fwiw,
I actually think the most important line is in the paragraph following the one you outlined:
"We cannot expect to remain a friend of God if we side with those who choose to be friends of the world."
Here the Watchtower sets up two classes of people, those on the "outside" and those on the "inside". Local Watchtower Elders are given a very broad amount the authority to decide who falls into what class. The rules that govern their behavior are vague, and can lead to some pretty major discrepencies in fairness. Additionally, the official procedures for determining issues such as this include judicial committees, private hearings that are heavily biased. If the same kind of procedures were used in a federal or state court, the Watchtower would cry injustice.