A Palestinian vendor counts his money at a street market in Gaza City on March 19, 2010.

STEVE CHIOTAKIS: To the Middle East now. In July, the Palestinian Authority cut government workers' salaries in half. That's because promised donations haven't come through.

Marketplace's Alisa Roth reports.


Alisa Roth: In the garden of a tea house in Nablus, Chaled Abbad is playing backgammon with a friend. He used to come here almost every day, but he can't afford to come that often anymore. He works for the Palestinian Authority's health department. And like all public employees here, he only got half his salary.

Chaled Abbad: I've cut everything in my life in half.

Chaled Abbad isn't only cutting back at the teahouse. He's stopped paying for his telephone, and other bills are piling up too.

Abbad: The landlord has been asking me about the rent. I'm doing what the Palestinian Authority is doing to us: I'm making promises.

The Palestinian government does have money; it's a question of how it can spend it.

Forty minutes from the tea house, in Ramallah, construction workers are finishing three big buildings that will house government offices. Assad Chativ, who's the spokesman for the Palestinian Authority, says the government can't stop construction to pay salaries.

Assad Chativ: The room of maneuvering is limited because most of the projects, especially infrastructure projects, are financed by earmarked money coming from specific donors for specific projects.

Among the donors who haven't paid up are Arab countries, which need the money at home to deal with the ongoing unrest in this region. Chativ says whatever the reasons, the missing salaries are hurting the Palestinian economy. That's because the government is the biggest employer here, with 150,000 workers, but about a million people are thought to depend on those salaries.

Chativ: The salaries are a significant part of the liquidity that is usually pumped into the market. And when this liquidity is shrinked by half, it will affect the demand in the market.

Rolling the dice onto the backgammon board, Chaled Abbad, the health inspector, says the government is playing with his life. He says we are their people -- the government has to take responsibility.

In Nablus, I'm Alisa Roth for Marketplace.

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