By Rami Ayyub
JERUSALEM (Reuters) - Global financial bodies including the International Monetary Fund (IMF) and World Bank plan to be present at a U.S.-led conference on the Palestinian economy this month that the Trump administration has cast as an overture to its peace plan.
The efficacy of the June 25-26 meeting in Bahrain has been in doubt since Palestinian leaders and business people decided to shun it over Washington's perceived pro-Israel bias and inattention to their political demands.
Israel's new election, an upsurge in cross-border fighting and the Palestinians' resentment at U.S. recognition of Jerusalem as Israel's capital add to the complicated backdrop.
However, the IMF, which has been operating in the West Bank and Gaza since 1995, confirmed it and other institutions would be present in Bahrain's capital Manama.
"The IMF has been invited to the meeting and expects to attend, along with other international financial institutions," a representative said.
The European Bank for Reconstruction and Development (EBRD) confirmed it would have "someone" representing it. A World Bank spokesman said it had an invitation "and expects to participate".
Lenders and development banks have long played a stabilising role in the Israeli-Palestinian conflict, providing loans, credit guarantees, and policy advice to the Western-backed Palestinian Authority (PA).
White House senior adviser Jared Kushner this week concluded a trip to the Middle East and Europe aimed partly at drumming up support for the "Peace for Prosperity" conference intended to unveil the economic part of Trump's long-heralded peace plan.
But Palestinian and Arab officials suspect the event may be a prelude to a U.S. push to jettison the "two-state" solution - a long-standing, international formula for an independent Palestinian state alongside Israel in the West Bank, East Jerusalem and Gaza.
The twin state blueprint has been the basis for decades of lending and technical support from global financial institutions, aimed at building the capacity of Palestinian government ministries and the private sector.
Though Saudi Arabia and the United Arab Emirates plan to attend the Bahrain conference, they have assured the Palestinians they would not endorse a U.S. plan that fails to meet their main demands.
Deputy foreign minister Tzipi Hotovely said in a weekend radio interview "Israelis" would be there, but it was unclear if she was referring to officials or business delegates.
Asked if she believed the event should be postponed given Palestinians' boycott, Hotovely told Tel Aviv station 102 FM: "No. There is no reason to ... Apart from them, everyone's okay. Everyone's in favour."
In Israel's long-time foe Iran, Supreme Leader Ayatollah Ali Khamenei berated Saudi Arabia and Bahrain for enabling U.S. plans.
"This meeting belongs to the Americans, but Bahraini rulers are hosting it due to their weaknesses and anti-Muslim and anti-popular stand," he said in a televised sermon.
"The so-called 'deal of the century' will, God willing, never come to fruition ...We hope that Bahraini and Saudi rulers will realise that they are stepping into a quagmire."
(This story has been refilled to replace "attend" with "participate" in quote in paragraph 6)
(Additional reporting by Dan Williams in Jerusalem, Dubai newsroom; Editing by Andrew Cawthorne)