World powers urge Arabs to honor Palestinian pledges

By Arshad Mohammed and Adrian Croft

LONDON (Reuters) - World powers called on Friday on Arab states to honor their financial and political pledges to help the Palestinians in their U.S.-backed Middle East peace effort with Israel.

The Quartet of Middle East peace mediators, which comprises the European Union, Russia, the United Nations and the United States, also called on Israel to freeze all settlement building and to dismantle outposts erected since March 2001 to prevent the collapse of the peace talks.

"The Quartet called for all donors to follow through on pledges made ... The Quartet encouraged the Arab states to fulfill both their political and financial roles in support of the Annapolis process," it said after talks in London.

U.S. President George W. Bush announced the resumption of peace talks between Israel and the Palestinian Authority with fanfare at a November 27 conference in Annapolis, Maryland but the negotiations have since yielded no visible progress.

Arab diplomats and foreign policy analysts suggest that the absence of tangible headway has disheartened Arab states, who are deeply skeptical of Bush's goal of achieving a peace deal by the end of this year.

"Let's remember this is not about the United States, this is ... for the Palestinian people," U.S. Secretary of State Condoleezza Rice said when asked if Arab doubts about the U.S. peace push has made them reluctant to contribute.

"Clearly if you made a pledge, you ought to fulfill it," she added at a news conference before Quartet members were to meet with Arab states including Saudi Arabia, Egypt, Jordan, Tunisia, Kuwait and the United Arab Emirates.

Norwegian Foreign Minister Jonas Gahr Stoere said the Palestinian Authority's need for money would grow more acute in the second half of this year and that donors need to "step up with budget support".

"We believe it is a real challenge for the motivation of the donor community that they need to see ... progress on the political track," he added.

According to U.S. figures, of $717.1 million in budget aid for the Palestinians promised by Arab League members, only $153.2 million has been delivered, all of which came from three countries: Saudi Arabia, the United Arab Emirates and Algeria.

In contrast, other donors -- chiefly the United States and European nations -- have disbursed $502.1 million of the $834.9 million they pledged, the U.S. figures showed.

Palestinian Prime Minister Salam Fayyad said Kuwait had announced on Friday it would allocate $80 million of the $300 million it pledged in December as budget support.

Fayyad said he was pleased because Kuwait had previously indicated all the money was to be used for development projects.

SHIFT ON GAZA

The Quartet also voiced "deep concern" over humanitarian conditions in Gaza, where Israel tightened its blockade after the Islamist Hamas movement seized power from Palestinian President Mahmoud Abbas's more secular Fatah in June 2007.