Middle East violence roils Berlin donors meet

BERLIN (Reuters) - World powers called for calm in the Middle East on Tuesday after violence in the region shook a Gaza truce and overshadowed a donors' meeting for Palestinian police and legal institutions in Berlin.

Militants in the Hamas-controlled Gaza Strip fired at least two rockets into southern Israel after Israeli troops killed two Palestinians in the West Bank city of Nablus.

"The Quartet urged that the calm be respected in full and expressed the hope that it would endure, and lead to improved security for Palestinians and Israelis alike, and a return to normal civilian life in Gaza," the Quartet of Middle East negotiators said in a statement.

The Quartet, comprising the European Union, the United Nations, Russia and the United States, met in Berlin on the sidelines of a Middle East conference at which donors promised the Palestinians some $242 million.

Participants said the one-day conference was another step towards a two-state agreement between Israel and the Palestinians -- a goal the two sides pledged to pursue at a conference in Annapolis last November. The Quartet declared that the need for progress was now "urgent".

U.S. Secretary of State Condoleezza Rice said she remained confident the target could be attained before President George W. Bush leaves office early in 2009.

"I continue to be hopeful that we can reach a solution by the end of the year as was envisioned by Annapolis," she said.

"These are hard issues. Had there been a solution in sight, an easy solution, I think it would have been achieved many decades ago," she said.

Rice said she had had a three-way meeting with the two sides' top negotiators, Israeli Foreign Minister Tzipi Livni and former Palestinian prime minister Ahmed Queri, and said the parties continued to negotiate seriously.

A senior U.S. official said two Americans tasked with monitoring security in the region, Air Force Lt. Gen. William Fraser and retired Marine Corps Gen. James Jones, would return shortly.

Palestinian Prime Minister Salam Fayyad, also at the Berlin meeting, condemned the Nablus raid and called for calm, saying: "It is essential for the ceasefire, for calm to be sustained."

Participants at the Berlin meeting had welcomed the Gaza truce, which took effect last Thursday, in their opening speeches, but the question of how to deal with the Islamist group Hamas in Gaza had divided top diplomats.

Arab League Secretary-General Amr Moussa elicited a strong U.S. reaction when he said reconciling the Palestinians in Gaza and the Western-backed government of Mahmoud Abbas was critical for peace and the international "veto" on this had to be lifted.

He did not single out any country, but said it was the responsibility of all participants to help the Palestinians form a common front.

Rice surprised participants when she asked to respond directly to Moussa.

"You cannot have peace if there is not a partner who respects the right of the other partner to exist," she said, in an apparent reference to Hamas, which the United States refuses to deal with because it does not recognize Israel or past Palestinian agreements with Israel.

Hamas, which seized Gaza from Abbas's Fatah faction in fighting a year ago, opposes Abbas's peace talks with Israel.

The Egyptian-brokered truce calls on Hamas to prevent cross-border rocket fire from the Gaza Strip.

The militant group Islamic Jihad claimed responsibility for the rocket attack. Israel called the strikes a "blatant violation" of the calm and said it would weigh its options.

The Berlin conference followed a donors' meeting in Paris last year, where donors promised more than $7 billion to the Palestinians. The Quartet on Tuesday urged all donors who had not fulfilled their pledges to provide support. It also reiterated calls for Israel to freeze all settlement activity.