Palestine Investment Conference (Bethlehem) – Remarks by US Treasury Deputy Secretary – Press release

Remarks by Treasury Deputy Secretary Robert M. Kimmitt
at the Palestine Investment Conference

Bethlehem– On behalf of the U.S. delegation, I would like to thank President Abbas and Prime Minister Fayyad for inviting us to this conference. We also would like to express our appreciation to the chair of the Steering Committee, National Economy Minister Hassouneh, Conference CEO Hassan Abu Libdeh, and the many conference sponsors and partners who worked hard to put together such an historic, groundbreaking event.

I was in Jerusalem last November when the idea for this conference was just being explored. It is very exciting to return now, and gratifying to see such a large and diverse crowd of business representatives from so many sectors and regions. This evening, our delegation will have the pleasure of dining with a few of the Palestinian private sector leaders with whom I met in Jerusalem last fall — and we look forward to talking with them and others about the progress that has been made over the last six months and the new business opportunities that this conference is certain to generate.

The Annapolis process, initiated last November by President Bush, comprises several tracks being pursued concurrently, as Israel and the Palestinians work together toward a peace agreement. A crucial track–and one all of us attending this conference can influence positively–involves improving the situation on the ground in the Palestinian Territories. Here, Tony Blair's efforts deserve particular mention. His commitment to supporting and publicizing this conference, and to advancing several high profile projects, reflects a deep understanding of the link between peace and economic opportunity.

President Abbas and Prime Minister Fayyad understand this crucial connection as well. Often when U.S. Treasury officials have the opportunity to speak at an investment or business conference, our remarks focus on the benefits of investment flows and urge public sector leaders to establish open investment regimes. Fortunately, we do not have to convince the Palestinian leadership of the importance of the private sector and the need to open their markets to the world economy.

I have had the honor of meeting Prime Minister Fayyad during his trips to Washington, D.C., and can attest to his personal commitment to creating an economy underpinned by a robust private sector. Even those of you who do not know him personally can find ample evidence of the Prime Minister's free market credentials in his well-crafted Palestinian Reform and Development Plan. Appropriately, the plan focuses on improving governance, particularly as it pertains to public financial management, the security services, and the justice system.

We all know that there are some unique challenges to doing business in the Palestinian Territories. This is where close cooperation between government and industry can make a real difference.

The United States already has a robust bilateral economic and development assistance program in the Palestinian Territories, and this program will continue to grow. In 2008, we plan to provide $550 million to the Palestinians for activities to support economic growth and good governance, provide food assistance, improve education, and increase access to healthcare and water. We have already transferred $150 million of this assistance as budget support to the Palestinian Authority. We have also pledged to provide the UN Refugee and Works Agency with $148 million and are requesting significant levels of assistance from Congress for next year.

Much of this funding will be channeled through the U.S. Agency for International Development to help encourage private sector development. Agribusiness partnerships, microfinance assistance, modernizing financial institutions, and a new trade facilitation program are only a few of the several important initiatives that USAID is undertaking. Over the past fifteen years the United States has provided $1.9 billion in such assistance to the Palestinians through USAID alone.

However, our mid- to long-term goal is to catalyze private investment flows, which are the lifeblood of broad-based, sustainable growth. We have several new initiatives with this objective in mind.

First, the Overseas Private Investment Corporation, OPIC, in partnership with the World Bank's International Finance Corporation, the United Kingdom's Department for International Development, the Palestine Investment Fund, and the Bank of Palestine, is creating a $500 million mortgage lending facility in the West Bank. This facility will inject necessary liquidity into the Palestinian mortgage industry and convey the economic benefits of home ownership to many who would have been unable to realize them otherwise. The mortgage facility complements ongoing Palestinian efforts to develop much-needed affordable housing units in the West Bank over the next five years. And, during this conference, OPIC, under the leadership of President Rob Mosbacher and in conjunction with the National Insurance Company, will announce an exciting new political risk insurance program.

Second, under the leadership of Deputy Secretary John Sullivan, the U.S. Department of Commerce Commercial Service is providing ongoing support to the Palestinian-American Chamber of Commerce to promote Palestinian business linkages. The Commercial Service is also facilitating multilink digital videoconferences among Palestinian, Israeli, and U.S. businesses and recently organized a trade finance conference in Ramallah that attracted over two hundred Palestinian businesspeople. Additionally, at this conference, the U.S. Trade and Development Agency, under the leadership of Director Larry Walther, is signing a grant agreement with a Palestinian private sector company to spur development of a next generation WiMax internet accessibility network in ten cities in the West Bank.

Third is the U.S.-Palestinian Public Private Partnership, which is led by my friend and colleague Walter Isaacson, who heads the Aspen Institute. The Partnership, which is co-led by Dr. Ziad Asali, was launched last December by President Bush and Secretary Rice and has been instrumental in bringing this conference to fruition. It is also developing quick-impact projects to promote job creation in the West Bank, including establishing an Arabic-language call center and five youth development and resource centers designed to prepare youth for full and productive participation in the Palestinian society and economy.

Finally, the Middle East Investment Initiative, chaired by Berl Bernhard, is a Palestinian, American, and European-funded $228 million loan guarantee facility. It offers financial institutions substantial loan guarantees as an incentive to lend to small and medium Palestinian enterprises. Such enterprises now comprise up to 90 percent of registered Palestinian businesses, but they face many challenges, including a lack of access to credit. These small and medium sized businesses, if properly stimulated, could create tens of thousands of sustainable jobs–a critical requirement for fostering stability. OPIC and the Palestine Investment Fund are providing the loan guarantees to commercial banks, microfinance institutions, and non-governmental organizations who participate in the Investment Initiative.

Before concluding, I also want to commend Jake Walles – our Consul General in Jerusalem – and his team. It is they who have done the tremendous work needed to coordinate and implement all these different components of U.S. support, thereby ensuring that our government's efforts provide maximum benefit to the Palestinian people. To assist in this effort going forward, I am pleased to announce that the U.S. Treasury is assigning a senior officer, Ben Davis, to be a part of the strong consulate team in Jerusalem.

Today's conference is another important step toward developing economic self-sufficiency in the Palestinian Territories. Our task at this conference and in the weeks and months ahead is to work together to combine and leverage the expertise and business experience of those in this room with the assistance and political support of our governments. By building a vibrant economy led by the private sector in the Palestinian Territories, we will help improve the lives of the Palestinian people, enhance stability, and bolster prospects for lasting peace. There is no higher calling or more important goal for our common efforts.

Thank you for your kind attention.