Jerusalem, Apr 24: The Arab League said today it intended to transfer 50 million dollars later this week directly to the Hamas-led Palestinian Authority, enough to pay about 40 per cent of last month's overdue government salaries.
Arab League official Hesham Youssef said in Cairo that he knew of no banking problems that would prevent the 50 million dollars from being successfully transferred on Wednesday, when Egyptian banks reopen after an extended holiday.
On top of the 50 million dollars donated by Qatar, Saudi Arabia has sent 20 million dollars to the Arab League to aid the Palestinians, according to Alaa Roushdy, the official Arab League spokesman. Roushdy did not say, however, when the Saudi contribution would be transferred.
Palestinian officials and Western diplomats said yesterday that banks were refusing to transmit Palestinian Authority funds because of the threat of U.S. sanctions.
U.S. officials said the Bush administration could take punitive action against banks that help provide money or services directly to the Hamas-led Palestinian Authority because Washington has designated the Islamic militant group a ''terrorist'' organisation.
CASH-STRAPPED The United States has not threatened to punish banks that transfer funds directly to the office of moderate Palestinian President Mahmoud Abbas, whose Fatah faction was trounced by Hamas in January elections.
''We're not sending money to Hamas. We're sending money to the Palestinian Authority, to the minister of finance,'' Youssef said.
The Palestinian finance minister, Omar Abdel-Razek, is a Hamas member.
Shunned by the West and increasingly strapped for cash, Hamas has made urgent appeals in recent days to Iran and Arab donors to deposit emergency funds into bank accounts in Egypt. The government is already three weeks late paying salaries to 165,000 government workers.
One of the Egyptian accounts was set up by the Arab League at the Misr International Bank, which French bank Societe Generale gained control of last year.
A Palestinian official said the Jordan-based Arab Bank recently turned away a transfer of 50 million dollars from Qatar.
Western diplomats say the Arab Bank, already facing U.S.
regulatory scrutiny and lawsuits over alleged funding ties to Hamas, has frozen the Palestinian government's main treasury account. Arab Bank officials have refused to comment.
''There is pressure on the banks to impede the transfer process but we have agreed that the transfer be done through the Arab League,'' said Palestinian Foreign Minister and Hamas leader Mahmoud al-Zahar during a visit to Kuwait. Zahar did not elaborate.
Zahar said the Palestinian Authority ''has 90 million dollars'', of which 50 million dollars ''has arrived,'' though it was unclear what funding he was referring to and where the money had arrived.
Senior Abbas aide Saeb Erekat said Abbas's office has received 35 million dollars in funds from Algeria and was in the process of receive 10 million dollars from Russia.
Erekat said the money, pledged directly to Abbas's office as opposed to the Hamas-led Palestinian Authority, was being used to pay Palestinian gas bills and other debts.