GAZA CITY ø Saudi Arabia has withheld its pledge for millions of dollars to Hamas in a move that threatens operations of the Islamic insurgency movement.

Palestinian sources said the Hamas leadership had been expecting payment of between $2 million and $5 million from Saudi Arabia in February 2004. They said the Saudis suspended payment amid U.S. pressure and the subsequent assassination of Hamas leader Ahmed Yassin.

"Hamas envoys have been literally begging the Saudis to honor their pledge," a Palestinian source close to Hamas said. "The Saudis are nervous about giving Hamas money after Yassin's death. They don't know who they're dealing with anymore."

Saudi Interior Minister Prince Nayef Bin Abdul Aziz has headed the kingdom's fund for the Palestinian war against Israel, Middle East Newsline reported. Most of the money from the fund has gone to Hamas, the sources said.

Western diplomatic sources who follow Saudi Arabia confirmed that Riyad has suspended the transfer of millions of dollar to Hamas. But the sources cited U.S. pressure on the Saudi kingdom to end support for groups deemed by the State Department as terrorist.

"There's been a lot of U.S. pressure on the Saudis and that has held things up," a Western diplomatic source said. "I think the Saudis are using the chaos in Hamas as an excuse to delay."

The Palestinian sources said the Saudi failure has resulted in a financial crisis within Hamas. They said Hamas could begin cutbacks in social welfare services as early as May.

Saudi Arabia was estimated to relay more than $30 million a year to Hamas. A U.S. official who deals in counter-terrorism said the kingdom increased funding to Hamas in 2002 and 2003 to nearly $80 million a year.

The Hamas crisis has deepened in wake of the Israeli assassination of Yassin's successor, Abdul Aziz Rantisi. Under orders of political bureau chief Khaled Masha'al, Hamas has appointed a secret leadership believed headed by Mahmoud A-Zahar and Ismail Haniya.

The sources said Masha'al has appealed to Iran to compensate for the Saudi funds. They said Iran has agreed to send aid over the next few weeks.

Prominent Hamas members have acknowledged a crisis within the movement in the aftermath of the assassination of Yassin and Rantisi. They said Hamas has lost its entire leadership in the West Bank and most of its leadership in the Gaza Strip.

On Tuesday, Israel's military intelligence chief, Maj. Gen. Aharon Zeevi-Farkash, said Hamas has been hurled into anarchy. He said Hamas's ability to attack Israel has been reduced over the last few weeks.

The Egyptian state-owned daily said Hamas would meet on Wednesday to formally select a leadership. On late Saturday, Masha'al announced that Hamas's branch in the Gaza Strip had appointed a new leader, but said his name would remain secret to avoid any Israeli assassination attempt.