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Envoy: Palestinian Authority Facing “Financial Collapse”

HeadlineFeb 28, 2006

This news from the Middle East — the Special envoy to Israel and the Occupied Territories is warning the Palestinian Authority is on the brink of “financial collapse” because of Israel’s decision to withhold tax money following the electoral victory of Hamas. In a letter Saturday, former World Bank director James Wolfensohn wrote: “unless a solution is found, we may be facing the financial collapse of the P.A. within two weeks.” On Monday, the EU announced it would cover an immediate funding shortfall, but said the payments were only temporary. Earlier this month, the New York Times reported Israel and the US were considering withholding funds to destabilize the Palestinian Authority so that Palestinians will grow frustrated and force a Hamas-led government to call new elections.

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