The Quartet's Middle East envoy Tony Blair has warned that Israeli intrasigence could cost the Palestinian Authority millions of dollars in losses one one of the West Bank's most important economic projects, even as Prime Minister Benjamin Netanyahu outlines his economic peace vision abroad.

Blair's comments in a written Quartet document, add to Palestinian Authority claims that Israel is violating the agreement to allocate frequencies to operate the Palestinians' second cellular phone company in the West Bank, Wataniya Mobile. The company has threatened to pull out of the deal.

If Israel delays releasing the frequencies any further, Wataniya Mobile's $700 million investment in the West Bank could go down the drain and other investors could be deterred, Blair wrote in the document published recently.

If Israel delays releasing the frequencies any further, Wataniya Mobile's $700 million investment in the West Bank could go down the drain and other investors could be deterred, Blair wrote in a Quartet document.

Blair said that releasing the frequencies, which Israel and the PA agreed on in 2008, would bring the cash-strapped PA $214 million and help it to fulfill urgent financial needs.

Wataniya Mobile said on Sunday that it has set a September 15 deadline for the release of frequencies needed for the mobile phone network launch scheduled for October 15. Unless Israel releases the frequencies by then, Wataniya will demand $140 million in license fee returns and other financial compensation.

Wataniya Mobile, owned by Kuwait's National Mobile Telecommunications Co and a holding company for Palestinian public assets, was promised a minimum frequency allocation of 4.8X2 MHz according to an agreement between the PA and Israel. However, it has been provided with 3.8 MHz, less than the minimum frequencies needed to launch the network.

Wataniya has undertaken to invest $650 million in the West Bank economy in the next few years and to create 2,500 work places.

Less than 4.8 MHz would not enable it to compete with other companies and to provide services throughout the West Bank, Wataniya says. Israeli cellular companies providing services to settlements and outposts have spread all over the West Bank, Blair wrote.

Palestinian minister of communications, Mashhour Abu Daqqa, told Reuters the PA would ask international powers to press Israel to cover financial costs that would result from a possible Wataniya pull-out from the deal.

The Prime Minister's Bureau would not comment on this report. A defense source said the delay in releasing frequencies has nothing to do with Israel, but with power struggles within the PA.