Fayyad: Israeli Sanctions Have 'Devastating Impact' on Palestinian Economy

Palestinian PM Salam Fayyad says he will be unable to pay the salaries of tens of thousands of civil servants due to Israel's withholding of tax revenues it collects on behalf of PA.

Palestinian Prime Minister Salam Fayyad says he will be unable to pay the the salaries of tens of thousands of civil servants, as Israeli economic sanctions start to bite.

Israel decided last month to suspend the monthly transfer of about $100 million in tax revenues it collects on behalf of Fayyad's Palestinian Authority. The transfers, along with foreign aid, are crucial for keeping Fayyad's government afloat.

Palestinian Authority Prime Minister Salam Fayyad.AP

Nearly one-third of the close to 4 million Palestinians in the West Bank and Gaza depend on public sector salaries.

Fayyad told reporters Sunday that the sanctions have a "devastating impact" on the Palestinian economy.

Israel suspended the transfers in retaliation for Palestinian attempts to win international recognition for a state of Palestine.