CAIRO (AFP) -- Palestinian foreign minister Mahmud Zahar and Arab League chief Amr Mussa met to find a way to deliver $70 million in badly-needed Arab aid to the Palestinians.

Zahar also held talks with his Egyptian counterpart Ahmed Abul Gheit, a meeting which was due to have taken place last month but was postponed, in what was interpreted by some observers as a snub.

"We discussed how to overcome the technical barriers to the transfer of these Arab funds to the Palestinian people," Mussa told a joint press conference after their talks.

The United States and the European Union, formerly the largest donor to the Palestinians, suspended direct aid after Hamas took office in March, given the Islamists' refusal to renounce violence or recognize Israel's right to exist.

Mussa said a team of Palestinian financial experts was in Cairo, where the League is based, for a brainstorming session aimed at resolving the problem which has arisen since Hamas took control of the Palestinian government.

Zahar said the Hamas-led government would not oppose the transfer of the funds to the Palestinian Authority presidency rather than his administration "because either way it will be distributed to the Palestinian people".

Officials from the pan-Arab body have also been examining a mechanism to pay salaries individually to each of the Authority's 160,000 employees.

"It is very complicated and ... there is no guarantee it will work ... More than 1.5 million euros (1.89 million dollars) will be wasted on commissions," said Mohammed Sobeih, the Palestinian permanent representative to the League.

"We are trying to work with a German bank because all the others have backed off under U.S. pressure," he said, declining to name the bank.

The $70 million received so far by the Arab League from its member states falls far short of the estimated 240 million needed to cover salaries for March and April. The sum is currently in the hands of Banque du Caire.

Recently, a defiant Palestinian premier Ismail Haniya slammed U.S. pressure and said his government had secured sufficient pledges from Muslim countries to end the financial crisis.

The Palestinian government has requested $100 million from the Palestinian central bank, its governor George al-Abed said Thursday.

However, the governor hinted that the request would be turned down, underlining that Palestinian fiscal law prohibits borrowing from the Authority to finance budget deficits.