Prime Minister Ehud Olmert has instructed Israeli negotiators to work on sealing an agreement with the Palestinians as quickly as possible, but is dismayed Palestinian Authority President Mahmoud Abbas has not passed down to his negotiating team the same pliable positions he has discussed with Olmert in private, a government official said Monday. The official spoke as the international community gave a huge boost to the Annapolis process by pledging some $7.4 billion for the Palestinians at the Paris donor's conference on Monday. French Foreign Minister Bernard Kouchner said this massive sum beat the Palestinians' own expectations. "The real winner today is the Palestinian state," Kouchner told a news conference after the gathering of nearly 90 countries and international organizations in Paris. "We wanted $5.6b., we have $7.4b., not bad." According to the official, Olmert and Abbas have met eight or nine times and told their respective teams to write a paper that would form the basis for negotiations. But when the teams sat down, the official said, the Palestinian side did not do what Abbas had told Olmert would be done. The official said that Israel's rationale for quickly trying to wrap up an agreement was to show the Palestinian population that there is a reward for fighting terrorism: A Palestinian state that Hamas can't bring them. At the same time, the official warned that if Fatah "starts flirting" with Hamas it "is the end with Israel." Olmert has made clear in the past that the negotiating process would end if Hamas were brought back into a PA government. The official said that what happened Monday in Paris was "a positive part of the process." The PA, he said, needed to set up effective and functioning institutions as the basis for a Palestinian state. "If so we will have a serious and strong partner," he added. Although PA Prime Minister Salaam Fayad has presented the international community with an economic reform plan, the official said Israel has not yet seen a security plan, and that he hoped Fayad would present one. "The main issue is security," the official said. "If they build credible security forces the whole process will change, and our ability to take a risk will be much more then it is now." In Paris, world leaders at the conference urged Israel to ease limits on Palestinian movement in the West Bank and Gaza Strip, following up on a warning from the World Bank that without an easing of restrictions on movement donors may be wasting their money. Abbas used the session to demand that Israel freeze settlements without excuses or exception. "It's the moment of truth," Abbas told the gathering of donor countries and international organizations in Paris. "I'll be eager to implement all our commitments," Abbas said, and "I expect them to stop all settlement activities, without exceptions." Israel pledged no money, but Foreign Minister Tzipi Livni outlined hopes for cooperation with Palestinians. "We need you to know that Palestinian welfare and Israeli security are not competing interests; they are interconnected ones," Livni told delegates. "We have no desire to control Palestinian lives. We do not want the image of Israel in the Palestinian mind to be a soldier at a checkpoint." Livni, in a speech to the Paris donor's conference, said that she was in attendance "because the establishment of a peaceful and prosperous Palestinian state that respects law and order and fulfills the legitimate national aspirations of its people is not just a Palestinian dream - it is also an Israeli interest." She told the conference that there was a need to close the gap "between the vision and reality," adding that "no dialogue or understanding about the future can take hold, unless it is matched by real changes on the ground." Reiterating Israel's position that any agreement reached as a result of the current negotiations won't be implemented until the Palestinians implement obligations under the road map to dismantle the terrorist infrastructure, Livni said. "True peace can never be achieved unless we create the conditions on the ground for it to take root." Also in an apparent reference to the first meeting of the Israeli-Palestinian steering committee that ended in mutual recriminations last Wednesday, she said, "Changing the reality on the ground takes more than a political decision. It requires constant effort in the face of daily difficulties, and it can lead to frustration on both sides. The temptation to engage in mutual accusations or to find reasons for halting our dialogue will appear, at times, difficult to resist. But ultimately it is self-defeating." Following the meeting, the Quartet - the US, EU, Russia and the UN - met and issued a statement that, among other elements, "expressed concern over the announcement of new housing tenders for Har Homa/Jabal abu Ghneim. Principals called for all sides to refrain from steps that undermine confidence, and underscored the importance of avoiding any actions that could prejudice the outcome of permanent status negotiations. The Quartet called on both parties to make progress on their Phase One Roadmap obligations, including an Israeli freeze on settlements, removal of unauthorized outposts, and opening of East Jerusalem institutions, and Palestinian steps to end violence, terrorism, and incitement." The Quartet also "reiterated its deep concern over the humanitarian conditions facing the population of the Gaza Strip and emphasized the importance of continued emergency and humanitarian assistance without obstruction," and "called for the continued provision of essential services, including fuel and power supplies. It expressed its urgent concern over the continued closure of major crossing points given the impact on the Palestinian economy and daily life." The statement also "condemned the continued rocket fire from Gaza into Israel and called for an immediate cessation of such attacks." The government official said that Israel had made clear to both the Palestinians and the Americans that building in the Har Homa neighborhood of Jerusalem will continue. US Secretary of State Condoleezza Rice said the donor conference was the "last hope" to salvage the Palestinian government from bankruptcy. The pledges topped the Palestinians' own expectations. "This is the most promising opportunity to seek peace that we have had in nearly seven years, and we need to seize it," Rice told the conference organized by Mideast envoy Tony Blair, the former British prime minister. The pledges include $3.4b. for 2008, of which the US will give $555 million. The US money includes about $400m. that the White House announced but has not been approved by Congress. The US pledged $150m. in direct aid for the moderate Palestinian government based in the West Bank next year. That is a departure for the United States, which has provided little direct aid in the past because of corruption and cronyism throughout the Palestinian leadership. The EU promised $650m. in 2008, a substantial contribution from a leading donor. In 2007, the EU initially pledged $245m., but ended up contributing $798m. for that year because of deepening poverty in the Palestinian territories. Fayyad has been assuring donor countries that they are not expected to prop up the Palestinian government indefinitely. International donors have given more than $10b. to the Palestinians over the past decade only to see large amounts wasted. Once built, some projects withered under new restrictions on Palestinian movement imposed by Israel. Fayyad said 70 percent of the aid would initially go to reducing his huge budget deficit, with the emphasis shifting only gradually to development projects. He said he needs cash quickly to keep the government afloat. AP contributed to this report.