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Suleiman Farhan is halfway through his farming year but has already done enough accounting to know he'll find himself heavily in debt by next summer.

Farhan, 40, a Palestinian farmer in the village of Jiftlik, in the north of the occupied West Bank, was up before dawn on Saturday to harvest a crop of sweet, green peppers. Although the quality was excellent, he stands to make little or no profit on them.

By 6am he had loaded a truck with 300 boxes of peppers and sent it off to Nablus, one of the West Bank's largest cities and Farhan's nearest key market.

Nablus is just 16 miles away and the truck driver's return trip ought to take little more than an hour.

But the route is circuitous and the driver must pass through a large Israeli military checkpoint where he can expect to be delayed for several hours.

By 1pm, seven hours after he left, there was no sign of the truck driver and that meant Farhan could not make a second delivery of peppers to Nablus that day.

By yesterday morning the rest of Farhan's peppers, which were already picked and waiting in the sun, would have begun to age and rot.

"If he's not back in time, we'll have to throw them out with the rest," he said. "It's a disaster." Behind the black tent in which he and his family live, a couple of camels are grazing on the remains of an earlier, rotting aubergine harvest which never made it to market in time. "I already know I'm not going to be able to pay everybody this year."

Today the international community meets in Paris to pledge an unprecedented $5.6bn (£2.75bn) to the Palestinian Authority over the next three years. This money is supposed to support the political process begun last month at Annapolis: the return to peace negotiations between Israel and the Palestinians.

But although the sums of money on offer are formidable, little is likely to trickle down to the most vulnerable Palestinians. The World Bank has warned that unless Israeli closures and checkpoints are lifted the money will only slow a "downward cycle of crisis and dependence".

So far about $10bn has been given to the Palestinians since 1993, but poverty and unemployment have only increased, the result of poor management, continued conflict with Israel and the occupation.

The crisis in Jiftlik is stark. The village sits in the Jordan valley, one of the most fertile regions of the West Bank, where the warm winter sun provides unusually long planting seasons and high-quality crops. Jewish settlers run large farms which dominate huge tracts of the Jordan valley and are thriving. The Palestinians, whose land is shrinking, struggle to survive.

Jiftlik, home to 5,500 Palestinians, is surrounded by settlements, Israeli military bases, nature reserves and roads set aside mostly for Israeli-owned cars only. The past 40 years of occupation have swallowed most of their grazing and farmland, and the farmers describe constant harassment from Israeli soldiers.

Many farmers live in tents because it is almost impossible to get an Israeli permit to build a house; in 2005 and 2006 the Israelis demolished 24 homes and structures there. Only a quarter of the residents are connected to the electricity and water network. The entire village is in Area C, the large swath of the West Bank that is entirely under Israeli military and administrative control.

Israel is thought to want to retain control over the Jordan valley in particular, even if a Palestinian state is eventually created, because it is regarded as an important security buffer.

"We ought to be kings. This is the best winter farmland there is," said Ali Daragmeh, 37, another Jiftlik farmer. His house was destroyed and rebuilt again four times. Now he lives with his six children in a small tent surrounded by his fields of vegetables: squash, aubergine, tomato, corn, pepper, cauliflower and cabbage.

He too calculates that because delays at checkpoints push up transport costs, he cannot make enough money to cover the cost of seeds, plastic sheeting and diesel to power his irrigation pump. "We send the boxes of vegetables to the market. But in the end we lose," he said.

"If we could export our vegetables straight into Israel or out to Jordan and if we could get a fair price then we could make a living," said Ayman Idaes, 28, another farmer. Hardly any of the farmers have permits to enter Israel and the only recourse for those who cannot afford to farm is to work on a neighbouring Jewish agricultural settlement, where the wage is 50 shekels (£6) a day.

"They are isolating us and they know we have no other choice," said Idaes. He blames both Palestinian and Israeli leaders. "The Palestinians have received billions of dollars but where has it gone?"

Aid package

Tony Blair is to chair today's conference of 90 countries and organisations expected to pledge $5.6bn (£2.75bn) over three years to help galvanise the Palestinian economy. Saudi Arabia has already pledged $450m, while the US and Britain are offering in the region of $500m. Most of the aid would go to the Palestinian budget deficit, with the balance going to development projects. But only Britain is linking disbursement to improved conditions on the ground, including the easing of Israeli restrictions that might enable Palestinian goods to find more lucrative markets. The conference is also underpinned by reforms promised by Palestinian prime minister Salam Fayyad, an economist whose three-year development plan includes measures to trim the public payroll and cut subsidies to utilities. Despite receiving $10bn in international funds since 1993, Palestinians are getting poorer and 65% live below the poverty line. Even if donor countries meet the request for $5.6bn it may still not be enough to stem the economic decline in the West Bank and Gaza. The Palestinian economy can only recover if Israel eases restrictions on Palestinian movement, the World Bank says, but a reluctant Israel, putting its security first, has given no guarantees.

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