French President Nicholas Sarkozy urged the donors to be generous at the one-day conference, the financial sequel to last month’s Annapolis meeting that launched the first peace negotiations between Israelis and Palestinians in seven years.

The Palestinians are seeking $5.6 billion over three years at the aid meeting. The United States will pledge nearly one tenth of this, or $555 million, and the European Union executive offered $640 million of grant aid.
Sarkozy said France would give $300 million. “After years of violence, after years of mistrust, Annapolis revived hope,” he said. “Let us be generous. Let us be audacious. Peace depends on it.”

The money is designed to revive the moribund Palestinian economy, strengthen President Mahmoud Abbas in a power struggle with Hamas Islamists and underpin his peace talks with Israel.

Abbas and Israeli Prime Minister Ehud Olmert agreed at the November 27 Annapolis meeting to begin peace negotiations and to try to reach a deal on a Palestinian state by the end of 2008.

Those talks, which formally resumed on December 12, have been complicated by Israel’s announcement of plans to build about 300 new homes near Jerusalem.

“If we want to launch serious talks to end the conflict as we and the world have decided to do, then how can a key party pursue settlement activity and expansion?” Abbas told the conference. “I expect, in fact, I demand from my neighbours, the Israelis, to give a clear and unequivocal response.”

Israel Foreign Minister Tzipi Livni did not directly address Abbas’s question but she reiterated Israel’s desire for peace and its intent to live up to the 2003 US-backed “road map” peace plan that demands it freeze settlement activity.  “Despite the difficulties, we are ready to do so and are committed to meet our road map obligations, including in relation to settlement activity,” Livni said.