PARIS Led by Europe, international donors on Monday pledged $7.4 billion over three years to help Palestinians as new peace talks begin with Israel, yet old Mideast fights over disputed land and freedom of movement shadowed the largest show of support for the Palestinians in more than a decade.
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 the sweeping physical and administrative restrictions donors may be wasting their money.
Israel has been reluctant to lift scores of roadblocks in the West Bank, many of them put there by the Israeli military amid the street violence and suicide bombings by Palestinian militants that followed collapse of the last peace talks seven years ago.
The restrictions have left the Palestinian economy, always dependent on international help, in much worse shape since then.
The pledges are meant to help moderate Palestinian leaders in their power struggle with Hamas militants who have seized the Gaza Strip, the smaller territory that, with the West Bank, would make up an eventual independent Palestinian state alongside Israel.
Palestinian President Mahmoud Abbas used the session to demand that Israel freeze Jewish settlements without excuses or exception. Palestinians are outraged by Israel's announcement, within days of the formal start of the new peace effort at a U.S.-backed peace conference last month, that it planned hundreds of new Jewish houses in the West Bank.
"It's the moment of truth," Abbas told some 90 donor countries and international organizations gathered Monday in Paris. "I'll be eager to implement all our commitments," Abbas said, and "I expect them to stop all settlement activities, without exceptions."
West Bank settlements are an emotional issue on both sides and a practical problem for peacemakers trying to draw boundaries of a Palestinian state by the end of 2008. Additional Jewish homes on land claimed by the Palestinians complicate the task, and the latest announcement from Israel has undermined Palestinian confidence in the infant talks.
It was the first meeting for Israelis and Palestinians since peace talks formally began with a brief, rancorous session last week.
Israel pledged no money, but the chief Israeli negotiator 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," Israeli Foreign Minister Tzipi 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."
International peacemakers meeting on the sidelines of the conference said movement must be freer and expressed dismay at the new housing plan. The group that includes the United Nations, United States, European Union and Russia also said the humanitarian situation in the sealed-off Gaza Strip is urgent.
The language of a statement issued by the group was unusually sharp, and contrasted with the celebratory atmosphere as organizers tallied the pledges.
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 real winner today is the Palestinian state," French Foreign Minister Bernard Kouchner said. "We wanted $5.6 billion, we have $7.4 billion not bad."
Governments would have to make good on the pledges, and some attached conditions.
The pledges include $3.4 billion for 2008, the year that both sides have said they want to use to reach peace. The United States would give $555 million of that. The U.S. money includes about $400 million that the White House announced but has not been approved by Congress.
The United States pledged $150 million 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 European Union promised $650 million in 2008, a substantial contribution from a leading donor. 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.
Palestinian Prime Minister Salam Fayyad had asked for $5.6 billion over three years.
Fayyad has been assuring donor countries that they are not expected to prop up the Palestinian government indefinitely. International donors have given more than $10 billion 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.
Fayyad has installed financial reforms and out the sprawling and inefficient Palestinian government on an austerity diet. Fayyad was appointed prime minister this summer following the split with Hamas, which won Palestinian parliamentary elections nearly two years ago. The elected Hamas prime minister, Ismail Haniyeh, claims legitimacy. Abbas accuses Haniyeh of a coup d'etat in Gaza.
Abbas ruled out dialogue with Hamas, and warned that without international support Gaza is "heading into disaster."
Gaza has been virtually cut off from the world since the Hamas takeover in June. Israel and Egypt sharply restricted border access in response, and the blockade has further deepened poverty there.