UN Seminar on Prospects for Palestinian Economic Development and ME Peace Process (Cairo, June 2000) – Report – DPR publication

REPORT ON THE

UNITED NATIONS SEMINAR

ON PROSPECTS FOR

PALESTINIAN ECONOMIC DEVELOPMENT

AND THE MIDDLE EAST PEACE PROCESS

Cairo, 20 and 21 June 2000

CONTENTS

_________________

* This report was also circulated to the General Assembly and the Economic and Social

Council at the request of the Committee on the Exercise of the Inalienable Rights of the

Palestinian People (A/55/144 – E/2000/87).

I.   INTRODUCTION

A.   Organization of the Seminar

1. The United Nations Seminar on Prospects for Palestinian Economic Development and the Middle East Peace Process 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 on 20 and 21 June 2000 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 Deguène Ka (Senegal), Chairman; Mr. Ravan Farhâdi (Afghanistan), Vice-Chairman; Mr. Walter Balzan (Malta), Rapporteur; Mr. Ibrahim M’baba Kamara (Sierra Leone); Mr. Rafael Dausá Céspedes (Cuba); and Dr. Nasser M. Al-Kidwa (Palestine). The Committee Chairman served as Chairman 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, Albania, Argentina, Armenia, Austria, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Brunei Darussalam, Bulgaria, Burkina Faso, Cameroon, Chile, China, Colombia, Cuba, Cyprus, Czech Republic, Democratic People’s Republic of Korea, Democratic Republic of the Congo, Denmark, Ecuador, Egypt, Ethiopia, France, Germany, Ghana, Greece, Guatemala, Hungary, India, Indonesia, Ireland, Italy, Japan, Jordan, Kazakhstan, Lebanon, Lesotho, Liberia, Malawi, Malaysia, Mali, Malta, Mauritius, Mexico, Mozambique, Myanmar, Nepal, Netherlands, Norway, Oman, Pakistan, Panama, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sudan, Sweden, Tanzania, Thailand, Tunisia, Turkey, Uganda, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United States, Uruguay, Viet Nam and Zambia.

5. The following organizations, agencies and other entities of the United Nations system participated in the Seminar: Economic and Social Commission for Western Asia (ESCWA); Food and Agricultural Organization of the United Nations(FAO); International Civil Aviation Organization (ICAO); International Monetary Fund (IMF); International Telecommunication Union (ITU); Office of the United Nations Special Coordinator (UNSCO); United Nations Conference on Trade and Development (UNCTAD); United Nations Development Programme (UNDP); United Nations Educational, Scientific and Cultural Organization (UNESCO); United Nations High Commissioner for Refugees (UNHCR); United Nations Industrial Development Organization (UNIDO); United Nations Information Centre (Cairo); United Nations Population Fund (UNFPA); United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA); United Nations Truce Supervision Organization (UNTSO); Universal Postal Union (UPU); and World Food Programme (WFP).

6. The following intergovernmental organizations were represented at the Seminar: European Commission; International Organization for Migration; League of Arab States; Organization of African Unity; and Organization of the Islamic Conference.

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

8. The following experts presented papers:  Mr. Samir Abdullah, General Manager of the Palestine Trade Center (Paltrade); Mr. Salem Ajluni, Head, Economic and Social Monitoring Unit, Office of the United Nations Special Coordinator (UNSCO); Mr. Saad Al-Khatib, Deputy Director-General for International Relations, Ministry of Economy and Trade, Palestinian Authority; Mr. Maher Al-Masri, Minister of Economy and Trade, Palestinian Authority;  Mr. Saeb Bamya, Director-General for International Relations, Ministry of Economy and Trade, Palestinian Authority; Mr. Omar Daoudi, Senior Advisor to the Programme of Assistance to the Palestinian People of the United Nations Development Programme (UNDP/PAPP), Jerusalem; Mr. Sharif S. Elmusa, Associate Professor of Political Science, American University in Cairo; Mr. Gil Feiler, Managing Director of Info-Prod Research (Middle East), Ramat-Gan; Mr. Emad Gad, Researcher on Palestinian affairs, Al-Ahram Center for Political and Strategic Studies, Cairo; Mr. Nadav Halevi, Professor of International Trade, Hebrew University, Jerusalem; Mr. Edward Haley, Professor of International Relations, Claremont McKenna College and Claremont Graduate University, California;  Mr. Samir Huleileh, Nassir Investments Co. Ltd., Bethlehem; Mr. Yossi Katz, member of the Israeli Parliament (Knesset); Mr. Raja Khalidi, Coordinator, Assistance to the Palestinian People Unit, Globalisation and Development Strategies Division, United Nations Conference on Trade and Development (UNCTAD); Mr. David Newman, Head of the Department of Politics and Government, Ben Gurion University of the Negev; Mr. Taher Shash, Legal Advisor, Arab Organization for Human Rights; Mr. Mohammad Shtayyeh, Director-General of the Palestinian Economic Council for Development and Reconstruction (PECDAR), Palestinian Authority; Mr. Akrum Tamimi, Vice-President for Planning and Development, Hebron University; Mr. Shibley Telhami, Professor of Government and Politics, University of Maryland, and Senior Fellow, the Brookings Institution, Washington, D.C.

9. The following non-governmental organizations participated as observers in the Seminar: Afro-Asian People's Solidarity Organization; American University in Cairo, Office of African Studies; Arab Organization for Human Rights; Catholic Relief Services; Council of Arab Economic Unity; Egyptian Center for Environmental and Rural Development; Egyptian Committee for Peace and Disarmament, Arab Coordination Centre for NGOs; Egyptian Consolidation Committee; Gaza Center for Rights and Law; Info-Prod Research (Middle East) Ltd.; Japan International Cooperation Agency; Palestine Red Crescent Society; Palestinian Council for Justice and Peace; Palestinian Working Women Committee; Pax Christi International; Research on Refugees Welfare; Shadow United Nations; Swiss Trade Initiative Middle East North Africa; Tami Steinmetz Center for Peace Research, Tel Aviv University; World Muslim Congress.

C.   Agenda

10. The purpose of the Seminar was to discuss the current state of the Palestinian economy, the factors that affect it and its future prospects, with a view to mobilizing greater support from Governments, intergovernmental and civil society organizations for the attainment of the legitimate economic rights of the Palestinian people, thus contributing to the broader peace-building efforts.

11. In the opening session and in the course of four panel discussions, the participants addressed in-depth the following issues:

(a) Palestinian institution-building and economic performance during the interim period:  achievements, shortcomings and future tasks;

(b) Palestinian development objectives and strategies;

(c) Israeli-Palestinian economic relations during the interim period: expectations and reality;

(d) The current state of Israeli-Palestinian negotiations on economic issues;

(e) The future of Israeli-Palestinian economic relations (trade; labour flows; money, finance and investment); and

(f) Impact of non-economic issues on sustained Palestinian economic and social development (Israeli settlements; Jerusalem; Palestine refugees; water and natural resources).

