Khaled Abu Aker, Isabel Kershner
The New York Times
July 3, 2011 - 12:00am

The Palestinian Authority will pay its employees only half their monthly salaries in July, the prime minister told reporters here on Sunday, because of what he said was “the failure of donors, including our Arab brothers, to fulfill their pledges.”

Prime Minister Salam Fayyad added that the salaries would be paid in full when the promised funds arrived.

Mr. Fayyad last warned of a financial crisis in May when Israel briefly delayed the transfer of tax revenue it collects on behalf of the Palestinians. The delay was a response to a reconciliation accord reached between Fatah, the party that dominates the West Bank-based Palestinian Authority, and Hamas, the Islamic militant group that controls Gaza.

Then, too, Mr. Fayyad appealed for assistance, particularly from Arab countries, saying that they had been slow to fulfill their pledges since 2010.

Mahmoud Abbas, president of the Palestinian Authority, plans to seek recognition of a Palestinian state at the United Nations in the fall. Mr. Fayyad said that the current financial crisis had no bearing on the Palestinians’ readiness for independence.

The Palestinian Authority has accumulated a deficit of more than $500 million in 2011, Mr. Fayyad said. He added that the authority had been borrowing from banks in recent months to alleviate the crisis, but that the deficit had reached the point where the problem could no longer be addressed by bank loans. Of the $971 million pledged by donors for this year, $330 million of it has been paid so far, Mr. Fayyad said. He said the only Arab countries that had fulfilled their pledges this year were the United Arab Emirates, Algeria and Oman.


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