The blueprint envisions a global investment fund to lift the Palestinian and neighbouring Arab state economies
* $50 billion plan to be discussed in Bahrain
* Many Arabs regard it as "non-starter" and "dead on arrival"
* Some allies in the Gulf say plan should be given a chance (Adds Saudi minister of state for foreign affairs, paragraphs 15-16)
By Stephen Kalin, Suleiman Al-Khalidi and Mohamed Abdellah
RIYADH/AMMAN/CAIRO, June 23 (Reuters) - Arab politicians and commentators greeted U.S. President Donald Trump's $50 billion Middle East economic vision with a mixture of derision and exasperation, although some in the Gulf called for it to be given a chance.
In Israel, Tzachi Hanegbi, a Cabinet member close to Prime Minister Benjamin Netanyahu, described Palestinians' rejection of the "peace to prosperity" plan as tragic.
Set to be presented by Trump's son-in-law, Jared Kushner, at a conference in Bahrain on Tuesday and Wednesday, the blueprint envisions a global investment fund to lift the Palestinian and neighbouring Arab economies and is part of broader efforts to revive the Israeli-Palestininan peace process.
"We don't need the Bahrain meeting to build our country, we need peace, and the sequence of (the plan) - economic revival followed by peace is unrealistic and an illusion," Palestinian Finance Minister Shukri Bishara said on Sunday.
The lack of a political solution, which Washington has said would be unveiled later, prompted rejection not only from Palestinians but in Arab countries with which Israel would seek normal relations.
From Sudan to Kuwait, commentators and citizens denounced Kushner's proposals in strikingly similar terms: "colossal waste of time," "non-starter," "dead on arrival."
Egyptian liberal and leftist parties slammed the conference as an attempt to "consecrate and legitimise" occupation of Arab land and said in a joint statement that any Arab participation would be "beyond the limits of normalisation" with Israel.
While the precise outline of the political plan has been shrouded in secrecy, officials briefed on it say Kushner has jettisoned the two-state solution - the long-standing worldwide formula that envisages an independent Palestinian state alongside Israel in the West Bank, East Jerusalem and Gaza.
The Palestinian Authority is boycotting the Bahrain meeting, saying only a political solution will solve the problem. It said Kushner's "abstract promises" were an attempt to bribe Palestinians into accepting Israeli occupation.
The White House has not invited the Israeli government to Bahrain.
On Israel Radio, Hanegbi said Washington had tried to create "a little more trust and positivity" by presenting an economic vision but had touched a raw nerve for Palestinians.
"They are still convinced that the whole matter of an economic peace is a conspiracy, aimed only at plying them with funds for projects and other goodies only so they will forget their nationalist aspirations. This is of course just paranoia, but it's another tragedy for the Palestinians," he said.
U.S.-allied Gulf states, including Saudi Arabia and the United Arab Emirates, will take part in the Bahrain gathering along with officials from Egypt, Jordan and Morocco.
Saudi Arabia's minister of state for foreign affairs, Adel Jubeir, said anything that improves the Palestinians' situation should be welcomed but that addressing the political process in resolving the conflict with Israel was "extremely important".
"The Palestinians are the ones who have the ultimate decision in this, because it's their issue and so whatever the Palestinians accept, I believe everybody else will accept," he said on Sunday in an interview with broadcaster France 24.
Lebanon and Iraq will not attend the conference.
"Those who think that waving billions of dollars can lure Lebanon, which is under the weight of a suffocating economic crisis, into succumbing or bartering over its principles are mistaken," the parliament speaker, Nabih Berri, said.
Lebanon's Iranian-backed Shi'ite group Hezbollah, which wields significant influence over the government, previously called the plan "a historic crime" that must be stopped.
Thousands of people marched through the Moroccan capital, Rabat, on Sunday to express their solidarity with the Palestinians and their opposition to Kushner's plan.
"We came here to speak in one voice as Moroccans and express our rejection of all conspiracies that target the Palestinian cause," Slimane Amrani, vice secretary general of the kingdom's co-ruling Islamist PJD party, told Reuters.
Arab analysts believe Kushner's economic plan is an attempt to buy off opposition to Israel's occupation of Palestinian land with a multibillion-dollar bribe to pay off the neighbouring hosts of millions of Palestinian refugees to integrate them.
After Israel's creation in 1948, Jordan, Syria and Lebanon absorbed the most Palestinian refugees, with some estimates that they now account for around 5 million.
'NO HARM IN LISTENING'
In recent years, Iran's bitter rivalry with a bloc led by Sunni Muslim Saudi Arabia has increasingly pushed the Arab-Israeli struggle into the background.
While Riyadh and its allies have welcomed Trump's harder line against Tehran, which has cast itself as the guardian of Palestinian rights, critics accuse Saudi Arabia, the custodian of Islam's holiest places, of abandoning the Palestinians.
Muslim scholars in the region, who would have in the past rallied popular opinion in support of the Palestinians, were largely silent hours after the plan was released, in a sign of a crackdown on dissent in several Arab countries.
Saudi Arabia has detained several prominent clerics in an apparent move to silence potential opponents of the kingdom's absolute rulers. Egypt's top Sunni Muslim authority, al-Azhar, has yet to issue a statement.
Ali Shihabi, who heads the Arabia Foundation, which supports Saudi policies, said the Palestinian Authority was wrong to reject the plan out of hand.
"It should accept it and work on delivering the benefits to its people and then move forward aggressively with non-violent work ... to seek political rights," he tweeted.
Emirati businessman Khalaf Ahmad al-Habtoor also criticised the Palestinians' refusal to go to Bahrain.
"There is no harm in listening to what will be placed on the table," he wrote last month.
Yet even in the Gulf, backing for Kushner's plan is limited.
"The deal of the century is a ... one-sided concession, the Arab side, while the occupier wins everything: land, peace and Gulf money," said Kuwaiti parliamentarian Osama Al-Shaheen. (Reporting by Stephen Kalin in Riyadh; Mohammed Abdellah, Amina Ismail, Nadine Awadalla and Mahmoud Mourad in Cairo, Suleiman al-Khalidi in Amman; Samia Nakhoul, Tom Perry and Ellen Francis in Beirut, Ghaida Ghantous, Alexander Cornwell, Hadeel Al Sayegh, Sylvia Westall and Aziz El Yaakoubi in Dubai, Eric Knecht in Doha, Michael Georgy in Khartoum, Ahmed Hagagy in Kuwait and Jeffrey Heller in Jerusalem; Writing by Stephen Kalin; Editing by Samia Nakhoul, Keith Weir, Gareth Jones and Peter Cooney)
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