D.   Opening of the Seminar

12. At the opening session, a statement was made by Mr. Mustafa El Fiqi, Assistant Minister for Arab Affairs, Permanent Representative of Egypt to the League of Arab States.  A statement on behalf of the Secretary-General of the United Nations was read out by his representative Mr. Hazem Abdel Aziz El Beblawi, Executive Secretary of the United Nations Economic and Social Commission for Western Asia (ESCWA). Statements were also made by Mr. Ibra Deguène Ka, Chairman of the Committee on the Exercise of the Inalienable Rights of the Palestinian People, and Mr. Maher Al-Masri, Minister for Economy and Trade, Palestinian Authority, Representative of Palestine.

13. In his statement, Mr. Mustafa El Fiqi, Assistant Minister for Arab Affairs and Permanent Representative of Egypt to the League of Arab States, noted the continuing efforts of the United Nations to fulfill its role vis-à-vis the Palestine question. He expected the Seminar to provide a clear view of the situation in the Palestinian territory and to encourage donor countries to support the new Palestinian State when it is declared. Despite economic achievements, the Palestinian Authority had continued to suffer from measures taken by the Israelis and the new State would require development and training resources to make up for the problems inherited from the Israeli occupation. What was required under the circumstances was a new vision for an effective and comprehensive international role to assist the Palestinian Authority on the path to sustainable economic development. Mr. El Fiqi expressed the hope that the peace process would succeed in accordance with Security Council resolutions and recent agreements and that a final agreement would be concluded in September.

14. In the statement read out on behalf of the Secretary-General of the United Nations by his representative Mr. Hazem Abdel Aziz El Beblawi, Executive Secretary of ESCWA, the Secretary-General expressed his belief that in the continuing Israeli-Palestinian negotiations, difficulties notwithstanding, both sides were demonstrating a strong commitment to making tangible progress and achieving a final status agreement. He encouraged them to recognize the urgency of advancing the peace process towards the achievement of a comprehensive, just and lasting peace in the Middle East based on Security Council resolutions 242 and 338.  The international community should continue to assist the Palestinian people in meeting its social and economic development needs so as to create a solid foundation for future peace and stability in the region. The United Nations programmes and agencies for many years had provided such assistance, and since the beginning of the Madrid peace process had focused on developing Palestinian infrastructure, enhancing institutional capacity and improving the living conditions of the Palestinian people. They would continue this important work, particularly now, at this crucial transitional stage. The contribution of donor countries remained essential, as did the support to UNRWA. The Secretary-General expressed hope that the withdrawal of Israel from Lebanon would be seen by all peoples in the region as an encouragement to move ahead faster in negotiating peace treaties. It was crucial for Israelis and Palestinians not to let precious time slip away, and for the international community to do its best to help the parties on the road to peace. The Secretary-General assured that the United Nations would remain at the disposal of the parties in their quest for peace and reconciliation.

15. Mr. Ibra Deguène Ka, Chairman of the Committee on the Exercise of the Inalienable Rights of the Palestinian People, emphasized the importance of international assistance in meeting the economic and social challenges facing the Palestinian people. He noted that since its inception in 1993, the Palestinian Authority has been operating under conditions of particular adversity and complexity. It had become directly responsible for education, health care and the provision of other basic services to the vast majority of Palestinians in the Occupied Territory, it maintained public law and order, and tried to develop the economy and to build Palestinian institutions. At the same time the Palestinian Authority lacked control over key resources, such as land and water, did not have direct access to external markets, and a large share of its budget remained dependent on transfers of taxes and duties collected by Israel. The improvement in living conditions in the Palestinian territory, the establishment of cooperative relationships and business partnerships throughout the region and the promotion of development, were the essential foundations for peace and were in the interest of everyone, Arabs and Israelis alike.

16. In his statement, Mr. Maher Al-Masri, Minister for Economy and Trade of the Palestinian Authority, representing Palestine, noted that there have been numerous problems since the Palestinian Authority took over. There were no institutions in place and challenges to the Authority abounded, such as the closure of the borders by Israel and the occasional obstacles to passing between different parts of the West Bank. Nevertheless, with international assistance the Palestinians had been able to overcome many of these obstacles. Mr. Al-Masri  stated that the Palestinian Authority looked forward to establishing an independent state with its hand extended to all neighbours, including Israel. The new State would like to become an integral part of the world economy but for that it would require the assistance of the world and the United Nations to help establish institutions and to insist on the implementation of United Nations resolutions. Stability and peace in the Middle East could not become a reality without justice, and economic support was essential to prevent instability and poverty from becoming paramount.

17. The Representative of the Russian Federation reaffirmed his country’s commitment as a co-sponsor of the Madrid peace process to the inalienable rights of the Palestinian people.  He emphasized the importance of progress on the Israeli-Palestinian track of the negotiations facing an extremely difficult and pivotal stage, and the vital importance of uniting international community efforts at championing the fair demands of the Palestinian people. The socio-economic situation of the Palestinians remained far from satisfactory, despite some real successes of the Palestinian Authority in establishing basic public institutions, reducing public deficit, providing social services and creating new jobs. A lot of work had to be done to raise living standards, ensure sustainable economic development, promote investment, expand access to international markets, and reduce unemployment. However, these problems could not be really solved until the Palestinian people exercised its legitimate national rights within the framework of its own State.

18. The Representative of Brazil reaffirmed his Government’s support for the realization of the inalienable rights of the Palestinian people and for the successful conclusion of the Middle East peace process. He also referred to recent moves aimed at strengthening Brazilian–Palestinian cooperation, such as the acceptance by President Henrique Cardoso of Mr. Arafat’s invitation to be a member of the International Committee of the Bethlehem 2000 Project.  The United Nations had an important role in guaranteeing the exercise of Palestinian rights,  in improving their living conditions and in promoting the social and economic development of the occupied territories.

19. The Representative of the League of Arab States noted that economic development and the political situation were closely interlinked, as observed in the practice of the Israeli occupation policy aimed at tying the Palestinian economy to the State of Israel. The peace process had elicited commitments from the donor countries to assist the Palestinian people to alleviate the consequences of the Israeli occupation and to enable them to build institutions and the necessary infrastructure.  That commitment, however, had been less than what was hoped for and has affected the success of the efforts of the Palestinian Authority. The League of Arab States would spare no effort to help the Palestinian people to establish the necessary framework for economic development, peace and stability. Israel continued maneuvering in order to avoid fulfilling its commitments to the peace process and placed many obstacles to the implementation of Palestinian rights. The violation of agreements put into question the peaceful intentions of the Israeli Government and resulted in continued difficulties in the region.

