A Hamas government spokesman said on Monday: "We have given the list and bank account details of the civil servants to the Arab League so that the salaries can be paid to them directly.

 

"We have had a lot of contact with the Arab League and secretary general Amr Mussa to find a solution to the financial crisis as quickly as possible" Ghazi Hamas said.

 

He could not say when the money would be transferred.

 

The money collected by the 22-member Arab League only covers a fraction of the needs of the cash-strapped Hamas-led government, which requires about $240 million to pay its 160,000 employees for March and April.

 

Cuts

 

Banks have been reticent to transfer money to government accounts, fearing sanctions from the United States, which like the European Union considers Hamas a terrorist organisation and has refused any dealings with its government.

 

After talks with the Palestinian president, Mahmoud Abbas in Paris on Friday, France proposed that a special World Bank account be created to channel foreign aid and pay civil servants.

 

Abbas, who leads the mainstream Fatah faction, is widely seen as a moderate leader by Western leaders.

 

The European Union, once the biggest donor to the Palestinians, and the United States have suspended all direct aid to the government, citing Hamas's refusal to renounce violence and recognise Israel's right to exist.

 

Israel, meanwhile, suspended transferring the tax and custom revenues it collects on behalf of the Palestinians on imported goods destined to the West Bank and Gaza.

 

These represented more than $50 million a month.

 

Hamas has had to approach Arab governments, such as oil-rich Saudi Arabia, and Iran to fill in its ever-growing financial gap.

 

Reconising Israel

 

Hamas, a religious movement that has carried out the most bombings in Israel since the start of the intifada but enforced a truce for the past year, overwhelmingly won the general elections in January.

 

The leader of its politburo, Khalid Mishaal, insists that Israel must withdraw from the Palestinian territories it captured in 1967, including east Jerusalem, before his movement can recognise Israel.

 

Mishaal also said he wants to see Israel allow the return of refugees that fled or were expelled from their land in 1948-49 and 1967, release all Palestinian prisoners and dismantle the West Bank wall and every settlement.