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Palestinian banks strapped by U.S. ban

May 4, 2006 at 10:43 AM

RAMALLAH, West Bank, May 4 (UPI) -- While the cash-strapped Palestinian Authority is receiving financial aid from Arab countries, their U.S.-linked banking system is refusing to accept deposits.

The problem began last month when the U.S. Treasury Department barred almost all financial dealings with the authority following the election victory of Hamas, which is deemed to be a terrorist organization.

Since then, the Arab League in Cairo has raised more than $70 million, but so far, Palestinian officials say no bank has been willing to move the money to the West Bank or the Gaza Strip, wary of legal entanglements with the United States, the New York Times reported Thursday.

Palestinian Prime Minister Ismail Haniya, a leader of Hamas, said the government could begin paying overdue salaries, which are now two months late, if the money reached the Palestinian Authority's bank accounts.

"The problem is not with raising money," Haniya said. "The problem is how to transfer this money to the Palestinians."

The European Union and Israel have also suspended all financial assistance for the authority.

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