Global donors exceed Palestinian expectations at Paris conference

The $7.4 billion that nearly 90 countries and international organizations pledged over the next three years is first a critical show of support for Palestinian reform.

The unexpectedly large pot of money the international community committed to the Palestinians at a donors' conference here Monday is a sign of confidence and optimism – even if daunting problems like Israel's restrictions on Palestinian movement and Hamas's control of Gaza persist.

The $7.4 billion that nearly 90 countries and international organizations pledged over the next three years for the development of a Palestinian state – largely exceeding the $5.6 billion sought by the government of Palestinian President Mahmoud Abbas – is first a critical show of support for the reform and development plan of Mr. Abbas's prime minister, Salam Fayyad.

Calling the conference a "success," Mr. Fayyad said it was "a vote of confidence in our plan for going forward." Before the pledges were announced, Secretary of State Condoleezza Rice warned participants that the conference was the Palestinians' "last hope to avoid bankruptcy."

But it is also an expression of at least cautious optimism that the Israeli-Palestinian peace process, relaunched last month at a White House-sponsored international gathering in Annapolis, Md., has a real chance of ending in a peace accord.

Noting that Annapolis restarted a negotiating process that was dormant for seven years, and that "Paris now sets in motion the [Palestinian] state-building," former British Prime Minister Tony Blair said, "Six months ago none of these things was in place. It means we have a chance to do it, whereas six months ago we didn't have that chance before us."

One measure of this new optimism came in the form of stepped-up financial support from Arab countries, which have long expressed misgivings about what they perceived as essentially subsidizing Israel's occupation of Arab lands. Saudi Arabia pledged at least $500 million and as much as $750 million for the three-year period, between budgetary support and physical projects. Kuwait, which had declined an invitation to the Annapolis conference, pledged $300 million.

Asked how the much-anticipated Arab participation was viewed, a French official involved in planning the conference noted that after years of reluctance, the Saudis had pledged a sum that would make them the largest single-country donor to Palestinian "survival and development."

"When Prince Saud [Al-Faisal, the Saudi foreign minister] spoke and announced the Saudi pledge, there was complete silence in the room because everyone knew it would be an indication of both the Arab point of view and prospects for the whole process," says the official, who requested anonymity because he was not authorized to comment publicly on the conference. "They remain skeptical, but they want to be perceived as participants in the process of Annapolis and not a brake on it. The money means they've decided this is a train they want to be on."

But the bright cast officials gave the results was not universally endorsed, with analysts and critics of the process noting two dark spots: Israel's unaltered clampdown on Palestinian movement and economic activity, and the conundrum of the control of Gaza by Hamas, the militant Islamist Palestinian party.

In a recent report, the World Bank said the moribund Palestinian economy would continue to shrink, even with large international assistance, if Israel's restrictions on the movement of Palestinian goods and people remained in place. With eased restrictions, the Bank said the economy could quickly rebound to substantial growth.

The other dark cloud over the peace process is Hamas, and the doubts raised by the deep divisions among Palestinians between the Fatah organization of Abbas and the Islamist group controlling Gaza.

In Gaza, Hamas issued a statement saying, "The Paris conference is coating poison with honey and is a dangerous conspiracy."

Those words reflected the organization's fears that the assistance to Abbas further divides Palestinians. But part of the international donations will go toward paying the salaries of Palestinian public servants, including in Gaza, and so could eventually drain political support away from the group, which won parliamentary elections last year.

Although repeatedly asked, neither Palestinian leaders nor other officials could say exactly how Israeli-Palestinian negotiations – whether on immediate security and freedom-of-movement concerns, or on final-status issues – can get very far with the Palestinians so divided and Hamas in control of Gaza.

Palestinian Prime Minister Fayyad minimized the impact on the peace talks, saying, "It is not factions that negotiate on the behalf of the Palestinian people, it is the Palestinian Liberation Organization."

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Paris conference aid commitments

Arab League – $1.3 billion*

EU – $650 million for 2008

US – $555 million for 2008**

Saudi Arabia – $500 million*

Britain – $500 million*

France – $300 million*

Germany – $200 million*

Norway – $120 million*

*To be paid over three years

**Congress has yet to approve $400 million