DONORS PLEDGE $7.4 BILLION TO THE PALESTINIAN AUTHORITY

by Abid Aslam

(IPS) WASHINGTON -- International donors pledged billions of dollars Monday to shore up peace prospects amid warnings no amount of money can help if Israel keeps the Palestinian economy in a stranglehold.

Donor countries and agencies promised $7.4 billion to the Palestinian Authority at a pledging conference in Paris Monday. Prime Minister Salam Fayyad had asked them for $5.6 billion by 2010 to help develop a viable economy for a future Palestinian state.

Secretary of state Rice pledged $555 million but Congress must approve some $400 million.

Rice described Monday's donor meeting as make-or-break for the Palestinians and for the Middle East peace process, revived last month in the waterside town of Annapolis, near here.

"This conference is literally the government's last hope to avoid bankruptcy," she was quoted as saying, adding: "This is the most promising opportunity to seek peace that we have had in nearly seven years."

The money pledged Monday is to be used to rebuild Palestinian institutions, including the security forces, and to finance new projects ranging from a sewage treatment plant to industrial parks.

Urgent needs also to be covered include schools, hospitals, and civil servants' pay. This has been at the mercy of Israel, which collects taxes on behalf of the Palestinian Authority.

Donors at the Paris conference urged Israel to make a Palestinian economic recovery possible by easing its restrictions on the movement of people and goods to, from, and between the West Bank and Gaza.

This, after the World Bank warned last week that "even with full [donor] funding but no relaxation in the closure regime, growth will be slightly negative," with the Palestinian economy shrinking by about two percent a year.

Separate assessments by the United Nations and international charities also suggested that Fayyad, who is widely respected for his competence and hostility to corruption, is being asked to produce a winning hand from a badly stacked deck of cards.

The number of Palestinians in "deep poverty" nearly doubled to more than one million last year as a result of Israel's suspension of tax transfers and the severance of Western aid, anti-poverty lobby Oxfam said last week.

The situation worsened after Hamas, an organization pledged to Israel's destruction, won a majority in Gaza during parliamentary elections last year and, in June, took armed control of the territory following a power struggle with other Palestinian factions.

The outcome effectively split the Palestinian territories, with Western-backed President Mahmoud Abbas left in control of the West Bank.

"In the first half of 2007, 58 percent of Palestinians were living below the poverty line, and 30 percent in extreme poverty," Oxfam said in a report. "Essential-service delivery and Palestinian institutions were seriously undermined, and the economy declined alarmingly, contributing to unprecedented factional violence among Palestinians."

"A divided Palestine is not the basis on which to negotiate a lasting peace," it said.

Separately, the World Bank urged that Israel remove at least some of its 500-plus roadblocks, to allow the Palestinian private sector to generate trade, incomes, and jobs needed for stability.

"The successful implementation of Palestinian commitments alone will not achieve even the modest growth anticipated" in the recovery plan, the bank said.

"They must be fully supported by both the large increase in aid and the relaxation of the closure regime" imposed on Palestinians since their second uprising began in 2000, the bank added in a report remarkably similar to one it issued a decade earlier.

The UN World Health Organization (WHO) and Office for the Coordination of Humanitarian Affairs (OCHA), in separate releases, highlighted the dire circumstances of Gaza's 1.5 million people.

Gaza has sustained potentially irreversible economic damage since Hamas seized control and Israel responded by sealing off the territory to all but essential humanitarian traffic.

"The isolation of the Gaza Strip has lasted six months, leaving the local economy to possibly face irrevocable damage, and the population in Gaza more reliant on aid than ever before," OCHA said.

"If the closures are not eased, the UN predicts the need for food and direct assistance will sharply rise above and beyond the current level of 80 percent of the population," it added.

Hundreds of businesses have gone bust because foreign trade has been banned, the report said. Thousands of jobs have been lost and import and export restrictions have led to severe shortages. Medicines, infant formula, and cooking oil are increasingly hard to come by.

Essential services, including water and sanitation, have been disrupted by reductions in Gaza's fuel supply imposed by Israel in response to frequent rocket attacks from the Palestinian territory. Nearly one patient in every five referred to specialists for medical treatment unavailable at Gaza's hospitals is denied an exit permit, OCHA said.