Arab League sends 50 million dollars to Palestinians

CAIRO, July 5 (Reuters) The Arab League has wired 50 million dollars to Palestinian President Mahmoud Abbas to ease a fiscal crisis by providing humanitarian grants to government workers who have gone unpaid for months, an official said today.

Hesham Youssef, chief of staff for Arab League Secretary-General Amr Moussa, said the money -- donated by Arab states including Qatar, Libya and Syria -- was sent on Monday to an account held by Abbas's office after months of delays.

The transfer of funds effectively bypassed the Hamas-led Palestinian government, which faces a Western aid boycott over its refusal to recognise Israel, renounce violence and accept past peace agreements. The aid freeze has left the government on the brink of financial collapse.

The Arab League move followed a similar transfer of million it sent to Abbas last week to aid Palestinian refugees in Arab countries.

It also coincided with increasing violence in the Gaza Strip, where the Israeli army launched raids and airstrikes following the abduction of an Israeli soldier by Palestinian militants. The soldier is still being held.

''The situation there is extremely bleak. There is a growing recognition that something has to be done,'' Youssef told Reuters, explaining why aid was sent this week after delays.

About 165,000 Palestinian government employees have gone largely unpaid since Hamas, whose charter calls for Israel's destruction, formed a government in March after winning a parliamentary election in January.

The Arab League has been trying for months to find a way to transfer aid to the Palestinian Authority, but has been blocked by U S restrictions.

Under U S law, any foreign bank that refuses to cooperate with the United States in cutting off funding to Hamas risks having its U S assets frozen and its access to U S financial markets denied.

Abbas's office has been generally able to receive funds, but Youssef said the Arab League had put off making the transfers to his office for fear of possible economic repercussions.

REUTERS CH HT1520