WASHINGTON - President George W. Bush pledged $350 million in aid to the Palestinians in his State of the Union speech on Wednesday.

The goal of the Palestinian statehood "is within reach," Bush said. Bush´s aid pledge - bigger than expected - was meant to demonstrate U.S. support for Palestinian Authority Chairman Mahmoud Abbas.

"The beginnings of reform and democracy in the Palestinian territories are showing the power of freedom to break old patterns of violence and failure," Bush said in the speech.

"The goal of two democratic states, Israel and Palestine, living side by side in peace is within reach - and America will help them achieve that goal," he added.

Secretary of State Condoleezza Rice is due to arrive in Israel and the Palestinian Authority on Sunday for talks with Abbas and Prime Minister Ariel Sharon, after visiting Europe.

She will ask European states to help finance a monthly pension plan for needy Palestinians and a pension for "war veterans" of Palestinian organizations that will be dismantled.

During her visit in Israel and the PA, Rice will try to reach an agreement about building an Israeli-Palestinian-American mechanism to handle problems that arise during the implementation of the disengagement plan and the road map, and make sure the sides fulfill their commitments.

Sharon intends to ask Rice to help modify the U.S. government travel advisory to American citizens not to go to Israel. The warning, issued with the intifada´s eruption at the end of 2000, has been renewed periodically since then.

Tourism Minister Avraham Hirschson, who asked Sharon to broach the subject with Rice, said the warning severely damages tourism to Israel.

Officials said the U.S. money would finance a wide range of projects in Palestinian areas, from building homes and improving the infrastructure, to providing social services. The money includes $41 million for "short-term, high-impact projects," $50 million for new high-tech crossing points along Israel´s separation fence "to help improve the flow of goods and people," an official said. (© Copyright 2005 Haaretz. 02/04/05)