A United Nations Seminar on Assistance to the Palestinian People this morning held a panel discussion on the theme “Looking Ahead: Coping Strategies for the Palestinian Economy”.

Experts addressing the Seminar spoke about the Palestinian perspective of the economic recovery, prospects for a longer-term economic development, the economy of an independent Palestinian State, and of donor strategies and assistance coordination.

Speakers also stressed that the international community had a great responsibility to force Israel to adhere to international law, end the occupation, and implement United Nations resolutions to resolve the conflict. There was no substitute for political stability and control which should be in place in order to build economic self-sufficiency and end dependency on foreign aid, they said.

Opening the panel discussion, Ghania Malhis, Director of the Palestine Economic Policy Research Institute, said the only practical way to solve the economic crises and promote economic recovery was not an economic strategy, but a political process that would end the Israeli occupation of 1967, ensure the return of refugees to their homes and land, remove the Israeli settlements and their effects including the apartheid wall, lead to the recognition of the Palestinian rights to sovereignty over their land and resources, free their economy from its colonial dependency on the Israeli economy, and provide a possibility for a peaceful and cooperative relationship based on mutual interests between Israel and Palestine.

Mohammad Abu Koash, General Delegate of Palestine to Denmark, said the Palestinian State with provisional borders was an unnecessary arrangement that might prove to be a permanent trap. The idea of economic integration was only a cover up leading to forced colonialism. Before 1967, there were no economic relationships with Israel, yet Palestinians had better economic conditions. At present, because of Israeli policies, Palestinians were dragged into dependency on the Israeli economy.

Eli Sagi, Head of the Department of Economics and Management at the Academic College of Tel Aviv Yaffo, said some of the problems today suffered by the Palestinian people were recoverable, for example a destroyed house could be rebuilt, but some could not, such as deterioration in health and holes in education. The issue of separation versus integration in the long term was an important one, notably in the context of a potential independent State. The dilemma on both sides was how to compromise. For Palestine, it was sovereignty versus prosperity, and for Israel it was security versus prosperity.

Raja Khalidi, Chief of Assistance to the Palestinian People at the Division on Globalization and Development Strategies of the United Nations Conference on Trade and Development, said that today, a qualitatively different development challenge had been imposed on the Palestinian people than what they had had to face so far. The bridging of the first political and security steps under the Road Map would immediately entail elaborating an “economic road map” which would have to be seriously addressed if the political process had a chance to succeed.

Judy Barsalou, Director of the Grant Programme at the United States Institute of Peace, said the foreign donor community had responded in significant ways to the needs of the Palestinian people since the Oslo process had begun. Foreign aid, however, could only go so far. So long as the occupation continued and the Israeli policy of closure continued to cripple the Palestinian economy, foreign aid could not achieve the long-term development goals that remained the priority of Palestinians and the donor community.

Francis Okelo, Deputy Special Coordinator at the Office of the United Nations Special Coordinator for the Middle East Peace Process, said that in order for the “Road Map” to succeed, the discrepancies on the ground should be resolved. The Palestinian Prime Minister was doing all he could to redress the economic situation that affected the whole population, but he needed the cooperation of the international community in the economic sphere.

Representatives of the United Nations Children’s Fund as well as World Vision, the Palestine Return Centre, and Gush Shalom also took the floor to participate in the discussion. Austria also made a brief comment.

The Seminar, which opened yesterday, 15 July, will hold a closing meeting between 12:30 and 1:30 p.m. today to round up its work.

Presentations on “Looking Ahead: Coping Strategies for the Palestinian Economy”

GHANIA MALHIS, Director of the Palestine Economic Policy Research Institute, said the Seminar was being held at a juncture in history that forecast transformation of global magnitude. History foretold that humans yearned for basic values, and would not spare their lives to achieve them, and that peace founded on military superiority and arrogance was an illusion. This explained why the Palestinian people were able to survive despite all attempts to annihilate, transfer and negate them. It was true that global transformation, together with the Palestinian ability to accept sacrifices to establish Statehood, along with international consensus, provided an appropriate opportunity to resolve the conflict. However, the presence of this opportunity did not guarantee success. There were grave risks that could, as in the past, destroy this opportunity, unless lessons were learned from past experiences and the same mistakes were avoided.

