U.S. announces $200 million in aid to Palestinians

Palestinian President Mahmoud Abbas attends a Palestinian Liberation Organization (PLO) executive committee meeting in the West Bank city of Ramallah July 18, 2009.

WASHINGTON (Reuters) - Secretary of State Hillary Clinton said Friday there had been some progress toward reviving Israeli-Palestinian peace talks in the "near future" and announced $200 million in U.S. aid to the Palestinians.

Clinton said the money, which is part of a $900 million pledge she made in March at a donors conference in Egypt, was transferred directly to the Western-backed Palestinian Authority and would help it meet a budget shortfall.

The infusion of U.S. funds comes ahead of a visit this weekend to Israel and the Palestinian territories by U.S. special envoy George Mitchell, who is trying to create conditions to get stalled talks resumed between both sides.

"I believe we are making progress to create the environment for a successful resumption of negotiations in the near future," Clinton said at a news conference, without providing a timeline of when talks could resume and under what conditions.

Palestinian Authority Prime Minister Salam Fayyad appeared via video link-up from the West Bank and thanked the United States for the financial help.

"We have severe financial difficulties that we have been facing for many months. Your assistance could not have been more timely," Fayyad said.

International funds promised at several donor conferences have not materialized and the Palestinian Authority says it has received only a fraction of the $1.5 billion in assistance it needs to meet its budget in 2009.

Clinton urged others to follow through on their promises, praising the Palestinian Authority for reforms it had implemented to ensure donor funds were used appropriately and did not reach militant groups such as Hamas.

"The PA needs financial help and they need it now," she said.

'COMPLICATED WORK'

Abbas's government runs the West Bank while Hamas controls the Gaza Strip, which was pummeled during Israel's December invasion in response to rockets fired into the Jewish territory from Gaza.

Mitchell is due to arrive in Israel Sunday as part of a trip to the region to revive the talks halted after the invasion of Gaza and by disputes over Jewish settlements.

Asked about prospects for an agreement on settlements, Clinton said Mitchell was exploring "in depth" how to push the peace process forward.

"This is very complicated work where there are lots of moving parts, and so I think we will wait until there is some announcement to be made and once that happens it will be obviously right to ask questions about it," Clinton said.

Mitchell will visit Damascus Saturday for meetings with President Bashar al-Assad and other senior officials as part of U.S. attempts to improve its ties with Syria and to resume Syria-Israeli talks.

"We think that it is a fruitful engagement which we intend to pursue," Clinton said of Syria-U.S. relations, reiterating the promise to return a U.S. ambassador to Damascus.

"This is just a beginning. I don't want to leapfrog over the hard work that has to be done in working through many of the issues that are of great concern to the United States," she added.

She said Mitchell was exploring "deeply" with the Syrians how they would respond to renewed negotiations with the Israelis and the timing of that. "That is all to be determined," Clinton said.