Thursday, July 1, 1999

RAMALLAH -- The Palestinian Authority has complained that donor nations have diverted their pledges to the current effort to return refugees to Kosovo.

PA officials said the result is that Palestinian projects waiting for funding have been shelved or suspended. They said the delay in funding is worse than at perhaps any other time over the last three years.

"There has been a protest that the funds have gone to Kosovo," PA International Cooperation and Planning Minister Nabil Shaath told PA radio on Wednesday. "The justifications given are insufficient."

Earlier this year, donor nations approved some $3 billion over the next five years. But Shaath said that with half of 1999 gone the PA has hardly received any funds.

Officials said the PA wasn't even told which projects have lost funding. They said that donor nations just stop sending money and Palestinian contractors are left with unpaid bills.

The PA raised the issue with representatives of donor nations now visiting Ramallah. Officials said PA Chairman Yasser Arafat also raised the issue in talks on Tuesday night with World Bank Vice President Kemal Dervis.

Dervis urged PA officials to focus development on energy and improvement of infrastructure. The PA has drafted plans to construct at least two power stations in Gaza and has asked the World Bank for a $60 million loan.

For his part, Dervis has called on the PA and Israel to coordinate economic policies. "If the Israelis and Palestinians will have made peace with each other, the Middle East will have an economic golden age,'' Dervis told a seminar in Bethlehem. "But if the two sides do not cooperate, the opportunity will turn into a nightmare.''

On Wednesday, the PA Water Authority and a French company signed a cooperation agreement for the firm to recycle water in Bethlehem and Hebron. Bethlehem Governor Mohammad Jaabari said the agreement would lead to the resolution of the water problems in the two cities within three months.