At the end of a donors conference comprised of 43 nations, Arafat registered his satisfaction with the outpouring of aid, and said he was confident the pledges would be fulfilled.
The Palestinian leader then reignited a long-simmering dispute with Israeli Prime Minister Benjamin Netanyahu by calling for a Palestinian state with traditionally Arab east Jerusalem within its borders.
Despite repeated admonitions from the Clinton administration to soft-pedal the Jerusalem and statehood issues in advance of talks with Israel on a final settlement, Arafat called parts of Jerusalem "occupied territory" that Israel was bound to relinquish under U.N. Security Council resolutions on an overall settlement with the Arabs.
Jerusalem was divided before Israel pushed Jordanian troops out of the eastern part of the city and the entire West Bank in the 1967 Mideast War.
Israel declared the united city the eternal capital of the Jewish state - a stand most Israelis appear to support however they may differ on other aspects of the ongoing peace effort.
Jerusalem is now home to an estimated 422,000 Jews and approximately 200,000 Palestinians.
The pledges of aid to the Palestinians on the West Bank and in Gaza are designed to alleviate poverty. The assistance is to be used for water projects, road-building, the construction of a Palestinian airport and seaport and for industrial zones.
"No peace stands a chance of lasting if it does not deliver real results to ordinary people," President Clinton said in urging the European, Asian and Arab nations to do better than the $2.3 billion pledged five years ago.
Mr. Clinton met privately with Arafat at the White House, hearing his complaint that Israel had not released enough political prisoners under the Wye agreement the president helped to arrange in October.
Secretary of State Madeleine Albright invited the Palestinian leader to her home Sunday for a similar chat.
"I am satisfied," Arafat said in response to the announcement by Albright that "it appears the delegations pledged more than $3 billion." She called the response "a substantial achievement."
The European Union pledged $2 billion in assistance to Palestinians on the West Bank and in Gaza over five years, Austrian Foreign Minister Wolfgang Schuessel said at a windup news conference.
He said a half-million jobs had to be created for the Palestinians over the next 10 years.
Mr. Clinton said the United States intends to increase its contribution by adding $400 million to the $100 million a year it plans to donate over the next five years. The United States has contributed $500 million since 1993. Any U.S. increase would be subject to congressonal approval.
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