Gore Meets Arafat, Announces Plan to Use U.S. Aid to Create Gaza Jobs : Mideast: Failure to see improvements in daily life has eroded Palestinians’ support for peace plan.

Seeking to demonstrate support for the troubled Palestinian self-governing authority, Vice President Al Gore on Friday announced a rechanneling of U.S. aid for projects designed to quickly create jobs in the Gaza Strip.

After meeting with PLO Chairman Yasser Arafat in Jericho, the only West Bank town controlled by the Palestinians, Gore also said the United States will allow the duty-free import of many Palestinian products.

But Gore brought no new pledges of economic assistance to the financially strapped authority, beyond the five-year, $500-million aid package Washington pledged in December, 1993.

For his part, Arafat repeated his now-ritual pledge to combat terrorism and said again that he intends to try suspected security offenders in special courts.

Gore hailed Arafat’s pledges as “an important step forward in helping to build confidence in the peace process and in the effort by authorities on all sides to control violence and stop terrorism and defeat the enemies of the peace process.”

The primary thrust of Gore’s visit, however, was economic.

The Palestinian Authority is on the verge of bankruptcy. It has been administering Gaza and Jericho since last May but has been able to produce few tangible benefits of peace for Palestinians living there.

After a suicide bombing attack on Israelis by a pair of militant Palestinians in January, Israel banned Palestinian workers from going to their jobs inside Israel and announced a policy of “separating” Israel from the territories through a combination of security measures and the replacement of Palestinian workers by foreign workers.

As unemployment soars and living standards plunge in the territories controlled by Palestinians, public opinion polls show declining support for the peace accord with Israel--and for the Palestinian Authority.

Arafat is hoping that more than $1.5 billion in pledges from the international community will soon start flowing into Gaza. He wants the United States to lead a renewed effort to help the Palestinians meet operating costs and launch big-ticket development projects.

Twice during his five-day regional tour, which ended Friday, Gore had to confront growing doubts about the U.S. willingness--and ability--to help financially underpin Arab-Israeli peacemaking.

In Jordan on Wednesday, Gore reassured King Hussein that the United States will keep its commitment to write off all of Jordan’s debts, despite congressional balking. He also heard a plea from the king for further economic assistance that Congress--looking for ways to cut the budget--will at best be reluctant to consider.

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Hussein faces growing criticism within Jordan for having signed a peace treaty with Israel without first securing an aid package from the United States.

Israel receives about $3 billion in annual military and economic aid from the United States. Egypt, the first Arab country to sign a peace treaty with Israel, receives $2.2 billion annually, although that is now threatened by anti-aid sentiment in the Republican-controlled Congress.

Peace negotiations between Israel and its neighbors remain at the top of the Clinton Administration’s foreign policy agenda.

But the Administration is finding its aid pockets are empty at a critical time--when Syrian President Hafez Assad is weighing the benefits and risks of moving toward a treaty with Israel.

Gore called Friday for greater private investment in the Palestinian-controlled territories.

He announced a “quick start” package of projects worth $65 million for those areas, including a $40-million sewage repair and upgrade project for Gaza and a plan to build sidewalks, pave streets and rehabilitate the housing of elderly Gazans.

“We looked around and said, what has our aid accomplished in this first year?” said one U.S. official, speaking on condition of anonymity. “We realized that the answer was: nothing. This is old money we’re announcing today, but the hope is that it will get spent quickly on things that people can see.”

It was Arafat’s second trip to Jericho since he arrived last July to head the Palestinian Authority.

In a speech he made before Gore’s arrival, the Palestine Liberation Organization leader expressed frustration with what he said are Israel’s violations of the Israeli-Palestinian peace accords, but he vowed that his administration will soon expand throughout the West Bank.

Palestinian officials say their economy has no chance of taking off until they control the West Bank, which is much more prosperous than Gaza.