United Nations

A/51/166


General Assembly

Distr. GENERAL  

17 June 1996

ORIGINAL:
ENGLISH


                                             A/51/166
                                             E/1996/67
                                                  


GENERAL ASSEMBLY                             ECONOMIC AND SOCIAL COUNCIL
Fifty-first session                          Substantive session of 1996
Item 21 (e) of the preliminary list*         Item 5 (c) of the provisional
STRENGTHENING OF THE COORDINATION OF           agenda**
  HUMANITARIAN AND DISASTER RELIEF           SOCIAL, HUMANITARIAN AND HUMAN
  ASSISTANCE OF THE UNITED NATIONS,            RIGHTS QUESTIONS:  REPORTS 
  INCLUDING SPECIAL ECONOMIC                   OF SUBSIDIARY BODIES,
  ASSISTANCE:  ASSISTANCE TO                   CONFERENCES AND RELATED
  THE PALESTINIAN PEOPLE                       QUESTIONS: IMPLEMENTATION 
                                               OF THE DECLARATION ON THE
*    A/51/50.                                  GRANTING OF INDEPENDENCE TO
                                               COLONIAL COUNTRIES AND
                                               PEOPLES BY THE SPECIALIZED
                                               AGENCIES AND THE 
                                               INTERNATIONAL INSTITUTIONS
                                               ASSOCIATED WITH THE UNITED
                                               NATIONS
                 
                                               **    E/1996/100.


             Letter dated 6 June 1996 from the Chairman of the
                Committee on the Exercise of the Inalienable     
             Rights of the Palestinian People addressed to the
                            Secretary-General


     I have the honour to draw your attention to the Seminar on
Assistance to the Palestinian People, convened by the Committee on the
Exercise of the Inalienable Rights of the Palestinian People in
accordance with its mandate to promote international support for and
assistance to the Palestinian people during the transitional period.  The
Seminar was held from 21 to 23 June 1996 at Cairo.

     The Seminar provided the framework for an exchange of views on
various aspects of the current challenges facing the Palestinian
people in its efforts to rehabilitate and develop the economy, and on
the role of international assistance in that regard.  The Seminar was
attended by donor and other Governments, intergovernmental
organizations, organizations and entities of the United Nations
system, officials of the Palestinian Authority and non-governmental
organizations active in the field, as well as experts.  The Committee
considers that the Seminar was a useful gathering and hopes to have
made a constructive contribution to international efforts aimed at
promoting the economic and social development of the Palestinian
society during the transitional phase.  The Committee also believes
that ensuring the viability and advancement of the Palestinian economy
is a key to a just and lasting peace in the region.

     I have the honour to attach for your information the report of the
Seminar (see annex).  I should be grateful if you would have the text
of the present letter, together with the report, circulated as a
document of the General Assembly, under item 21 (e) of the preliminary
list, and of the Economic and Social Council, under item 5 (c) of the
provisional agenda.


                                               (Signed)  Ibra Degue`ne KA     
                                                             Chairman         
                                                     Committee on the Exercise
                                                     of the Inalienable Rights
                                                     of the Palestinian People


                                     ANNEX

            Report of the United Nations Seminar on Assistance
              to the Palestinian People, held at Cairo from     
                               21 to 23 May 1996

                       Building the Palestinian economy


                                   CONTENTS

                                                              Paragraphs Page

  I.  INTRODUCTION ........................................      1 - 17   4

      A. Organization of the Seminar .....................          1     4

      B. Participation ...................................        2 - 9   4

      C. Agenda ..........................................       10 - 11  5

      D. Opening of the Seminar ..........................       12 - 17  6

 II.  PLENARY SESSION:  BUILDING THE PALESTINIAN ECONOMY -
      CHALLENGES AND PROSPECTS ............................      18 - 20  8

III.  SUMMARY OF PRESENTATIONS ............................      21 - 45  8

      Round-table discussions .............................      21 - 45  8

         Round table I.  International assistance to the 
         Palestinian people:  experience and perspective .       21 - 26  8

         Round table II.  Trade sector ...................       27 - 33  10

         Round table III.  The role of the financial 
         institutions ....................................       34 - 38  11

         Round table IV.  The housing sector .............       39 - 45  12 

 IV.  CLOSING SESSION .....................................      46 - 49  14

                               I.  INTRODUCTION


                        A.  Organization of the Seminar

1.   The Seminar on Assistance to the Palestinian People was convened
by the Committee on the Exercise of the Inalienable Rights of the
Palestinian People in accordance with its mandate to promote
international support for and assistance to the Palestinian people
during the transitional period.  The Seminar was held from 21 to 23
May 1996 in Cairo.


