SHARM EL-SHEIKH, Egypt - International donors on Monday pledged almost 4.5 billion dollars to the Palestinians and demanded the immediate lifting of Israel's crippling blockade on the war-battered Gaza Strip.
But foreign leaders meeting in the Red Sea resort of Sharm El-Sheikh insisted that the money must bypass Hamas, the Islamist group which rules Gaza but is boycotted by the West as a terrorist group.
"We have gathered today 4.481 billion dollars, in addition to previous pledges," Egyptian Foreign Minister Ahmad Abul Gheit said at the close of the conference aimed at raising funds to help rebuild Gaza after Israel's devastating three-week war.
Donors also called for "the immediate, total and unconditional opening of all of Gaza's borders with Israel", Abul Gheit said.
World leaders at the conference also appealed for urgent action to breathe new life into the moribund Middle East peace process and said reconciliation between Hamas and Palestinian president Mahmud Abbas's Fatah was crucial.
US Secretary of State Hillary Clinton -- on her first visit to the region as America's top diplomat -- said the economic aid to the Palestinians must go hand-in-hand with efforts to reach a comprehensive peace deal with Israel.
"Our response to today's crisis in Gaza cannot be separated from our broader efforts to achieve a comprehensive peace," Clinton said.
The Palestinian Authority was seeking 2.8 billion dollars from the 70-odd countries and donor groups which gathered in Sharm six weeks after the guns fell largely silent around Gaza.
More than 1,300 Palestinians were killed in the three-week Israeli offensive which also left large swathes of Gaza in ruins, destroying homes, schools and other infrastructure.
Israel has linked any lifting of its blockade, and any agreement to a long-term Gaza truce with Hamas, to the release of a soldier held by Gaza militants since June 2006.
The US adminstration has pledged 900 million dollars, which Clinton said must not end up in the "wrong hands," while the Arab monarchies of the Gulf have pledged 1.65 billion and the EU 554 million dollars.
Clinton said Abbas and his government are "offering their people the option of a peaceful, independent, and more prosperous future, not the violence and false choices of extremists whose tactics -- including rocket attacks that continue to this day -- only will lead to more hardship and suffering."
Abbas said any economic aid was "insufficient" without a political settlement to the decades-old Middle East conflict, with the creation of a Palestinian state alongside Israel.
He called on the international community to take urgent steps to help revive peace talks at a time when Israel is set for a right-wing government led by hawkish former premier Benjamin Netanyahu.
Clinton met fellow members of the Middle East Quartet to try to advance the peace negotiations, and is later due to head to Israel.
UN chief Ban Ki-moon had called for the easing of Israel's crippling blockade of Gaza, imposed after Hamas seized the territory in June 2007 after days of fierce fighting with forces loyal to Abbas.
"The situation at the border crossings is intolerable. Aid workers do not have access. Essential commodities cannot get in," Ban said.
Neither Israel nor Hamas were represented in Sharm.
Palestinian prime minister Salam Fayyad also said it was essential to see a reopening of the border crossings into Gaza, where most of the 1.4 million population rely on aid handouts.
"If the donors provide the necessary funds and if the crossing points are open we will be able to begin reconstruction within six weeks at the latest."
But Hamas said it would not accept any "politicised" aid, with spokesman Fawzi Barhum calling on the international community not to get involved in "internal Palestinian divisions."
Hamas and Abbas's secular Fatah which forms the backbone of the Palestinian Authority have long been rivals but agreed at talks in Egypt last week to work towards the creation of a unity government.