Quartet's envoy to Middle East stepping down-office

JERUSALEM, Apr 28 (Reuters) W Asia envoy James Wolfensohn has decided to step down because of divisions within the Quartet of international mediators over his role now that Hamas controls the Palestinian Authority, officials said.

''His term is expiring at the end of the month and he has no intention of remaining'' in the job, an official in his office said, adding that no formal announcement was planned.

Wolfensohn's departure expands a diplomatic vacuum after the United States, the European Union and Israel severed contacts with the Palestinian Authority.

''What would a Quartet envoy do?'' said a Western diplomat close to Wolfensohn. ''You can't do economic development in a vacuum.'' US officials have told Palestinian officials that there is little chance Quartet partners the United States, the European Union, Russia and the United Nations will agree to appoint a new envoy anytime soon.

Wolfensohn, who was appointed to the post a year ago, had threatened to quit because he said his mandate and backing were unclear after Hamas won parliamentary elections in January. Hamas assumed control of the Palestinian Authority a month ago.

The Quartet has called on Hamas to renounce violence, recognise the Jewish state and abide by past peace deals, but divisions remain over cutting off contacts and aid to pressure the Islamic militant group.

The United States and the EU have frozen direct aid to the Hamas-led Palestinian Authority.

But Russia has brushed aside pressure from the United States and Israel to shun Hamas and has called the decision to cut off funding to the Palestinian government a mistake.

UN officials have also expressed concern that a cut-off in direct assistance to the Palestinian Authority could trigger a humanitarian crisis and hobble the very institutions that would be needed to run any future Palestinian state.

Hamas, whose charter calls for Israel's destruction, has been struggling since assuming control of the Authority to secure the funds to pay overdue salaries to 165,000 workers and to keep ministries running.

As many as one in four Palestinians are indirectly dependent on wages from the Palestinian Authority, prompting Wolfensohn to warn of the risk of growing unrest.

Western diplomats said the EU, Russia and the United Nations had pushed to extend and expand Wolfensohn's mandate, but ran into resistance from some top U.S. officials.

US officials say they questioned whether the Quartet still needed an envoy.

The Quartet had agreed only to extend Wolfensohn's mission to April 30, though it had not ruled out giving him another extension.

The Quartet initially appointed Wolfensohn last April to help coordinate Israel's withdrawal from the Gaza Strip and spearheaded rebuilding efforts there.

The United Nations, which has its own Middle East envoy, could try to fill the diplomatic void.

But the world body has advised its agencies to avoid meeting Hamas political leaders unless such contacts were required to conduct their humanitarian work.

REUTERS CH ND1822