Palestinians ask nations for $5.6 billion investment

RAMALLAH, West Bank - The international community is being asked today to take a very expensive leap of faith in approving a huge new injection of aid to the Palestinians.

Even if 90 donor countries, meeting in Paris, agree to a Palestinian request for $5.6 billion over three years, that still may not be enough to stem the economic decline in the West Bank and Gaza.

The Palestinian economy can recover only if Israel eases restrictions on Palestinian movement, the World Bank says, but a reluctant Israel, putting its security first and pointing to frequent rocket attacks from Gaza, has given no guarantees.

It's simple math for clothing wholesaler Samer Zawiyani, from the West Bank city of Nablus. Shipping costs eat up most of his profits because his trucks wait for hours at checkpoints as soldiers search for bombs.

"We don't need the billions of the world. We need Israel to remove the checkpoints," he said.

Aid and freer movement are viewed as essential if the new U.S.-led push for an Israeli-Palestinian peace deal by the end of 2008 is to be spared a serious psychological blow.

Among those making a pitch will be U.S. Secretary of State Condoleezza Rice and international Mideast envoy Tony Blair, the former British prime minister.

The donors say they are aware of the stakes and are urging Israel to be more flexible. "The political pressure exists, it is being exerted by the Europeans and the Americans," said Christiane Hohmann, spokeswoman for the European Union's external relations commissioner, Benita Ferrero-Waldner.

Palestinian Prime Minister Salam Fayyad says he is doing his best not to disappoint the donors, who have seen $10 billion in aid since 1993 largely go to waste because of mismanagement under Yasser Arafat and years of Israeli-Palestinian fighting that destroyed much of what was built with aid money.

Fayyad, a respected economist, has won the support of the World Bank and the International Monetary Fund for his three-year development plan, including promises to trim the public payroll and reduce hundreds of millions of dollars in utility subsidies.

Fayyad said in an interview in Paris yesterday his government needed a quick injection of cash to get through the next few months and he hoped Arab states will pitch in. "This is a point in time where we need cash assistance, and we need it in a hurry," Fayyad said.

Europe is the biggest donor to the Palestinians, providing $1.4 billion in support in 2007, according to officials in the European Commission, the EU's governing body.

In 2002, Arab countries had promised to give the Palestinians $55 million a month, but have not disbursed the full amount pledged.

The plan being presented aims to assure donors they are not expected to prop up the Palestinian Authority indefinitely, even though the largest single chunk of aid, $3.9 billion, would go to the government's budget deficit.

The balance is to shift slowly to development projects, under a scenario that has Israel easing restrictions so that the Palestinian private sector can recover.

The Palestinian plan formally covers both the West Bank and Gaza, territories on either side of Israel, but the focus is on the West Bank, run by Palestinian Authority President Mahmoud Abbas.

Abbas has no control over Gaza, which was seized in June by Hamas, which Israel considers a terrorist group, and has since been cut off from the world by Israeli and Egyptian border closures. Only basic goods are allowed in, and exports have stopped, except for a few recent shipments of flowers and strawberries.

The blockade has wiped out tens of thousands of jobs and three-quarters of Gazans now live in poverty.

A rocket fired

by Palestinians from Gaza wounded a 2-year-old boy in Kibbutz Zikim,

an Israeli communal farm, on the Gaza-Israel border, Israeli police and rescue services said yesterday.

The toddler was hit

by shrapnel and taken to

a hospital, and his mother was being treated for shock, police spokesman Micky Rosenfeld said.

Television news

footage showed the boy and his mother leaving the hospital after treatment.

Palestinian extremists

regularly launch rockets and mortars into Israel from Gaza, drawing Israeli incursions and air strikes aimed at halting the fire.

- Associated Press