A request by Israel for the International Monetary Fund (IMF) to make an emergency loan to the Palestinian Authority has highlighted growing concerns over unrest in the West Bank and within the Palestinian security forces.

The request for a $100 million bridging loan was made by the Governor of the Bank of Israel, Stanley Fischer, who was approached by Palestinian Prime Minister Salam Fayyad.

Both men are former employees of the IMF and the request was made with the approval of Prime Minister Benjamin Netanyahu. However, it was turned down because the PA is not a state and the IMF did not agree to set a precedent by having Israel serve as the go-between for the funds.

Despite the fact that official diplomatic talks between Israel and the PA broke down three months ago, when the sides could not agree on agenda for the talks, Israel has a clear interest in maintaining the fragile Palestinian economy — especially the salaries that the PA pays its employees.

Mr Fayyad faces a budget deficit of $1 billion and does not have the funds to pay civil servants their salaries this month — or the 30,000 members of the security forces.

For the past five years, President Mahmoud Abbas’s Fatah movement has ruled the Palestinian cities of the West Bank, using the American-trained battalions of the General Security force to prevent its rivals Hamas from gaining ground, as they have in the Gaza Strip. Palestinian security has been co-operating closely with the IDF during this period and terror levels in the West Bank are at their lowest in decades.

But in May, groups of fighters, some of them members of the security forces, shot at PA and UN offices in Nablus and Jenin in what was seen as a direct challenge to Mr Abbas’s rule by rivals from within Fatah. Loyal fighters were sent to the two cities from Ramallah and dozens were arrested. PA spokesmen described the shootings as disputes between criminal gangs, which is partly true, but it reflects also on the impatience within Palestinian circles over the weakness of Mr Abbas’s administration, the lack of any progress in the diplomatic process and an economic crisis caused largely by a slowdown in foreign aid coming into the West Bank.

Over the weekend, Palestinian security forces brutally dispersed two demonstrations in central Ramallah which called upon Mr Abbas to end the security co-ordination with Israel. The demonstrators were from a new group calling itself “Palestinians for Dignity”, which is not officially connected to any of the opposition groups and accuses the PA of “collaborating” with Israel.

While this kind of demonstration is a relatively new phenomenon, Israeli security officials are more worried by a change of direction within the Palestinian leadership, especially its security forces. “If another year goes by without them realising their goal of two states, why should they continue to co-operate? They may as well use their weapons against us,” said a senior IDF officer.