20. The Representative of the Organization of Islamic Conference underscored that the peace process was going through its most delicate phase.  The Israeli policy of procrastination and prevarication prevented the implementation of the major parts of the peace agreements.  As 13 September drew near, everything pointed to the Israeli refusal to withdraw to the 1967 borders or to implement Security Council resolutions and to discuss issues such as the return of Palestinian refugees to their homes.  The Palestinian people were experiencing extreme hardships as result of the stranglehold imposed by the Israeli authorities. Economic development required peace and stability. The Israelis under various pretexts were confiscating land and water, and border closures by the Israelis were aimed at keeping Israel as the only country with which the Palestinians can trade. Israel also kept the fiscal returns on goods and commodities and did not revert them to the Palestinian Authority.  Throughout the years of the occupation, Israel had bogged down the Palestinian economy. Now, Israel must do its part to end the conflict, returning to 1967 borders and dismantling colonial settlements.

21. The Representative of Pakistan said that his country had always steadfastly supported the Palestinian people's right to self-determination.  The international community must remain closely involved, in order to ensure the fulfillment of the solemn commitments under the Peace Agreements.  It should also help overcome the severe economic difficulties faced by the people of Palestine. Economic development would enhance the peace process, while a major peace dividend would be economic cooperation between all the peoples of the region, which would enable them to reap the rich fruits of globalization.

22. The Representative of Malaysia expressed deep concern in view of the potentially volatile situation and called on the parties concerned to revive the stalled peace process and on the international community not to allow this window of opportunity for finally bringing peace and stability to the Middle East to slip away. For peace to take root and flourish, it must be accompanied by economic growth and development as well as improvement in the social and living conditions of the people.  The international donor community should continue to support the rehabilitation of the Palestinian economy and to ensure that the socio-economic development of the Palestinian society continued to be viable and sustainable.  Malaysia had continuously supported the Palestinian people, inter alia by establishing a special fund to assist the Palestinians in the occupied territories, financing Gaza Strip reconstruction, regularly contributing to UNRWA, assisting in the training of the Palestinian police force and civil servants, and establishing an open-ended training programme for Palestinian pilots.

23. The Representative of Norway affirmed that the Middle East peace process is closely linked to the prospects for Palestinian economic and social development.  International support for this development had contributed to keeping the peace process on track during a critical phase and had improved the quality of life of people in important areas.  Norway had provided support for activities undertaken by various United Nations agencies and was a major aid donor to the Palestinian Authority. It had pledged to maintain the same level of bilateral support for the five-year period 1999-2003, with continued involvement in water issues, planning, education and electrification, as well as support for the reform of the Ministry of Finance.  It hoped to consolidate and make its aid more efficient and better attuned to Palestinian development plans, as well as the donor coordination framework.

24. The Representative of Tunisia noted that there was a close link between economic development and the need to achieve a just global solution that would enable the Palestinian people to realize their inalienable rights and to devote their efforts to sustainable development. The international community, represented by the United Nations, was called on to end the restrictions and obstacles imposed on the Palestinian economy by Israel.  There could be no peace without development and no development without peace.  It was hoped that the international community would respond to the requirements and needs of the Palestinian economy. Tunisia looked forward to increasing all forms of cooperation with the future Palestinian State.

25. The Representative of South Africa said that the Seminar highlighted the fact that the sustainable and prosperous future of a Palestinian State was dependent on “economic peace”, that is, the freedom to develop the Palestinian economy.  There had been great strides by the Palestinian Authority in developing the economy but there were many constraints and obstacles faced by the Palestinian businessmen, such as tariff and non-tariff barriers and restrictions to the free movement of goods and people. Still, the Palestinian people had a justifiably proud reputation for their business and economic acumen. With a full and just peace, the Palestinian economy would flourish and develop.

26. The Representative of Japan stated that his Government had contributed to the Middle East peace process through political support, active participation in multilateral negotiations, and economic assistance to the Palestinian people.  With regard to political support, Japan tried to facilitate dialogue among the parties concerned and supported confidence-building measures. Young diplomats, both from Arab countries and Israel, were invited every year to visit Japan together to forge mutual understanding and respect. In multilateral negotiations, Japan had taken chairmanship of the Environmental Working Group, as well actively participated in other working groups, in the belief that their initiatives contributed to regional cooperation and facilitated the bilateral negotiations. Finally, the economic assistance was one of the most important contributions of Japan to the Palestinian people, amounting to US$520 millions since 1993. In planning these assistance programs, Japan focused on (1) human resource building, (2) legal/institutional building, and (3) small-scale projects for rural communities, (4) Japan-Palestinian Authority-Israel trilateral projects for confidence-building, and (5) assistance to Palestinian refugees in the West Bank and Gaza Strip, as well as in neighbouring countries. The Representative of Japan assured that his country would continue these efforts.

27. The Representative of the United Nations Economic and Social Commission for Western Asia (ESCWA) referred to the Commission’s activities in supporting the economic development in the Palestinian territory. Meetings, information and publications had been used to raise and discuss the different issues of Palestinian development. More importantly, ESCWA analyzed problems and suggested policy alternatives, provided advice on institution building and on formulation and implementation of policies. The Commission’s Regional Advisors supported various Palestinian institutions in the areas of agriculture, household and expenditure statistics, the system of national accounts, social development questions and issues of the liberalization of international trade and the World Trade Organization.  Advisory services had also been provided to the transport sector, including the construction of the Gaza harbour. Training on issues such as agricultural development policy, gender statistics and hydrology and water harvesting was a further service provided by ESCWA.

28. The Representative of the Universal Postal Union (UPU) affirmed the right of the Palestinian people to communicate and to enjoy efficient postal services. The UPU Congress decided in 1999 to recognize the right of the Palestinian Authority to exchange mail with any country directly, without going through a third State. The UPU was paying particular attention to modernizing the Palestinian postal services.

II. SUMMARY OF THE PANELS

Panel I.   Palestinian institution-building and economic performance during the interim period:

achievements, shortcomings and future tasks

29. The first panel, entitled "Palestinian institution-building and economic performance during the interim period:  achievements, shortcomings and future tasks", comprised a keynote address and two expert presentations.

