Palestinians rally in support of Hamas government

GAZA, May 5 (Reuters) Thousands of Palestinians held rallies across the Gaza Strip and the West Bank today in support of the militant Hamas-led government which continues to face diplomatic isolation and aid cuts from donors.

Palestinian officials have warned the economy could collapse within months as Israel and Western countries led by the United States keep up pressure on the Palestinian Authority. The West has cut direct aid while Israel has stopped tax transfers.

The resulting aid cut-off has deepened poverty in Gaza and the occupied West Bank.

Thousands of Hamas supporters held protests across Gaza, some burned Israeli and US flags. Others carried banners which called US moves ''a starvation and siege'' of Palestinians.

''These are wrong policies. You are leading the region towards a big explosion,'' Hamas lawmaker Mushir al-Masri told supporters in Gaza.

Hamas, which is sworn to Israel's destruction, refuses to recognise the Jewish state or disarm, key conditions demanded for resuming aid.

The government has been unable to pay salaries to 165,000 Palestinian Authority workers, whose wages are a key driver of economic activity in Gaza and the West Bank.

Palestinian officials say US pressure has also thwarted a Hamas-backed plan for the Arab League to deposit donor funds directly into the accounts of workers.

The government needs 120 million dollars a month for salaries and has failed to pay March and April wages. Officials say it is also unlikely to secure funds for May salaries.

Thousands carrying Hamas flags held a solidarity rally in the West Bank city of Ramallah, with collection boxes passed round by Hamas officials.

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