Aid to Gaza

But as donors met in Egypt on Monday, March 2, they emphasized that financial aid must not fall into the hands of Hamas, the Islamist group which rules Gaza. The donors also called for an immediate lifting of Israel's blockade of the battered coastal strip preventing all but vital aid from entering the area. Gaza has an estimated 1.4 million inhabitants.

"The status quo is of benefit to all the extremism. It is time for us to speed up the agenda," French President Nicolas Sarkozy told the conference at the Egyptian Red Sea resort of Sharm El-Sheikh.

Final figures from the conference show the EU has pledged $554 million, the US $900 million and Gulf Arab states $1.65 billion in aid for the Palestinians.

Germany will reportedly pledge an extra $126 million on top of its contribution to the EU aid package.

Palestinian President Mahmoud Abbas had asked for some $2.8 billion, almost half of that to pay for the reconstruction of the Gaza Strip after Israel's offensive in late December and January.

"We are confronted with a serious dilemma," Norwegian Foreign Minister Jonas Gahr Stoere told a final news conference. "Will we once again reconstruct something we built a few years ago and now has been hammered and flattened?

"Many donors, despite pledges, will wish to see political progress before they commit to infrastructure reconstruction," he said. Norway and Egypt jointly presided over the conference.

Gaza remains sealed off

But the United Nations and aid agencies have said that rebuilding the coastal enclave would be extremely difficult as long as border crossings into Gaza remain closed.

"The situation at the border crossings is intolerable. Aid workers do not have access. Essential commodities cannot get in," UN Secretary-General Ban Ki-moon told donors at the conference.

"Our first and indispensable goal, therefore, is to open crossings. By the same token, however, it is therefore essential to ensure that illegal weapons do not enter Gaza."

"Money is very important but it is not going to solve the problem unless there is pressure from the international community on Israel to open all (border) crossings with Gaza" said Gasser Abdel-Razek, a spokesman for human rights group Oxfam International.

French President Nicolas Sarkozy called on Israel to open the border crossings and allow goods through. "Gaza should not actually be a prison with open skies," he told the conference.

Money will not end up "in the wrong hands"

Donors have balked at giving aid to Hamas, which has controlled the Strip since 2007. In response, leaders of Hamas and Abbas's rival Fatah faction agreed to work towards forming a "national unity" government on Thursday, Feb. 26, and to hold fresh elections soon.

US Secretary of State Hillary Clinton, who was making her first appearance at such a large-scale conference in her new role, reassured delegates on Monday that the US was working with the Palestinian Authority to install "safeguards" to ensure that funding "is only used where and for whom it is intended" and "does not end up in the wrong hands."

She also stressed that the response to the current Gaza crisis "cannot be separated" from broader peace efforts, adding that aid to Gaza could "foster conditions in which a Palestinian state can be fully realized."

Neither Israel nor Hamas were present at the conference. Israel said it supported efforts to help Palestinians in the strip, but wanted assurances the aid money would not reach Hamas militants.

"We definitely don't want to see the goodwill of the international community exploited by Hamas and serve Hamas' extremist purposes," said Mark Regev, a spokesman for Prime Minister Ehud Olmert.

More than 1,300 Palestinians were killed and thousands of Gaza homes and government buildings were reduced to rubble during the Israeli offensive. Thirteen Israelis also died in attacks by Hamas militants.