The Associated Press

Wed, May 21, 2008 (12:22 p.m.)

Saudi and Qatari companies signed up with Palestinian partners for $550 million in construction projects Wednesday, kicking off an investors conference meant to help revive the Palestinian economy and support Mideast peace efforts.

"We are creating a positive new reality in Palestine," Palestinian Prime Minister Salam Fayyad said.

Palestinian President Mahmoud Abbas urged foreign companies to spend money in the Palestinian territories in the service of peace, assuring them their investments would be safe.

Hundreds of foreign representatives attended, along with Palestinian businesses that are seeking partners for 109 projects worth nearly $2 billion.

The three-day meeting is a follow-up to a December gathering in Paris at which governments pledged $7.7 billion in aid to the deeply impoverished Palestinians over three years _ help that the World Bank says can be effective only if coupled with a Palestinian economic recovery.

Such a recovery depends to a large extent on an easing of Israeli movement restrictions in the West Bank, the World Bank says. Israel has promised Abbas it will ease up some, but insists it needs roadblocks and other restrictions to stop Palestinian attackers.

Israel is supportive of the conference and issued more than 500 visas and permits to foreign investors. However, Palestinians with foreign passports who are already doing business in the West Bank have complained of unclear Israeli policies concerning the right of entry.

International Mideast envoy Tony Blair said the conference is an important signal for Palestinians.

"The real message of this conference is that they ... are taking their future into their own hands, they are saying nothing will stop us from creating a state," Blair said. "That is the real message we want to send to the world today."

U.S. Treasury Deputy Secretary Robert Kimmitt said investing in the Palestinian territories includes "some unique challenges," a reference to the security situation. But he said the U.S. is funneling $550 million in aid this year and is promoting private investment initiatives.

Abbas promised participants their investments would be safe. In the past, the Palestinian Authority under Abbas' predecessor, the late Yasser Arafat, was plagued by official mismanagement and corruption.

"I pledge that we are going to provide you with all you need to make your investment lucrative and protected by force of law," Abbas told the investors.

The Qatari government-owned Qatar Diar Real Estate Investment Co. signed a $350 million agreement with a Palestinian partner, Masar Company, to build a new West Bank town with 5,000 homes near the city of Ramallah. The Qataris will put up two-thirds of the capital. The town, to be called Rawabi, will be the first planned community in the West Bank.

The company's chief executive, Ghanim Bin Saad Saad Al Saad, told The Associated Press that his company will open an office in the West Bank and get involved in additional projects.

A Saudi company, Al Ard Al Qabeda, or The Land Holding Co., signed a $200 million deal with the Palestine Investment Fund to build office towers, malls, entertainment centers and a hotel in the West Bank town of El Bireh, next to Ramallah. Each is putting up 50 percent.

Fawaz Abdel Hadi, an executive at the Saudi company, said he is not deterred by the uncertainties of the region. "The risk is higher than in other places, but Palestine is not the worst in the world," he told the AP.

About a third of the projects offered at the conference are in construction, organizer Hassan Abu Libdeh said. Housing is considered a relatively safe investment, both because of the growing need and because it is less affected by Israeli trade restrictions than the shipping of goods.

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Associated Press writer Karin Laub contributed to this report.