Palestinian workers receive partial pay in Gaza

GAZA, June 19 (Reuters) Palestinian government workers today lined up at post offices in Gaza to receive cash that members of the Hamas-led administration hand-carried into the territory to sidestep a Western aid boycott.

''This is only an injection to put us to sleep and then wake up in pain again,'' said a government employee who gave his name only as Abu Abdallah.

He was one of 90,000 workers on the Palestinian Authority payroll allocated 300 dollars as partial payment after more than three months without wages.

Economic hardship has deepened in the occupied West Bank and in the Gaza Strip since Western donor nations froze aid to the Palestinian government after Hamas, an Islamic militant group dedicated to Israel's destruction, came to power in March.

Fearing a humanitarian crisis, The European Union is trying to set up a mechanism to distribute aid directly to some Palestinians, bypassing the Hamas-led Authority.

''Today we were able to begin paying 300 dollars to employees in the Gaza Strip who earn less than 1,500 shekels,'' Finance Minister Omar Abdel-Razek told a news conference in the West Bank city of Ramallah.

''Today we paid through the Postal Bank. Tomorrow or the day after, we will pay those in the West Bank with the same salaries,'' he said.

The Postal Bank is government-owned. Palestinian commercial banks have refused to handle Authority funds, fearing the United States may impose sanctions on them.

Abdel-Razek said the 27 million dollars in partial payouts ncluded cash Hamas officials and cabinet ministers carried in suitcases across the border from Egypt into Gaza in the past few weeks.

''Since (commercial) banks have come under direct or indirect pressure and we cannot transfer money through the banks, we are considering making the post office bank (arrangement) permanent,'' he said.

EMERGENCY AID In Jerusalem, European External Relations Commissioner Benita Ferrero-Waldner briefed Israeli Foreign Minister Tzipi Livni on an EU plan to contribute 126 million dollars in emergency aid to the Palestinians, while bypassing the Authority.

Under a ''temporary mechanism'' agreed by the Quartet of Middle East mediators -- the European Union, the United States, United Nations and Russia -- money would start to flow next month to cover Palestinian health and utilities costs, including ''allowances'' for doctors and nurses.

Allowances for the poorest Palestinians would not be paid until a system was in place to determine who was eligible and to ensure the money was spent as intended, Ferrero-Waldner said.

Livni said Israel, which is withholding million in monthly tax transfers to the Palestinians, would study the Quartet plan.

The Quartet has set three conditions for easing the economic boycott, demanding that Hamas recognise Israel, renounce violence and accept past interim peace deals.

In a challenge to Hamas, and apparently in an attempt to persuade donors to resume overall aid, Palestinian President Mahmoud Abbas has called a referendum for July 26 on a manifesto envisaging a two-state solution to the Israeli-Palestinian conflict.

Abbas's Fatah faction and Hamas have been trying to reach an agreement on the document, written by Palestinian prisoners in Israeli jails, proposing a possible unity government that would lead to the cancellation of the referendum and, possibly, a lifting of sanctions.

REUTERS SHB PM2019