Palestinian Self-Rule Gets Cash Infusion : Mideast: Donor nations will give $148 million to boost authority in Gaza Strip and West Bank.

The troubled Middle East peace process received a major boost Wednesday as a group of donor nations agreed to an emergency injection of $148 million to prevent the collapse of limited Palestinian self-rule in the Gaza Strip and the West Bank.

The money will fill a $125-million hole in the current Palestinian operating budget, allowing the fledgling government to do such basics as pay its police force and other employees through the end of March.

The additional $23 million was earmarked for an urgent jobs creation program aimed at putting as many as 5,000 more Palestinians to work in a matter of weeks and generating employment for an additional 10,000 to 15,000 within a few months.

The agreements came at a two-day meeting here of the so-called Ad Hoc Liaison Committee that includes Israel, the Palestinians, major donor nations and international institutions such as the World Bank and the United Nations.

Both Palestine Liberation Organization Chairman Yasser Arafat and Israeli Foreign Minister Shimon Peres earlier this week warned that failure to come up with the needed funds would place the entire Middle East peace process in jeopardy.

With the initial euphoria that followed last year’s historic agreement between Israel and the PLO all but gone in the Palestinian areas, increased violence has threatened both Arafat’s grip on power and Israeli security.

“It was the moment of truth,” said Norwegian Deputy Foreign Minister Jan Egeland, who chaired the meeting. “The donors rose to this occasion.”

The senior Palestinian representative, Minister for Economic Planning and International Cooperation Nabil Shaath, praised the accord. “I’m happy to say this meeting provides some serious measures for helping out,” he said. “It’s a very important step toward the future.”

Speaking at a news conference, Egeland said low-key U.S. diplomacy during the run-up to the meeting played an important role in getting the necessary funds. U.S. Secretary of State Warren Christopher is said to have personally lobbied several foreign ministers by telephone over the weekend.

Unemployment in Gaza is about 50%, and immediate visible economic benefits were seen as a crucial ingredient to dampen the volatile political atmosphere in the Palestinian areas.

The highly unusual nature of most of the assistance--foreign aid usually covers high-profile development projects--reflected the mood of urgency that surrounded the meeting.

This same mood appears to have been responsible for what many participants saw as a new level of Israeli-Palestinian cooperation.

“This wasn’t a meeting of slogans but of brainstorming, of real thinking of what each side could do to get real results,” said the senior Israeli representative, Uri Savir.

In September, a meeting of the same ad hoc committee broke down amid recrimination after the Palestinians sought funding for development projects in East Jerusalem, which they see as their future capital but which Israelis claim as an inseparable part of a city that belongs to them forever.

Officials said the Jerusalem issue was not raised this time.

Egeland said Wednesday’s agreement came within the framework of last year’s initial donor community pledge to back the Middle East agreement with $2.4 billion, for “the next few years,” and constituted not new money but a shift of funds initially planned for longer-term projects.

“They knew that if they didn’t give money for the short-term crisis, there would be no need for the grand, long-term projects everyone wanted to do,” Egeland said.

The donors also agreed to establish a locally based coordinating committee with Israeli, Palestinian and their own representatives to help clear bottlenecks and bureaucratic snags that have so far slowed the transformation of pledged aid into real projects.