updated 12/17/2007 5:40:34 AM ET 2007-12-17T10:40:34

The world rallied to the support of the embattled Palestinian government Monday, pledging $7.4 billion in aid over the next three years at a donors' conference — a sum that tops the Palestinians' own expectations.

"The real winner today is the Palestinian state," French Foreign Minister Bernard Kouchner told a news conference after the gathering of nearly 90 countries and international organizations.

"We wanted $5.6 billion, we have $7.4 billion — not bad," he said.

World leaders at the conference also urged Israel to ease restrictions on movement in the West Bank and Gaza to make a recovery of the Palestinian economy possible.

"Our feeling is great, this is generous. It is a vote of confidence for the program, and a sign of solidarity on the Palestinian question," Palestinian Planning Minister Samir Abdullah told The Associated Press.

He confirmed the overall figure and said the pledges include $2.9 billion for 2008.

Secretary of State Condoleezza Rice pledged $555 million for 2008. However, the money includes about $400 million that the White House announced but has not been approved by Congress.

For renewed peace efforts to succeed, she said, "the continued and unwavering support of the international community is absolutely vital. That is why we are here today, and not a moment too soon."

Rice called the U.S. pledge "a significant increase" from earlier pledges.

"The Palestinian Authority is experiencing a serious budgetary crisis," Rice said. "This conference is literally the government's last hope to avoid bankruptcy."

Referring to renewed Middle East peace efforts stemming from the U.S.-sponsored conference in Annapolis, Md., last month, Rice said, "This is the most promising opportunity to seek peace that we have had in nearly seven years. And we need to seize it."

A substantial sum
Palestinian Prime Minister Salam Fayyad said the pledges amounted to "an endorsement."

He called it part of the process for "establishing an independent Palestine."

The sum raised Monday was substantial even compared to the more than $10 billion that donor countries have given to the Palestinians in the past decade, according to the World Bank. Officials have said the Palestinians have received more international aid on a per capita basis than any other nation or group of people in the postwar period.

From international Mideast envoy Tony Blair to French President Nicolas Sarkozy, participants called for urgent action, saying a new chance for an Israeli-Palestinian peace deal must not be missed. Peace talks resumed last week after seven years of diplomatic deadlock, and international aid is seen as key to making the process work.

"We will not rest until we have that two-state solution a reality in this region of the world," Blair, a co-sponsor of the conference, told the conference.

U.N. Secretary-General Ban Ki-moon said the donors must "invest now, invest generously, and remain steadfast in their financial commitments over the next 36 months."

European Union foreign policy chief Javier Solana said the conference was "very constructive" and had "created a momentum to continue the good start we had in Annapolis."

The EU said it would give $650 million in 2008 and Norway pledged $140 million a year for three years. Britain, France and Germany announced a combined $1.08 billion for three years.

Western donors have urged Arab states to do more. Since 2002, Arab League members have been promising the Palestinians $55 million a month but have not always paid in full.

Two key issues dominated the conference: the need for Israel to ease restrictions on Palestinians while not compromising on its security, and the fate of Gaza, which has been virtually cut off from the world since the Islamic militant Hamas seized control by force in June.

In Gaza, Hamas spokesman Sami Abu Zuhri called the Paris conference "a declaration of war against the Hamas movement." Last weekend, Hamas leaders told tens of thousands of supporters at a rally that Hamas will not recognize Israel or renounce violence.

Palestinian President Mahmoud Abbas used the high-profile platform to urge Israel to remove roadblocks quickly, stop building its separation barrier in the West Bank and to freeze settlement expansion, "without exceptions." The first round of peace talks had been overshadowed by Israel's decision to expand a Jewish neighborhood, built on war-won land on the outskirts of Jerusalem.

Abbas said the Palestinians are committed to reform their government, restructure the security forces, and work hard to restore order in the often lawless Palestinian territories.

He had harsh words for Hamas, reiterating that he will not resume a dialogue with the militants unless they hand back control of Gaza to Abbas' security forces. He also warned that without continued international aid, Gaza is "heading into disaster."

Building responsibility
About three-fourths of Gaza's 1.5 million residents live in poverty, and the blockade — Israel and Egypt virtually closed borders after the Hamas takeover — has wiped out tens of thousands of jobs.

Israeli Foreign Minister Tzipi Livni called the Palestinian reform plan "a serious effort to build the basis for a responsible Palestinian state that the Palestinian people so deserve and that peace so needs."

Livni said Israel is committed to its road map obligations, "including in relation to settlement activities," but did not elaborate.

Arab League head Amr Moussa welcomed Livni's comments as "very significant." Moussa urged the donors to follow the situation concerning roadblocks and settlements closely.

Fayyad is trying to assure donor countries 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, Fayyad wants 70 percent of the aid initially to go toward reducing his huge budget deficit, with the emphasis shifting only gradually to development projects.

Economists say it's not enough for the donors to pledge aid and for the Palestinians 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.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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