                               B.  Participation

2.   The Committee on the Exercise of the Inalienable Rights of the
Palestinian People was represented by a delegation comprising Mr. Ibra
Degue`ne Ka (Senegal), Chairman; Mr. Ravan A. G. Farhadi
(Afghanistan), Vice-Chairman, Mr. Joseph Cassar (Malta), Rapporteur;
Mr. Pedro Nun~ez Mosquera (Cuba); and Mr. Nasser Al-Kidwa (Palestine). 
The Committee Chairman served as Chairman of the Seminar and the
Committee Rapporteur as the Rapporteur of the Seminar.

3.   Invitations to participate in the Seminar were extended to
Governments, intergovernmental organizations, organizations and
agencies of the United Nations system, and non-governmental
organizations.  A number of experts were invited to make presentations
at the Seminar.

4.   The following Governments were represented at the Seminar: 
Afghanistan, Algeria, Armenia, Australia, Austria, Bahrain, Belgium,
Bolivia, Bulgaria, Burkina Faso, China, Co^te d'Ivoire, Croatia, Cuba,
Cyprus, Czech Republic, Ecuador, Egypt, Eritrea, Finland, France,
Greece, Honduras, Hungary, India, Indonesia, Italy, Japan, Jordan,
Kazakstan, Kenya, Malaysia, Mali, Malta, Mexico, Morocco, Nepal,
Norway, Pakistan, Poland, Portugal, Qatar, Republic of Korea, Romania,
Russian Federation, Saudi Arabia, Senegal, Slovakia, South Africa,
Spain, Sri Lanka, Sudan, Sweden, Switzerland, Thailand, Tunisia,
Turkey, Ukraine, United Kingdom of Great Britain and Northern Ireland,
Uruguay, Yemen and Zaire.

5.   The following organizations, agencies and other entities of the
United Nations system participated in the Seminar:  United Nations
Educational, Scientific and Cultural Organization (UNESCO),
International Labour Organization (ILO), United Nations Children's
Fund (UNICEF), United Nations Conference on Trade and Development
(UNCTAD), United Nations Development Programme (UNDP), United Nations
Institute for Training and Research (UNITAR), United Nations Relief
and Works Agency for Palestine Refugees in the Near East (UNRWA),
Office of the United Nations Special Coordinator in the Occupied
Territories, Office of the United Nations High Commissioner for
Refugees (UNHCR), United Nations Commission on Human Settlements
(Habitat), United Nations Environment Programme (UNEP), United Nations
Industrial Development Organization (UNIDO), World Bank, World Health
Organization (WHO), United Nations Information Centre (Cairo) and Food
and Agriculture Organization of the United Nations (FAO).

6.   The following intergovernmental organizations were represented at
the Seminar:  Arab Administrative Development Organization, the
European Union and the League of Arab States.

7.   The delegation of Palestine took part in the work of the Seminar.

8.   The following experts presented papers:  Mr. Taha Abdel Aleem,
Deputy Director, Al-Ahram Centre for Political and Strategic Studies,
Cairo; Mr. Marwan Abdul Hamid, Assistant Deputy Minister, Ministry of
Housing and Public Works, Palestinian Authority; Mr. Mahmoud Ahmad Al
Takruri, Deputy Regional Manager, Cairo-Amman Bank, Ramallah; Mr.
James S. Duesenberry, Professor, John F. Kennedy School of Government,
Harvard University; Mr. Jean-Michel Dumont, Secretary-General,
Parliamentary Association for Euro-Arab Cooperation; Mr. Nabil
El-Sherif, Deputy Managing Director, Palestinian Economic Council for
Development and Reconstruction, Gaza, and Director, Palestinian Water
Authority; Mr. Geoffrey Haley, Aid Coordinator for Technical
Assistance, Office of the European Union (EU) to the West Bank and
Gaza; Mr. Said Hammoud, Secretary, Founding Committee of Salam
International Investment; Mr. Milad Hanna, former Chairman, Committee
on Housing and Construction, Egyptian Parliament; Mr. Walid Hasna,
Chief Engineer, United Nations Development Programme (UNDP)/Programme
of Assistance to the Palestinian People; Mr. Samir Huleileh, Assistant
Deputy Minister, Ministry of Economy, Trade and Industry, Palestinian
Authority; Mr. Odin G. Knudsen, Resident Representative and Programme
Manager, West Bank and Gaza, Resident Mission, the World Bank;
Mr. Robert Z. Lawrence, Professor of International Trade, Institute
for Social and Economic Policy in the Middle East, Harvard University;
Ms. Ghania Malhees, Assistant Deputy Minister, Ministry of Economy,
Trade and Industry, Palestinian Authority; Mr. Ahmad Mashal, Director,
Research Department, Palestinian Monetary Authority; Mr. Yousef
Mahmoud Najem, Palestine Chamber of Commerce, Gaza Strip; Mr. James
Ryan, Chairman, Shahrazad Homes; Mr. Henry Siegman, Director,
US/Middle East Project, and Senior Fellow, Council on Foreign
Relations, New York; Mr. Ali Sha'at, Assistant Deputy Minister,
Ministry of Planning and International Cooperation, Palestinian
Authority; Mr. Hanspeter Tscha"ni, Senior Advisor, Swiss Trade
Initiative for the Middle East and North Africa; and Mr. Mohamed M.
Ziara, Director-General, Ministry of Housing and Public Works,
Palestinian Authority.  Mr. Nadav Halevi, Professor of International
Trade at the Hebrew University, who accepted the invitation to
participate in the Seminar, could not attend because of unforeseen
circumstances.  His paper was made available to participants.

