RAMALLAH, West Bank (Reuters) – Palestinians will seek recognition as a United Nations member-state in September given the deadlock in U.S.-brokered peacemaking with Israel, a senior Palestinian official said Saturday.

Nabil Shaath urged President Barack Obama, who Thursday criticized the planned move at the U.N. general assembly, to join other countries in endorsing a Palestinian state taking in the Israeli-occupied West Bank and East Jerusalem.

Another Palestinian official, Nabil Abu Rdainah, said the drive to win statehood status unilaterally could be forestalled should Israel accept the demand to extend a freeze on its settlement on occupied land so that negotiations can resume.

But no such rapprochement looked imminent after Israeli Prime Minister Benjamin Netanyahu, hosted in Washington on Friday, sparred with Obama over a new American call for the future Palestinian state to have a border approximating the West Bank’s boundary before Israel captured it in the 1967 war.

“Of course we will go to the United Nations,” Shaath, an aide to Palestinian President Mahmoud Abbas, told Reuters.

“Especially after Netanyahu used the old pretext that he needs defensible borders’ to keep stealing our land, control the Jordan Valley and create demographic facts on the ground.” Diplomats expect majority support for the Palestinians in the U.N. General Assembly.

But the statehood vote would have first to be approved in the Security Council, where the United States — which insists on a negotiated peace accord — has a veto.

RAMALLAH, West Bank (Reuters) – The Palestinian Authority appealed to Arab countries Wednesday to pay the salaries of 155,000 government workers after Israel decided to suspend the transfer of tax funds to the PA.

“We say to our Arab brothers: save us. We need your help more than any time before. It is the moment of truth,” Palestinian Prime Minister Salam Fayyad told a news briefing in the West Bank city of Ramallah.

Public sector workers’ April salaries were about a week overdue following Israel’s decision, taken in protest at a Palestinian unity deal involving the Islamist group Hamas.

The Israeli government decided on May 1 to halt the transfer of Palestinian customs and other levies which make up 70 percent of PA revenues, citing fears that the money would go to Hamas, a militant group hostile to Israel.

Monday Fayyad said the PA had not been able to pay public sector salaries for the first time since 2007, putting it in an impossible financial position.

Fayyad said the April bill totals $170 million which the PA will not be able to pay unless Arabs and others intervene.

“It is not a must. Rather we are seeking their help for us in this difficult time,” Fayyad told Reuters.

RAMALLAH, West Bank (Reuters) – Palestinian government workers fear pay cuts this month after Israel halted transfer of tax revenues in response to a deal to reunite the two rival wings of the Palestinian independence movement.

But many believe the surprise agreement between President Mahmoud Abbas’ secular Fatah faction and Hamas Islamists in Gaza will be worth the price if it brings statehood closer.

Israel refuses to deal with Hamas, which does not recognise the Jewish state. The two came close to a second war last month.

On Sunday, Israel blocked the transfer of $105 million (63 million pounds) in customs duties and other levies it collects on behalf of the Palestinian Authority, which is under the control of Abbas and has been engaged for years in a peace process with Israel.

Israel says it won’t let revenues flow to Hamas.

Palestinian officials say that concern is baseless, as any new Palestinian government would be formed by independents. Prime Minister Salam Fayyad says the PA won’t be able to pay wages unless Israel releases the April revenues.

The aid-dependent government would have to take out loans to pay its 155,000 workers, Fayyad told reporters on Monday.

RAMALLAH, West Bank (Reuters) – The Palestinian Authority is ready to run an independent state but will struggle to make further institutional progress due to the restrictions of the Israeli occupation, the United Nations said on Tuesday.

The U.N. report followed equally upbeat assessments of the PA’s nation-building achievements released over the past week by the World Bank and the International Monetary Fund.

The positive statements comes before a meeting in Brussels on Wednesday of aid donor countries which will review Palestinian Prime Minister Salam Fayyad’s drive to construct the framework of a state by mid-2011.

“In six areas where the U.N. is most engaged, governmental functions are now sufficient for a functioning government of a state,” said the report, entitled “Palestinian State-building: A Decisive Period.”

It listed the six areas as rule of law and human rights; livelihoods; education and culture; health; social protection; and infrastructure and water.

However, it said the PA could not make significant further advances given the continued Israeli occupation of much of the West Bank and a breakdown in Middle East peace talks.

“Measures of occupation which stifle Palestinian life need to be fundamentally rolled back by more far reaching Israeli actions to match the progress of the state-building program,” the report said.

RAMALLAH, West Bank (Reuters) – The Palestinians are ready for statehood now, according to a report to be presented to major aid donor countries in Brussels this week by Prime Minister Salam Fayyad.

He will present facts and figures to show how his Palestinian Authority has used hundreds of millions of dollars in foreign assistance over the past two years to create health, education, energy, water, security, justice and housing services.

“I believe that our governing institutions have now reached a high state of readiness to assume all the responsibilities that will come with full sovereignty on the entire Palestinian occupied territory,” Fayyad says in the 63-page document.

But he underlines that unless Israel’s military occupation comes to an end, these achievements cannot go far enough.

“Without a change to the status quo, the positive impact of internal reforms to build a strong and healthy economy will be limited in both scope and sustainability,” the report says.

SEPTEMBER DATE

Palestinian leaders aim to ask the United Nations General Assembly in September for recognition of statehood on all of the territory Israel occupied in 1967, including Gaza — over which Fayyad and President Mahmoud Abbas actually have no control.

RAMALLAH, West Bank (Reuters) – While Paris’s Left Bank is famous for its fine restaurants and bustling cafes, Palestine’s West Bank is not. But that might be about to change.

