By Manuel Jimenez

SANTO DOMINGO, April 20 (Reuters) - The European Union on Friday pledged 233 million euros ($303 million) in aid for impoverished Haiti and said it would raise the grant by 25 percent if the chaotic Caribbean country managed to improve its governability.

EU officials, meeting with the Rio Group of Latin American nations in Santo Domingo, also vowed to support cross-border development projects between Haiti and its more developed and prosperous neighbor, the Dominican Republic.

The aid for Haiti, afflicted for years by political instability and struggling since the February 2004 ouster of former president Jean-Bertrand Aristide with violent crime, would help develop infrastructure sorely lacking in the country of 8 million, said the European Commissioner for External relations and Neighbourhood Policy, Benita Ferrero-Waldner.

It would also fund education, rural programs and the establishment of government institutions.

In all, the European Commission has proposed a 5.5-billion-euro aid package for Latin America and the Caribbean from 2001-2013. Of that 2.7 billion euros would be in grants and 2.8 billion in development loans.

Ferrero-Waldner said the EU had been paying attention to developments in Haiti, where a U.N. force has tried to keep the peace since shortly after Aristide was driven into exile by an armed revolt. President Rene Preval's election last year has raised hopes for peace and stability.

The EU donated 300 million euros to Haiti between 2002-2007, the commissioner said.

Haiti's foreign relations minister, Jean Reynald Clerisme, thanked the EU at the meeting and said Haiti "would do everything possible to make sure we do not disappoint you."

The meeting in Santo Domingo also addressed trade talks between Latin American nations and the EU, the drug trade, other security issues and climate change. Next year's meeting is due to take place in Peru.

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