Special Envoy for Middle East Peace George Mitchell at Palestine Investment Conference (AP)
"President Obama from his very first days in office has made the pursuit of Israeli-Palestinian peace and comprehensive peace in the Middle East a very major focus. It is important that proximity talks currently underway with the Israelis and Palestinians continue, and we’re going to continue to encourage the parties to find a way to direct negotiations and make progress towards a two-state solution."What is the significance of the Palestine Investment Conference that will take place on June 1 and 2? What has the U.S. Government done to assist in preparing for the conference?
First we should put it in context. The Palestine Investment Conference is part of the PA’s overall institution and state-building effort. Since the summer of 2007, the PA under President Abbas and Prime Minister Fayyad has taken some very significant reforms that are aimed directly at improving the livelihoods of Palestinians and supporting the cause of peace. The PA has focused, first and foremost on security, on reestablishing the rule of law throughout the West Bank and improving the conditions in which the Palestinians can safely and securely go about their daily lives. And, of course, this has had a very significant impact on the prospects for peace. It is part of the Palestinians’ Road Map obligations, but it also directly contributes to creating the conditions for private sector growth and improving the investment climate. It is the basis on which this conference, the 2008 investment conference and, overall, the prospects for sustained economic growth are possible.
One of the criticisms of the 2008 Palestine Investment Conference, which I’ve heard but do not share, was that it was a one-off, PR event that essentially brought together large groups of people, but didn’t really have any impact on the ground. I happen to disagree, and I think one of the most significant points of next week’s conference will be to demonstrate just how false that is. There has been real and continuing progress on the ground in the West Bank. The PA has continued its process of internal reforms, supported by the international community, to improve the investment climate, and attract and increase domestic and foreign capital. There are success stories in just about every sector: in information technology, banking, insurance, construction, retail sales, tourism and agriculture. There is a recognition of serious potential in this economy if the process of reform continues and the restraints on its growth continue to be relaxed.
In terms of what the U.S. Government has done, we have played a very strong supporting role in the run up to this conference and I hope that the Palestinian organizers would not disagree. In addition to direct support through one of the many USAID programs that we are currently running to promote the private sector, we have helped the organizers identify potential partners for investment. We’ve also encouraged and invited guests to attend and have reinforced to our friends in the Government of Israel the importance of making this conference a success by easing access for potential investors and for Gazan business people to get to Bethlehem. On this last point we haven’t had to work too hard since the Israelis have expressed strong support for the conference from the very early planning stages.
What is the role of the international community in working with the PA to support Palestinian state-building efforts?
The PA is playing a central role in leading the effort of institution building. On the economy, they are looking at improving the ease of doing business through economic and legislative reforms. We are not the only donor but we happen to be the largest bilateral donor to the PA and we have worked hard to support its efforts by providing assistance both to the private sector in terms of training, capacity building, and trade facilitation, and also to the PA directly through budget support, institution building and training for the PA security forces. This is an important aspect of the efforts to continue to build or improve the rule of law in the West Bank. We have helped extend credit to Palestinians that they previously did not have access to, in terms of loans to expand businesses or purchase homes. Programs like the Loan Guarantee Facility, that is supported by OPIC, as well a very significant and promising program called the Affordable Mortgage and Loan facility program (AMAL).
In terms of economic growth, what are main factors that have led to the 8.5 percent GDP growth in the West Bank and the overall 6 percent in the Palestinian territories? How can this growth be sustained in the long run?
There have been notable improvements in the West Bank’s economic outlook in the last two years. They have been driven primarily by the improved security situation and the reforms that have been implemented by the PA. In response to the commitment to reform, the international community has stepped up with increased levels of assistance, both for implementing projects and in terms of direct budget support that has enabled the PA to pay salaries, meet its financial obligations consistently, and improve its overall effectiveness. It is also important to note that the Government of Israel has eased restrictions on the movement and access of people and goods within the West Bank. One very important development is the increased number of Israeli Arabs shopping, eating, and touring in the West Bank. These were traditional economic ties from the past that were largely broken in recent years and their re-emergence is a fairly significant economic and cultural development.
In terms of sustainability, sustainable economic growth is only achievable in the long run through the development of a strong and vibrant private sector. The PA is on a path to increasingly cover its own budget expenditures though domestic revenues, but it still has a significant way to go. It will only be successful if the private sector is able to realize its potential. And that in turn is dependent on continuing internal reforms, support for the private sector, and continued Israeli measures to ease movement and access restrictions on people and goods, to provide increased access to resources in the West Bank, and to allow development of external markets for Palestinian goods.
