The Islamic militant group Hamas, which now controls the Palestinian Authority, is blaming the United States for its economic woes. Hamas finds itself on the brink of financial collapse just five weeks after taking office.
Hamas is accusing the United States of blocking the transfer of funds from the Arab League to pay the salaries of 165,000 Palestinian Authority employees. The salaries are two-months overdue and Hamas is broke in the wake of international sanctions.
The U.S. and European Union cut off nearly $1 billion in annual aid to the Palestinian Authority after Hamas rejected demands to renounce violence and recognize Israel.
Hamas had hoped that Arab states would make up the difference. To appease the United States, the Arab League had proposed bypassing Hamas and transferring money directly into the accounts of Palestinian-government employees.
But officials say Arab banks are refusing to cooperate because they fear American sanctions.
Palestinian analyst Bassam Eid says Hamas is learning the hard way that the Palestinian people depend on the West.
"We do not have as a Palestinian [people], any kind of independent economy," said Eid. "Our economy is only the donations and the grants that we receive from the international community."
Jerusalem Post correspondent Orly Halperin says Hamas is dead wrong, if it thinks that the Arab states or Iran, can support the Palestinian Authority.
"These governments are not going to be able to support the PA, the Hamas-led PA or any PA, for a very long period of time," said Halperin. "We are talking about $116 million a month, just in salaries to health-care workers, teachers and civilian employees, and security forces."
The deepening economic crisis has sparked debate within Hamas about whether to moderate its position toward Israel. But the Hamas charter calls for Israel's destruction, and recognition of the Jewish state would violate the group's ideology.
Hamas does not have a lot of time to decide. The financial crunch has raised doubts about whether the new Hamas government can survive.