By Sue Pleming and Haitham Haddadin

UNITED NATIONS, Sept 22 (Reuters) - U.S. Secretary of State Condoleezza Rice urged donor nations on Monday to follow through on more than $7 billion in aid pledges to the cash-strapped Palestinian government.

"We need to make certain that everyone is paying attention to their Paris commitments to the Palestinians," Rice told reporters before a meeting to discuss aid to the Palestinians on the sidelines of the U.N. General Assembly.

At a Paris conference last December, donors pledged $7.7 billion in aid over the next three years, but the Palestinians say only a small fraction of that money has been paid.

Arab nations, in particular, have been reticent to hand over aid money to the Palestinians but Rice said they had been "very attentive" of late. She gave no details.

Last month, Saudi Arabia promised a $100-million cash boost to help Prime Minister Salam Fayyad pay public sector salaries to the Palestinians.

Fayyad is pushing for more allocations of the funding to budget support to help him to pay government workers, something he has been struggling to do in recent months.

Delays in paying salaries are embarrassing for Fayyad, who was appointed with Western backing last year when President Mahmoud Abbas fired a Hamas government after the militants routed his forces and took over the Gaza Strip.

European Union foreign policy chief Javier Solana also urged countries to deliver on their aid pledges so Fayyad could meet his budget shortfall.

"The budget situation for Fayyad requires that everyone comply with their pledges. There is much to be done on other aspects of institution building," Solana said.

At the U.N. meeting Fayyad was expected to provide a report on conditions in the Palestinian territories, said Rice, who saw Fayyad privately on Sunday.

PEACE TALKS SLOW

Benita Ferrero-Waldner, the EU's external relations commissioner, said improvements on the ground for Palestinians are needed if the money is to be used effectively.

"It is most important that there is a change and betterment of access of movement, there should not be Israeli settlements and incursions," she said, adding that the EU would give 540 million euros ($791 million) this year to the Palestinians.

U.S.-mediated peace talks between the Israelis and the Palestinians have slowed amid political turmoil in Israel with the weekend resignation of Prime Minister Ehud Olmert.

The political uncertainty has further dimmed prospects of an Israeli-Palestinian peace deal, which the United States had hoped Olmert and Abbas could achieve this year.

Israeli Foreign Minister Tzipi Livni, the chief negotiator in the talks with the Palestinians, was replaced as the head of the ruling Kadima party, narrowly winning an internal election. (Writing by Sue Pleming; Editing by Chris Wilson)

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