Donor Nations Review Project List Aid Promised To Palestinians Is For Hospitals, Hotels

Envoys from the United States and 40 other donor nations set to work Sunday on a new $3.5 billion wish list of Palestinian development projects, from hospitals to a luxury hotel in Bethlehem.

The Palestinians also were expected to use the two-day Paris conference, put on by the World Bank, to press donors to fulfill earlier aid pledges for about 20 projects in the West Bank and Gaza Strip.

The request for aid - mostly in grants and low-interest loans - is part of a three-year development scheme. It follows the Palestinians’ 1993-1998 plan, for which donors pledged about $3.6 billion but have delivered only $1.8 billion.

Leila Shahid, the Palestinian representative in France, said the annual conference of donors to Palestinian development is a “way to save the peace … on the economic level, since the peace process is so frozen on the political level.”

Donor nations are pushing the Palestinian Authority to create a strong legal system and a more open government in general, World Bank officials said.

The donor countries were likely to discuss allegations of corruption that have tarnished Yasser Arafat’s administration. But World Bank officials, speaking on condition of anonymity, said there had been no problems with handling of the donor money.

Donor countries are expected to give $500 million for Palestinian projects over 1997, roughly what they gave for the previous three years.

The West Bank and Gaza proposals include $20 million for housing and other projects, $15 million to help establish a judicial system, $44 million for schools and hospitals and $10 million to finish a hotel in Bethlehem.

The Palestinian Authority also wants $10 million for risk insurance to help entice private investors reluctant to place their money in the turbulent region.

The World Bank estimates that the stalled Middle East peace process cost the Palestinian economy about $2.8 billion between 1994 and 1996, mostly because of wages lost when workers were banned from traveling into Israel or between Gaza and the West Bank.

Private investment in the Palestinian territories plummeted from $1 billion in 1992 to $250 million in 1996, the World Bank officials said.

Many of the previously pledged funds went to emergency needs rather than infrastructure investment.

Israel is among the participants in the conference, as are the United States, the European Union, Japan and Saudi Arabia.