9.   The following non-governmental organizations attended the meeting: 
Afro-Asian Peoples' Solidarity Organization, Arab Organization for
Human Rights, Arab Network for Environment and Development, Asian
Regional Coordinating Committee on Palestine, Ibn Khaldoun Centre for
Development Studies, Presbyterian Church (USA), Welfare Association
and Society for Upgrading the Built Environment.


                                  C.  Agenda

10.  The purpose of the Seminar was to provide the framework for an
expert discussion on the various aspects of international assistance
to the Palestinian people, problems of the reconstruction of the
Palestinian economy, as well as the Palestinian institution- and
nation-building in the wake of the important developments, which have
taken place since June 1995, when the Committee on the Exercise of the
Inalienable Rights of the Palestinian People held its last similar
event at UNESCO Headquarters in Paris.

11.  In the plenary sessions and in the course of the round-table
discussions, the participants addressed the following general themes:

     (a) Building the Palestinian economy - challenges and prospects;

     (b) International assistance to the Palestinian people: 
experience and perspective;

     (c) Trade sector;

     (d) The role of the financial institutions;

     (e) The housing sector.


                          D.  Opening of the Seminar

12.  At the opening session, a statement was made by Mr. Mohamed Adel
El Safty, First Under-Secretary, Ministry of Foreign Affairs of Egypt. 
A statement on behalf of the Secretary-General of the United Nations
was read out by his representative, the Commissioner-General of UNRWA,
Mr. Peter Hansen.  Statements were made by Mr. Ibra Degue`ne Ka,
Chairman of the Committee on the Exercise of the Inalienable Rights of
the Palestinian People, Mr. Zuhdi Nashashibi, the Minister of Finance
of the Palestinian Authority and President of the Palestine National
Fund and Mr. Said Kamal, Assistant Secretary-General of the League of
Arab States (LAS).

13.  In his statement, Mr. Mohamed Adel El Safty, First Under-Secretary
of the Ministry of Foreign Affairs of Egypt, expressed Egypt's deep
appreciation of the United Nations efforts to support Palestinian
rights and to assist the Palestinian people.  Significant progress had
been registered in the peace process and Egypt would continue to
contribute towards its consolidation.  The process, however, was still
vulnerable and could be derailed if the challenges it still faced were
not treated in a coordinated manner.  A strengthened and developed
Palestinian economy was an integral part of the peace process.  Though
aid was important at the current stage of its development, the
consolidation of trade was the only guarantee for its continued and
sustainable growth and the generation of employment.  Mr. El Safty
urged the international community to assist the Palestinian people in
achieving a qualitative shift in their economy through a
"double-focus" approach.  Commenting on the closures of the
Palestinian territory and their political and economic impact, he said
that they represented measures conflicting with the peace process.

14.  In the statement read on behalf of the Secretary-General of the
United Nations by his representative, the Commissioner-General of
UNRWA, Mr. Peter Hansen, the Secretary-General emphasized the
importance of the agreements reached between Israel and the Palestine
Liberation Organization (PLO) since 1993 and expressed the hope that
those achievements would encourage progress in the crucial stage of
Israeli-Palestinian negotiations, which had begun in early May, as
well as on the Israeli-Syrian and Israeli-Lebanese tracks.  Also, the
recent cease-fire agreement in Lebanon augured well for the resumption
of negotiations and was essential for the attainment of a
comprehensive, just and lasting settlement based on United Nations
Security Council resolutions 242 (1967) and 338 (1973) and the
establishment of real peace in the area.  Over the past few months,
the Secretary-General had, on several occasions, expressed outrage at
acts of violence aimed at derailing the peace process.  He had also
expressed deep concern over the deterioration of the Palestinian
economy as a result of the Israeli closure of the West Bank and the
Gaza Strip.  The programmes and agencies of the United Nations system
would continue to provide all possible assistance towards the
achievement of the sustainable economic and social development of the
Palestinian people.  As regards implementation of General Assembly
resolutions on assistance to the Palestinian people, the
Secretary-General emphasized the need for an effective and integrated
approach on the ground through the close cooperation of the Special
Coordinator, UNDP, and UNRWA.  The transfer of UNRWA headquarters to
Gaza should give further impetus to that process.

