Easing travel would boost Palestinian economy: PM

RAMALLAH, West Bank (Reuters) - The Palestinian economy could grow more than 10 percent in the next three years if Israel removed travel restrictions in the occupied West Bank and Gaza, Prime Minister Salam Fayyad said on Tuesday.

Fayyad said his government's three-year reform and economic development plan which was approved by international donor states in a Paris conference on Monday had projected a more modest growth target of 6 percent.

"But I believe a growth rate in excess of 10 percent is possible if restrictions on mobility are removed," Fayyad told reporters in the West Bank city of Ramallah, seat of his Palestinian government.

The international donors' conference pledged $7.4 billion in support of Fayyad's government over the next three years.

Fayyad said Israel must remove checkpoints that restrict the movement of goods and people in the occupied West Bank and it must lift a siege on the Gaza Strip if the aid is to improve the life of Palestinians and the economy is to grow.

"If the status quo remains, if the roadblocks and closures and travel restrictions remain, then the economic outlook will be mediocre and it won't be enough to bring about a significant improvement in the living standards of the Palestinian people," Fayyad said.

The donor pledges exceeded the Palestinian government's request for $5.6 billion in aid over three years for budgetary support and development projects.

OFFER TO MANAGE GAZA CROSSINGS

Western-backed Abbas appointed Fayyad after sacking the Hamas-led government following the Islamist group's violent takeover of Gaza Strip on June 14.

International sanctions imposed on the Palestinian Authority after Hamas formed a government in March 2006 were lifted after Fayyad's appointment but they have remained in place in the Gaza Strip that is run by Hamas which refuses to recognize Israel.

Fayyad said he was "extremely concerned about the siege imposed on Gaza and its economic and humanitarian consequences".

Fayyad said his government was ready to manage the crossings in and out of Gaza if Israel agreed to lift its blockade on the coastal territory. "We are ready to take control of the border crossings and we have discussed this with the donors," he said.

He said the matter had also been discussed with the Quartet of Middle East peace mediators -- the United States, Russia, the European Union and the United Nations.

Israel had rejected the idea because it said Palestinian forces were not strong enough to ensure the Jewish state's security and reopening the crossings would strengthen Hamas.

But Israeli government spokesman Mark Regev said: "If the reality changes inside Gaza, on the other side of the crossings, that could create new opportunities."

(Writing by Wafa Amr; Editing by Ori Lewis and Robert Woodward)