abbas arab summit.
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Arab governments hope to increase aid to the Palestinians, including channeling more money to the newly formed Palestinian unity government led by Hamas, according to a document prepared for this week's summit of Arab leaders.
The proposal, expected to be endorsed by Arab leaders later this week, comes as US Secretary of State Condoleezza Rice is in the region seeking a common footing with Arab allies on how to revive the stalled Middle East peace process.
Arab diplomats said the aid increase would be aimed at coaxing Hamas toward more compromise and would give it equal billing with Western-backed moderates in the Palestinian coalition government.
According to a draft resolution obtained by The Associated Press, Arabs would add some US$ 150 million more in funding each year to the annual US $750 million economic and financial package they have pledged to the Palestinians each year since 2001.
Only part of the US $750 million has actually gone to the Palestinians any year, however, because many Arab governments have balked at their pledges.
The leaders are also expected to renew a pledge made at last year's summit to provide some US$ 55 million monthly to the Palestinian government. That money has so far been sent to the office of Palestinian Authority Chairman Mahmoud Abbas, and not to the Hamas-led government.
Arab diplomats taking part in Sunday discussions, speaking on condition of anonymity because of the issue's sensitivity, said the Arab leaders will decide whether the money should go to the government.
Speaking to reporters Sunday, Saudi Foreign Minister Saudi al-Faisal confirmed the summit would extend the aid to the Palestinians, but did not say whether the money would go directly to the government.
Overall, international aid to the Palestinians grew from about US$ 1 billion in 2005 to more than US$1.2 billion in 2006, according to the UN.
Much of that was emergency aid from Europe, the United Nations and the Arab world that was funneled to people outside the government to ease a humanitarian crisis largely triggered by the international sanctions.
Despite the aid, the Palestinian economy suffered greatly, according to George al-Abed, head of the Palestinian Monetary Fund. The emergency aid helped Palestinians survive, just barely, he said.
Palestinian officials have cited the flight of investors, loss of trust in the economy and weakening of government institutions as the main problems. Also, with aid restricted to averting a humanitarian crisis, development projects have largely been put on hold.
"Relying on aid makes the Palestinian economy even worse - it makes it lose it dynamism," said Majdi al-Khaldi, an adviser to the PA chairman.