Arab foreign ministers on Thursday agreed to raise funds for Jerusalem Palestinians in a bid to counter Israel's settlement drive in the Holy City, at preparatory talks for a weekend summit.

The request to establish a plan to support the Jerusalem Fund was submitted by both Syria and Palestine. The fund was established in 2001 upon a request by Saudi Arabia following the eruption of the Second Intifada.

Their decision will be submitted to Arab leaders for final ratification when they gather on Saturday and Sunday in the Libyan Mediterranean city of Sirte for their annual conference.

"Yes, they have agreed," Arab League chief Mussa told reporters when asked if the fund had been approved by the ministers.

The Palestinian Authority had asked for 500 million dollars (376 million euros) in Arab aid to help Jerusalem Palestinians cope as they are squeezed out by Israel's settlement drive.

The weekend summit is set to be dominated by the Middle East peace process after Israel infuriated Palestinian and Arab leaders by announcing earlier this month plans to build 1,600 new homes for Jewish settlers in east Jerusalem.

Mousa said the Arab follow-up committee would hold a meeting Friday evening to evaluate the situation in the event that US and international efforts to stop Israel's settlement activities fail. "We can't accept continuation of settlement activities at any rate," he said.

"Settlement issue"

Israeli settlement plans have been condemned worldwide.

The United States and its partners in the Middle East diplomatic Quartet -- the European Union, Russia and the United Nations -- last week called for Israel to end all settlement construction and for a peace deal with the Palestinians by 2012.

The Quartet urged Israel "to freeze all settlement activity... to dismantle outposts erected since March 2001 and to refrain from demolitions and evictions in east Jerusalem."

A senior Palestinian official said the money would go towards improving infrastructure in mostly Arab east Jerusalem, building hospitals, schools, water wells and providing financial support to those whose homes have been demolished by the Israelis.

"We are not asking for too much or for the impossible, or even for an amount of money which our Arab brothers cannot match," Malki said.

He said the fund was much-needed "support if we really want to bolster the presence of Palestinians in Jerusalem."

UN chief Ban Ki-moon, who has been invited to the summit, will on Friday meet Arab foreign ministers to brief them on last week's Quartet meeting in Moscow, Mussa said.

Meanwhile, Kuwaiti news agency said, that Italian Prime Minister Silvio Berlusconi will call for a complete halt of all Israeli settlement expansion in occupied territories when speaking at the upcoming Arab Summit in Libya.

Foreign Franco Frattini, in a statement to the press, said Friday that Berlusconi was the only Western leader to be invited to the summit, set to kick off tomorrow.

The premier will be delivering a speech to call on Italy's "Israeli friends" to freeze their settlement activities in order to allow the resumption of indirect negotiations with the Palestinians, Frattini said.

But, he also said that Berlusconi would also be encouraging Arab leaders and their representatives to "sent out positive messages" to Israel on the normalization of relations.

The US has demanded Israel make some concessions to bring the Palestinians back to the negotiating table after they abandoned indirect talks following the settlement announcement.

But Binyamin Netanyahu, the Israeli prime minister, has since confirmed plans to expand the Jewish presence in occupied East Jerusalem.

In a speech to America's influential Jewish lobby in Washington on Monday, Netanyahu said that "Jerusalem is our capital" and building will continue there "as Israel sees fit".


Agencies