It was obvious that no peace agreement could survive unless it served the interests of the parties involved, and that any agreement that failed to inspire the hope of a better future was doomed. While the Oslo Accords had brought to the Israeli economy unprecedented growth in all fields at the macro and micro levels, the seven years of limited Palestinian autonomy had not brought about any improvement, and, in fact, conditions had deteriorated steadily. The only practical way to solve the economic crisis and promote economic recovery was not an economic strategy, but a political process that would end the Israeli occupation of 1967, ensure the return of refugees to their homes and land, remove the Israeli settlements and their effects including the apartheid wall, lead to the recognition of the Palestinian rights to sovereignty over their land and resources, free the Palestinian economy from its colonial dependency on the Israeli economy, and provide a possibility for a peaceful and cooperative relationship based on mutual interests between Israel and Palestine.

If the Road Map was to succeed, it had to benefit from past experiences and avoid any policies and practices that had created a vicious circle of escalation and counter-escalation from both sides. In order to revive the peace process, the international community had the great responsibility to force Israel to adhere to international law, end the occupation, and implement United Nations resolutions to resolve the conflict.

MOHAMMAD ABU KOASH, General Delegate of Palestine to Denmark, recalled that the Oslo Accords had concentrated on the political issues while the economic ones had attracted little attention. The serious economic negotiations between the Palestine Liberation Organization (PLO) and Israel took place in Paris and had led to the signing in 1994 of the Israeli-Palestinian Economic Relations Agreement. The Road Map to peace envisaged the establishment of an independent and sovereign Palestinian State by the end of the year 2005 preceded by a Palestinian State with provisional borders by the end of the current year. The Palestinian State with provisional borders would not be the result of negotiations that might drag on for several years.

The Palestinian people had become sensitive to adjectives indicating a temporary settlement arrangement owing to their miserable experience with the Oslo interim period which had lasted for a decade so far. They were not eager to have another interim period until they achieved independence and sovereignty. The Palestinian State with provisional borders was an unnecessary arrangement that might prove to be a permanent trap. Palestinian experience indicated that there was nothing more permanent than the temporary. Hopefully, the interim stage would be cancelled and negotiations including economic ones would tackle the issues pertaining to the independent and sovereign State.

The external and internal closures of borders were meant to advance a one-way market economy, with goods flowing from Israel to Palestine. The idea of economic integration was only a cover up leading to forced colonialism. The Israelis had stopped Palestinian goods from reaching the Israeli markets. Before 1967, there were no economic relationships with Israel, and Palestinians had better economic conditions. At present, through the Israeli policies, Palestinians were dragged into dependency on the Israeli economy. People under foreign occupation yearned for freedom and were willing to make sacrifices including economic ones to achieve that goal.

ELI SAGI, Head of the Department of Economics and Management at the Academic College of Tel Aviv Yaffo, said it was very important to look far ahead into the issue, until there was success. Past failures should not impede this, for without an end goal, there was no path for the interim period. When looking into the long term, there were some effects of the current crisis that would have bearing. Some of the problems today suffered by the Palestinian people were recoverable, for example a destroyed house could be rebuilt, but some could not, such as deterioration in health and holes in education. The issue of separation versus integration in the long term was an important one, notably in the context of a potential independent State for Palestinians.

What role should the Israeli economy play in Palestinian development, he asked, and noted that this could only be resolved in the context of an integrated economy. There were several spheres and dimensions of economic integration and relations, which were fundamental indicators of the differences between the two economies. There were three fundamental factors to be borne in mind when analyzing the relations between the economies, and these were the size differential between the two, the economic development gap, and the proximity between the two economies, which was by far the most important and relevant factor.

A pre-requisite for Israeli long-term sustainable growth, he said, was a prosperous and peaceful Palestinian neighbour, since this would enhance geopolitical stability in the region, and lead to efficient utilization of Israeli resources through integration in the global economy, thus securing its ability to obtain long-term sustainable growth. However, the dilemma on both sides was how to compromise. For Palestine, it was sovereignty versus prosperity, and for Israel it was security versus prosperity. However, integration should take place on a parity level, so each side would have to compromise, since that was the way forward.

