French President Jacques Chirac suggested this weekend that the World Bank funnel assistance, including funding the salaries of Palestinian Authority employees, directly to Palestinians to stave off a humanitarian crisis, a move that could put him in conflict with Israeli and US positions.
The proposed mechanism would allow Western donors to circumvent the new Hamas-led PA but still allow PA workers to get paid.
The World Bank, United Nations and others have warned of a brewing humanitarian crisis in the territories ever since first Israel and the United States, and then Europe, cut off direct funding to a regime they all label a terrorist entity.
A local World Bank official said, "The bank has experience in implementing such mechanisms" but their applicability in the case of Gaza and the West Bank would need to be studied. He stressed, however, that "the World Bank needs to be tasked to examine the feasibility of such a mechanism and it hasn't been as of yet."
Hamas said it would consider the idea, and PA Chairman Mahmoud Abbas welcomed it. Israel's reaction was more ambiguous, and some in the international donor community fear that the US will oppose the move.
Foreign Ministry spokesman Mark Regev declined to comment on Chirac's proposal, since details of how such a program would work were unknown.
He said, however, that in principle, "Nobody wants to see the Palestinian people unnecessarily suffer" and that Israel and the West were looking at ways to "directly fund humanitarian activities" for Palestinians.
The US and Israel have suggested channeling money through non-governmental organizations or other non-Palestinian agencies, but so far haven't offered any concrete plans for doing so.
Regarding the possibility of the World Bank serving as the conduit for such monies, Regev said, "The World Bank has been very involved in the past, and we've supported their activities in the past."
A UN source said that Alvaro de Soto, the organization's special Middle East coordinator, would have to study the proposal and would like to see a wider discussion on the issue among the all the Quartet members, which also include the US, EU and Russia.
He said, "Potentially, it is a step in the right direction. The United Nations doesn't want to see a salary crisis in the Palestinian Authority. No one wants to see unpaid security personnel." He painted a dire picture of what the 70,000 armed men might do.
One Western diplomat said the US would rather see the PA collapse than find a way to help its workers receive pay, as part of a strategy to undermine Hamas. He attributed the delay in finding a funding mechanism to a lack of will on the part of the US and other players.
Officials at the US embassy could not be reached for comment Saturday.
The diplomatic source added that even if Chirac's proposal became reality, it would take too long to refine and to implement to be of much help.
"The fiscal crisis is already here," he said.
Chirac said France hoped to discuss the proposal before a May 9 meeting of the main international players behind the stalled road map peace plan, his spokesman Jerome Bonnafont said.
Chirac's aides refused to specify which salaries would be paid out of such a fund and whether Palestinian police, for example, might be among those to benefit. French officials said such details would have to be worked out in discussions with European partners.
Hamas cautiously welcomed the proposal.
"Any means that will maintain the authority of the government and the preservation of money and at the same time help the Palestinian people, we will study and think about thoroughly," said PA Prime Minister Ismail Haniyeh of Hamas.
Abbas said failure to reach a solution "will be catastrophic." He suggested that Hamas be given time to adapt to its new role.
Abbas, whose Fatah Party was defeated by Hamas in January's legislative elections, has tried to keep the West from shunning the Palestinians over the Islamist group's violently anti-Israel ideology.
"The international community should give this new government the opportunity to express itself, to adapt, to harmonize itself with international law," he said through a translator. "Hamas is adapting. Hamas is today a government, a responsible government with ministers who are working with neighbors, with the Israelis and the world."
AP contributed to this report.