Obama pledges $400 million for Palestinians

President Obama pledged an infusion of $400 million in aid for housing, school construction and business development in the Palestinian territories Wednesday, saying after a one-on-one meeting with Palestinian leader Mahmoud Abbas that the situation in Gaza is "inherently unstable." Obama had planned the White House meeting to talk mainly about the Middle East peace process. But in the aftermath of a deadly May 31 Israeli assault on an aid flotilla bound for the Gaza Strip, the two leaders ended up focusing instead on the blockade of Gaza and its effects on the people who live there. "We agree that Israelis have the right to prevent arms from entering into Gaza that can be used to launch attacks into Israeli territory," Obama told reporters after his meeting with Abbas in the White House. "But we also think that it is important for us to explore new mechanisms so that we can have goods and services, and economic development, and the ability of people to start their own businesses, and to grow the economy and provide opportunity within Gaza." The meeting between Obama and Abbas was scheduled before the attempt by activists to break Israel's naval blockade of Gaza ended in the deaths of nine of them during the takeover by Israeli commandos, provoking international outrage. In response, Israeli officials announced Wednesday that they would relax some border restrictions on Gaza, allowing in some snack foods and spices that had previously been off limits for delivery. Palestinian leaders dismissed the change as inconsequential because it does not allow more urgently needed items, such as fabric, fishing equipment, spare parts and electronics. The Obama administration's promise of aid includes money to increase access to clean drinking water, create jobs and build schools and affordable housing. State Department officials called the projects "a down payment" on the U.S. commitment to improving life in Gaza. Last year, U.S. officials pledged a total of $900 million for Gaza and the West Bank, but acknowledged the difficulty of distributing the funds, especially because Hamas controls Gaza and is considered a terrorist organization. The aid announced Wednesday may be distributed through organizations performing relief work, State Department officials said. Abbas said he saw Wednesday's aid pledge as a positive sign for Gaza and the West Bank. "This is a positive signal of the United States that the United States cares about the suffering of the people in Gaza and about the suffering of the Palestinian people," Abbas said. Yet he also emphasized the need to lift what he called the "Israeli siege of the Palestinian people" by opening all crossings into Gaza and ending the ban on building materials and humanitarian supplies. No amount of international aid will solve that problem, Obama suggested. Just as the status quo in Gaza unsustainable, he said, "the status quo with respect to the Middle East is unsustainable." "It is time for us to go ahead and move forward on a two-state solution that will affirm the needs of Israeli citizens and will affirm the needs of Palestinians who are desperate for a homeland," Obama said.