15.  Mr. Ibra Degue`ne Ka, Chairman of the Committee on the Exercise of
the Inalienable Rights of the Palestinian People, said that the
Committee welcomed the breakthroughs in the Israeli-Palestinian track,
the Palestinian elections of 20 January 1996 and the timely start of
the final status negotiations in Taba.  The Committee greatly
appreciated the efforts by donor Governments, the Bretton Woods
institutions and other intergovernmental and non-governmental
organizations to assist the Palestinian people in reconstruction and
development.  He said the Committee had expressed great concern at the
closure by the Israeli authorities of the Palestinian territory,
including Jerusalem.  In addition to delays in the implementation of
the agreements, the Palestinian people had also been held back in its
nation-building efforts by the slow progress in the disbursement of
the assistance funds pledged by the donor community.  Also, while
trying to reconstruct their economy and lay the foundations for their
future State, the Palestinians were aware of the need for eventual
integration into a larger economic context and developing mutually
beneficial ties with countries of the Middle East, North Africa and
the Mediterranean basin.  He emphasized that the Committee had given
special attention to the promotion of international assistance to the
Palestinian people and the convening of the Seminar devoted to the
issue.

16.  In his statement, Mr. Zuhdi Nashashibi, Minister of Finance of the
Palestinian Authority and President of the Palestine National Fund,
underlined the importance of progress in the final status
negotiations.  They were crucial and none of the parties involved
could afford any mistake in the talks.  The speaker was grateful to
the international community and to the World Bank and the Bretton
Woods institutions for their assistance.  Their aid was of great
importance in laying the foundations of a sound and sustainable
economy.  Referring to the closures by Israel of the Palestinian
territory, he said that they could result in a dramatic increase of
the budget deficit and would hinder the Palestinian Authority's
progress in the economic area.  The losses caused by the closure
measures cost the Palestinian Authority US$ 6 million a day.

17.  Mr. Said Kamal, Assistant Secretary-General of LAS said that any
political solution for the Palestinian issue must be accompanied by
crucial solutions in the economic area.  Attaching importance to
higher education in the West Bank and the Gaza Strip, LAS was
endorsing the idea of establishing a Palestine Arab University as a
collective endeavour by the Arab States.  The World Bank and other
donors had expressed interest in its establishment.


II.  PLENARY SESSION:  BUILDING THE PALESTINIAN
     ECONOMY - CHALLENGES AND PROSPECTS        

18.  The plenary session, entitled "Building the Palestinian economy -
challenges and prospects", was reserved for statements by
representatives of donor countries and other Governments,
intergovernmental and national organizations, non-governmental
organizations and organizations and entities of the United Nations
system.

19.  Statements were made by representatives of Palestine, UNRWA, the
Office of the United Nations Special Coordinator in the Occupied
Territories, the United Kingdom of Great Britain and Northern Ireland,
Indonesia, Norway, Finland, Jordan, UNDP, UNESCO, FAO, UNEP, UNICEF,
Habitat and Mr. K. M. Khan, MP, on behalf of non-governmental
organizations from India, and the Asian Coordinating Committee for
NGOs on the Question of Palestine.

20.  In the statements, details were given on the projects being
undertaken both in setting up infrastructures and promoting growth in
different areas of the economy.  The important contribution of the
United Nations entities ensured continuity in certain areas and new
openings in others.  The required coordination of bilateral and
multilateral programmes was satisfactory and efforts to avoid overlap
or duplication of the various activities were giving the desired
results.


                        III.  SUMMARY OF PRESENTATIONS

                            Round-table discussions

           Round table I.  International assistance to the Palestinian
                           people:  experience and perspectives        
        

21.  The round table was moderated by Mr. Robert Z. Lawrence.

22.  Mr. Odin G. Knudsen, Resident Representative and Programme
Manager, West Bank and Gaza Resident Mission, the World Bank,
addressed the issue of international assistance to the Palestinian
people.  He said that a series of Israeli-Palestinian agreements had
marked the peace process, bringing with them additional but partial
responsibilities to the Palestinian Authority.  Although all of the
agreements were important in that they moved the political agenda
forward, none were sustainable in themselves and required the support
of the donors not just for investments but also for the budget.  To
support the private economy, two instruments were to be used:  the
donor investment programme and the trade and employment relations as
outlined in the economic protocol accompanying the Gaza-Jericho
Agreement.  He discussed the present state of economic relations
between Israel and the Palestinian Authority and models of economic
interaction between them.

