Billions for Peace

At the start of the conference on Monday, Dec. 17, Palestinian President Mahmud Abbas urged the international community to step up financial aid to the Palestinians or risk a "catastrophe."

"Without this support, without the payment of aid that will allow the Palestinian treasury to fulfill its role, we will be facing a total catastrophe in the West Bank and Gaza," Abbas told the opening ceremony, at a conference center near the Arc de Triomphe in Paris. Abbas had asked for $5.6 billion by 2010 to help develop a viable economy for a future Palestinian state.

"We are way ahead of this amount," said Palestinian Prime Minister Salam Fayyad, whom Abbas appointed as Palestinian prime minister when Hamas seized armed control of the Gaza Strip.

"That's the most important thing," Fayyad added. "We see this as an important vote of confidence from the international community. This conference provided endorsement for our vision of statehood."

The donor conference was the biggest meeting of its kind since 1996. Some 90 delegations had announced pledges at the one-day gathering. Of the sum promised, $3.4 billion is to be directed to the Palestinian government's 2008 budget.

Tony Blair, Middle East envoy for the diplomatic "Quartet", said the money would be used for "building the capacity and the institutions for the (Palestinian) state."

"Over the next few months what we have got to show to people is that we are capable of making the difference on the ground," he said.

EU leads donation pledges

The European Commission pledged to donate $650 million in aid for 2008, while Britain announced a three-year aid package of up to $490 million. Opening the conference earlier, French President Nicolas Sarkozy pledged $300 million over three years. Germany promised $200 million by 2010 and Sweden offered $300 million in 2007 and 2008.

The United States promised $555 million for 2008. Saudi Arabia was to provide $500 million over three years, diplomats said.

German Development Minister Heidemarie Wieczorek-Zeul said the money was to support the reform and development program of the Palestinian government.

But she also called for Israel to cease blockading the Palestinian economy and to halt the building of settlements in the West Bank.

"The development plan can only be effective if the economic development of Palestine is no longer hindered, if the building of settlements by Israel is stopped and if the inner-Palestinian divide can be overcome," she said.

The money was intended to improve the miserable conditions under which Palestinians were living and to support the Israeli-Palestinian peace process, Wieczorek-Zeul said from Berlin.

Sarkozy proposal gets rise from Hamas

Wieczorek-Zeul's calls for a halt to Israeli settlements in the West Bank and Gaza was echoed by French President Nicolas Sarkozy.

In his address to the opening ceremony, Sarkozy said "the Paris conference must accompany the progressive construction of a modern state."

He called for the creation of an international force to beef up the Palestinian security services, "when the time comes and when the conditions are right."

"The Palestinian services need to reform, to become more professional. In parallel, Israel must withdraw from the West Bank," Sarkozy said.

The radical Islamist group Hamas slammed the French proposal, saying an international force in the Mideast would amount to "blatant interference" in internal affairs.

Israel claims commitment to independence

Israel responded by saying it is committed to the establishment of an independent and viable Palestinian state.

Israeli Foreign Minister Tzipi Livni said Israel wants "the obstacles to the Palestinian economy and daily life to be removed."

"We have no desire to control Palestinian lives," she added. "We do not want the image of Israel in the Palestinian mind to be a soldier at a checkpoint."

Abbas seeks halt to Israeli settlements

As the conference kicked off, Abbas called on Israel to freeze all settlements in the Palestinian territories to allow the newly re-launched peace process to gain a foothold.

"I expect a complete halt of all settlement activities without exception, the dismantlement of the 127 wildcat settlements set up since 2001, the reopening of Palestinian institutions closed in Jerusalem, the lifting of military barrages, a halt to construction of the separation barrier and the release of prisoners," Abbas told the conference.

At a US-sponsored meeting in Annapolis, Maryland last month, Israel and the Palestinians pledged to seek a peace deal by the end of next year, relaunching negotiations frozen for seven years.