US to give 'billions' to build 50,000 strong Palestinian army

Diplomats said the $4.2 billion to $7 billion estimate was based on the projected cost of providing Abbas's forces with the infrastructure, equipment and training they would need.

The security overhaul calls for reducing the size of Palestinian forces by about one-third. By offering retirement incentives, Abbas's government hopes to avert a backlash from Fatah's old-guard and heavily-armed clans now on the payroll.

One European diplomat compared it to decommissioning.

"It's not cheap," said another diplomat briefed on the numbers. "But the price of this end-game is not that relevant. What is important is how you get there... How many people should be paid this year? How many people should be retired this year?"

US-taxpayer money for advanced training in Jordan started arriving last fall, nearly two-and-a-half years after Washington first dispatched a team to help coordinate Palestinian security.

The first battalion -- nearly 700 US-vetted recruits -- began a four-month, $15 million course last month. The training program is projected to graduate only 2,000 of Abbas's men in 2008, Bush's timeframe for a statehood deal.

Though Middle East envoy Tony Blair declared this week that the capabilities of Abbas's forces have "significantly" improved, Israeli officials insist that they have a long way to go, citing Monday's suicide bombing in Dimona.