Delegates at a major conference in Berlin pledged millions to help Palestinians improve state institutions. Meanwhile, a six-day truce between Israel and Palestinian militants was broken with an attack.
The promised funds are to boost Palestine's police and justice systems
Over $242 million (156 million euros) will be made available over the next several years for concrete projects designed to reinforce the police force and modernize the judicial system in the West Bank.
"Every link in what we call the chain of security must be intact and unbreakable," said US Secretary of State Condoleezza Rice at the start of the conference. "To … invest in a future state the Palestinians must have confidence that their police, courts, penal system are dedicated to upholding the rule of law and respecting human rights."
Delegates from more than 40 countries and international organizations attended the Berlin meeting on Tuesday, June 24, where the opening speeches saw calls for an end to Israel's settlements policy and reconciliation between the radical Hamas movement and the government of Palestinian President Mahmoud Abbas.
The donation announcement coincided with reports that two rockets fired from the Hamas-ruled Gaza Strip had struck southern Israel on Tuesday. The militant group Islamic Jihad claimed the attack, saying it was avenging an Israeli military raid in Nablus earlier in the day that had killed two Palestinians.
Rice chats with German Foreign Minister Steinmeier and Musa
Tuesday's attack was the first initiated from Palestinian territory since an Israeli-Hamas truce went into effect on June 19. No casualties were incurred.
Israel criticized for settlement expansion
In Berlin on Tuesday, Palestinian Prime Minister Salaam Fayyad and Arab League Secretary General Amr Musa urged Israel to halt settlement expansion, which they saw as a major obstacle to peace.
The Palestinian people needed to taste freedom," Fayyad said. "They need to feel tangible improvements in their daily lives," he added, saying the removal of Israeli roadblocks in the West Bank as an example would go some way towards this goal. Israel has said it needs to maintain military operations in the region in order to protect its citizens.
Musa said the Israeli settlement policy had dealt a severe blow to the Israeli-Palestinian talks, which were jump-started at a meeting in Annapolis in November 2007 with the goal of reaching a framework agreement by the end of this year.
The Arab League chief also said the international "veto" on talks with Hamas had failed, prompting Rice to intervene.
"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.
Donations exceed expectations
The gathering in the German capital comes in the wake of a major donors' conference in Paris in December. Tuesday's donations come from the $7.4 billion in aid pledges raised in the French capital.
The pledges made in Berlin are more than the $189.9 million requested by Fayyad, who presented a series of proposals to upgrade the 7,000-strong Palestinian police force in the West Bank and improve the judicial system there.
The funds are expected to be used for improvements to infrastructure, police training and the purchase of equipment, such as patrol cars and communications devices.
Germany supports two-state model
Israel has defended its military presence in the West Bank
Both Israel and the Palestinian Authority agreed that a two-state solution was the best way to resolve their conflict, but took differing views on how this should come about.
German Chancellor Angel Merkel said a functioning system of law enforcement and justice were the basic requirements for the emergence of a Palestinian state.
Germany, she said, supported a two-state solution that guaranteed the right of Israel to exist within secure boundaries. Merkel also made clear that Hamas was not a negotiating partner for the West.
Minister: Israelis favor independent Palestine
Referring to the Israeli military operation in Nablus which claimed the lives of two Palestinians on Tuesday, Fayyad called it "an example of activity which has to stop immediately and promptly if we are to provide security to our people."
Israeli Foreign Minister Tzipi Livni said the security situation on the ground "is not good for Israel," but said the Israeli people basically supported the idea of an independent Palestinian state.
"Out neighbor is not a terrorist state, but a responsible partner in the peace process," she said. "When it comes to law enforcement and judiciary, these are basic requirements for the security of Israel," she said.
"Without an effective police system based on the rule of law, implementation [of a peace agreement] will be very difficult if not impossible," she said.
Following the conference, representatives from the so-called Middle East Quartet -- including the US, the United Nations, the EU and Russia -- were due to meet to discuss the peace process.