Quartet envoy James Wolfensohn is scheduled to go to the Persian Gulf later in the week to raise funds for the financially strapped Palestinian Authority, amid concern in some western capitals that if the money is not raised, Iran may step in and fund the PA to get a strong foothold in Gaza.
Wolfensohn is scheduled to come to Israel before going to the Persian Gulf, to discuss the critical Palestinian financial situation with both Israel and Palestinian officials.
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Acting Prime Minister Ehud Olmert, who on Sunday released some NIS 250 million of customs and tax revenue collected on behalf of the PA, said the decision was made because ""We will not play into the hands of extremists who want to create an unending war here."
Speaking at a European-Israeli economic conference in Tel Aviv, Olmert said Israel had no interest in harming Abbas, "the elected leader of the PA."
He said that as long as the Palestinian government "is not a Hamas government, we will cooperate with the PA cautiously, responsibly, but with the intention of strengthening the forces that recognize Israel's right to live without terrorism in secure borders."
Olmert said that the money would no longer be transferred automatically every month, but that its transfer would depend on whether Hamas was part of the government and on the situation that existed on the ground at the time.
"The money is theirs, as long as the PA does not cooperate with Hamas and the Palestinian government is not a Hamas government," Olmert said.
Olmert is scheduled to meet Wolfensohn on Wednesday. The Quartet envoy is also scheduled to meet with Finance Minster director-general Yossi Bachar, before going to the PA to meet with Abbas and acting Finance Minster Jihad Wazir.
Acting Palestinian Economy Minister Mazen Sonnoqrot, in an interview with Reuters, said the PA would ask Wolfensohn to release $300 million that had been pledged by donor countries last year.
Diplomatic officials, however, said that neither Wolfensohn nor the World Bank were holding on to anything near that much money. The only sum that has not been transferred to the PA was some $60 million from the EU that was placed in a World Bank trust fund late last year, rather than passed on to the PA, because the PA had failed to meet certain fiscal benchmarks set by the EU.
Wolfensohn is scheduled to go to Saudi Arabia, Qatar, Kuwait and the United Arab Emirates. He is expected to ask the Saudis immediately for $20 million of a $100 million the Saudis pledged in December, but has still not paid. The Palestinians also recently received a $12 million pledge from the Qataris which Wolfensohn wants to collect.
Western diplomatic officials said that Wolfensohn's agenda now is to "keep the interim PA government afloat."