( AP ) - The European Union on Monday launched a day of pledges of aid to the Palestinians by promising $650 million in 2008, a substantial contribution from a key donor amid a renewed international push for a Palestinian state.
In 2007, the European Union initially pledged $245 million, but ended up contributing $798 million for that year because of deepening poverty in the Palestinian territories.
Nearly 90 countries and international organizations were gathering in Paris to announce how much they're willing to spend to help revive the moribund Palestinian economy and build the institutions of a future Palestinian state.
The conference is hoping to ride on renewed hopes for Mideast peace after Israeli-Palestinian negotiations resumed following seven stalled years.
Palestinian Prime Minister Salam Fayyad is asking for $5.6 billion over three years. On the eve of the conference, Fayyad was optimistic, saying he was encouraged by statements of support from the donors.
The EU is to pledge $650 million for 2008 on Monday, EU External Relations Commissioner Benita Ferrero-Waldner told The Associated Press.
Ferrero-Waldner said she couldn't say yet how much the EU would contribute in 2009 and 2010, since she didn't know what the available EU budget would be, but suggested the aid would roughly hold steady. That would make the overall EU contribution a substantial chunk of the total pledged Monday.
Ferrero-Waldner and Fayyad urged Arab states to do more. Since 2002, Arab League members have been promising the Palestinians $55 million a month, put have not always paid in full.
"It is very important that they contribute to the burden-sharing," the commissioner said of the Arab donors.
The U.S. has announced it is pledging about $555 million for 2008. However, the money includes about $400 million that the White House already has announced but that has not been approved by Congress.
Fayyad is trying to assure donor countries - which gave more than $10 billion to the Palestinians over the past decade - that they are not expected to prop up the Palestinian government indefinitely.
He has presented a three-year reform plan, with promises to cut government spending by trimming a bloated public payroll and reducing hundreds of millions of dollars in utility bills.
Still, he wants 70 percent of the aid initially to 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 in coming months.
Economists say it's not enough for the donors to pledge aid and for the Palestinian to carry out reforms. The Palestinian economy will only recover, according to the World Bank, if Israel eases sweeping physical and administrative restrictions on movement in the West Bank and Gaza.
Israel has been reluctant to do so, putting security first. The Israeli military considers roadblocks key to preventing attacks on Israelis by Palestinian militants.
Fayyad urged donor countries to make the link between the need for aid and conditions on the ground, particularly Israeli restrictions.
"We are committed to doing everything we possibly can to help ourselves," he said in an interview Sunday. "At the same time, it's about time that foreign aid will no longer be looked at as a substitute for that which has to happen, and can only come through the removal of (Israeli) restrictions."
The conference is hosted by France, and co-sponsored by international Mideast envoy Tony Blair, the EU and Norway.
The aid is to boost the Palestinians at a time of renewed peace hopes. Israeli-Palestinian negotiations resumed last week, after seven years of violence and diplomatic deadlock.
The donor countries are to follow the money closely, with the World Bank and the International Monetary Fund to issue reports every three months.
"The Paris conference will install a system of control and transparency once and for all," French Foreign Minister Bernard Kouchner said on Radio-J on Sunday. "Usually in the past we wrote a check and we didn't know where it was spent."
The Palestinian development plan also formally includes Gaza, but most of the money is expected to go to the West Bank, controlled by moderate Palestinian President Mahmoud Abbas.
Gaza has been virtually cut off from the world since Abbas' rival, the Islamic militant Hamas, seized control of the territory by force in June. Israel and Egypt sharply restricted border access in response, and the blockade has further deepened poverty there.