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Palestinian Authority Faces Isolation Threat

The resounding victory of Hamas - designated a terrorist organization by Israel, the European Union and the United States - has threatened the Palestinian Authority`s lifeblood of foreign aid. But the collapse of the authority, which has been dominated by the secular Fatah party, would pose enormous financial risks for the Israeli government and could give countries opposed to U.S. policies a chance to play a larger role in financing the Palestinians.

"Israel and the international community are now about to collapse the Palestinian Authority, and that would bring us back to the occupied-occupier relationship," said Ghassan Khatib, the outgoing Palestinian planning minister who is not a member of either major party."

Under international law, Israel remains the occupying power in the West Bank and Gaza, with responsibility for the well-being of the roughly 4 million Palestinians in those territories. This legal designation has not been modified, despite Israel`s departure from this unruly coastal strip last year. The Palestinian Authority has been providing health, education and welfare services that Israel would have to finance in its absence.