23.  Ms. Ghania Malhees, Assistant Deputy Minister, Ministry of
Economy, Trade and Industry, Palestinian Authority, said in her
presentation that international assistance, while forthcoming, had
been very limited when measured against basic needs and had been
insignificant compared to the extremely high costs of the alternatives
should the peace process not succeed.  That assistance, however, did
play a crucial role in expanding mutual interests, which was needed
for the peace process and for peaceful coexistence.  She spoke about
the international assistance programme and performance assessment,
highlighting the issues that had arisen from the implementation of the
programme and which reflected negatively on the credibility of the
peace process.

24.  The presentation of Mr. Nabil El-Sherif, Deputy Managing Director
of the Palestinian Economic Council for Development and
Reconstruction, Gaza, and Director, Palestinian Water Authority,
focused on the issues of water supply and job creation in the West
Bank and the Gaza Strip.  He said that the water supply problem had
three components:  the lack of efficient management of the present
water sources; the shortage of water in relation to demand; and the
poor quality of water.  He also described the present water supply
situation.  On the job creation issue, he explained the progress in
the programme of job creation, which has been in place since 1995.  He
stressed that the United Nations had an important role to play in
coordinating the job creation projects.  The World Bank was also
coordinating the managing of the rehabilitation, job creation and
water programmes.

25.  Mr. Henry Siegman, Director, US/Middle East Project, and Senior
Fellow, Council on Foreign Relations, New York, in his presentation,
cautioned against excessive pessimism with respect to the present
situation on the ground.  He observed that one of several factors that
prevented greater economic success before the latest closures of the
Palestinian territory was the elaborate structures and procedures
established by the international community to plan and manage the flow
of development assistance.  It was entirely predictable that, in their
intermediary role, those structures and procedures would not only
cause interminable delays but would also absorb a not inconsiderable
proportion of the resources.  Far more money had been disbursed to
experts and consultants for feasibility studies than to Palestinians
in the West Bank and the Gaza Strip.  There was a need for a
simplification of the intermediary structures and procedures.  He was
of the view that, perhaps, the idea of an Israeli mini Marshall Plan,
first put out by a group of Israeli economists, was one whose time had
now come.  He also described the work on the issue of international
assistance carried out by the Council on Foreign Relations.

26.  Mr. Geoffrey Haley, Aid Coordinator for Technical Assistance,
Office of EU to the West Bank and Gaza, said that since the summer of
1992 EU had stepped up its assistance to the Palestinians and had been
involved in efforts to support the budget deficit.  There was a need
to improve the way the aid was disbursed and implemented.  He
emphasized that sustainable employment was of special importance to
the Palestinians.

                         Round table II.  Trade sector

27.  The round table was moderated by Mr. James S. Duesenberry.

28.  Mr. Robert Z. Lawrence, Professor of International Trade at
Harvard University, discussed aspects of the Palestinian trade
strategy, including the issue of free trade with Israel and Arab
countries.  Special focus was placed on regional trade arrangements. 
He outlined advantages and disadvantages of the Israeli-Palestinian
customs union.  An alternative to the customs union might be a free
trade area between Israel and the Palestinian Authority, which could
ease the problem revenue attribution, mitigate trade diversion by
lowering tariffs on imports and provide for additional relationships
with other countries.  He favoured the customs union because of its
simplicity, a reduction in the diversion of trade, as Israeli tariffs
were continuously being liberalized and because it would save on the
need to police borders.  He also tackled the issue of protocol trade. 
For the future, instead of proceeding by concluding separate bilateral
agreements, a free trade agreement should be concluded among the triad
of Israeli, Jordanian and Palestinian economies and eventually be
extended to include Egypt, Lebanon, the Syrian Arab Republic and other
countries.

29.  Mr. Samir Huleileh, Assistant Deputy Minister, Ministry of
Economy, Trade and Industry, Palestinian Authority, discussed the
economic protocol between the Palestinian Authority and Israel,
describing it as an "awkward compromise" designed to survive the
five-year transitional period.  On the other hand, the protocol
enabled the Palestinian Authority to open direct trade links with the
Arab and Islamic countries.  He said that opening up the international
borders and the internal linkages between the West Bank and the Gaza
Strip should be the first priority, while the issue of the closure of
the territory from Israel should be the second priority for the
Palestinians.

