Palestinians seek cash aid

French anti-globalisation leader Joseph Bove protests against Israel's West Bank offensive ahead of the Valencia summit

VALENCIA, Spain (CNN) -- The Palestinian Authority needs $500 million in immediate aid to restore its operations destroyed in the Israeli military campaign, one of its ministers has told a summit.

The incursions that began on March 29, with Israeli troops moving into Palestinian West Bank towns, destroyed what planning minister Nabil Shaath called "the administrative memory" of the territories by wiping out land deeds, and school and vehicle records.

Shaath was talking on Tuesday at the two-day meeting in Valencia, Spain, of the European Union and its Mediterranean neighbours.

The Israeli government says incursions were a response to Palestinian suicide bombings that killed scores of Israelis. Israel has pulled back in recent days, but Palestinian leader Yasser Arafat remains encircled, as does the Church of Nativity in Bethlehem.

At a news conference, Shaath said the Palestinian Authority had met at the summit for the first time alone with the EU as part of a drive to form what he called a "strategic alliance" between the 15-nation bloc and Arab nations bordering the Mediterranean.

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The summit was convened to promote economic ties between the EU and its Mediterranean partners, but has been overshadowed by the Middle East conflict.

Shaath accused Israel of trying to return the territories to a "colonial" status and said he "very clearly explained" the problem to the EU.

He also announced he would go to Germany later on Tuesday to sign an agreement in which Germany pledges an immediate 80 million euros ($70 million U.S. dollars).

He said an international donors' conference planned for Thursday in Oslo would try to raise at least $1.8 billion for the Palestinian Authority. He added that $500 million was needed immediately.

Shaath also urged a quick response from an independent inquiry into the Israeli incursion in the Jenin refugee camp.

Arab leaders refused to be photographed on Tuesday with Israeli Foreign Minister Shimon Peres at the gathering, so the traditional summit photo was unexpectedly cancelled, officials told CNN.

Spain, hosting the conference of 25 nations, would have preferred to maintain the so-called "family photo" of all participants, but Arab foreign ministers declined, Spanish and European Union officials said.

On Monday, Arab foreign ministers walked out of the first working session of the summit when Israeli Deputy Foreign Minister, Rabbi Michael Melchoir, was about to deliver his prepared remarks.

But hours later, the same Arab leaders remained for the duration of a summit working dinner that included Melchoir, who was sitting in for Shimon Peres due to his late arrival.

EU and Spanish officials told CNN that the dinner included mutual accusations by the Arabs and Israeli leaders about the Middle East crisis.

At one point during the dinner EU foreign policy chief Javier Solana implored the Israeli and Palestinian sides to talk directly to each other.

But the Israelis or Palestinians indicated they would not hold a bilateral meeting in Valencia, which parties frequently arrange with ease during multinational summits.

Spain holds the rotating EU presidency of the European Union and it was expected to release a final summit document on Tuesday summarising the positions of the Arab and Israeli participants.

But unlike other unanimously approved documents expected here on trade and cultural exchanges between the EU and Mediterranean nations, the document on the Middle East was not expected to have the approval of the entire summit.

The EU, in separate meetings on Tuesday with the Palestinians, with the Arab nations and with Israel, has been trying to promote an end to the standoff at the Church of Nativity in Bethlehem, which Israel has sealed off because it says about 200 Palestinian fighters are holed up inside.