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Written by: Staff

GAZA, Apr 30 (Reuters) Palestinian Prime Minister Ismail Haniyeh said today he expected the funding crisis that has crippled his administration and prevented employees' salaries being paid for more than a month to be over ''very, very soon''.

Haniyeh, a leader of the militant group Hamas, which heads the Palestinian government, gave no details on how the crunch would be resolved, but it is expected to involve payments being made directly to Palestinian Authority employees from abroad.

The Hamas-led government, which is $1.3 billion in debt and has no income, cannot afford to pay its 165,000 employees.

It is also unable to receive transfers from abroad because local, regional and international banks fear sanctions by the United States, which regards Hamas as a terrorist organisation.

''I can say that very, very soon we will have begun ending the crisis of the salaries,'' Haniyeh told reporters.

''The Palestinian government has been exerting maximum effort in the past few weeks to afford the needs of the Palestinian people and the salaries of the public sector employees.'' Palestinian parliamentary sources say the Cairo-based Arab League is preparing to make direct transfers to the accounts of government employees, bypassing the government.

The sources said the Hamas-run finance ministry had sent a list of the names and bank account details of the 165,000 employees to the Arab League, and that the League would shortly arrange to pay two months' worth of salaries directly.

Arab League officials were not immediately available to comment.

The monthly wage bill for the Palestinian Authority runs to about $118 million. March salaries were not paid and April salaries are due next week.

It is not clear how much money the Arab League has ready to transfer, but Iran, Qatar, Saudi Arabia and Kuwait together have pledged funds totalling more than $200 million to the Palestinian Authority.

MORALE BOOST If the Hamas-dominated government were to succeed in getting salaries paid, it would be a morale boost to the administration.

The financial crisis, which began after Israel, the United States and European Union cut off funding to the Palestinian government immediately after Hamas took over in late March, has pushed Haniyeh's administration towards fiscal collapse.

''It is not a secret that the siege has political goals,'' Haniyeh said of the pressure from Israel and the West.

''They want to force the Palestinian government to adopt positions that would contradict the will of the Palestinians.'' Islamist Hamas came to power after defeating the long-dominant and more secular Fatah movement, headed by Palestinian President Mahmoud Abbas, in elections in January.

More than 60,000 security personnel are among those employees unpaid, so the crisis has affected security in the West Bank and Gaza strip.

As well as being unable to pay salaries, hospitals in Gaza have begun running short of medicines, and Israel's closure of Gaza's border crossings have interrupted the supply of basic foods such as bread and sugar.

''I appeal to Arab and Islamic countries, and to all regional and international health organisations, to immediately intervene to end the health crisis,'' Haniyeh told reporters.

''We demand the release of Palestinian money so that the ministry of health and other ministries can resume their jobs.'' REUTERS CH PM1944

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