Fayyad asks donors to channel Gaza aid through him

Palestinian Prime Minister Salam Fayyad is asking donor countries to channel hundreds of millions in expected aid for Gaza "first and foremost" through his government.

Fayyad's request is part of a 53-page report he presented to donors ahead of a pledging conference for Gaza next week. The report was obtained Thursday by The Associated Press.

Gaza's Hamas rulers are not invited to the conference. Instead, the Palestinians will be represented by Fayyad, a US-backed moderate and Hamas rival.

According to the report, released by the International Monetary Fund (IMF) on Thursday, the Palestinian Authority urgently needs $1.15 billion to cover external recurrent financing requirements in 2009.

The Western-backed government also needs $500 million for development projects, and at least $600 million for reconstruction and rehabilitation of Gaza after Israel's offensive last month, the IMF report said.

It added that should the funds not be paid immediately the cash-strapped authority would need to cut its cash expenditures and likely accumulate arrears, including on wages.

The IMF report also urged Israel to relax restrictions on movement of goods in the occupied West Bank, where Palestinian President Mahmoud Abbas' government holds sway, to enable recovery of trade and private investment.

Abbas favors a comprehensive peace treaty with Israel, to create a fully-fledged Palestinian state in the occupied West Bank and Gaza. Western nations have shunned Hamas for its refusal to recognize Israel and renounce violence.

"The restrictions in the West Bank have overall been tightened compared to 2007, despite some relaxation in late 2008," the report read.

Israel, the report added, had increased the isolation of Gaza Strip "markedly" since November 2008. Hamas, which won a Palestinian parliamentary election in 2006, took control of Gaza after ousting forces loyal to Abbas in 2007.

The report said Israeli restrictions on the passage of goods and people across Gaza's primary crossings remained tight even after the cessation of hostilities in mid-January.

"Slow progress in the peace process combined with continued (Israeli) restrictions on movement and access would further delay private sector recovery and impede public investment and reconstruction," the report said.

Donors have not yet decided who should lead reconstruction.