Palestinian aid may be funnelled via World Bank

JERUSALEM, Mar 6 (Reuters) Israel and donor nations are discussing a proposal to funnel most international aid to the Palestinians through the World Bank, in a bid to keep funds from a Hamas-led government, Israeli and Western diplomats said today.

The World Bank already manages a trust fund that provides budgetary support to the Palestinian Authority.

Expanding the World Bank's role could enable donors to sidestep the Palestinian government being formed by the Islamic militant group while ensuring humanitarian assistance gets through to the Palestinian people, sources familiar with the proposal said.

''That is one of the options being looked at ... to allow the Palestinians to receive the humanitarian aid they need and, at the same time, ensure (the money) doesn't go to terror,'' said a senior Israeli official who spoke on condition of anonymity because a decision has yet to be made.

A Western diplomatic source said the proposal was being pushed mainly by Israel and it was unclear whether it would be accepted by major donors because of complications involved in expanding the World Bank's mandate.

Israel froze tax revenue transfers to the cash-strapped Palestinian Authority starting this month in a bid to isolate Hamas, which won the January 25 Palestinian election. The tax revenues are worth around 50-55 million dollars a month.

Israeli Foreign Ministry spokesman Mark Regev declined to comment on the specific options under discussions to funnel aid to the Palestinian people once Hamas forms a government.

''While it is important to cut off direct financial support to a Hamas-controlled Palestinian Treasury, it is important to energise direct aid for the Palestinian people through non-government agencies,'' Regev said.

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