Hamas says will distribute cash to Gaza families

GAZA (Reuters) - Hamas said on Thursday it would begin distributing up to 4,000 euros ($5,180) in cash to families hard hit by Israel's offensive in the Gaza Strip.

Taher al-Nono, spokesman for Hamas's government in the coastal enclave, told reporters a total of 28.6 million euros ($37 million) would be distributed starting on Sunday.

The announcement appeared to be part of efforts by the Islamist group, which receives Iranian support, to shore up its standing after Israel's 22-day military offensive, which killed some 1,300 Palestinians and wounded more than 5,000 others.

Palestinian officials in the occupied West Bank said Israel has been preventing the Western-backed Palestinian Authority, headed by President Mahmoud Abbas, from transferring some $60 million in cash to the Gaza Strip to pay its workers and others hard hit by the war, which started on December 27.

Washington hopes the Palestinian Authority will lead and get credit for Gaza's reconstruction, estimated to cost more than $2 billion, rather than Hamas. But Western officials say Israel, by holding up cash shipments, was undermining Abbas's position.

Saudi Arabia said on Monday it would donate $1 billion toward the reconstruction effort.

Hamas spokesman Nono said families in the Gaza Strip whose homes were completely destroyed would each receive 4,000 euros. Those whose homes were damaged would get 2,000 euros.

In addition, Hamas would pay 1,000 euros for every family member killed and 500 euros to those who were wounded, he said.

Hamas did not say why it would make the payments in euros rather than in Israeli shekels, the currency used in the Palestinian territories.

Western officials say shekels are in short supply because of Israeli restrictions on transfers to the Hamas-controlled territory.

Hamas is shunned by Western powers over its refusal to recognize Israel and renounce violence but receives support from Iran and other Islamist allies in the region.

At the end of Israel's war in Lebanon in 2006, the guerrilla group Hezbollah, with Iranian financial support, pumped money into reconstruction, undercutting the Western-backed government in Beirut.

(Reporting by Nidal al-Mughrabi in Gaza and Adam Entous in Jerusalem, Writing by Adam Entous; Editing by Nick Vinocur and Jon Boyle)