RAJA KHALIDI, Chief of the Unit of Assistance to the Palestinian People of the Division on Globalization and Development Strategies of the United Nations Conference on Trade and Development, said that now that the prospects that a political process would re-emerge from the carnage of the past three years had improved, the United Nations had become one of the core parties committed to pursuing a common Road Map to resolve the Israeli-Palestinian conflict. Among other aims, that process was expected to lead to the establishment of the independent, democratic State of Palestine with a clear time limit. Though United Nations involvement in the Road Map process had yet to extend to the economic sphere, there was no doubt that the Organization’s wider competence, both technical and political, would be increasingly needed in a range of areas.

Today, a qualitatively different development challenge was being imposed on the Palestinian people than they had faced so far. The bridging of the first political and security steps under the Road Map would immediately entail elaborating an “economic road map”, which would have to be seriously addressed if the political process had a chance to succeed. The impact of the three-year conflict on the Palestinian economy had to be addressed without shying away from confronting the realities on the ground. A third new challenge in the transition from the current confrontation mode to a post-conflict situation was to establish a more coherent, elaborate and prudent national development policy and strategy that recognized and tried to bridge the relief, reconstruction and development phases of the economic Road Map process.

By mid-2003, the Palestinian people had endured decades of volatile and adverse conditions affecting their economic and social development under Israeli military occupation. Since 1994, there had been limited Palestinian interim self-government, interspersed with periods of prolonged popular uprising and violent confrontations, the most recent of which had spanned three years. To a degree not previously discernable, those conditions had effectively transformed the occupied Palestinian territory into a war-torn economy with most of the salient features of many conflict economies. In the transition from a war-torn economy to a successful developing economy, the new State of Palestine should be able to benefit from worldwide experiences to turn the economy into a sustained one.

JUDY BARSALOU, Director of the Grant Programme at the United States Institute of Peace, said the foreign donor community had responded in significant ways to the needs of the Palestinian people since the Oslo process had begun. While that response had not always been as fast or complete as Palestinians might have desired, foreign aid had been relatively effective in building up the capacities of the Palestinian National Authority and in meeting the basic humanitarian needs of the Palestinian people who continued to live under Israeli occupation. Foreign aid, however, could only go so far. So long as the occupation continued and the Israeli policy of closure continued to cripple the Palestinian economy, foreign aid could not achieve the long-term development goals that remained the priority of Palestinians and the donor community.

Support for recurrent expenditures and emergency assistance had especially increased in the years since the al-Aqsa intifada began. That period had been marked by even more stringent closures preventing the freedom of movement of goods and people, by the physical destruction of substantial portions of the infrastructure built during the Oslo period, and by a rising humanitarian crisis. These had made donors recognize the necessity of continuing to provide emergency support for recurrent expenditures and humanitarian aid. This large number of donors providing aid to the Palestinian people and government institutions had imposed the necessity for greater consultation and coordination between the donors than was usually the case.

It was possible to identify a number of tensions that had existed between the international donor community, the Palestinians and the Israeli Government in relation to the provision of foreign aid since the beginning of the Oslo period. Perhaps the greatest tension had stemmed from the desire by donors to invest in long-term infrastructure and development projects, versus the obvious need to provide for recurrent expenditures and humanitarian assistance, as the occupation had continued. Even under the best of circumstances, she said, aid was only a partial answer. There was no substitute for political stability and control that should be in place in order to build economic self-sufficiency and end dependency on foreign aid.

FRANCIS OKELO, Deputy Special Coordinator at the Office of the United Nations Special Coordinator for the Middle East Peace Process (UNSCO), said that there was a sign of optimism in the Middle East situation. There was a widely accepted peace plan at present, which was the first reason for optimism. Unlike the Oslo Accords, the Road Map provided a time limit for its implementation. Both sides had accepted the peace initiative. The major actors in the region, Egypt and Jordan, were actively involved in the process as was the United Nations Secretary-General. The Palestinians were fully determined to achieve Statehood. The Road Map was not without difficulties as there were renewed acts of violence from both sides. The international community, particularly the Security Council, had condemned violence and had affirmed that it was in no way a means to achieve peace.

