Donors' cash injection not a panacea for Palestinians

places with different problems and only one solution -- money.

Everyone agrees that Palestinian autonomy is a good idea, although

there were better ones. Never mind. Gaza and Jericho must be made to

work for reasons which stretch far beyond the mouldering borders of Gaza

or the pleasant orchards of Jericho.

If Gaza/Jericho is to become a new home for Palestinians in which they

can hold up their heads and work for a future, it is necessary that

large sums of money are invested; carefully, yes, but with determination

and a good deal more alacrity than has been shown thus far.

This was recognised even before the peace accord of September last

year. The handshakes and faltering goodwill were followed by pledges

from donor countries amounting to some $2.5bn, spread in varying sums

over different fixed periods with a ceiling of five years.

This sounded wonderful, indeed it was too wonderful. Pour large sums

of money into tiny Jericho and you simply create even worse inflation

than that which is already beginning to grip the place. Do the same in

Gaza and the result would be catastrophic.

Gaza is a wreck, pure and simple. Infrastructure hardly exists,

housing is lousy, power and clean water are hilariously and dangerously

unreliable, and there are even more potholes in the roads than in

Strathclyde.

All of these ailments have been recognised by the relevant Palestinian

and international planners, and lengthy and detailed projects have been

drawn up.

As the senior World Bank task manager for the various projects,

Kingsley Robotham, says: ''The infrastructure has been neglected for a

long time, particularly in Gaza. Unless we attend to these problems

pretty quickly, we won't be able to get the economy moving.''

Mr Robotham also points out that unemployment has been rising in the

occupied territories since the beginning of the Intifada, and that it is

critical that productive employment is created quickly as a means to

help stabilise the situation.

Up to this point it would seem that relative accord exists between all

parties, but nothing could be further from the truth. Until a few days

ago only $30m had been handed over, and most of that went into a fund

named after the late Norwegian Prime Minister, Johann Jorgen Holst, who

made the peace accord possible.

This is the first source of disagreement. The Palestinians desperately

need money and quickly, to pay for the Palestinian police force and the

civil administration.

Senior Palestinian figures, including leader Yasser Arafat, clearly

believe that the money should have been handed over to the Palestinian

institutions, but the major donors baulked at this.

The reasons given are many and various, but Palestinians have been

mortally insulted at suggestions that the donors worry about money

getting into the wrong hands, or that it might be used for political

patronage.

This particular argument has been eased by the admission by Western

diplomats that the main problem is not the lack of political will, but

the slowness of Western aid procedures.

The senior Palestinian negotiator, Mr Nabil Shaath, went to a donors'

meeting in Paris last week with a long list of achievements that he

hoped would persuade the international institutions to disburse money

quickly.

The Palestinians have worked hard at getting together a package of

proposals which include a full budget for this year, outline guarantees

of transparency and accountability in the use of money, and a renewal of

the pledge to start collecting taxes as soon as the relevant authority

is up and running.

The Israelis, who need Gaza/Jericho to work just as much as the

Palestinians, also went to Paris and gave vigorous support to the

Palestinian case.

In the end the result was reasonably acceptable. Another $40m will be

paid immediately into the Holst fund and promises of top-up funds were

made.

Yet, there is a feeling that all of this is still of a stop-gap

nature. Two major problems arise immediately. Dr Rodney Wilson of Durham

University points to the problem of raised expectations.

''It will be very difficult to satisfy these expectations,'' he says.

''There is a young and largely unemployed population, and coping with

their enhanced hopes will be a problem for the Palestinians. That is why

it is so essential to get the economy moving.''

Yet, to simply pour money into the area would be self-defeating as

inflation would rocket and the hopelessly inadequate infrastructure

could not cope.

The agreement reached at the weekend will be sufficient to tempt Mr

Arafat -- who has been convincingly playing the reluctant bridegroom --

to step onto semi-autonomous Palestinian soil for the first time,

probably around the middle of this month.

He will find the beginnings of a state and just enough money to get

the process going. If he is sensible he will realise also that in its

soft-skinned vulnerability it resembles nothing as much as a new-born

baby.