Rebuilding Gaza isn't the only effort under way to improve the Palestinians' plight. Eighteen months after it was wrecked in fighting between the Lebanese Army and Islamist militants, this impoverished refugee camp is just beginning to be put back together again in a project hampered by a political crisis, slowed by donor apathy, and overshadowed by the war between Hamas and Israel.

"We are telling donors if you really want the camps improved and to end the misery, which makes these places fertile grounds for extremism, then we need resources," says Khalil Makkawi, a former Lebanese ambassador and chairman of the Lebanon-Palestinian Dialogue Committee.

Even though Lebanon has been trying to raise funds to improve conditions for Palestinians across the country, it may not even have enough money to rehouse some 30,000 refugees left homeless after the 2007 battle in Nahr al-Bared.

The United Nations Relief and Works Agency (UNRWA), which is responsible for the welfare of Palestinian refugees, only has sufficient funds to rebuild homes for a quarter of the camp's population.

"Are there concerns of the money running out in the long term? Yes. There is a danger that the rebuilding of Gaza will suck away resources for Nahr al-Bared," says Rex Brynen, a professor of politics at McGill University in Canada and an expert on Palestinian refugee issues, who is on a visit to Lebanon.

The Palestinian refugees in Lebanon – estimated at fewer than 300,000 – live mainly in 12 camps. They are the descendents of some 110,000 Palestinians who entered Lebanon in 1948 having been driven from their homeland after the creation of Israel.

The camps are overcrowded, unsanitary neighborhoods of poorly constructed cinder-block homes. Of all the Arab countries hosting Palestinian refugees, Lebanon traditionally has imposed the harshest restrictions due to its opposition to tawteen, Arabic for settlement. Lebanon is held together by a delicate sectarian balance between Christians and Muslims. If the mainly Sunni Palestinians were settled permanently it could aggravate sectarian tensions.

In October 2005, the Lebanese government launched an initiative to put its relations with its Palestinian population on a better footing. Change has been slow, however. A Palestinian embassy opened in Beirut in May 2006, and Palestinians can now seek manual and semiskilled employment, although they are still barred from professional work.

Still, the lack of funds threatens to scuttle the entire process. An initial donor conference in April 2006 drew pledges of $50 million for improvements to the camps, although UNRWA so far has only received $17 million of the sum.

The Nahr al-Bared battle gave new impetus to improving conditions. A donor conference for Nahr al-Bared last June hoped to raise $450 million. But only $120 million was pledged and only $42 million transferred to UNRWA.

That has left Lebanese officials wringing their hands, particular when a donor drive this month to rebuild Gaza raised $5.2 billion, nearly double the expected amount. The US pledged $900 million at the Egyptian conference ($600 million of which is meant for the Palestinian Authority).

"In Nahr al-Bared, we had a mini-Gaza. So how come when we ask for $450 million we don't get it, but Gaza gets $5.2 billion?" asks Mr. Makkawi.

Much of the remaining rubble has been cleared away, the bomb-blasted buildings demolished and bulldozed. A few thousand Palestinian residents have returned to the less damaged edges of the camp. The construction work will cover eight sectors that will include homes of three or four stories, wide streets, green space, and functioning infrastructure. The shortage of funds means only the first two sectors can be built.

The Palestinian residents are skeptical that Nahr al-Bared will be rebuilt at all.

During a ceremony Monday to launch the rebuilding, scuffles broke out between soldiers and Palestinian protesters. Several Palestinian officials left the ceremony to resolve the altercation.

"What kind of democracy is this? We are living in a siege here. We need permission for everything," says Iktimal Bashir, a Palestinian mother.

Given the tension in Nahr al-Bared, the plight of the refugees still hangs in the balance. "We could be standing here in 25 years' time and say this was the beginning of a slow change that resulted in substantial improvements for the refugees, or we could be saying what a wasted opportunity. It's too soon to tell either way," says Professor Brynen.