30. The keynote speaker, Mr. Maher Al-Masri, Minister for Economy and Trade of the Palestinian Authority, presented some key aspects of the Palestinian economy. Unemployment had dropped but the problem of public sector employment had still to be tackled. Growth depended on external factors and the lives of Palestinians were not really affected; in real terms per capita income was about 10 per cent less that it was in 1993. A lot had been achieved but efforts had to be intensified in order to improve the quality of life of the Palestinian citizen. The Palestinian Authority had to attack institutional issues and improve the performance of its services. Core financial and economic laws had been drafted and diverse laws that applied in the West Bank and Gaza had been unified. Work was still ongoing and all basic laws on economy and finance should be functional by the end of year 2000. The aim of the Higher Council of Economic Performance was to draft a policy that would be reflected in the improvement of the lives of the people and the performance of the Government. It would entail disclosure and transparency of Government activities and projects in which the Government was a partner and consolidating revenues into one account. Several meetings had been held with private enterprise on privatization. The importance of the information technology sector was recognized. The change of the political situation was expected to attract foreign investment to the future State. Palestine was already part of the League of Arab States and wanted to be fully integrated into the Arab economic area. It would like to have greater diversity, to make use of the free trade agreement with the United States, and to go beyond the limitations imposed on it by the Paris Protocol. Palestinians looked forward to cooperation with Israel but also to the benefits granted to any emerging economy.

31. Mr. Omar Daoudi, Senior Advisor to the Programme of Assistance to the Palestinian People of the United Nations Development Programme (UNDP/PAPP) in Jerusalem, identified some of the shortcomings of Palestinian Authority institutions, from ministries to the village level, as follows: a lack of capacity in certain areas to plan and implement projects; weakened social, economic and physical infrastructures inherited from the occupation; weakness of governing institutions which had only four to five years to develop; a rapid population increase; a lack of financial resources; centralized decision-making; and a need of responsibility, transparency and accountability in financial management. To help Palestinians surmount the obstacles they face, good governance was a crucial priority area, as without it development efforts would be undermined, or even doomed to failure.  The gap between public expectations and actual results was growing in the area of institution building, therefore responsive institutions worthy of continuing public confidence should be created. UNDP’s Governance and Public Administration Unit focused on providing technical and capital assistance to the Palestinian Authority, in the area of public sector management, capacity building at the Ministry of Planning and International Cooperation, preparing the Palestinian Development Plan, and training and technical assistance to ministries.  The wealth of human resources of the Palestinian territory should define the parameters for international assistance, and a clear component for success should involve looking to the more than 4.5 million expatriates in North America and Europe. UNDP had succeeded in involving more than 250 professional scientists, technologists and other experts in development projects under the Transfer of Knowledge Through Expatriate Nationals scheme.

32. Mr. Salem Ajluni, Head of the Economic and Social Monitoring Unit at the Office of the United Nations Special Coordinator (UNSCO), reminded Seminar participants that for the past four years his Office had produced Reports on the Palestinian economy now available at www.unsco.org. He stated that in the last three years the recession of 1995-1996, caused by severe border closures, has given way to a recovery of macroeconomic conditions.  The Palestinian territory experienced growth of 7-8% in 1998 and 6-7% in 1999 that was underlined by improvements in most macroeconomic indicators, e.g. Israeli-Palestinian trade, planned private construction activity, value of approved private investment projects, bank credit to private businesses, etc. Nonetheless, the real per capita income remained about 10 per cent below its 1993 level. The growth resulted in a reduction of the standard unemployment rate from about 20% in 1997 to less than 13% in 1999, with additional increase of the number of employed women in the same period by about 25%. The reasons for renewed economic growth could be traced to the reduction in border closures and the regeneration of labour flows and wage income; a 23 per cent increase in public sector employment between 1997 and 1999; and public investment financed by donor countries.  These sources of employment growth, however, were not sustainable. The major challenge would be to create enough jobs to absorb a young labour force, while a related challenge was to raise women’s employment in the formal labour market as this would both raise family incomes and tend to reduce the presently very high fertility rates.  Data for 1999 and 2000 already showed weakening employment growth. The key to raising employment further would be private investment — mainly domestic but also foreign — which could augment productive and export capacities. A policy and enabling environment that maximized productive investment will be critically important.  In addition to the development of industrial and free zones and significant improvements in public infrastructure, future progress would depend on a more rapid pace of institutional and fiscal reforms on the part of the Palestinian Authority.  Also, serious judicial reform and additional public infrastructure would be required.  Furthermore, everything must be done to ensure that Israeli authorities did not continue to impede the free movement of Palestinian people and merchandise locally, regionally and globally.

Panel II.   Palestinian development objectives and strategies

33. The second panel, entitled "Palestinian development objectives and strategies", comprised three expert presentations and an exposé by the Committee Chairman on "International assistance to the Bethlehem 2000 Project".

34. Mr. Mohammad Shtayyeh, Director-General of the Palestinian Economic Council for Development and Reconstruction (PECDAR) of the Palestinian Authority, stated that the Palestinian infrastructure had been destroyed over the last 32 years. The roads had deteriorated and not a single new school had been built. The new State would need 415 new schools at a cost of $850,000 each. At the same time, the infrastructure serving the settlements was totally at the expense of the Palestinians, particularly with regard to land and water.  184 villages in the West Bank and Gaza had no water and more than 20 per cent of the people did not enjoy a constant electricity supply. Many Palestinians lived on less than $2 a day. It became impossible for Palestinians to move between the West Bank and the Gaza Strip. Employment fluctuated on an overnight basis, depending on when the Israelis chose to close the borders. Israel followed a policy of colonization that incorporated the West Bank into Israel and left Palestinian peasants landless and trying to find employment in Israel. Thus, the Palestinian economy had been made hostage to Israel. In rehabilitating the infrastructure, the Palestinian Authority had concentrated on water, schools and housing. Moreover, it had decided to unify the legal framework for the West Bank and Gaza, to create jobs for Palestinians who have returned from the Israeli labour market, and to encourage the private sector and privatization. The Authority was working on good governance and institution-building to create a transparent government. The question was how to restructure the relationship between the Palestinian and the Israeli economies.  Palestinians were 32 years behind the rest of the region and would have to rush to catch up.  Economics could not be divorced from politics and the final outcome of the political negotiations was not certain as regards control over water and the geographical continuity between the West Bank and Gaza.  Would donor countries continue to support the future Palestinian State?  Mr. Shtayyeh quoted Chairman Arafat who had said in the Paris meeting that mistakes had been made, and assured the participants of the Seminar that the Palestinian Authority had begun to correct those mistakes.

