated 140,000 workers and security personnel but does not know where it will get the money for the next payroll.

The immediate funding crisis stems in large part from Israel's decision to freeze tax revenue transfers to the cash-strapped Palestinian Authority in a bid to isolate the Islamic militant group Hamas, which won a January 25 election.

The tax revenues, collected by Israel on behalf of the Palestinians, are worth 50 million dollars to 55 million dollars a month.

Senior Ministry of Finance official Jihad al-Wazeer told Reuters the authority had secured the funds for February salaries and had begun to pay them out.

But Wazeer said it was unclear where the authority would get the funds to cover March's payroll.

The World Bank, the European Union and other foreign donors provided emergency funding to help keep the Palestinian Authority running until Hamas, whose charter calls for Israel's destruction, forms a government.

Palestinians depend on foreign aid totalling more than 1 billion a year. It is unclear how much of that money will be frozen by international donors once Hamas completes forming a government, which under Palestinian law must happen by the end of this month.

A proposal being discussed by Israel and donor nations would funnel most future international aid to the Palestinians through the World Bank. U.S. officials have rebuffed a European proposal to funnel that money directly through the office of Palestinian President Mahmoud Abbas, Western diplomatic sources said.

Since a Palestinian revolt erupted in 2000, Hamas has masterminded at least 60 suicide bombings against Israelis. But it has largely abided by a truce declared last year.

As many as one in four Palestinians is dependent on wages from the Palestinian Authority, prompting warnings from international Middle East envoy James Wolfensohn that violence could break out if salaries were not paid.

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