30.  In his presentation, Mr. Hanspeter Tscha"ni, Senior Advisor at the
Swiss Trade Initiative for the Middle East and North Africa, discussed
the Israeli-Palestinian agreements in the economic area with special
emphasis on the Paris Agreement.  He examined trade and trade-related
issues in the agreement, including its nature, trade and economic
relationship between Israel and the Palestinian Authority, and
external relations of the two parties.  He concluded by saying that
the objectives of the preamble had not been fulfilled since the
signing of the Paris Agreement.  Security considerations prevailed
over economic ones.  While Israel experienced an economic boom,
economic activity in the West Bank and the Gaza Strip faced a net loss
over the past two years and the near-total closure of the Israeli
market for the West Bank and the Gaza Strip products and workers made
matters even worse.  In the Paris Agreement, the approach chosen was
that of a mixed arrangement under the name of a customs union and the
predominance of the Israeli trade regime.  He outlined several
inconsistencies with regard to that approach, the trade provisions of
the agreement and their implementation.

31.  In his presentation, Mr. Jean-Michel Dumont, Secretary-General of
the Parliamentary Association for Euro-Arab Cooperation, described
trade relations between the Palestinian territory and EU.  He recalled
the various regulations on trade with the occupied West Bank and the
Gaza Strip adopted by EU (European Community, at the time) since 1986,
which served as the legal framework for such trade, and focused on the
contents of those regulations, outlining some present problems and
obstacles to trade, as well as the prospects for the development of
trade between EU and the Palestinian Authority.  He concluded by
saying that, despite the political importance of EU trade regulations,
the Palestinians had to explore other markets.

32.  In his presentation, Mr. Taha Abdel Aleem, Deputy Director,
Al-Ahram Centre for Political and Strategic Studies, Cairo, examined
the economic motives for peace in the region from the Arab
perspective.  The Israeli-Palestinian Declaration of Principles was a
major step towards peace with Israel.  It brought about the
possibility of Arab-Israeli economic cooperation whereby the Arab side
accepted, for the first time, the notion of Arab-Israeli regional
economic integration.  He then described the ways the Arab-Israeli
interaction could be developed.  The speaker gave a detailed outline
of the three perspective scenarios for the Middle Eastern market:  the
restricted market scenario, the common market and the open market.

33.  Mr. Yousef Mahmoud Najem of the Palestine Chamber of Commerce,
Gaza Strip, said that the only viable trade strategy for the
Palestinian economy would be to concentrate on external markets, those
which supported the export of Palestinian products.  He described the
situation with regard to the agricultural and industrial sectors and
the current status of the Israeli-Palestinian economic agreement of
April 1994.  He also stressed that the establishment of an independent
economy and sustainable economic development would necessarily require
a diversified production base, free trade relations with Israel and
the transformation from dependency on exporting the labour force to
production and exports to foreign markets.


           Round table III.  The role of the financial institutions

34.  The round table was moderated by Mr. Hanspeter Tscha"ni.

35.  In his presentation, Mr. Ahmad Mashal, Director of the Research
Department of the Palestinian Monetary Authority, spoke about the role
of the financial sector in the development of the Palestinian economy. 
On the issue of the development of banking operations in the West Bank
and the Gaza Strip, he said that the principal data indicated a
substantial growth in bank assets in the territory.  He outlined the
functions assigned to the Palestinian Monetary Authority and explained
how it operated.  Having characterized the current state of the
Palestinian economy, the speaker described the participation of
Palestinian financial institutions in the economic development and in
formulating a development strategy for the financial sector.

36.  Mr. James S. Duesenberry, Professor Emeritus of Money and Banking
at Harvard University, said that the West Bank and the Gaza Strip now
had a very limited financial sector, with a dozen or so banks having
wide powers and capable of undertaking all the functions appropriate
to depository banks.  There had been a substantial inflow of deposits
and an increase in lending.  The growth of lending was now inhibited
by a limited profitability of investment; the reluctance of banks to
take long-term commitments because of risks imposed by uncertainty
over future political and economic conditions; the inability to obtain
clear titles to real estate needed for collateral; and lack of use of
chattel mortgages by banks in financing vehicles and equipment.  As
regards structural changes, bank supervisors should press for legal
changes required for the operation of equipment finance and leasing
companies in order to provide competition and encourage lending to new
firms.  Once banks were more or less loaned up, the Palestinian
Monetary Authority should encourage development of an inter-bank
market in very short-term funds.  On the long-term markets, he
addressed the issues of credit and equity.  On the role of government
agencies and regulatory programmes in finance, the Government should
help to deal with the financial problems of particular sectors by
working with the banking system to remove legal or regulatory
obstacles to constructive action, provide technical assistance and,
occasionally, explicit subsidies.  On the currency situation, he was
of the view that after so much use of other currencies any new
Palestinian currency would be vulnerable to "dollarization" unless it
could prove its worth.  A stable currency required Palestinian exports
to be competitive enough at the outset to support the growing import
requirements of a growing economy.

