Donors pledge $650M for Palestinian aid

By KARIN LAUB, Associated Press Writer Mon Dec 17, 6:44 AM ET

PARIS - Donors began committing funds from around the world Monday for the moribund Palestinian economy amid a renewed international push for a Palestinian state, with the European Union promising $650 million in 2008.

Palestinian Prime Minister Salam Fayyad is asking for $5.6 billion over three years. U.N. Secretary General Ban Ki-moon urged the international community to fulfill the Palestinian needs and more.

"What we must do now is work together before the end of 2008 for the creation of an independent, democratic, viable Palestinian state," French President Nicolas Sarkozy, the meeting's host, said in a speech to representatives from nearly 90 donor countries and international organizations.

Meanwhile, Palestinian President Mahmoud Abbas said Monday that he has ruled out dialogue with rival Islamic militant Hamas, and that without international support Gaza is "heading into disaster."

Gaza has been virtually cut off from the world since Hamas seized control of the territory by force in June. Israel and Egypt sharply restricted border access in response, and the blockade has further deepened poverty there.

Abbas, speaking at the conference in Paris, said Gaza is already "close to catastrophe," and would head into disaster without continued international aid.

The European Union launched the day of pledges of aid by promising $650 million in 2008, EU External Relations Commissioner Benita Ferrero-Waldner told The Associated Press.

In 2007, the European Union initially pledged $245 million, but ended up contributing $798 million for that year because of deepening poverty in the Palestinian territories.

In all, the EU and its member states gave about $1.45 billion to the Palestinians in 2007. The figure includes not just aid to the Palestinian government, but also contributions to international agencies that assist the Palestinians.

Ferrero-Waldner said she couldn't say yet how much the EU would contribute in 2009 and 2010, since she didn't know what the available EU budget would be, but suggested the aid would roughly hold steady. That would make the overall EU contribution a substantial chunk of the total pledged Monday.

Ferrero-Waldner and Fayyad urged Arab states to do more. Since 2002, Arab League members have been promising the Palestinians $55 million a month, put have not always paid in full.

The U.S. has announced it is pledging about $555 million for 2008. However, the money includes about $400 million that the White House already has announced, but that has not been approved by Congress.

Fayyad is trying to assure donor countries — which gave more than $10 billion to the Palestinians over the past decade — that they are not expected to prop up the Palestinian government indefinitely.

He has presented a three-year reform plan, with promises to cut government spending by trimming a bloated public payroll and reducing hundreds of millions of dollars in utility bills.

Still, he wants 70 percent of the aid initially to go toward reducing his huge budget deficit, with the emphasis shifting only gradually to development projects.

Economists say it's not enough for the donors to pledge aid and for the Palestinians to carry out reforms. The Palestinian economy will only recover, according to the World Bank, if Israel eases sweeping physical and administrative restrictions on movement in the West Bank and Gaza.

Israel has been reluctant to do so, putting security first. The Israeli military considers roadblocks key to preventing attacks on Israelis by Palestinian militants.

The tensions on the ground played a role in the donors conference.

Abbas called on Israel Monday to freeze Jewish settlements "without excuses." Under the U.S.-backed "road map" peace plan, Israel is required to freeze the construction of Israeli settlements, while the Palestinians must disarm militants and restore order in the Palestinian territories.