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Rockets fired at Israel from the Gaza Strip continued to fall yesterday as more than 80 states and organizations met in the Egyptian resort of Sharm el-Sheikh yesterday to raise reconstruction aid for the territory battered during Operation Cast Lead.

At least $4.4 billion in aid was pledged yesterday by donors for both the Palestinian economy at large, and the Gaza Strip in particular. The plan is to make the money available to the Palestinian Authority over the next two years.

Originally, Palestinian Authority President Mahmoud Abbas had asked for a donors conference hoping that about $2.5 billion would be raised. However the figures have exceeded expectations and Egyptian foreign minister, Ahmed Aboul Gheit, said that in addition to pledges made before yesterday's gathering, the total figure comes to $5.2 billion.

Egyptian President Hosni Mubarak opened the international gathering by declaring that he "saw a chance for the peace efforts. I expect that this year will be a year of a peace agreement between Israel and the Palestinians." He described it as his "priority to reach a truce between Israel and the Palestinians."

The Egyptian leader spared no criticism of Israel, saying even though Israel had reversed direction after having reached an understanding on a cease-fire deal with Hamas, "and in spite Israel's insistence to link the tahadiyeh [calm] and the reciprocal release of prisoners [Gilad Shalit], Egypt will continue its efforts to achieve a cease fire."

Mubarak also said that if reconstruction is to be possible in Gaza, Israel will have to reopen the crossings into the Strip.

Even though Hamas was noticeably absent from the international gathering, Mubarak said that there must be reconciliation between Fatah and the Islamist group, which controls the Gaza Strip.

Hamas spokesman Fawzi Barhum said yesterday that the refusal of Western countries to speak with the group before it surrenders its arms and recognizes Israel will undermine the reconstruction efforts.

"Bypassing the legitimate Palestinian authorities in the Gaza Strip is a step in the wrong direction and aims to harm the reconstruction," he said.

Regarding the pledged funds, Mubarak said that a mechanism needs to be created to ensure that the transfer of the money will be used solely for reconstruction purposes in the Gaza Strip and that it will not be used to fund any of the militant groups there.

The Egyptian leader called on all Palestinian factions to get together to establish a unity government that will be able to undertake the reconstruction effort.

Mubarak's call for Palestinian unity was seconded by Syrian Foreign Minister Walid al-Mualem, who was one of 45 foreign ministers at the meeting. Agencies reported that Mualem shook hands with Secretary of State Hillary Clinton, whose participation at the meeting marks the start of her first visit to the Middle East since Barack Obama took office.

The U.S. pledged $900 million in economic aid to the Palestinian Authority, $300 million of which will be allocated to the rebuilding of the Gaza Strip. The rest will most likely be used to pay the salaries of PA civil servants.

Clinton stressed aid money for Gaza must be accompanied by a "comprehensive peace between Israel and its Arab neighbors."

"By providing humanitarian assistance to Gaza, we also aim to foster conditions in which a Palestinian state can be fully realized," said Hillary Clinton. "A state that is a responsible partner, is at peace with Israel and its Arab neighbors, and is accountable to its people. This is the Palestinian state we have an obligation to help create."

Clinton also met with French President Nicolas Sarkozy, who said that making peace with Israel was the duty of all "responsible Palestinians" and excuses are no longer acceptable.

"It is a matter of will," he said. "Do we want to meet, just to talk or do we want to take the risk of making peace? Some tell me that the conditions [for peace] are not ripe. Well, if we wait for the conditions to be ripe to talk peace, we will be waiting a long time, and in the meantime we will be giving the initiative to extremists, everywhere."

Israel insisted yesterday that an international mechanism be created to oversee the transfer of the funds toward reconstruction efforts.

Prime Minister Ehud Olmert and Foreign Minister Tzipi Livni intend to emphasize the need to supervise the transfer of the funds during meetings with visiting Secretary of State Clinton today.

The Israeli leadership has reiterated that the money should be used to benefit the economic well-being of the Palestinian Authority and the civilians of the Gaza Strip alone.

Retaliation threat renewed

Israel threatened yesterday to launch retaliatory strikes against Hamas anew, unless the rocket attacks ceased.

Israeli defense sources said yesterday that there are two options: restoring order along the border by agreement or a large scale military operation.

Military sources said that at this time the army brass lean toward the latter option, but added that there is not very much time left for a decision to be made between the two options.

"As things appear at this time, the main issues will be decided by the new government," the source said, referring both to a cease-fire agreement and a prisoner exchange.