Rich nations will be asked to give cash aid to Palestinians

reticence so far over who will contribute what, Western diplomats said

yesterday.

Although the accord on Palestinian self-rule in the West Bank and Gaza

Strip is only a first step, key Western states see it as the best hope

for an end to the long-running Middle East dispute and do not want to

see it lost through stinginess.

''What is important is that there is agreement that an international

effort is needed to make (the accord) stick,'' one diplomat said. Israel

and the Palestine Liberation Organisation are expected to sign the

agreement in Washington on Monday.

The territories, their economy badly retarded after 26 years of

military occupation, will need billions of dollars in aid and

investment.

But the demand has come at a time of recession in the developed world.

In addition, Europe and the United States already face big calls on

their aid budgets from the former communist states of Eastern Europe and

the ex-Soviet Union.

Even the fabled wealth of the Gulf Arab oil states is not what it was

since Saudi Arabia and Kuwait footed a $120 billion bill for the 1991

Gulf War. Those states have also not forgiven Palestinian leaders for

their support of Iraq in that war.

In the short term, the United States is trying to assemble an

emergency fund of $590m to cover start-up costs, with the Gulf states

being asked for some $200m, according to diplomats and Palestinian

sources.

Longer-term aid is expected to be coordinated through the World Bank,

which in a recent report drafted a $4.3 billion dollar economic

development plan for the territories, spread over eight years or more.

The plan will be discussed in Washington on September 20 by officials

of the PLO, Israel and Arab states. The PLO is expected to propose a

much more ambitious plan for $11.6 billion by the year 2000.

While Gulf states have made no public commitments on any aid,

Britain's Foreign Secretary Douglas Hurd predicted after a trip to the

region this week that they would eventually contribute, despite their

differences with the PLO.

''It is accepted here, as everywhere, that a settlement will need

support . . . part of that support will need to come from the countries

of the Gulf,'' he tolds a news conference in Saudi Arabia.

But Palestinian and Western officials stressed that they were looking

for the aid burden to be distributed around the world to bring in

European countries, the United States, Japan and Israel as well as the

Gulf states.

''Palestine is an international responsibility,'' said Afif Safieh,

PLO representative in London. ''I am not happy with those who think it

is up to the Arab states only.''

The European Community's executive Commission has proposed a $600m aid

plan for the occupied territories, to be spread over five years.

The Commission hopes the plan will be given broad political blessing

at an informal meeting of EC foreign ministers in Belgium over the

weekend.

Scandinavian countries last week pledged $140m in aid over the next

four years.

Japan is also planning to offer aid for the self-rule project,

according to an unconfirmed report by the Kyodo news agency. It said

this would be in keeping with Tokyo's global role but gave no figures.

Israeli Foreign Minister Shimon Peres said yesterday he hopes to reach

an agreement with Jordan next week to complete ''a triangle'' of peace.

He said the Israel-Palestinian deal meant that ''the entire fabric of

the Middle East was and has been changed''.

Speaking on American television, he referred to Israel, the

Palestinians and Jordan as ''a triangle'' and said the three should live

together peacefully.

He said the best solution would be if all three came together

economically, but each remained separately as nations.

''But the other possibilities are a confederation between the

Jordanians and the Palestinians, which is the most natural thing to

happen, and I won't exclude even a confederation between the

Palestinians and the Israelis,'' he said.

Israel's deal with the PLO is a personal triumph for Peres, a tireless

campaigner for peace through most of the Jewish state's 45-year history.

Though persistent, Peres long seemed out of place in Israeli politics.

War-hardened Israelis scorned his visions of a new and flourishing

Middle East.

''We don't hate peoples, and we don't hate persons,'' he said after

Prime Minister Yitzhak Rabin signed thes historic agreement recognising

the PLO as the representative of the Palestinian people.

''What we are trying seriously is to get rid of a poisonous past and,

to use a biblical wish, to return to a land of milk and honey.''

Last month Peres turned 70. That same week he sealed the first-ever

settlement with Israel's worst enemy, the PLO.

Asked what was in it for him, especially if Rabin took the Nobel Peace

Prize, Peres told Israel's Haaretz newspaper: ''That I'll be able to

look my children, my grandchildren, straight in the eye and tell them 'I

tried. I didn't hesitate. I did all that I could'.''

The deal followed years of failed attempts at politics and

peacemaking.

An opinion poll at one point found him to be the most hated man in

Israel. Failed bids to win elections, weld coalitions and garner support

for secret peace plans gave him a reputation as a loser and a schemer.

A legendary rivalry with Rabin, 71, only made things worse.

Last year, Rabin seized the Labour Party from Peres and led it to a

decisive victory.

Rabin grudgingly gave Peres the job of foreign minister but kept for

himself the headline-grabbing job of managing Israel's direct talks with

the Arabs.

The discovery that the two arch political foes collaborated to clinch

the peace was as surprising as the secret PLO deal itself.

At yesterday's signing ceremony Rabin also let bygones be bygones.

''I would like to thank you, Shimon, for your efforts to bring it

about,'' he said.

Peres arrived in Israel from Poland at age 11 and began his public

career in his 20s before Israel's independence in 1948.