35. Mr. Saad Al-Khatib, Deputy Director-General for International Relations at the Ministry of Economy and Trade of the Palestinian Authority, informed participants that a Higher Council for Development Objectives had been established in order to identify development goals and to put in place a strategy for achieving them. Lower unemployment rates and rising per capita income as well as the rise in bank deposits and lending were first indicators of an improvement since 1995/1996. However, unemployment remained at twice the level of 1993 and recent gains were primarily from the public sector hiring and increased employment in Israel, both of which were not sustainable. The incidence of poverty was prevalent, trade statistics showed a continuing deficit, and the much needed private sector response and investment had largely not yet materialized. The economic policy framework presented by the Palestinian Authority set forth a Palestinian government where finances were under control of several mechanisms including the adoption of a full yearly budget in a timely manner, the integration of the relevant development budgets, consolidation of governmental accounts, transparency in governmental investment, privatization where possible and consolidation of the civil service hiring procedures and wages programme. Emphasis was also put on the creation of an efficient system for social services, primarily for education and health, with many programmes aimed at improving service delivery in this field. Social security mechanisms had to be created for the unemployed and the aged or disadvantaged and a social pension system, insurance system and other public or private means of addressing poverty were essential for sustained development.  The creation of an environment for private sector development was an important pillar in the Palestinian economy.  To this end, the Palestinian Authority had undertaken to formulate financial laws, which would meet international standards; develop a dialogue with the private sector, which would affect public sector policies; and establish alternative trade partners.

36. Mr. Raja Khalidi, Coordinator of the Assistance to the Palestinian People Unit, Globalisation and Development Strategies Division, United Nations Conference on Trade and Development (UNCTAD), stated that the UNCTAD Secretariat had studied the future Palestinian economy and had drawn optimistic conclusions.  In 1990, the Secretariat had begun work on a research project on prospects for sustained development of the Palestinian economy. The project included the design of a computerized quantitative framework (QF) that charted the historical relationship between key macroeconomic aggregates and projected alternative plans for the development of the Palestinian economy over the period 1990-2010.  The original version of the QF proved to be a robust and largely accurate tool for charting broad future trends that the Palestinian economy could be expected to follow.  A new version of the framework, redesigned as a “macroeconomic simulation framework (MSF)” had recently been completed.  The MSF assumed that the resident population would grow inline with forecasts projected in the original QF except for one major development.  The QF assumed that Palestinian expatriate population would begin to return to the Palestinian territory following a five-year interim period.  Their incorporation into the MSF increased the potential output and labour market gap and thus raised the challenge of productively absorbing them. Three alternative sets of projections were presented in the MSF, though all faced the same challenge: how to reverse or reduce major gaps while productively absorbing one million returnees from 2000 to 2010.  One scenario reflected a continuation of current economic trends into the projection period, with no effort undertaken to address structural imbalances and therefore disastrous long-term social and economic implications. 'Alternative scenario I' focused on extra investment in export industries and selected import substitution industries to boost savings, investment and growth drawing on currently available financial resources.  'Alternative scenario II' featured a more intensive investment and export drive, with support of significant flows of net external financial transfers. The key goals that the MSF attempted to achieve by the year 2010 were the attainment of a high and sustained rate of economic growth; a significant reduction in the overall GDP share of private consumption; a gradual decrease in government consumption from the current high levels and share of GDP established in the 1990s; maintaining a strong investment rate of around 30 per cent with more significant government investment; and exports to regain historically strong levels. Other policy goals included a major reduction in the share of imports out of GDP, a reduced trade gap and a current account balance, attaining a savings/investment surplus and a significant reduction in the reliance on net factor income from labour in Israel.  Policy goals also included sustainable, if not insignificant, unemployment rates; sustained growth in living standards; and productive, phased absorption of one million Palestinian returnees. The challenge was great, the policies and strategies to reach these goals were complex and called for a concerted Palestinian and international effort, but if the building of other new states, including Israel, provided any lessons, it was that with the will, vision and available resources, it could be done.

37. The expert presentations were followed by a statement made by Mr. Ibra Deguène Ka, Chairman of the Committee on the Exercise of the Inalienable Rights of the Palestinian People, regarding international assistance to the Bethlehem 2000 Project. The celebrations that began at Christmas 1999 and would last until Easter 2001 were originally conceived as a way of restoring the religious and historical sites of Bethlehem and of upgrading the city’s infrastructure and tourist potential, with a view to welcoming the millions of tourists and pilgrims who wished to commemorate a unique event in the holy land. It had been a real challenge for the Palestinian leadership, since years of conflict had had a negative impact not only on the socio-economic situation of the inhabitants of Bethlehem, but also on the condition of the sites and of the city’s buildings and public services. For two years in a row, the UN General Assembly had supported the Project and had called for the international community’s increased assistance to and engagement in this initiative. In 1999, the Committee on the Exercise of the Inalienable Rights of the Palestinian People implemented activities aimed at heightening awareness of the Bethlehem 2000 Project and mobilizing international support for and assistance to it. The convening of the Bethlehem 2000 International Conference in Rome in February 1999 was the highlight of the Committee’s programme of activities. A delegation of the Committee was received by the President of Italy and had an audience with His Holiness Pope John Paul II. United Nations system entities, such as UNDP, UNESCO, the World Bank and others, had assisted the Bethlehem 2000 Project. They had focused on rehabilitating the infrastructure and developing the tourist industry in close cooperation with the municipality of Bethlehem. The European Commission, non-governmental organizations, donor countries and individuals had made substantial contributions. However, much work was yet to be done in the city and in other Palestinian municipalities throughout the West Bank and the Gaza Strip.  The Palestinian people would not be able to cope with this enormous task by themselves, but needed help from the international community. Donor assistance, in particular, was vital to the sustainability of the Palestinian economy and to efforts aimed at improving the economic and social conditions of the Palestinian people.  The Committee called on the donor countries and the entire international community to spare no efforts in assisting the Palestinian people in this important undertaking. It was hoped that all Member States would give wholehearted support to the draft resolution that the Committee would submit to the fifty-fifth session of the General Assembly. It was also hoped that pilgrims would continue to flock to the holy land and forge bonds with the Palestinian people.

Panel III.   Israeli-Palestinian economic relations during the interim period and their future prospects

38. The third panel, entitled "Israeli-Palestinian economic relations during the interim period and their future prospects, comprised six presentations made by experts.

