Palestinian govt workers end 4-month-old strike

RAMALLAH, West Bank, Jan 13 (Reuters) Palestinian government workers signed an agreement today to end a strike over unpaid wages that has crippled the Palestinian Authority since September, officials said.

Government officials said the deal committed President Mahmoud Abbas to start making partial salary payments before the end of January -- although Western diplomats said it was unclear where the money would come from.

A Western aid embargo imposed on the Hamas-led government because of the Islamist movement's refusal to renounce violence and recognise Israel's right to exist has prevented payment of full salaries to 165,000 government workers.

''The agreement will start tomorrow and employees will go back to work,'' acting Finance Minister Samir Abu Eisha said after the deal was signed in Abbas's office.

The deal -- which comes after months of effort to reach a breakthrough -- could help boost Abbas, whose Fatah party is locked in a bitter power struggle with Hamas.

Abbas called for fresh elections last month, a move Hamas described as a ''coup'' attempt against its elected government, which took office in March.

The agreement applied to all government employees -- including civil servants and security workers -- who will return to work tomorrow, union officials said.

''Tomorrow we will go back to work. The agreement we signed today gives us all our rights,'' said Bassam Zakarneh, head of the government employees' union.

Among those on strike have been employees in numerous government departments, teachers and medical workers.

Abbas could try to pay wages using funds raised by Hamas and deposited in an account held by the Cairo-based Arab League.

That account contains 20-30 million dollar.

The Palestinian Authority's monthly wage bill tops 100 million dollar.

Abu Eisha said the Palestinian Authority makes between 20-30 million dollar in monthly tax revenues.

Abbas could also try to use 100 million dollar in withheld Palestinian tax revenues that Israel has promised to transfer to his office. Israel has yet to transfer that money, withheld since Hamas took office, and it is unclear when it will do so.

Security forces including those under the Hamas-led Interior Ministry will receive partial payments, Palestinian officials have said. The US has opposed previous payments to Hamas-controlled security forces.

US sanctions have prevented the Arab League from transferring money to the Hamas-led government, but Washington has allowed funds to be channelled to Abbas.

Reuters SSC GC2006