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Edition: U.S. Article Comments (1) Full Focus Editor's choice A selection of our top photos from the past 48 hours. Full Article Follow Reuters Facebook Twitter RSS YouTube Read Exclusive: EU calls emergency meeting as crisis stalks Italy 10 Jul 2011 Riders shocked after Tour de France carnage 7:40am EDT Scientists find first superbug strain of gonorrhea 4:35am EDT 12 killed in blast at Cyprus navy base 11:28am EDT Taxes still a stumbling block in debt talks | 11:41am EDT Discussed 102 Jury resumes deliberations in Casey Anthony murder trial 89 Asia pollution blamed for halt in warming: study 64 Obama faces new obstacles in high-stakes debt talks Watched Royal humor ahead of Polo match Sat, Jul 9 2011 William and Kate take Hollywood by storm Sat, Jul 9 2011 Obama aiming for big debt deal Sun, Jul 10 2011 Analysis: Palestinians start to feel pain from new strategy Tweet Share this Email Print Related News Obama, lawmakers still far apart on debt Thu, Jul 7 2011 Syrian forces shoot dead 14 in Hama: activists Tue, Jul 5 2011 Libya denies Russian report Gaddafi seeking way out Tue, Jul 5 2011 Middle East Quartet discourages more flotillas Sat, Jul 2 2011 Democrats weigh short-term debt limit increase Thu, Jun 30 2011 Analysis & Opinion America’s problematic remote control wars Obama’s position on the debt ceiling Related Topics World » United Nations » Israel » By Tom Perry and Ali Sawafta RAMALLAH, West Bank | Mon Jul 11, 2011 7:52am EDT RAMALLAH, West Bank (Reuters) - The Palestinians' drive to forge a new Middle East strategy, opposed by Israel and the United States, is starting to exact a financial price that will test their resolve. Palestinian Authority employees, who received only half wages in July, are getting a taste of what could be in store if their leaders defy Washington and follow through on plans to take their statehood quest to the United Nations in September. Dependent on aid from Europe, the United States and its Arab allies, some of which has not been forthcoming this year, the Palestinians are facing a financial crisis which a senior official linked directly to their decision to go on the diplomatic offensive at the United Nations General Assembly. "It's part of the pressure on us to take the wrong decisions," Nabil Abu Rdainah, a senior aide to President Mahmoud Abbas, told Reuters. "We saw this film with Yasser Arafat several times. You either say 'yes' or you face hunger," he said, referring to the late Palestinian leader. "They will not pay you and will not let the others pay you." The impact of the wage cuts affecting the Palestinian Authority's 150,000 employees is already being felt on the Palestinian economy. "Cutting the aid is a dangerous game," said George Giacaman, a political scientist at Birzeit University near the West Bank city of Ramallah. "I think the idea is not to close the tap completely, because this might be counterproductive: it could lead to widespread discontent and agitation. The idea is to keep it trickling," he said. PALESTINIANS' DIPLOMATIC OFFENSIVE The Palestinians have yet to decide exactly which diplomatic course they will chart at the U.N. meeting if, as expected, there is no resumption of the moribund peace process which has been overseen by the United States for the past two decades. In general terms, they want to build as much international support as they can at the U.N. for a state of Palestine on land occupied by Israel in the 1967 Middle East war. The Security Council has scheduled a July 26 open debate on the possibility of Palestine becoming a U.N. member state. The United States opposes the idea, describing it as a unilateral step contrary to its approach of seeking a deal through bilateral agreement between Israel and the Palestinians. Israeli officials worry it is part of a new Palestinian strategy aimed at isolating and "delegitimizing" Israel. Palestinian officials acknowledge the diplomatic maneuver would have little or no immediate impact on the ground, but portray it as part of an inevitable departure from a failed strategy. They hope it will mark a shift away from a dependence on U.S. mediation to a more international approach that could level the playing field in future negotiations with their much stronger adversary. "We are left with no option," said Mohammad Shtayyeh, a leading figure in the Fatah movement headed by Abbas. The Palestinians' boldest U.N. option would be to ask the Security Council to admit Palestine as a full member state -- a move which the United States has already said it would oppose. In Ramallah, officials are studying alternatives that would not depend on Security Council approval, including the idea of seeking an upgrade of the Palestinians' U.N. status to a level below that of full member state. It would be the second time in a few months that Abbas has taken steps at odds with U.S. wishes, challenging the view of domestic critics who have long dismissed him as an instrument of Washington's policy. ABBAS SAYS "LOSING SLEEP" ON SALARIES Abbas signed an agreement with Hamas in May aimed at reuniting the Palestinian Authority in the West Bank and the Gaza Strip, controlled for four years by his rivals in the Islamist movement listed as a terrorist group by the United States. That too carried a financial cost that underlined the fragility of the Palestinian Authority, which exercises limited self-rule over areas of the Israeli-occupied West Bank. Citing concerns the funds would reach Hamas, Israel temporarily withheld tax revenues it collects on behalf of the Palestinian Authority, whose employees did not have their salaries paid on time for the first time since 2007. The reconciliation agreement, brokered by Egypt, has since stumbled. But it is still very much on the minds of policymakers in Washington, where an overwhelming majority of the U.S. Congress last week passed a resolution urging a suspension of aid to the Palestinians if they seek U.N. recognition. "We will be steadfast to confront these pressures," Abbas said in remarks reported by Palestinian media. Palestinian officials have said Arab governments are to blame for the shortfall in the funding they need to fill a $970 million hole in their 2011 budget. They are reluctant to name states but a review of sums paid by donors this year shows Saudi Arabia, a big contributor in recent years, has yet to offer any budgetary support. Riyadh, a close U.S. ally, has donated some $620 million in budget support to the Palestinian Authority since 2008. "We may not be able to pay salaries next month, or perhaps we will pay half salaries ... we are working day and night to secure salaries," Abbas said. "This is something I am losing sleep over." (Editing by Timothy Heritage) World United Nations Israel Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (1) JamVee wrote: After 50+ years with no success, it is hard to blame the Palestinians for wanting to try a different tactic. After all, Israel is “on top”, and has no real reason to cooperate (Their hawks far outnumber their doves). Jul 11, 2011 9:43am EDT -- Report as abuse See All Comments » Add Your Comment Social Stream (What's this?) © Copyright 2011 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Reader Feedback Mobile Newsletters RSS Podcasts Widgets Your View Analyst Research Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts Venture Capital Journal International Financing Review Project Finance International PEhub.com PE Week FindLaw Super Lawyers Attorney Rating Service Reuters on Facebook Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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