Arab leaders focus on economy after Gaza

Arab leaders looking to bridge sharp divisions over Israel's Gaza offensive will agree at a summit today to launch a $2 billion (£1.43 billion) reconstruction fund and call for greater economic cooperation.

Differences over how to deal with the three-week Israeli offensive that killed more than 1,300 people highlighted the divide between Egypt, Saudi Arabia and their allies on one side, and Syria, Qatar and their allies on the other.

In a bid to restore unity, Saudi King Abdullah on Monday hosted a lunch attended by the leaders of Qatar, Jordan, Egypt, Syria and Kuwait at which they agreed to patch up their differences over Gaza.

Leaders were expected to back a $2 billion fund to rebuild Gaza. Saudi Arabia has committed $1 billion to the fund.

The final declaration would concentrate on increased economic cooperation, with the emphasis on energy.

It also calls on Arab countries to work together to tackle the impact of the global financial crisis on the region and to take part in global efforts to restore stability to the financial system. It urges financial institutions to facilitate credit.

World Bank President Robert Zoellick told Arab leaders in a speech to the summit on Monday that the Arab world must be a part of the global response to the crisis. Western governments have also asked cash-rich Arab oil exporters to contribute to efforts to ease the crisis.

Arab central bankers and finance ministers meeting ahead of the summit last week urged their governments to keep state spending high to shore up domestic economies amid a collapse in oil prices and recession in the industrialised world.

The slump in oil prices has slowed an explosive phase of regional growth, battered investor confidence and strained budgets.

Energy

Arab leaders will call for cooperation in the use of nuclear energy for peaceful purposes and the expansion of regional power grids and natural gas networks, according to a draft copy of the declaration obtained by Reuters. The document also details the need to establish a regional power trading market.

Governments across the Arab world have expressed interest in nuclear power to meet rapidly rising electricity demand. Some of the world's top oil exporters are looking at nuclear energy to avoid burning fuel at home and keep the oil export cash rolling in.

Arab interest in nuclear power has raised fears of a regional arms race with Iran, although Arab states have said they would avoid the processes that could be used to build nuclear bombs.

The draft declaration also called for an increased private sector role in investment and management of the energy sector.

Oil production in top oil exporters Saudi Arabia and Kuwait is off-limits to private investment. But the private sector has taken an increasing role across the Arab world in natural gas, power, refining and petrochemicals.

No binding decisions or time frame for the plans were made, according to the draft.

The draft also calls for more Arab investment in projects to develop transport links and calls for an Arab customs union by 2015.