Israeli military officials discussed cutting Gaza off completely from the West Bank and making the Israeli-Gaza border an international one.
[13] The CRS Report for Congress wrote on 27 June 2007: "With the suspension of all USAID-managed economic aid to the West Bank and Gaza Strip and the general prohibition on financial transactions by U.S. persons with the PA, the United States has tried to assuage fears that its policies are causing Palestinian suffering.
According to Oxfam, this was because international aid did not compensate for the substantial loss of income created by the withholding of at least $475m of Palestinian tax and customs revenues by Israel.
[1] In February 2006, Quartet envoy James Wolfensohn warned that the Palestinian Authority was on the verge of economic collapse within two weeks time, because of the cessation of tax funds to the PA from Israel.
[16] In conjunction with the World Bank, the Quartet attempted to find a way to provide some relief to the Palestinians without working with the Hamas-led government.
[1] The US softened its hardline position to prevent the PA from collapsing and agreed to a mechanism for indirect funding under pressure of EU and Russia.
[13] On 17 June 2006, the Quartet announced the establishment of a temporary international mechanism (TIM), to channel funding directly to Palestinians, while bypassing the Hamas-led PA government.
On 16 June 2007, United States Consul-General Jacob Walles said that the US was planning to lift the ban on direct aid to the emergency government installed by Palestinian President Mahmoud Abbas.
The Quartet voiced support for Abbas and concern for the humanitarian situation in Gaza, though they did not announce any change in the ban on direct aid.
[18] On 25 June 2007, Israel agreed to transfer hundreds of millions of dollars in tax revenues it had seized to Palestinian President Abbas.
[21][22] Similarly, in 2017, Jonathan Powell called the Quartet approach a "terrible mistake" and missed opportunity to "unite Palestinians in a way that's been impossible since".