How does the economic growth fit into larger picture and how does it relate not only to Palestinian state-building efforts, but also to the political process between Israelis and Palestinians? Can one happen without the other?
Our assistance represents the continuing and unwavering U.S. commitment to help President Abbas and Prime Minister Fayyad build the institutions, develop the capacity and provide the services essential to the establishment of a viable and a vibrant independent Palestinian state. The foundation of a future Palestinian state rests in turn on the development of a strong, viable economy. Continued Israeli cooperation is going to be essential to allow the PA to fully realize its plans to build the institutions of a future state. This is an essential complement, but not a substitute, to the efforts to achieve a two-state solution through negotiations. They are, at the end of the day, mutually reinforcing.
Israel has taken some commendable measures over the past year to allow greater freedom of movement for Palestinians within the West Bank, but there is more to be done. Improving Palestinian businesses’ access to export markets, to equipment, to industrial inputs and ensuring that foreign investors are able to visit their investments could go a long way to making this growth sustainable.
Right now the people of Gaza are being left out of the economic growth. What can different actors do to improve the situation in there?
The U.S. is strongly committed not only to the well-being of the people in Gaza, but also to the restoration of its economy. This is a tall mountain to climb. We are working closely with the PA and coordinating with the international community to improve the humanitarian and economic conditions there. The U.S., through both USAID and UNWRA, remains the largest contributor of humanitarian support in Gaza.
The Gazan economy requires increased access to goods, especially reconstruction materials and spare parts. We are working with the Israeli government to ease access restrictions and to increase the ability of Palestinians to get in and out of Gaza. Over the last few months we’ve seen some progress with the entry of glass, wood and aluminum for the private sector, and the recent delivery of cement for a few specific reconstruction projects. In terms of the broader picture, we recognize that Gaza must play a central role in the political and the economic future of a future Palestinian state. Gaza has been, and we think must be, a vital part of the Palestinian economy, with a strong export-oriented private sector and trade ties to the West Bank, to Israel and to the outside world. The current circumstances, in particular Hamas’ continued illegitimate rule over the people of Gaza, are preventing that.
In terms of the materials that were recently let in, what is the process that was undertaken to allow them to go through and what role has the U.S. played in allowing those materials to get in?
We consult very closely with the PA and with the key players in the international community, particularly in the UN family and within the Government of Israel, to see what can be done to broaden the types of products that can get in, in a way that respects Israel’s security needs as well as the quantities of products needed. It is an intense process of consultation and one that we are going to continue to put maximal effort into.
What is the U.S. Government’s position on the Palestinian boycott of Israeli settlement products and discouraging Palestinian workers from working in Israeli settlements?
Our position on settlements is very clear. With regards to the boycott, we have encouraged both the PA and the Government of Israel to discuss these kinds of issues directly in bilateral channels. And that’s probably the best way these things can be addressed.
With visits to Washington scheduled for Prime Minister Netanyahu and President Abbas soon there after, what are the goals for the upcoming meetings?
President Obama from his very first days in office has made the pursuit of Israeli-Palestinian peace and comprehensive peace in the Middle East a very major focus. It is important that proximity talks currently underway with the Israelis and Palestinians continue, and we’re going to continue to encourage the parties to find a way to direct negotiations and make progress towards a two-state solution.
Since the commencement of proximity talks there have been reports that the Israeli government has offered a package of confidence-building measures, including giving Palestinian control over some pieces of Area C for a road to Rawabi and also easing movement at border crossings. Can you tell us anything about this package?
The U.S. continues to encourage the Government of Israel to permit Palestinians greater access to resources and land in Area C, and that includes the access road to the future city of Rawabi. I would have to refer you to Government of Israel for comment on any specific measures they are contemplating at this point.
What is the interlinkage between security and the economy? Can you speak more about how these two sectors work together and what the United States can do to support further progress in those sectors in unison?
Without a good security baseline and without rule of law it is very hard for economic development to proceed in any setting. I think, first and foremost, the Palestinian leadership recognized that and that’s why they have taken such a serious approach to improving the rule of law in the West Bank and have put such major efforts into it. We, and other parts of the international community, have tried to be supportive of that. There is definitely a very close relationship between those areas which have seen a significant change in the security situation and in rule of law and the ability for businesses and individuals to prosper economically. I have seen that in my various visits throughout the West Bank, and I have heard directly from Palestinian citizens, businesses and officials that the two are interwoven quite closely.
As we continue to try to do what we can to help the Palestinians strengthen the rule of law and security in their areas, we also continue to be supportive of their programs to provide the basis of sustained private-sector-led economic growth, helping them implement their vision and, in fact, these things are intimately connected.
