PALESTINE - July 8 - Palestinian Aid Boost Backed.

The leaders of the Group of Eight gives strong support to a new initiative to give $3 bn a year in aid to the PA once Israel withdraws from the Gaza Strip this year. No firm decisions on the aid package were taken at the G8 summit in Gleneagles. But diplomats from some non-UK countries suggested that significant momentum had built up among the leaders to agree a package this year. Jim Wolfensohn, the former World Bank president and representative of the Quartet - the EU, US, Russia and the UN - on withdrawal from Gaza, met the G8 leaders to push for agreement on the package. He was said by aides to be near to achieving a deal on technical economic aspects of the disengagement. According to G8 diplomats, Wolfensohn has made clear he does not yet have a plan to boost political and economic reform in the PA after Gaza withdrawal. However, he argued that financial aid was essential if any reform plan was to have credibility. One senior G8 diplomat said leading industrial countries would want to see what progress Wolfensohn got on the aid package from the Gulf States. If the $3 bn (2.5bn, [pounds sterling]1.7bn) package were spread over the next three years, it would amount to a doubling of existing international aid to the PA, already the biggest sustained aid effort to any crisis area since the second world war. After the outbreak of the Palestinian uprising in September 2000, aid doubled to around $1 bn a year, but many of the funds were diverted to emergency assistance and away from infrastructure projects designed to prepare the Palestinian economy for statehood. Wolfensohn was returning to the region to resume talks with Israeli and Palestinian representatives on co-ordinating the Gaza withdrawal. He has said transfer of control to the PA would work only if there were free flow of goods out of Gaza and between Gaza and the West Bank. He recently told the US Senate foreign relations committee it was in the world's self-interest to ensure Palestinian economic recovery as a step towards resolving the conflict with Israel. "Disengagement needs to be accompanied by an immediate demonstrable change in living conditions if it is to resonate with the Palestinian people", he said.