Palestinian President Mahmoud Abbas gestures during a press conference in the West Bank city of Ramallah on Sept. 8, 2012. Abbas said will ask the United Nation's General Assembly to be accepted as a non-member state in the international organization. (Nasser Shiyoukhi/AP)

Thrown on the defensive by street protests against rising prices of basic goods, Palestinian Authority President Mahmoud Abbas backed his embattled prime minister Saturday and blamed Israel for restrictions that he said hampered an effective response.

Abbas said that he bore ultimate responsibility for government policies and that he had asked Prime Minister Salam Fayyad and the cabinet to meet with representatives of the business sector and civic groups to examine ways to lower the cost of living.

Speaking at a news conference called at his headquarters, Abbas said the Palestinian Authority was facing a cash crisis because of a shortfall in donor contributions, particularly from Arab states, and he warned that civil-service employees would not receive full salaries this month.

At demonstrations in several West Bank cities in recent days, protesters have called for Fayyad’s dismissal, blaming him for the rising prices of fuel and basic foodstuffs, and for high unemployment. An internationally respected economist, Fayyad has strong backing in the West, where he is credited with building institutions needed for a future state.

Seeking to defuse public anger, Abbas said that he would not dispatch the police to break up demonstrations and that people had the right to protest peacefully against their leadership.

“We are not sacred,” he said. “But Salam Fayyad is an integral part of the Palestinian Authority. . . . I’m the first person who should be held responsible.”

“Whatever the government is doing is upon my instructions and orders,” Abbas added, pledging to make “every effort” to alleviate the financial burden on ordinary Palestinians.

He also pointed an accusing finger at Israel, saying its policies in the West Bank, including restrictions on movement and access to resources, had hampered the Palestinian Authority’s ability to manage the economy.

“We are not free to bring in whatever we want, goods or people, or to export,” Abbas said. “They control the borders.”

Israel has demolished homes and uprooted trees cultivated by Palestinians in West Bank areas under direct Israeli control, even as Jewish settlements were expanding there, Abbas added. “So long as there is occupation, I cannot do what I want,” he said.

Abbas accused oil-rich Arab states of not making good on pledges to contribute funds to the Palestinian Authority. “To tell the truth, Arabs . . . have not made payments,” he said. “They have resources, but they have not paid. Can I declare war against them? I cannot.

Reiterating his intention this month to seek a U.N. General Assembly vote to upgrade the Palestinians’ status to that of a non-member observer state, Abbas linked the Palestinian Authority’s financial woes to U.S.-led efforts to head off the U.N. initiative.

“They are trying to exert pressure on us not to go to the U.N.,” he said. “This will not happen.”