37.  In his presentation, Mr. Mahmoud Ahmad Al Takruri, Deputy Regional
Manager of the Cairo-Amman Bank in the West Bank, discussed the role
of private financial institutions in building the Palestinian economy
and described the economic situation in the West Bank and the Gaza
Strip, with special emphasis on the role of banks.  The economic
development process in the territory was complicated by three factors: 
the delay in the disbursement of donors' pledges; slow international
and diaspora investments; and the slow pace of implementation by
Israel of the Oslo II agreements.  He proposed a number of
recommendations aimed at improvement and activization of economic
growth:  at the bank level - development of client awareness of
banking services; development of long-term lending tools; introduction
of sophisticated products and services; and focusing on productive
lending as opposed to consumer type.  At the national level, he
recommended maintaining an open market policy, adopting an offshore
banking and industrial strategy by the Palestinian Authority,
establishing a risk mechanism, creating a rediscount facility and
taking steps towards enhancing the overall investment environment.

38.  Mr. Said Hammoud, Secretary of the Founding Committee of Salam
International Investment, explained problems encountered by the
Palestinian economy in developing an effective financing system and
the need for revolutionizing and modernizing Palestinian approaches
towards the roles played by the financing institutions.  He said that
the closures by Israel of the Palestinian territory prevented the free
flow of goods and the population, causing hardships for the
Palestinians.  He proposed the establishment of a new enterprise or
commerce development bank.


                      Round table IV.  The housing sector

39.  The round table was moderated by Mr. Khaled Abdel Shafie, Head of
the UNDP Office at Gaza.

40.  Mr. Marwan Abdul Hamid, Assistant Deputy Minister of Housing and
Public Works of the Palestinian Authority, said that there was a high
demand for housing in the West Bank and the Gaza Strip, which would be
affordable to low-income population groups.  It would continue growing
to accommodate the high rate of population growth and the expected
returnees.  The Palestinian Authority was working on strategies for
solving the housing problem and on increasing the supply of affordable
housing to low-income population groups.  Strategies would focus on
long-term financing by establishing a housing bank, upgrading
infrastructure in low-income neighbourhoods and encouraging private
sector participation in the development of the housing sector.  He
dealt in greater detail with the relationship between population
growth and the need for housing and the role played in addressing the
housing problem by the public and private sectors.

41.  Mr. James Ryan, Chairman of Shahrazad Homes, devoted his
presentation to factors affecting the housing situation in the West
Bank.  The factors that must be dealt with for affordable housing were
the need for mortgage banking capability; the availability of land at
reasonable prices with electricity, sewer and water availability; the
availability of building materials, including finished products; and
the availability of a work force capable of keeping schedules and
decreasing building time.  He was of the view that housing with proper
financing could and should be used to stimulate the West Bank economy
and, in doing so, to support the peace process.

42.  Mr. Ali Sha'at, Assistant Deputy Minister of Planning and
International Cooperation of the Palestinian Authority, dealt in his
presentation with the refugee aspects of the housing situation.  The
circumstances encountered by Palestine refugees had all had an impact
on the refugees' socio-economic status.  Within the context of the new
political changes, it was hopeful that an international agreement
would be reached, which would address the unique situation of
Palestine refugees.  The refugee question is likely to prove the most
difficult component of the Palestinian-Israeli conflict to resolve. 
Mr. Sha'at gave an in-depth description of the political context of
the issue, its demographic and socio-economic characteristics, the
health conditions of Palestine refugees, as well as their rights.  He
also highlighted the fact that continued rapid population growth and
increasing population density, without the development of adequate
housing and infrastructure, created environmental and social problems
and detrimentally affected the status of the population.  He called
for the implementation of General Assembly resolution 194 (III) of
11 December 1948 on the question of Palestine refugees, as well as
strengthened programmes of assistance to the refugees until the
resolution is implemented.