The hilly city of Ramallah, which lies just to the north of Jerusalem, has undergone a massive boom in recent years on the back of Western donor support, with new smart eateries and bars mushrooming alongside a plethora of pristine office blocks.

Latest data says Ramallah and the adjacent town of Al-Bireh that it has utterly engulfed have more than 120 coffee shops and some 300 restaurants, with 50 new diners opening in 2010 alone.

“When I started, I was competing with three to four other places, now I compete with many,” said Peter Nasir, who turned an abandoned family house into a bustling restaurant in 2007, which draws around 150 customers a day.

“Restaurants are good business,” said Nasir, whose popular Azure restaurant lies close to the city center.

Until recently a small town in the occupied West Bank, Ramallah has seen its population double in the last decade to around 100,000, and plays host to a growing army of NGO workers, diplomats and an increasingly wealthy, middle-class elite.

“These people need food, need to sit down and talk, need to hold receptions. This explains the increase in restaurants,” said Mohammad Amin, head of Ramallah Chamber of Commerce.

By Mohammed Assadi

RAMALLAH, West Bank (Reuters Life!) – A top Palestinian security official said police had arrested a member of the Islamist Hamas group over the assassination of award-winning Arab-Israeli actor and director, Juliano Mer Khamis.

“One of those arrested is a prime suspect in the killing, he belongs to Hamas and is being interrogated,” the official, who declined to be named, said on Tuesday,

Jenin governor Qaddoura Moussa also declined to reveal details about the suspect in Monday’s killing of Mer Khamis, 52, who was shot dead by a masked gunman, but he added that a number of other suspects had been held and were later released.

Western powers, including the United States and European Union view Hamas as a terrorist organization. It took control of the Gaza Strip in 2007 in a brief war with security forces loyal to Palestinian President Mahmoud Abbas.

“The security forces have arrested a number of people, there is an ongoing investigation,” Moussa told Reuters.

Mer Khamis, the son of a Jewish mother and Christian Arab father, ran the Freedom Theater in Jenin’s refugee camp in the northern West Bank for several years. He was driving his car near the theater with his infant son and a babysitter when the gunman ordered him to pull over and shot him.

RAMALLAH, West Bank (Reuters) – Palestinian President Mahmoud Abbas said Wednesday he was ready to go to the Gaza Strip immediately to try to end divisions with the Hamas Islamist movement that controls the territory.

In a speech in Gaza Tuesday, Hamas leader Ismail Haniyeh invited Abbas to the enclave, which the West Bank-based president has not visited since its seizure by the Islamist group in 2007, to launch a “comprehensive dialogue” on unity.

“I am ready to go to Gaza tomorrow in order to end the division,” Abbas, without mentioning Haniyeh’s invitation, said in an address to the Palestine Liberation Organization’s central council.

Abbas said he hoped to form “a government of independent national figures and to agree to parliamentary and presidential elections … within six months or as soon as possible.”

Welcoming what he called Abbas’s response to Haniyeh’s initiative, Hamas spokesman Sami Abu Zuhri said “special arrangements for the visit will be looked into.”

In a statement, Hamas said: “Haniyeh is discussing with his advisers, members of his government, Hamas leaders and other factions a mechanism to welcome the President and end division.”

The use of the term “president” in the statement appeared to mark a softening in Hamas’s attitude toward Abbas.

RAMALLAH, West Bank (Reuters) – Palestinians on Tuesday dismissed any attempt by Israeli Prime Minister Benjamin Netanyahu to take interim steps toward peace now that U.S.-sponsored statehood negotiations are frozen.

“Netanyahu is trying to escape from his obligations toward the peace process by talking about new proposals,” said Nabil Abu Rdainah, spokesman for Palestinian President Mahmoud Abbas.

An Israeli official on Monday said Netanyahu was crafting a proposal for a “phased approach” to break the deadlock. Netanyahu has not commented publicly on the issue.

In an interview in the Wall Street Journal on Tuesday, Israeli Defense Minister Ehud Barak was quoted as saying Netanyahu might propose a Palestinian state with temporary borders, an idea Abbas has long rejected.

“If he is serious, let him stop settlements and immediately start negotiations,” Abu Rdainah said.

Direct peace talks that began in Washington in September froze within weeks after Netanyahu refused to extend a partial moratorium on construction in Israeli settlements in the occupied West Bank.

Netanyahu accused the Palestinians of setting preconditions for negotiations. Palestinians say the settlements, deemed illegal by the World Court, will deny them a viable state.

RAMALLAH, West Bank (Reuters) – Palestinian President Mahmoud Abbas’ dominant Fatah political faction has demanded that he sack Western-backed Prime Minister Salam Fayyad, according to a letter shown to Reuters on Thursday.

The letter, signed by senior Fatah officials, was sent to Abbas on Saturday, but the president “did not take it seriously,” a Fatah official told Reuters.

However, the request underlined deep political friction at the heart of the Palestinian Authority, with many Fatah activists clearly frustrated by Fayyad, who has no significant political base of his own but wields substantial power.

Fayyad, a former World Bank economist, is widely credited by Western governments with transforming the institutional landscape in the West Bank, successfully building the core structures needed for a planned independent Palestinian state.

As prime minister he controls finances and security, leaving many Fatah members to complain bitterly in private that his high-profile activities are overshadowing their own work.

“We suggest you reconsider re-appointing Dr. Fayyad and (instead) ask that a strong Fatah figure do the job,” said the letter, backed by Fatah’s central revolutionary council.

Looking to show his commitment for change in the wake of popular protests across the Arab world, Abbas on February 14 asked Fayyad to appoint a new cabinet and prepare for elections.