It is an urgent mission that James Wolfensohn will begin immediately, Rice said.

Wolfensohn's duties at the bank involved improving economic conditions in poor countries. Wolfensohn, bank president since June 1995, is being succeeded on June 1 by Paul Wolfowitz, the deputy secretary of defense.

President Bush, speaking to the American Society of Newspaper Editors, said Wolfensohn will help Palestinian leader Mahmoud Abbas build a functioning government and ''help them try to pull out of this ash heap of what used to exist.''

''I think it's possible,'' Bush said. ''I wouldn't be expending U.S. capital if I didn't, and I know it's necessary if you want to see peace in that part of the world.''

On the diplomatic track, meanwhile, Assistant Secretary of State David Welch will go to the region next week for talks with Israeli and Palestinian leaders. A former U.S. ambassador to Egypt, he also will try to promote coordination and a smooth Israeli withdrawal.

Israel plans to withdraw all 8,000 Jewish settlers and all its troops from the territory this summer.

Prime Minister Ariel Sharon had urged the Bush administration to provide help on the transition.

The United States and its three partners in Mideast peacemaking - the European Union, the United Nations and Russia - joined in enlisting Wolfensohn, who is stepping down as president of the World Bank.

As special envoy from the four peace partners, Wolfensohn will focus on coordinating nonmilitary aspects of the pullout - like the disposal of property left behind - and reviving the Palestinian economy, Rice said.