Israel Matzav

Wolfensohn noted that if the Palestinian Authority did not receive the tax money Israel collects for it, if Israel continued its regime of restrictions on trade and labor and if the flow of donations continued to weaken, the GDP in the territories would drop this year by 27%.

According to the former World Bank president the bank's economists predict unless the situation turns around in 2008 74% of the Palestinians will be living beneath the poverty line and unemployment will reach 47%.

He attributes a large part of the tremendous economic damage caused to the Palestinians to a systematic violation of commitments by Israel regarding the Gaza Strip border crossings and freedom of movement in the West Bank. Wolfensohn stressed the Palestinian Authority provides 60% of the health and education services and that the U.N. and voluntary organizations can not replace it. He said due to fear of American sanctions banks throughout the world refuse to transfer money to the PA or even directly to its employees.

"We must ask ourselves whether humanitarian aid is enough to bring us to the desired goal - a two-state solution - as the Road Map says," Wolfensohn concluded his latest report. He noted that in recent years the international community allocated an annual sum of some two billion dollars as aid to the Palestinians, hoping it would help build effective institutions and a thriving economy, on the way to establishing a viable state. [All that money down the drain for nothing. CiJ]

"Are we going to give all that up now," he asks, alluding to the policy of completely boycotting the Hamas government, " or will we find a way that will allow us to work in the framework of the law and the policy, while continuing to support building a democratic and responsible administration, that can act to realize the dream of peace and security for the two peoples." [No sense in throwing good money after bad. Kind of reminds me of one of my old bosses. When I discovered that a client had forged documents - the receipt for the only sale of goods he had in the previous five years - and suggested to the boss that the client be dropped, his reaction was "but we've put so much time into this already." Maybe that's why he's a multi-millionaire and I'm still just an honest lawyer. CiJ].

"The Palestinians need to understand that it is not business as usual," Wolfensohn told the news conference, adding in a reference to Hamas, "Here you have a Palestinian group which has said it wants to destroy its neighbor. [How are the 'Palestinians' going to understand that if the world keeps throwing money at them regardless of what they do? CiJ]

"I guess if Canada did that to the United States, or New Zealand did it to Australia, the reaction would not be very [positive]," he said.

Speaking in Washington on Monday, Wolfensohn said he had made "quite a lot of progress" in promoting economic development of Gaza after the Israelis withdrew in September of last year. [Was that before or after the 'Palestinians' trashed the greenhouses that Wolfensohn and Bill Gates bought for them? CiJ]

But he said that given Hamas' accession to power after its surprise win in January's Palestinian elections, "the political events are such that I think the issues are above my pay grade".

"With the government of Hamas having taken over with the Palestinians, it's a very difficult movement to be able to try and negotiate any independent type of arrangements," Wolfensohn said.

Wolfensohn, who had frequently complained of being "disenfranchised" in his Gaza role and threatened to quit, left with a warning that the West should not consider trying to starve the Hamas-led Palestinians into submission.

"I don't think anyone in the quartet believes that to be the policy - although, sometimes, it is made to appear that that is what it is," he said. "I think that's a losing gambit."[What does he suggest? Keep giving them tough love until they come around? Why would they? CiJ].