39. Mr. Samir Huleileh, Nassir Investments Co. Ltd., Bethlehem, stated that Israeli policies and procedures implemented since 1967, including canceling the registry for companies, closing banks and pushing out the dinar, had made it difficult for Palestinians to develop their agriculture and industry and made migration of labour the main feature of the Palestinian economy, not only to Israel, but also to the Gulf States and other countries.  The Palestinian economy became too vulnerable to political and economic decisions taken in the surrounding countries, to the point when each Israeli-imposed closure caused not a recession, but a collapse of the economy. Palestinians hoped to reverse this process in the negotiations leading to the Paris agreements.  While there were arguments in favour of the separation with Israel, for instance, to reverse the restrictive economic policies and reabsorb the migrant labour, in reality such separation would be only on paper. In addition, it was impossible to build a solid economic entity without the proper infrastructure, specifically, seaport, airport or land port, all of which were prohibited during the interim period.  Describing the current economic situation, Mr. Huleileh mentioned that there was now a functioning registry of companies, and there were 21 banks with numerous branches operating in the West Bank and Gaza and gathering strength lost since 1967.  Three currencies were used in the territories: Jordanian dinar, Israeli shekel and US dollar. The direct links with other countries were much wider now, with trade reaching US$1 billion in 2000, although most imports had to be dealt with through Israeli customs.  While the Palestinian Authority had made some achievements in the interim period, there had been 3 main restrictions during the interim period. First, the political one, especially during the Government of Mr. Netanyahu, with the economic track always lagging behind the political.  Second, the security issue, which could cause the entire agreement to collapse.  Customs union was a kind of partnership, but closures meant restrictions on free movement of goods, and that kind of partnership was impossible to live with.  Third, the Israeli economic concerns also affected the development of the Palestinian economy and in the last six years, there have been restrictions imposed by other countries in the region as well, which raised the question of how ready were these countries to accept a Palestinian State. Mr. Huleileh mentioned two concrete economic measures that could help the development of the Palestinian economy: setting VAT at the level of 2% less than the Israeli one, and establishing free economic zones.

40. Mr. Nadav Halevi, Professor, Department of Economics, Hebrew University, Jerusalem, stated that before the Paris Protocols of 1994 there was what could be described as a one-sided customs union when Israeli goods went freely into Palestinian territory, but Palestinian goods faced many restrictions in Israel based on what seemed good for Israel, even in the eyes of a small official. The Paris Protocols changed that, creating a more equal customs union with some aspects of a free trade area, encouraging trade with Egypt and Jordan. However, the expectations it raised, of a larger volume of trade with other countries and of more opening of Israeli market to Palestinian goods, were not met. In Mr. Halevi's opinion, there were four reasons for this: closures, and security in general, not only as related to actual terrorism, but also very much to the perception of it; a lot of red tape; plain ill will; and absence of a direct outlet to other markets for Palestinian goods. Also, there is an opinion that the Protocol itself could have been formulated differently, it could have included some clauses for the settlement of disputes and other items could have been adjusted but basically, there could not have been another agreement under the prevailing conditions. Still, there was some progress like the recent removal of 1,300 tariff items or the clarification of handling of taxes. For the future, Mr. Halevi expressed his belief that total separation from Israel, as well as complete integration of Palestinian economy into the Israeli one, were both equally unlikely; and that, overall, the Palestinian economy needed the Israeli one more than the Israeli economy needed the Palestinian one. Mr. Halevi said that a free trade area or a customs union were feasible. In a free trade area, Palestinians would have complete sovereignty over trade with other countries, but a border was needed to distinguish between goods for one party and the other.  Once the borders and checks existed, it opened up avenues for protectionist activities and other abuse.  Jerusalem would not be physically divided and an open city made a customs border unfeasible. Mr. Halevi favoured instead a hybrid between a free trade area and a customs union with no customs checks. There should be smooth movements of goods and labour.  The problem, from the Israeli point of view, was one of security, so the arrangements must be as closure-proof as possible.  The Palestinians had to have direct contact with other economies.  Mr. Halevi expressed his view that the main problem was not a lack of good ideas, but a lack of good will.  If there were good will, good things would happen.

41. Mr. Samir Abdullah, Head of Paltrade, pointed out that possible options for Palestinian-Israeli trade included economic separatism, a free trade system or a customs union, and that there could be no total separation.  Economic separatism would provide freedom to develop an independent foreign trade policy and there would be no problems with Israel regarding rules of origin and financial outflow.  There was, however, the possibility that Israel might close its market to Palestinian products.  Moreover, Palestinian products were not very competitive in the markets of neighbouring Arab countries.  A free trade system would affect the cessation of the financial outflow of taxes and customs receipts, as the future State of Palestine would levy customs duties and taxes on all imported goods.  It would guarantee the continuation of Palestinian exports to Israel and provide and incentive to develop its imports. Improvement in the terms of trade with Israel would force its companies to compete with international companies in the Palestinian market.  On the negative side was the high cost of the formulation and control of rules of origin and the cost of ensuring that Palestinian products comply with rules of origins in order to guarantee their entry into Israel.  A customs union would provide the possibility of benefiting from the network of Israeli economic relations with foreign states and avail the Palestinian territory of an ongoing outflow of Palestinian exports to Israel.  It would strengthen the negotiating power of the participating countries and facilitate saving the costs of checking and administering rules of origin.  A free trade union would be the logical step to enable the Palestinian Authority to make progress in the development of its future relations with Israel.  The Israeli labour market should remain open to Palestinian workers for the next ten years until Palestine was able to develop programmes to absorb them into the Palestinian market.

42. Mr. Gil Feiler, Managing Director, Info-Prod Research (Middle East), Ltd., Ramat-Gan, stated that since the signing of the Oslo accords, the Palestinians had not been reaping an economic reward, facing economic decline instead, despite some improvement in the situation lately. The change in the economic relations due to the peace process created new problems for the Palestinians who were now competing with their Arab neighbours. Mr. Feiler in his presentation in particular concentrated on the Israeli-Palestinian-Jordanian economic dynamics. Expressing concern about the lack of outside, and in particular, Israeli investment in the Palestinian market and noting the extent of Israeli investment in Jordan, he proposed that Palestinians considered adopting Jordanian methods to attract investment. Since the signing of the Oslo Accords, there had been less than 20 million dollars of joint venture capital in the Palestinian territory compared to more than 100 million dollars in joint venture investments in Jordan.  It served to signal international investors that Jordan was a feasible place to invest.  Moreover, the labour costs in Jordan, whose population was in large part Palestinian, were lower than that in the Palestinian territory.  Further, the infrastructure in Jordan was better than that in the Palestinian territory. Reviewing Israel-Palestinian Authority trade statistics, he stressed that the Palestinian market was Israel’s second single largest market, and Israel was both the leading Palestinian export destination and the leading import source, while Palestinian products success in Arab markets has been marginal. Still, through the years, both sides had expressed dissatisfaction over the nature of their economic relations. It was likely that the Palestinian market would offer lucrative business opportunities to Israel in the future, though construction of the new seaport in Gaza would change the Israeli-Palestinian business prospects by creating a short-term increase in demand for Israeli goods and services, but in the long run cutting Palestinian exports from Israel. Further, Mr. Feiler suggested that the high tech sector and the services around them could be a fertile ground for Palestinian-Israeli joint ventures.  If the Palestinian Authority cooperated with Israel in that sector, venture capital would be immediately available.

