Palestinian salaries paid after Israel sends funds

RAMALLAH, West Bank (Reuters) - Palestinian government workers received their wages almost a week late on Tuesday after Israel transferred tax revenues it held back over Palestinian attempts to block upgraded European-Israeli ties.

Prime Minister Salam Fayyad said on Monday the aid-dependent Palestinian government in the occupied West Bank had expected to receive tax revenues that Israel collects on its behalf on June 2 and to pay salaries two days later.

But the money was delayed, an Israeli official said, in response to Palestinian Prime Minister Salam Fayyad's lobbying of the European Union against upgrading its relations with Israel.

Palestinian officials said on Tuesday the funds had arrived and government employees had been paid.

In a letter to the EU dated May 27, Fayyad accused Israel of "flagrant disregard" of Palestinian rights by continuing to build Jewish settlements in the West Bank and refusing to remove checkpoints which hamper economic development.

Israel says it intends to keep major settlement blocs in the West Bank under any future peace deal with the Palestinians. It says checkpoints help to prevent Palestinian attacks on Israelis.

A senior Israeli official said on Sunday the Israeli Finance Ministry planned to deduct about a quarter of the 250 million shekel ($75 million) tax revenue payment to cover Palestinian Authority debts to Israeli utilities.

It was not immediately clear how much money was transferred.

The tax payments are a main source of Palestinian Authority funding and are used to pay the salaries of more than 165,000 government employees in the West Bank.

This month's delay was the first since Fayyad was appointed prime minister by Palestinian President Mahmoud Abbas after Hamas's takeover of the Gaza Strip last June.

(Reporting by Mohammed Assadi; Editing by Charles Dick)