International donors meeting in Rome have voiced their impatience with the lack of progress in the Middle East peace process. They said concrete results are needed or the region could lose financial assistance.

The international donors conference, held near the end of Italy's six-month rotating presidency of the European Union, comes as Israel and the Palestinians are looking for ways to end the impasse in the peace process.

Following his arrival in Rome, Israeli Foreign Minister Silvan Shalom immediately headed into a meeting with his Palestinian counterpart Nabil Shaath. It was the first time the two had met since Palestinian Prime Minister Ahmed Queira formed his government last month.

Both men said they are working to arrange a meeting between their prime ministers soon, but insisted it must be well-prepared. Mr. Shalom said the meeting could take place immediately but added Israel would not accept any pre-conditions.

Representatives of donor nations and international aid organizations are discussing how much funding they can make available for the Palestinian Authority. But they made clear they are increasingly dissatisfied with the lack of progress in the peace process.

Violence by both sides has impeded international assistance efforts, and Israeli military strikes have also wrecked dozens of donor projects. The U.S. Middle east envoy, William Burns, said both sides must do better, to ensure for donors both a secure operating environment and the freedom to operate.

Italian Foreign Minister Franco Frattini stressed the need for Palestinian leaders to make all efforts to bring an end to acts of terrorism. Israel was criticized for its targeted killings of suspected militants, its frequent travel restrictions on Palestinians, its continued settlement building and construction of a security barrier.

The Palestinian Authority says donor aid is needed to finance infrastructure and humanitarian projects, and to cover the authority's huge deficit. Donors and Palestinians agree that health and living conditions in Palestinian-ruled territories have deteriorated since the start of the second Intifadah three years ago.

Palestinian officials have said they are hoping for $1.2 billion in donations, but potential donors want assurances about transparency in the management of the funds.

Sixty percent of the Palestinian budget is funded by foreign aid. A recent report by the International Monetary Fund found that some $900 million was diverted from the authority's accounts between 1995 and 2000.