43. Mr. Edward Haley, Professor of International Relations, Claremont McKenna College, California, noted that there was nothing so far in the seminar about the social vision by the Palestinian Authority. Mr. Haley identified three different gaps or inconsistencies in the present situation. First, there was the expectations gap on both sides. Some or most Israelis thought that the peace process would mean the end of conflict, of military confrontation and terrorism, and further the end of the militarization of their society. On the Palestinian side, equally unrealistic expectations included the reversal of past losses and humiliation, economic progress, and generally the solution of all their problems. Second, there was a gap in orientation of the parties towards each other, when on both sides there was hope that they would achieve separation and integration without costs of any one. And third, there was the integration gap, with this region being one of the least integrated in the world. The level of Arab-Arab trade was very low and Arab-Israel trade was even lower. An interesting model could be provided by the Association of South East Asian Nations (ASEAN), which pursued a kind of open regionalism and was an example of a politically painless method in which one could begin regional cooperation.  Mr. Haley stressed that there also must be regional support for the peace process.  Isolation provided the greatest freedom of unilateral action and was the easiest choice for domestic politics, however, it presented far less ability to influence other countries ahead of such action. The promise of integration held a great deal of advantage over isolation.

44. Mr. Saeb Bamya, Director-General for International Relations in the Ministry of Economy and Trade, Palestinian Authority, Ramallah, called attention to actions taken by Israelis based on their perception of security considerations.  Closures caused innumerable problems for the Palestinians.  Open regionalism, such as that pursued by the Association of South East States (ASEAN) provided an interesting model for Palestinians to consider.  Analyzing the Paris protocol, Mr. Bamya said that it presented something unique.  It could not be called a customs union, because the two parties were not equal.  Israel changed and defined import policies without consultation with their Palestinian counterparts.  There was a big gap between the two economies and there should be an Israeli fund to fill in the gap. During the interim period, the question of security, as perceived by the Israelis presented major obstacles for the Palestinians.  The majority of Israelis felt that security concerns would exist for the next 20 years.  Another issue of concern was the need for the diversification of trade.  In any future trade arrangements, Palestinians should not be totally dependent on Israeli interests.  Palestinians were impeded in establishing trade relations with a third party because of the need to use Israeli ports. Israeli policy was that there should be no real Palestinian economic development during the interim period.  For example, until now, Israel does not recognize the Palestinian agreement with the European Union. Realistically, the economic relations between the two sides had to be based on the following principles: any future economic agreement should be an agreement between two independent states; there should be territory continuity in the Palestinian State and there should be no Israeli interference in the movement of goods and people between the different parts of the State; any agreement must be compatible with World Trade Organization rules and regulations; the Palestinians should have full authority over their internal and external economic policies, they should be free to establish their own trade regulations and should be able to freely negotiate with any trade partner.  In Mr. Bamya's opinion, any agreement would be better than the existing situation.  Ideally, there should be unrestricted market access for the export of Palestinian goods and services; full autonomy for trade policies with third parties and absolute treaty making powers and provision for efficient systems of revenue collection through the elimination of fiscal leakage and dependence on transfers from Israel.  Major obstacles, such as back-to-back trade, should be eliminated.  Economic relations with Israel should also allow for the introduction of special preferential treatments, and be consistent with a Palestinian politically sovereign State as a single territorial unit. In Mr. Bamya's view, institutional cooperation could solve a lot of problems they had had in the interim period, a lot of agreements could be implemented through it, and mutually recognized dispute settlement could be guaranteed.

Panel IV.   Impact of non-economic issues on sustained Palestinian economic and social development (Israeli settlements; Jerusalem; Palestine refugees; water and natural resources)

45. The fourth panel, entitled "Impact of non-economic issues on sustained Palestinian economic and social development (Israeli settlements, Jerusalem; Palestine refugees; water and natural resources)", comprised seven presentations made by experts.

46. Mr. Shibley Telhami, Professor of Government and Politics at the University of Maryland and Senior Fellow at the Brookings Institution in Washington, D.C., noted that the task confronting the Palestinians in economic development was not simple. A number of non-economic factors had to be taken into account and economic pay-off would not be immediate. Non-economic challenges to economic development included the relative independence as well as institutional and social barriers. An independent legal system was a necessity. Currently there was no clear line of authority and no confidence in the judiciary, something that was important to investors. Much could be accomplished with regard to banking. There should be further focus on the private sector and increased privatization.  The size of the public sector employment was too large for the economy. Despite the high level of education in the Palestinian territory, the focus was not necessarily in the right areas.  There was too little emphasis on research and a lack of cutting edge research institutions, elements needed to attract qualified expatriates. Sound economic programmes could not be implemented in the absence of independence. A major barrier to Palestinian trade was the absence of access to the outside world, while the lack of contiguity presented a significant barrier to trade within the territories. A robust programme of development would require unimpeded access regardless of short-term sovereignty arrangements. The final agreement should address that problem, as it should also address the settlement problem.  A proposal that selective settlements be dismantled over the next five years through Palestinian and Israeli disincentives for settlers to stay would allow Israel to keep extraterritorial control.  That constituted grounds for problems and any timetable of that sort had to be limited.

47. Mr. Yossi Katz, Member of the Israeli Parliament (Knesset), noted that the basic economic interests of the two parties were so intertwined that even political separation could not solve the problem. Poverty, ignorance and a sick economy were the best way to fan the flames of terrorism and promote radical groups, whereas a strong Palestinian economy would afford peace a better chance. A correct balance between security needs and the free movement of resources was needed, as well as a balance between economic cooperation and dependency. Twenty-five per cent of Palestinian workers found ways to avoid the roadblocks every day in order to go to work.  Israel sold three times what it bought from Palestinians and that ratio should be changed. Political steps should accompany economic steps. Although neither side would be able to realize all its aspirations, Israel and the Palestinian Authority should reach agreement on each of the remaining sensitive issues on the agenda. Jerusalem should be an open city without borders and the holy places should be open to all. Mr. Katz said that his personal nightmare was to see Jerusalem surrounded by barbed wire fence, and proposed that all the Palestinian villages like Abu Dis, El Azaria, Anata, as well as clearly Palestinian suburbs of Jerusalem, such as Beit Hanina, should be part of Palestinian Al-Quds, under the sovereignty of the Palestinian State. There also should be an arrangement by which the Jewish settlements in the territories remained under Israeli control. To educate its public and to demonstrate sensitivity to the Palestinian people, Israel should announce its willingness to take in 200,000 refugees. Palestinian prisoners should be released, even those who had killed Jews before the Oslo agreements. The most radical members of Fatah would thus be turned into the best ambassadors of peace.

