$2 Billion Vowed for Palestinians : Mideast: 43 nations convene to raise funds for PLO’s self-government plan. But World Bank believes more is needed to bolster new government in Gaza and Jericho.

The world’s wealthiest governments pledged almost $2 billion over five years to support Palestinian self-government Friday, a figure that Secretary of State Warren Christopher said “exceeded our expectations.”

The sum, however, fell several hundred million dollars short of the estimated amount needed to give the Israel-Palestine Liberation Organization peace accord a chance to succeed.

The financial aid was promised during a multinational conference convened less than three weeks after the signing of the precedent-shattering agreement between Israel and the PLO. Organizers of the gathering predicted that additional pledges ultimately would boost the total to the $2.4 billion that the World Bank believes will be needed to bolster the new Palestinian government in the Gaza Strip and the West Bank city of Jericho.

The United States offered $500 million, half of it in the first two years. The 12-nation European Community promised $600 million over five years; Japan pledged $200 million over two years, and Saudi Arabia made a $100-million commitment in the first year.

In an astonishing gesture, Israel promised to give its former enemy a $25-million grant and a $50-million loan. The Palestinians thanked the Israelis for the symbolism of the gift but said that they would far rather have the $300 million or so that Israel collects each year in income taxes from Palestinian residents of the West Bank and Gaza Strip.

The U.S. sponsors of the conference--attended by 46 delegations representing 43 governments, the World Bank, the European Community commission and the PLO--refused to provide a breakdown of the pledges, leaving it to each donor to announce its contribution if it wished. The Americans said that the totals exceeded $600 million in the crucial first year and $1 billion for the first two years combined.

The package includes both grants and loans, although U.S. officials declined to say how much the Palestinians would be expected to repay. Of the U.S. contribution of $500 million, the officials said, about three-quarters will be in grants.

In a related development, Israel and Jordan announced the creation of a joint committee to foster economic development, the first fruit of the nations’ agreement two weeks ago on a framework for peace.

Jordanian Crown Prince Hassan and Israeli Foreign Minister Shimon Peres made the announcement after a meeting with President Clinton in the Oval Office.

“This meeting is another important step on the road toward a comprehensive peace in the Middle East,” Clinton said in a brief statement to reporters outside his office. “This symbolizes a new relationship between Jordan and Israel marked by dialogue and acceptance rather than confrontation and rejection.”

Hassan hailed the creation of the economic commission but cautioned that “there is much to be done.” He said that it is more important “to commit ourselves to a work ethic for peace” than to pose for the cameras and deliver lengthy public statements.

It was a rare public meeting between officials of the combatants in the 1967 Arab-Israeli War. But in recent years, Israel and Jordan have established an informal relationship in which private meetings at the highest levels are relatively common.

Welcoming participants, many of them foreign and finance ministers, to the meeting at the State Department, Christopher said, “Your presence here and your immediate response to our invitation clearly demonstrates an outpouring of moral and political support for the (Israel-PLO) agreement and for a comprehensive peace settlement.”

But the support seemed to come far more freely from Europe, North America and Japan than from the oil-rich Arab nations of the Persian Gulf, which have long complained about the Israeli occupation of the West Bank and Gaza Strip and which were angered by PLO leader Yasser Arafat’s support of Iraq in the Persian Gulf War.

Six Gulf countries sent representatives to the conference, but only Saudi Arabia and the United Arab Emirates agreed to contribute money. Saudi Arabia pledged $100 million in the first year--about one-sixth of the entire total for that year--but did not promise to continue to contribute in future years. The Emirates’ total was not announced.

American officials had hoped that Arab participants would take the opportunity to reward Israel for reaching a peace agreement with the PLO by announcing an end to the Arab economic boycott that dates from Israel’s war of independence in 1948. But they were disappointed.

Arab foreign ministers told Christopher on Thursday at the United Nations that the Arab League will review the boycott, but they made no promises that it would be removed. On Friday, the PLO’s minister of information, Yasser Abed-Rabbo, told a press conference at the State Department that the Palestinians want the boycott to remain on the books until they reach a final peace settlement with Israel, an event that is five years away even without any hitches in the interim.

Clinton expressed disappointment that there will be no early change in the boycott. But he added that the Arab position “is not altogether discouraging.”

“Obviously, as you know, the United States wanted the boycott lifted now but, basically, they were saying we have to finish the peace process,” Clinton said. “We are moving this process very quickly, and I am confident that in the course of time we’ll get the boycott lifted.”

The pact that Israel and the PLO signed Sept. 13 is, in effect, an agreement to reach agreement on interim Palestinian self-government for the West Bank and Gaza Strip. Although the pact calls for the PLO to begin governmental operations this month in Gaza and the West Bank town of Jericho, many details are yet to be negotiated. Ultimately, Palestinian self-government is expected to cover all of the predominantly Arab towns in the West Bank and Gaza, although Israeli law will continue to apply to Jewish settlements in the territories.

Under the agreement, the interim self-government will last at least five years. Negotiations for a final settlement will not begin until the interim plan has been in effect for two years.

Economists are all but unanimous in their belief that the West Bank and Gaza are not economically viable now and may never be. For that reason, foreign aid is essential for the Israeli-Palestinian peace plan to succeed. Although all of the funds pledged at the conference will go to the Palestinians, the Israeli government of Prime Minister Yitzhak Rabin has a major stake in the success of the peace pact.