World Bank Urges Israel to Ease Palestinian Blockade

Israel must ease crippling restrictions on the Palestinians if international efforts led by Tony Blair to boost the Palestinian economy are to be successful, the World Bank and Oxfam said yesterday.

Next Monday Blair, representing the Quartet of Middle East peacemakers, is to chair a conference in Paris of 90 countries and organizations expected to pledge $5.6bn (£2.75bn). The event is being billed as "the economic Annapolis" - the follow-up to last month's relaunch of peace talks at the Maryland summit.

Blair is confident the cash target will be met, aides say. But there is no evidence yet of Israel's readiness to ease closures and checkpoints limiting Arab movement. If they remained in place, the World Bank said, the cash would at best slow a "downward cycle of crisis and dependence".

Saudi Arabia has pledged $450m and there are substantial sums from Kuwait, Qatar and the United Arab Emirates. The US offer is in the region of $500m, the European commission has promised $500m-$730m, and Gordon Brown $500m.

The Palestinian Authority (PA) has drawn up a three-year reform and development plan. "We are determined to rebuild the trust and faith of our citizens, and our international partners by embarking on a challenging reform agenda for stabilization and recovery," says the draft obtained by the Guardian. The plan predicts annual growth of about 5%, provided Israel eases its restrictions on travel and trade.

After a meeting in Jerusalem yesterday between Blair, the Palestinian prime minister, Salam Fayyad, and Israel's defence minister, Ehud Barak, Blair said: "If this dialogue continues in this way we've got the prospect during the course of next year of not just having a political negotiation but also real and positive change on the ground."

Despite receiving $10bn in international funds since the formation of the PA in 1993, Palestinians are getting poorer and 65% now live below the poverty line.

Things have got worse since Israel's withdrawal from the Gaza Strip in 2005 and the takeover by the Islamist movement Hamas in June. "The measures imposed by Israel come at an enormous humanitarian cost, leaving the people living under occupation with just enough to survive but not enough to live a normal and dignified life," the International Committee of the Red Cross said yesterday.

Oxfam said millions of dollars of aid were already being lost due to Israeli policies. "It is not enough simply to plough more money into Palestine. Foreign governments and the PA must increase the pressure on the Israeli government to lift the blockade of Gaza and make it possible for people in the West Bank to go about their business," said Adam Leach, Oxfam's Middle East director. "This is essential if the Annapolis peace process is to work."