48. Mr. Sharif S. Elmusa, Associate Professor of Political Science at the American University in Cairo, put emphasis on water resources as a major non-economic factor affecting Palestinian development. Much of the Palestinian foreign exchange went for imported food that could not be grown because of the lack of water. Israel had imposed water restrictions as a way to control the land and Israeli consumption of water had increased over the years. Palestinians and Israelis have agreed that the inequality would have to be addressed. However, no matter how much the water was divided or redivided, there was not enough. Israel, which was much more able to tap the water resources, had an important but little known aquifer in the Negev desert with 70 billion cubic meters of water. Israel also had the capacity to desalinate water. Therefore, it was able to give back to the Palestinians water that it had denied them over the years.

49. Mr. Taher Shash, Legal Advisor to the Arab Organization for Human Rights, maintained that the situation in the Palestinian territory had not improved with the Oslo agreement. Cooperation was to be extended to various areas but the agreements were implemented in a selective manner. The settlements were the cornerstone for the Israeli project to take over all Palestine, as they controlled the sources of water and occupied arbitrarily annexed land from which Palestinians had been forced to flee. The annexation of Palestinian territories and Israeli settlements had thus taken over a large part of the West Bank. It was said that Israel was proposing to keep 40 per cent of the West Bank.  The settlements represented agricultural and social centers that were subsidized by the State. In Jerusalem, Israel had been following a policy of annexing it entirely.  The development of East Jerusalem, one of the largest cities and main tourist site, had been expanded so that it represented 25 per cent of the West Bank.

50. Mr. David Newman, Head of the Department of Politics & Government at Ben Gurion University of the Negev, stated that the Oslo II map was a recipe for disaster, as there was no territorial compactness and contiguity and one had to cross from one side to the other on a daily basis. The whole of the peace process had been based on the concept of separation and the argument for a bilateral state was not acceptable to the vast majority on either side.  The location of Israeli settlements was problematic. The Government at the time of the Oslo agreement was unable to discuss the question of evacuation of 180,000 settlers. The big test would come when the first settlement were to be evacuated. It could be a rallying call for settlers and the right wing and result in major violence. Even if the Israelis wanted to withdraw from the settlements they could not. The idea that some settlements could remain as exclaves was not feasible. Mr. Newman suggested that when discussing the borders one does not have to be limited by the borders of 1949 or 1967; all other options had to be reviewed to arrive at a best possible separation. Modern computer systems could assist in such an undertaking.

51. Mr. Emad Gad, Researcher on Palestinian affairs at the Al-Ahram Center for Political and Strategic Studies in Cairo, noted that, in general, the Arab- Israeli negotiations were divided into direct bilateral negotiations and multilateral regional negotiations. The Israeli-Palestinian agreements were meant to reach the final status in September 1998. The parties should recognize that it was pointless to base their future on weapons. They should firmly believe in the need for a settlement, something the Palestinians had come to believe. Israel depended more on arms and weapons in its dealings with the Arab countries. The Arabs, who had owned more than 44 per cent of Palestine, did not accept the 1947 partition.  The United States supported Israel both financially and politically. The Palestinian question had both bilateral and multilateral aspects. When the bilateral negotiations stopped, regional negotiations stopped too and all projects came to a halt. Settlement of the issues of refugees and water required a regional cooperative climate; otherwise those issues might lead to the total sabotage of the negotiations.

52. Mr. Akrum Tamimi, Vice-President for Planning and Development of Hebron University, presented a slide show on experimental stations under the auspices of Hebron University which were intended to demonstrate that sustainable use of natural resources led to sustainable economies. Natural resources needed to be carefully managed. The many different climates encountered in the Palestinian territory made possible agricultural production throughout the year. A project known as the Arub experimental station obtained a US$1 million grant to upgrade its facilities. Greenhouses, agricultural machinery, land-leveling were to be financed by the European Union but Israeli military restrictions had interfered with construction plans. Moreover, the project was further threatened by the Israeli plan to build a paved road through the experimental station.

III.   CLOSING SESSION

53. Closing statements were made by Mr. Soliman Awaad, Assistant Minister for Multilateral Affairs of Egypt; Dr. Nasser Al-Kidwa, Permanent Observer of Palestine to the United Nations; and by Mr. Ibra Deguène Ka, Chairman of the Committee on the Exercise of the Inalienable Rights of the Palestinian People.

54. In his statement, Mr. Soliman Awaad, Assistant Minister for Multilateral Affairs of Egypt, summarized some of the findings of the panel discussions.  He emphasized the need for sustained increase of the growth rates of the Palestinian economy, as well as its import and export rates, which would positively reflect on the improvement of the living conditions of the Palestinian people.  That required continued and increased assistance by the international donor community.  He stressed that any economic success was closely linked to progress in the peace process.  He expressed Egypt's desire to cooperate closely with a future independent Palestinian State.

55. Dr. Nasser Al-Kidwa, Permanent Observer of Palestine to the United Nations, expressed his delegation's appreciation for Egypt's continued support of the Palestinian people, be it at the United Nations or elsewhere.  He emphasized the important role of the donor countries, United Nations bodies and agencies, in particular UNDP and UNSCO, in providing much needed assistance to the Palestinian economic development.  He pointed out that in the whole Middle East region, economic development was very closely linked with the political situation.  For the Palestinian people, that meant above all to put an end to foreign occupation and to achieve national independence.  Healthy economic relations with Israel were in the interest of Palestinians and Israelis alike.  He expressed also the wish for mutually advantageous economic relations with the Arab countries.  In conclusion, he reiterated the hope that the final status agreement will be concluded in time and that the United Nations should grant full membership to Palestine to enable it to participate fully in the United Nations Millennium Summit.

56. In his concluding remarks, Mr. Ibra Deguène Ka, Chairman of the Committee on the Exercise of the Inalienable Rights of the Palestinian People, said that the Committee had always attached great importance to social and economic development and the improvement of living conditions of the Palestinian people. It was for this reason that the Committee had devoted a special place in its annual programme of work to social and economic issues of the transitional stage. In a continued effort to mobilize international assistance to the emerging Palestinian nation, the Committee had decided to convene the United Nations Seminar on Prospects for Palestinian Economic Development and the Middle East Peace Process.  The participants reviewed the current status of Palestinian institution-building and economic performance during the interim period, the steps taken towards establishing a better environment for sustainable economic development, in coordination with donors, intergovernmental organizations and other actors. The experience, gained in the past several years, has been thoroughly discussed and formed the basis for formulating objectives and strategies of Palestinian development. The participants were of the view that partnership between Israelis and Palestinians in the peace process had to be accompanied by partnership in economic development, and that the sustained Palestinian economic and social development was in great measure influenced by non-economic issues. The outcome of the negotiations on interim and permanent status issues would most certainly affect the present Palestinian economic activity and the future of the Palestinian economy in general.

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