Chirac suggests World Bank channels Palestine aid

PARIS, Apr 28 (Reuters) French President Jacques Chirac suggested today that the World Bank could channel funds to the Palestinian Authority to help it pay salaries held up by foreign objections to the Hamas-led government.

Meeting visiting Palestinian President Mahmoud Abbas, Chirac also said it would lobby its European and international partners to resume aid cut off after the Islamist movement Hamas took over the government, his spokesman Jerome Bonnafont said.

''We could urgently study the creation of a fiduciary fund managed, for example, by the World Bank, which would receive the aid meant to pay civil servants' salaries,'' he told journalists after the meeting.

''France is proposing to its European and international partners, especially in view of the meeting of the Quartet on May 9, that they urgently consider a plan that would allow a resumption of (direct) aid,'' he added.

This aid should be channelled through ''institutions independent of the government'' and could include increased aid for the president's office, he said.

Abbas urged the international community to rush the funds to the cash-strapped Palestinian Authority but said it was not yet clear how they could do this.

''If we don't find a solution, there will be a catastrophe,'' he told a news conference after his meeting with Chirac.

Abbas said one option for getting funds quickly would be to have them sent to his office for further distribution to ministries controlled by Hamas, the Islamist group classified by the United States as a terrorist organisation.

It was premature to consider this, he added.

Under U.S. law, any foreign bank that refuses to cooperate with the United States in cutting off funding to Hamas could have its U.S. assets frozen and its access to U.S. financial markets denied.

REUTERS CH HS1950