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World News

Arab leaders set to agree Gaza aid and economic accord

KUWAIT (Reuters) - Arab leaders, meeting for the third time in five days Monday, were expected to agree a $2 billion (1.4 billion pounds) aid package to rebuild Gaza after a three-week Israeli onslaught.

Arab countries’ split over how to deal with Israel’s offensive against Hamas-led Gaza had clouded longstanding plans for the two-day summit that initially was meant to focus only on economic cooperation.

Leaders will still discuss at the Kuwait meeting how to counter the impact on the Arab world of the collapse in oil prices, the global economic slowdown and the credit crunch.

But they are now also expected to back the Palestinian Authority and discuss plans to set up a $2 billion fund to rebuild the battered Gaza Strip after Israel and Hamas both declared unilateral ceasefires.

Participants in Kuwait hoped the meeting would narrow the divides exposed by a meeting in Doha, where Qatar and Mauritania froze ties with Israel and Syria, which broke off indirect peace talks over Gaza, pronounced a 2002 Arab peace initiative dead.

Gulf Arab leaders also met in Saudi Arabia last week but regional powerbrokers Egypt and Saudi Arabia shunned the later Doha meeting, preferring to merge the Gaza discussion into the economic summit.

“The Kuwait summit is a chance to find a joint Arab stance,” Iraq’s Foreign Minister Hoshiyar Zebari told Reuters.

Lebanese Prime Minister Fouad Siniora said Sunday that Gaza would be a priority.

“Gaza and the Palestinian cause are among priorities... and the development projects that connect between our interests should also take our attention,” he said.

The flurry of gatherings reflects the Arab divide between Egypt, Saudi Arabia and their allies on one side, and Syria, Qatar and their allies on the other.

KEEP SPENDING

Arab finance ministers and central bankers have urged governments to boost public spending to shore up domestic economies amid a collapse in oil prices and recession across the industrialised world.

Oil prices have slumped to below $40 a barrel from their peak over $147 a barrel in July, taking a huge chunk out of export revenues for petrodollar-dependent Arab states.

The credit crisis has worsened the problem by slowing the flow of capital into the region, leading to project cancellations and delays.

Leaders will discuss a range of initiatives and some 400 projects to improve economic cooperation, such as an Arab railway and regional power grids.

Even the wealthiest oil producers have been hurt by the credit crisis, with Kuwait having to save one of its major lenders.

The summit, which the World Bank chief is due to attend, will also look at how to reduce poverty in the Arab world as well as improving health and telecommunications and achieving food security.

Standards of living differ vastly among Arab states, from the rich Gulf oil-producers to poorer countries such as Yemen or Sudan. According to summit organisers, the Arab world has 100 million illiterate people and some 20 million unemployed.

“The Arab world needs to create 100 million new job opportunities to solve its unemployment problem,” Siniora said.

Additional reporting by Simon Webb and Eman Goma; Editing by Louise Ireland

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