MIDDLE EAST: Palestinians were last night given a powerful signal of international and Arab support for an independent state, with $7.4 billion (€5.08 billion) in aid pledged to revive their moribund economy and bolster renewed but still badly faltering peace negotiations with Israel.
Opening a grand donors conference in Paris three weeks after the Annapolis summit, Nicolas Sarkozy, the French president, underlined the urgency of creating a Palestinian state by the end of 2008 - a hugely ambitious goal given the gap between the sides, bitter internal divisions and doubts about whether weak leaders can deliver a workable deal.
"Momentum for peace is building once again," Mr Sarkozy said. "It must not, it cannot, fail."
Tony Blair, co-chairing the event for the Quartet of Middle East peacemakers, said: "The next few months will be crucial." It was, said US secretary of state Condoleezza Rice, the Palestinian government's "last hope to avoid bankruptcy".
Financially, the conference succeeded - the total exceeded the Palestinians' target of $5.6 billion over three years - though there was confusion about individual contributions. "There are lots of complicated reckonings and we will need to double check," admitted Bernard Kouchner, the French foreign minister.
But there was no sign of any thaw towards Hamas, the Islamist movement controlling the Gaza Strip, home to 1.4 million Palestinians, and scant evidence of any easing of Israeli restrictions on the ground.
"Peace will not be made without Gaza," Mr Sarkozy told representatives from almost 70 countries and organisations. "And peace will not be made with groups that do not recognise Israel."
Mahmoud Abbas, the Palestinian president, fiercely attacked Hamas "putschists", insisting they would have to face new elections and respect previous peace agreements.
He also urged Israel to halt settlement "without exception" in the West Bank, asking: "If we want to launch serious talks to end the conflict then how can a key party pursue settlement activity and expansion?"
Ms Rice pledged $555 million and urged others to follow suit. Saudi Arabia gave $500-$750 million, emphasising its increasingly active role in the search for a settlement.
The one-day meeting near the Arc de Triomphe was the biggest of its kind since 1996 and billed as the economic counterpart to Annapolis, convened by George Bush to jump-start Israeli-Palestinian talks after almost seven years of stalemate and violence. Mr Blair said it was about "state-building", not just raising cash. Taking pains to be even-handed, he said: "We must see the worry of ordinary Israelis when rockets are fired from Gaza . . . and we must understand the Palestinian perspective when ordinary decent people live under the misery and difficulty and injustice of having their territory occupied."
But he added: "It is on the ground that people must notice the difference in order to have the confidence to move forward." Israel was ready to co-operate, insisted its foreign minister, Tzipi Livni. But the first round of renewed negotiations last week was overshadowed by news of the expansion of the Har Homa settlement in East Jerusalem.
"We'll do everything to help the development and strengthening of the Palestinian Authority infrastructure, but not at the price of giving up any vital security interests," Ehud Olmert, the prime minister, told members of his Kadima party.
Palestinians said they need Israeli withdrawals and a drastic easing of restrictions. The World Bank insisted financial aid and improved governance would make little difference if closures and checkpoints were not eased.
Salam Fayyad, the Palestinian prime minister, said 70 per cent of the $5.6 billion sought for his reform plan would go towards reducing his huge budget deficit and the remaining 30 per cent to development projects. In Gaza, a Hamas spokesman dismissed the conference as "a declaration of war".