The mayor of Gaza said today he has rejected $400,000 in U.S. Agency for International Development funds as a "symbolic" protest against what he called the "unbalanced policy" of the United States in the Middle East and against what he said were unnecessary delays by Israel in approving the funded projects.

"The amounts are so insignificant, compared to the billions to dollars Israel receives from the United States, that it is not worthwhile going through the difficulty of getting Israeli approval of the projects," Mayor Rashid Shawa said in a telephone interview. "The least we can do is show that we are not happy with the U.S. policy, which favors Israel over the occupied territories."

The rejected funds include $250,000 for a water catchment project for irrigation in the Gaza Strip, and $150,000 for construction of a new road, Shawa said. An additional $100,000 for a sewage recycling project has not been approved yet, but Shawa indicated he will reject that also.

Shawa also said he was protesting delays by the Israeli government in approving release of the money, which he said was blocked for more than a year before being released yesterday.

The aid money was to have been administered by the American Near East Refugee Aid. That voluntary agency also has complained that more than $1 million in AID money for community self-help projects in the West Bank and Gaza Strip have been held up by Israel.

Community development programs in the occupied territories have long been a sensitive issue for the Israelis because of the concern that they can strengthen the economic independence of the Palestinians and bolster nationalistic opposition to continued occupation. The Social Welfare Ministry had denied that political considerations are involved in what Shawa contends are deliberate delays in approval, maintaining that legitimate problems with some of the proposals cause delays in their approval.

"All that is allotted for the occupied territories is a couple million dollars, while the United States always seems to have billions for Israel," Shawa said. "We're such an insignificant body to them [the Americans] that we felt we had to protest. For $400,000, I can go beg to the Arab countries and get it without delays. Perhaps the Regans administration will take note of us."