Tom Perry
September 6, 2011 - 12:00am

RAMALLAH, West Bank, Sept 6 (Reuters) - The Palestinian Authority will pay only half wages this month, Prime Minister Salam Fayyad said on Tuesday, the second time in three months it has taken such a step because of a financial crisis it blames on donors failing to provide promised funds.

Fayyad announced the half pay measure at a cabinet meeting on Tuesday. The Palestinian Authority took the same measure in July. Last month it paid full salaries but said its funding crisis had not been solved.

The Palestinian Authority pays salaries to 150,000 people in the West Bank and the Gaza Strip and monthly allowances to another 75,000 people.

A Palestinian official, speaking on condition of anonymity, said the aid-dependent authority was facing an unprecedented financial squeeze on funding from Arab states which are failing to meet commitments to provide support.

"We do not know why they are imposing this siege on us," the official said. In recent years, Saudi Arabia and the United Arab Emirates have been the Palestinians' most generous Arab donors.

The financial crisis has highlighted the fragility of the PA as President Mahmoud Abbas embarks this month on a diplomatic offensive to secure U.N. endorsement for Palestinian statehood -- a step opposed by the United States and Israel.

The Palestinians are hoping to secure an upgrade in their status at a United Nations General Assembly meeting in New York.

The leadership has called for popular protests to add weight to the diplomatic initiative. However, the official suggested turnout at such demonstrations could be hurt by the financial crisis.

"People will be concerned with the financial situation," the official said.


American Task Force on Palestine - 1634 Eye St. NW, Suite 725, Washington DC 20006 - Telephone: 202-262-0017