Deputy Prime Minister Muhammed Mustafa said on Sunday that the PA will not pay Hamas civil servants' salaries in Gaza, though alternative financial support may be arranged. Concern over an international boycott makes direct transfer of funds impossible.
The major factor in the decision over salaries concerns the possible United States response if money were to be sent directly to Hamas; an organisation blacklisted under US law as they consider it a terrorist group. Both the US and the wider international community risk boycotting the Palestinian Authority in such an eventuality.
For this reason, Mustafa told the press that temporary solutions were being looked for such as using the UN or other NGOs to transfer the money in question.
The announcement followed Saturday's threat by Mahmoud Abbas to break off Palestinian unity agreements with Hamas unless the government is allowed to operate fully in Gaza.
Prime Minister Rami Hamdallah spoke further on this major stumbling block, confirming that "the government and the banks operating in the Palestinian territories were warned that if they make these payments to former Hamas government employees in Gaza then the government and the people will be boycotted."
"If this happens, the Palestinian banking system will face a huge problem that will threaten the Palestinian situation in general," he told AFP on Sunday.