“Sanctions did nothing to remove Saddam, nothing to remove Castro, and will do nothing here”: You are right on the two points you mentioned. HOWEVER Castro and Saddam did need money from abroad. They exported what they had and survived. But sanctions did work in Serbia (leading to the Serbian Revolution and the fall of Milosevic) and Croatia (leading to the capture of Gotovina). Sanctions worked in South Africa and Libya as well.

“A majority of the Palestinian electorate was fed up with Fatah and preferred to support an openly militaristic, anti-Israel political organization as their alternative”. Right again, however I would recent the fact that my money would be use to finance a terrorist organisation which never hind its anti-western stances and which alternatively will try to kill me or my family if and when possible. HAMAS doesn’t want to negotiate; HAMAS, as a Islamo/fascist (with Nazi accents, time to time) organisation want the destruction of all what I believe.
The Palestinian voted for this organisation. Now, they feel the effect of their choice. What the Donors (and how surprising, most of them are from the Evil West) want is just from HAMAS a declaration including the right of existence for Israel, which will be a road (or a path) to possible negotiation.
Why should we finance people who want to kill us? Let’s travel in Absurdy, and do you think that the Jews would have to finance the Nazis under the pretext they were democratically elected?
So, yes, EU and US have to find an alternative solution… But no money to help HAMAS to secure its dictatureship.