"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.
On 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.
He said Arab countries had paid only $52 million in Palestinian aid since the beginning of 2011 -- $42.5 million from the United Arab Emirates and $10 million from Oman. This compares with $236 mln from Arab countries in 2010.
The European Union paid 145 million Euros ($210 million) during the same period. The EU announced on Friday it would provide an additional 85 million Euros ($122 million) in aid in 2011, with 45 million Euros of this earmarked for salaries for key workers. It was not clear when these funds would arrive.
Call to pressure Israel
The PA, which is heavily dependent financial support from donors including the United States and the European Union, has called for international intervention to persuade Israel to reverse the decision.
UN Secretary General Ban Ki-moon told Prime Minister Benjamin Netanyahu on Friday Israel should not withhold the revenues of customs and other levies Israel collects on behalf of the PA on goods imported via Israel to PA-controlled areas.
He said he had intensified his contacts with many world governments to press Israel to release the funds.
Israeli Deputy Prime Minister Silvan Shalom told members of parliament in Jerusalem that the 1993 Olso interim peace accords which set up the transfers states that "a group that calls for Israel's destruction cannot take part in the elections".
"You can't come along and say: 'I want the part of the Oslo Accords that's convenient for me, and I don't want the part that isn't convenient for me,'" he said.
Fayyad said: "Israel does not have the right to hold our money. This is an act of piracy. Israel is not doing us a favor when they transfer it."
Israel charges 3 percent for collecting funds, he noted.
Fayyad said the PA had to borrow from banks to meet its expenditure before the Israeli decision. The monthly cost was $30 mln and total bank debt has reached $890 million, he said.
The salaries paid by the PA include those of around 70,000 employees in the Gaza Strip, who continued to receive their wages even after Hamas seized control of the territory in 2007.
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