Palestinian Authority to request $5.5 bln in aid

RAMALLAH, West Bank - President Mahmoud Abbas's government will ask donors in Paris this month to provide $5.5 billion in aid to strengthen the cash-strapped Palestinian Authority, Palestinian officials said on Sunday.

The aid, to be used for budgetary support and development, is meant to strengthen Abbas against Hamas Islamists and revive the Palestinian economy after the president launched formal peace talks with Israel last week.

Prime Minister Salam Fayyad will ask donors at the Paris conference, scheduled for December 17, to provide $5.5 billion in aid over three years. The request is based on an economic plan for 2007 to 2010, a senior Palestinian official told Reuters.

The conference is the first forum for international donor states to make pledges to the Palestinian Authority since 1996, officials said.

"The government desperately needs the aid because by the end of the year it will not have funds to pay its outstanding private sector debts and salaries to the government employees, which amount to more than $500 million and other expenses," another official said.

Abbas and Israel last week launched talks aimed at creating a Palestinian state by the end of 2008.

Hamas routed Abbas's forces in the Gaza Strip in June, prompting him to sack the Hamas-led government and appoint the Western-educated Fayyad to lead an administration in the West Bank.

After the move, Western countries removed economic sanctions in place since Hamas won a parliamentary election in January 2006 that had pushed the Palestinian Authority to the brink of collapse. Sanctions remain on Hamas-controlled Gaza.

Fayyad's government is expected to approve on Monday the final draft of the document which will be presented at the Paris conference to international donors, Palestinian officials said. Some Western and Arab states have sent aid to Fayyad's administration, they said.

According to a draft of the report, 71 percent of the aid will be used for budget support and 29 percent for development.

"Twenty-six percent of the plan's budget will go to reforms, such as reforming the security services, judicial system and other governance sectors. Twenty-one percent is allocated for the economic sector and 23 percent for the infrastructure," a senior official said.

Analysts say Abbas's credibility will be undermined if his government does not manage to revive an economy damaged badly by violence and sanctions.

"If the Palestinians in the West Bank and Gaza don't feel an improvement in their daily lives, Abbas' peace policies will be weakened," Palestinian analyst Abdel-majid Sweilem said.