In order for the Road Map to succeed, the discrepancies on the ground should be resolved. The serious economic damage might be a major problem that the Road Map could face. Many families were affected by the economic downfall; and the rate of unemployment was higher than ever. The Palestinian Prime Minister was doing all he could to redress the economic situation that had been affecting the whole population. But he needed the cooperation of the international community in the economic sphere. In order to recover the Palestinian economy, donors had pledged $1.27 billion, which would be used to fund the damaged economy. The financial assistance to the Palestinian economy should be increased. The assistance for food needs had also been limited to $100 million, most of which came from the World Food Programme. Further financial support should also be made to the budget of the Palestinian Authority.

Debate on Coping Strategies for the Palestinian Economy

TOM GATEMAN (World Vision) said a lot of the organization’s work had been destroyed during the last three years of violence. The upbeat mood and factual content of this Seminar had been comforting, and he wished to reassure the participants that the spirit of the meeting was borne out in other meetings. Experience had shown that coordination between relief agencies and Palestinians was excellent and even a model. He wondered whether there was a growing willingness in Israel to engage in negotiations at a level that would move things forward and staunch the flow of blood.

A Representative of Palestine Return Centre asked whether the United Nations saw resolution 194 as a basis for the resolving of the refugee problem, and if so why was it not included in the Road Map.

A Representative of Gush Shalom spoke of the situation of a typical Palestinian male and of his dilemma on a personal and then on a general level with regards to the conflict.

A Representative of United Nations Children’s Fund said the issue of the large number of Palestinians entering the Israeli labour market should be examined in detail. There was a large number of educated and highly-qualified Palestinians joining the labour force, with a very high proportion of women, and it should not be ignored that this was an important factor to be taken into consideration. There was a need to identify ways and means of protecting this work force, and an effort should be made to ensure that Palestinians were the preferred labour work force within Israel, should they choose to enter that territory. The dilemma between peace and justice, and the need for reconciliation was also an issue.

In response to the questions and comments, Ms. Barsalou said that Palestine was a unique case in the effort of coordination among donors. Coordination in many sectors, such as health, had been successful, while in others, further efforts needed to be made. The preoccupation in the occupied territory was a question of survival. The donors had to play a role in influencing the political process. The donors should be able to involve themselves to take a position in the negotiation process.

Mr. Sagi said that economics was not a leading political factor in the Middle East; a politically driven economy had so far been a failure. The issue of education among the Palestinians was very important. The opening of the Israeli market for Palestinians on the basis of their education might pose a problem because of the fact that it might exclude unskilled ones. The reconciliation between Israel and the Arabs would indirectly contribute to the region’s economy.

Mr. Okelo said resolution 194 could not be ignored, but the right of return was a contentious issue, about which both sides felt very strongly. The debate on both sides was ongoing, and would not be ignored. The Road Map had been under discussion for nine months and the issue of the right of return was one which should be tackled at an appropriate time, when the climate was right and the parties were ready to deal with it. It was his impression that Palestinians agreed with this since they had agreed with the Road Map. It was hoped that when Palestinians and Israelis could live peacefully side by side, then reconciliation could take place on an organized national level.

Mr. Abu Koash said that in his paper, he had wished to underline that the moment that Israel treated Palestinians as equals, then since they had open minds, they would look to the future of the relationship in terms of economics, for example like the relationship between Germany and France, but only in terms of equals, with an established economic policy determined by the needs of the people themselves without external pressure. He stressed that another economic agreement that perpetuated the status quo would be a destabilizing factor for both Palestine and Israel, and would inevitably undermine any political agreement.

Ms. Malhis said there was a need to look ahead to identify the future relationship, but there was also a need to jump forward to a situation where Israel was no longer destructive. The use of the past model to define mutual benefits was irrelevant, since it was a colonial situation, and therefore could not be perpetuated. There was a growing gap between the two economies, and it was in contradiction to economic theory, and had been caused not just by the intifada but because of the colonial type of the economic relationship.

A Representative of Austria said that his country had observed a relative improvement in the situation in the Middle-East concerning the Israeli-Palestinian conflict. When the previous seminar was organized in Vienna in 2001 the situation was different.

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