[World Bank] Freezing PA funds means mass poverty

from Globes online

Quartet envoy James Wolfensohn told the US Senate Committee on Foreign Relations: Find ways to aid the Palestinians by bypassing Hamas.

Ran Dagoni,

In a report sent to donor countries, the World Bank warns that if Israel suspends the transfer of tax revenues that it collects on behalf of the Palestinian Authority (PA) to the latter, and donor countries simultaneously reduce aid, the territories will descend into a severe recession, cutting personal income 30% in 2006.

The World Bank predicts that the PA’s GDP could fall 27%, similar to the fall in the US GDP in the Great Depression after the 1929 Crash. Unemployment in the PA could nearly double to 40%, and two-thirds of the population would live below the poverty line.

James D. Wolfensohn, the special Middle East envoy of the Quartet (the US, EU, Russia, and the UN) told a US Senate Committee on Foreign Relations hearing that cutting aid to the PA would lead to chaos and increase “the radicalization of Palestinian society.”

Wofensohn is worried that the PA will not be able to pay salaries to its 140,000 employees. “If you don’t pay salaries to the civil servants, who support 900,000 people, I fear that frustration will reach a level that it will no longer be subject to control,” said the former president of the World Bank.

While Wolfensohn has made similar warnings before, yesterday’s audience is more important than previous ones. He called on the senators to give the PA “flexibility” in its contacts with Hamas, and avoid “tough” legislation that would block all ways of transferring aid to the Palestinians.

The Senate Committee on Foreign Relations heard a similar call from General Keith Dayton, sent by the Bush administration to help reform the Palestinian security services. He said the tougher legislation against aid passed by Congress, the harder his work would be.

Wolfensohn called on the international community to find ways to aid the Palestinians while bypassing Hamas. He stressed, however, that he unequivocally supported the Quartet’s position against Hamas’s use of violence and that Hamas must recognize Israel and accept agreements and obligations undertaken by the PA, including the Road Map.