43.  In his presentation, Mr. Walid Hasna, Chief Engineer with the UNDP
Programme of Assistance to the Palestinian People, spoke about the
relationship between the construction strategy and the housing policy. 
The unsatisfactory housing situation was attributed to a number of
constraints, including the lack of a national housing policy and
implementation strategy reflecting current and prospective economic
realities, inadequate delivery of land for housing, the lack of
financial mechanisms that cater to the needs of the low- and
middle-income groups, and high construction costs in relation to
incomes.  He discussed measures to be taken to relieve the contracting
industry from hindering factors impeding its development.  Owing to
the current unemployment situation in the West Bank and the Gaza
Strip, the construction strategy should also focus on promoting
labour-intensive construction techniques.

44.  Mr. Milad Hanna, former Chairman of the Committee on Housing and
Construction of the Egyptian Parliament, said housing was a local
problem and no general recipe for its solution could be offered.  In
the case of the Palestinian Authority, there were two sides of the
equation:  people and housing.  This represented a unique problem and
a unique challenge since the two sides of the equation were not
defined.  No sound housing policy could be implemented without land
being made available.  The Palestinian Authority had to deliver and
build immediately since any delay would make the population less
content and would affect the progress of the peace process.  A sound
housing policy required equilibrium between supply and demand, and
classification for the different income groups.  In conclusion, he
said that unless the housing policy was introduced properly, it would
lead to problems bound to affect the next generation.

45.  Mr. Mohamed M. Ziara, Director-General of the Ministry of Housing
and Public Works of the Palestinian Authority, speaking about the
housing sector in the West Bank and the Gaza Strip, stressed the
importance attached by the Authority to the question of housing. 
Having outlined the situation with respect to the housing conditions
of the Palestinian people and their housing needs, he explained the
role played by the Ministry of Housing and Public Works.  As part of
the Israeli-Palestinian peace process, a peace housing programme,
providing a range of housing choices for buyers, would be designed to
address those needs.  The pilot housing projects would include such
options as the development of new communities, neighbourhood
development and off-site infrastructure and services.  Other
programmes included:  the national housing strategy; data collection
and analysis; international/Palestinian centres; land and housing
regulations; and technical assistance and training.


                            IV.   CLOSING SESSION

46.  Closing statements were made by representatives of Egypt and
Palestine.  The closing remarks were made by Mr. Ibra Degue`ne Ka,
Chairman of the Committee on the Exercise of the Inalienable Rights of
the Palestinian People.

47.  In his statement, Mr. Qassem El-Masry, Assistant Minister for
Foreign Affairs of Egypt, said that the meeting underscored the
importance attached by the international community to assistance to
the Palestinian Authority.  The papers presented at the Seminar
contributed to the development of the Palestinian economy.  He called
the attention of participants to the closures by Israel of the
Palestinian territory and their negative effect on the Palestinian
economy.  The speaker said that the peace process should be supported
by the improvement of the economic and social conditions, as well as
the quality of life of the Palestinian people.  In that regard, he
acknowledged the contribution made by the agencies of the United
Nations system.

48.  Mr. Nasser Al-Kidwa, Permanent Observer of Palestine to the United
Nations, said that the Seminar had important political and economic
implications.  The meeting underscored the following points:  (a) that
the international community was ready to increase its support to help
build the Palestinian economy; (b) that there was still a need to
develop performance on both sides, the Palestinian Authority and the
donor community, and that this would result in the honouring of
commitments by donors; and (c) that there was an urgent need for
Israel to undertake substantive changes in its policy vis-a`-vis the
Palestinian Authority if there was a will to make the peace process
succeed and to achieve success in building the Palestinian economy.

49.  In his concluding remarks, Mr. Ibra Degue`ne Ka, Chairman of the
Committee on the Exercise of the Inalienable Rights of the Palestinian
People, said that the Committee had always attached importance to the
various aspects of socio-economic development and the improvement of
living conditions of the Palestinian people.  Since the beginning of
the Madrid peace process, and particularly in the last three years,
the task of Palestinian economic reconstruction had evolved as a key
factor affecting its pace and progress.  It was in that period that
the Committee had decided to devote a special place in its annual
programmes of work to the socio-economic issues of the transitional
stage.  Describing the main elements of the discussion, he said that
the participants had been in agreement as to the need for an
accelerated disbursement by the international donor community of the
pledged assistance.  The view was also expressed that trade should
become an important vehicle in developing a sustainable Palestinian
economy, which should reduce the dependence on Israel and the need to
rely heavily on various external forms of assistance.  Much was said
about the critical need of the Palestinian population for housing. 
Many participants voiced concern about the closures by the Israeli
authorities of the Palestinian territory and their severe impact on
economic activity in the West Bank and the Gaza Strip.  He expressed
appreciation to the officials of the Palestinian Authority for the
information they had provided on the various measures aimed at
establishing an effective Palestinian administration.


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Date last posted: 28 December 1999 17:35:10
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