Jasem al-Manai, the managing director of the Arab Monetary Fund (AMF), said: "We agreed to allocate 10% of 2005's net profits of the funds to aid the Palestinian population."

The money will not go to the cash-strapped Hamas-led government, leaders of the funds said.

The AMF and four other Arab funds ended a two-day annual meeting in Rabat with the decision to participate in an Arab drive to bail out the Palestinians hit by a Western aid cut over Hamas's rejection of peace deals with Israel.
 
The Hamas-led Palestinian government inherited $1.3 billion in debt.

Israel has cut off $55 million in monthly tax transfers, while the United States and the European Union have cut aid to the government unless it recognises Israel and disbands its military wing.

Lawsuits feared

Banks are refusing to deal with the Palestinian Authority, fearing lawsuits by Washington which has prohibited any commercial dealings with a Hamas government.

The aid will finance health and
education projects

"The financial aid from the funds will go through no Palestinian government channels. It will benefit directly the population as it will finance health and education projects as well as urgent needs of the poor people," al-Manai said.
   
The Arab Fund for Economic and Social Develpment in a statement said: "The board of governors agreed to set aside 10% of its 2005's net profits and allocate that amount to the benefit of the Palestinian people."

Officials from other funds made similar remarks.

Al-Manai said the funds will coordinate their relief efforts to avoid duplication and ensure an efficient use of the aid.

"The aid money from the funds will not resolve the Palestinian sufferings, but it will help ease their hardships. The Palestinians are facing a crisis because of the financial siege."

Specified needs

The Inter-Arab Investment Guarantee Corporation, which attended the two-day meeting, is not involved in the decision to allocate part of profits to Palestinian aid as its statute prevents it from doing so.

"The aid money from the funds will not resolve the Palestinian sufferings but it will help ease their hardships. The Palestinians are facing a crisis because of the financial siege"

Jasem al-Manai,
managing director,
Arab Monetary Fund

But Fahad al-Ibrahim, the director general of the investment body, said his corporation was aiding Palestinians in its own way and will continue to do so.

"We asked the Palestinians to specify their needs and we are ready to help them with things like training staff or providing some office equipment," he said.

The funds were set up by Arab states to promote trade, investment and other economic cooperation within the Arab world in the hope of building a common market in the future.

Finance ministers and central bank governors from 20 Arab states attended the annual meeting of the funds, during which they discussed the region's economic outlook and cooperation.