Countries pledge to help Palestinian economy

Los Angeles Times Staff Writer

Representatives from around the world collectively endorsed the latest U.S.-backed Mideast peace initiative Monday, pledging to support the crippled Palestinian economy at a crucial moment when its moderate leaders are engaged in peace talks with Israel.

Ninety countries and international organizations shored up the Palestinians with pledges to donate $7.4 billion, almost $2 billion more than Palestinian Authority President Mahmoud Abbas had originally sought to prepare the area for statehood over the next three years.

Europeans promised about half the money; Arab nations, with Saudi Arabia taking the lead, came through with 20%; the U.S. and Canada gave 11% and international organizations gave another 11%, with other regions making up the rest.

The one-day donor conference came at a pivotal moment, as Israel and the Abbas government are promising to engage in an intensive yearlong effort to reach a final peace agreement. The effort began last month at a summit in Annapolis, Md., and was followed up at a Dec. 12 meeting.

But even as they tendered financial support to bolster the nascent peace process, nations like France, Britain and Germany rebuked Israel for its settlement activities and for maintaining checkpoints that, they say, make trade and economic recovery in the Palestinian territories nearly impossible.

French President Nicolas Sarkozy called on Israel to freeze its settlement activities and to ease checkpoint restrictions. German Foreign Minister Frank-Walter Steinmeier told German TV that the Israelis had to stick to their promise to halt settlement building. In discussing their donation, the British requested that Israel lift trade and travel restrictions that the World Bank and the International Committee of the Red Cross say are critical to economic well-being in the area, wire services said.

In a speech to the donors, however, Israeli Foreign Minister Tzipi Livni said that while Israel endorses reform plans presented by Abbas, the checkpoints are needed for security. She said nothing about Israel’s announcement that 300 new homes would go up in a Jewish neighborhood in East Jerusalem, but restated Israel’s intent to live up to a 2003 commitment to end settlement activity.

“We want the obstacles to Palestinian economy and daily life to be removed,” she told the donors. “We have no desire to control Palestinian lives. . . . But we know that making every effort to improve quality of life also means making every effort to end the threat to life posed by terror and violence.”

As if to punctuate the point, an Israeli airstrike in Gaza City on Monday killed the commander of the Islamic Jihad’s military wing and his assistant. Israel’s army said the commander, Majid Harazin, was responsible for directing persistent cross-border rocket attacks into communities in southern Israel. Several hours later, a separate Israeli attack south of Gaza City killed two additional Islamic Jihad members.

Although Livni and Palestinian Authority Prime Minister Salam Fayyad did not formally hold peace meetings in Paris on Monday, they did talk over lunch about many issues, including checkpoints, said French Foreign Minister Bernard Kouchner, a host of the conference.

Abbas began the day by presenting an ambitious reform and development plan to donors that spelled out how money would be spent. Seventy percent, he said, would be earmarked to meet a payroll for 110,000 civil servants and other day-to-day needs, with the rest budgeted for capital projects and humanitarian aid. The goal is to reduce an unprecedented budget deficit of 29% of the gross domestic product that the Palestinian Authority has run up over the last seven years.

For 2008 alone, the United States pledged $555 million, including $150 million in budget support. The 27-member European Union pledged $650 million. The U.S. pledge represents one of many complications the Palestinians face as they rely on promises to plan their future. The American money is conditioned on congressional approval.

Although the international community has pledged almost $9 billion to support the Palestinians since 1993 through similar pledge-fests, less than half the amount of money promised actually materialized, according to a Palestinian source who asked not to be named. The delinquents include members of the Arab League as well as Japan and Italy, the source said.

“It’s not that Italy doesn’t want to give the money,” said a spokesman for the Italian Foreign Ministry. “It is a practical matter and always takes time” to find the right way to release the money, he said.

Others have not paid because they were suspicious of corruption and incompetence in the Palestinian bureaucracy. Still others, after sending millions of dollars, stopped paying when their efforts -- in new buildings and programs -- were literally blown up in fighting.

At a news conference, former British Prime Minister Tony Blair, a co-chair of the conference, banged his hand gently on the table, insisting that this time it was important that donors who make promises “make sure they pay the money too.”

The Palestinian Authority’s Fayyad, a U.S-educated economist and former World Bank executive, offered reassurance by describing multiple accounting mechanisms that would track how money would be spent.

Sami abu Zuhri, spokesman for the radical Islamist movement Hamas, labeled the Paris gathering, with its stated goal of aiding the Abbas government, as a “declaration of war” against Hamas. “We do not accept conditional money,” he said.

Times staff writers Tracy Wilkinson in Italy and Ken Ellingwood in Jerusalem and special correspondent Rushdi abu Alouf in Gaza City contributed to this report.