Islamic Jihad, the second-strongest armed movement in the Gaza Strip after Hamas, is on the verge of bankruptcy after losing favor with its backer Iran, a leading Arab newspaper reported on Tuesday.

According to the London-based, pro-Saudi daily Asharq Al-Awsat, members of the terror group have not received salaries in three months and are not expected to receive next month’s salary either. The reason for the crisis, the report said, is Islamic Jihad’s refusal to condemn the Arab coalition’s military campaign against Iran-backed Houthi insurgents in Yemen.

“Knowledgeable Palestinian sources” told the paper that Iran had expected Islamic Jihad, its main Palestinian protege, to issue a statement condemning the Saudi-initiated Operation Storm of Resolve launched against the Shiite rebels in March. Instead, Islamic Jihad official Nafez Azzam said at the time that his movement “insists on not intervening in any internal Arab affairs.”

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While Iranian funding for Gaza’s Hamas government was also slashed in light of the movement’s public stance against the Assad regime in Syria in late 2013, Islamic Jihad’s position is more precarious due to its complete financial dependence on the Islamic Republic. The movement was dealt a significant blow by Israel during the war in Gaza last summer, when a large number of its senior commanders were killed in action.

Both Hamas and Islamic Jihad are Sunni movements, so that escalating tensions between the Sunni Arab world and Shiite Iran have tested their loyalties and placed them in a difficult situation.

“The position of [Islamic] Jihad’s leadership has surprised the Iranians,” a source was quoted by Asharq al-Awsat as saying. “Iran believed Islamic Jihad would stand by it on everything, as the movement did in the Syrian crisis, but that didn’t happen.”

Indications of the crisis began to emerge publicly last week, when Ramadan Shalah, secretary general of Islamic Jihad, abruptly left his home base of Tehran for Beirut, the Palestinian daily al-Quds reported on May 19. “Nothing is for free,” tweeted Jamil Abdul Nabi, an Islamic Jihad commander in the northern Gaza Strip, four days earlier, a cryptic statement subsequently understood to refer to Iran’s conditional support.

According to al-Quds, Iran has begun diverting its funds to an offshoot of Islamic Jihad in Gaza named as-Sabirin (Arabic for “the patient ones”), headed by a former Islamic Jihad military operative, Hisham Salem.

In an interview with the Gaza-based news agency Ar-Rased Al-Arabi last Friday, Islamic Jihad official Khaled Al-Batsh refused to answer whether as-Sabirin had become Iran’s alternative to Islamic Jihad in Gaza, or whether Tehran had in fact stopped funding Islamic Jihad.

He did, however, explain the rationale behind his movement’s decision not to comment on the war in Yemen.

“We want the entire world to be with Palestine,” he said. “If we adopted a position regarding one side, it would be as if we are quarreling with [Muslim states] when in fact we need them. Therefore, Islamic Jihad has decided not to intervene in internal Arab affairs.”