PARIS, Dec 17 (Reuters) - An international donors'
conference pledged $7.4 billion in aid to the Palestinians over
the next three years, French Foreign Minister Bernard Kouchner
said on Monday.
 

"Our goal had been for $5.6 billion. Now we have $7.4
billion," Kouchner told a news conference following the one-day
conference which aimed to boost the Palestinian economy and
underpin renewed Middle East peace talks.
 

The Palestinian government had sought $5.6 billion over
three years, funds designed to revive the moribund Palestinian
economy and strengthen Western-backed President Mahmoud Abbas in
a struggle with Hamas Islamists while he negotiates with Israel.
 

"Without the continuation of this aid and without the
liquidity needed for the Palestinian budget, we will have a
catastrophe in the Gaza Strip and in the West Bank," Abbas told
the conference.
 

French President Nicolas Sarkozy had urged the 68 visiting
states to be generous at the conference, the financial sequel to
last month's Annapolis meeting that launched the first
Israeli-Palestinian peace talks in seven years.
 

The European Union executive offered $640 million of grant
aid for the Palestinians. The United States pledged some $555
million and Sarkozy said France would give $300 million.
 

"This conference is literally the government's last hope to
avoid bankruptcy," U.S. Secretary of State Condoleezza Rice
said.
 

A World Food Programme survey on Monday found median
household income in Gaza fell 30 percent over the last six
months. The survey said about 70 percent of non-refugee
households surveyed earned less than $1.2 per person per day.
 

Abbas's challenges go well beyond finances. Hamas, which
opposes the peace talks, seized control of the Gaza Strip in
June and Israel antagonised Palestinians by announcing plans to
expand a settlement near Jerusalem by around 300 homes.
 

"If we want to launch serious talks to end the conflict as
we and the world have decided to do, then how can a key party
pursue settlement activity and expansion?" he said.
 
 

"CHECKPOINT BY CHECKPOINT"
 

Israeli Foreign Minister Tzipi Livni did not directly
address his question but she reiterated Israel's intent to live
up to the 2003 U.S.-backed "road map" peace plan that demands it
freeze settlement activity.
 

"Despite the difficulties, we are ready to do so and are
committed to meet our road map obligations, including in
relation to settlement activity," Livni told the conference.
 

Several states and the World Bank told Israel it needed to
scrap checkpoints that criss-cross the occupied West Bank if it
wanted the aid to make a big difference for Palestinians.
 

Livni struck a conciliatory tone in her speech but stood
firm on checkpoints which Israel has refused to lift, citing
security concerns. It has also tightened its military and
economic cordon around Gaza.
 

Abbas and Israeli Prime Minister Ehud Olmert agreed at the
Nov. 27 Annapolis talks to try to reach a deal on a Palestinian
state by the end of 2008. Those talks formally resumed on Dec.
12 but have been complicated by the new settlement announcement.
 

Many analysts doubt the peace effort will go far because of
divisions among the Palestinians and Olmert's weak position with
a fragile governing coalition, part of which opposes the
compromises necessary for a peace deal.
 

"The Paris conference was a meeting to declare war on Hamas
and other resistance factions," Hamas official Sami Abu Zuhri
said.