Opening Remarks to Ad Hoc Liaison Committee of Donor Countries

Madam Chairperson, Distinguished Guests,

May I begin by paying tribute to the Norwegian Chairperson of the Ad Hoc Liaison Committee, as well as to the World Bank and the I.M.F. for the extensive effort invested in this meeting. At the same time, I would like also to use this opportunity to send a message of thanks to the State Department of the United States of America for hosting this conference.

Today's event takes place following the meetings held here in Washington between the Israeli delegation, headed by the Minister of Foreign Affairs, Mr. David Levy, and the Palestinian delegation, headed by Deputy Chairman, Mr. Abu Mazen. These meetings, despite the gaps in the positions of the parties, demonstrate the commitment of both Israel and the P.A. to the continuation of the process that started at Oslo. That process may not be as speedy and as smooth as first hoped, but it is nevertheless an irreversible historic process. In the end we will achieve a comprehensive settlement.

We all agree that the strategic goal of this vital forum is to support and strengthen the Palestinian economy. I would like to focus briefly on three economic issues which I believe demonstrate the commitment of Israel to the improvement of economic conditions in the territories and which we hope will provide positive impetus for Palestinians economic development.

Firstly, I would like to point out the importance of the development of the industrial zones. The Erez Industrial Zone, which is functioning for several years, demonstrates that even in most difficult periods in the Israeli-Palestinian relationship the pattern of economic relations, established at Erez, has continued to function and even to expand. The Erez Industrial Zone, comprising today over 80 factories - a significant part of which are owned by Palestinians - and employing more than 3,000 residents of Gaza, is an example of a viable economic project based upon solid mutual interest.

Israel and the Palestinians are currently finalizing the principles for the Gaza Industrial Estate regarding the movement of goods and people. This first Palestinian Industrial Estate, which will open at the mid of 1998, is planned to provide employment for 20,000 Palestinians. It will make available to the individual Palestinian worker an alternative to the option of working in Israel.

Karni is designed specifically so that it will be able to function continuously and without interruptions subject to security needs. The Israeli business sector has shown a great interest in Karni's potential and in investing either unilaterally or in joint ventures together with Palestinian or international entrepreneurs in this promising project. Furthermore, the Israeli government has designated the Minister of Trade and Industry to coordinate between all the relevant authorities in order to facilitate the active involvement of potential investors in Karni. In addition, it has been decided on a vast simplification of the relevant bureaucratic processes in order to enable the speedy development of the project.

Corresponding to the work on Karni and realizing the potential of the industrial zones, Israel is currently engaged in evaluating the possibilities of continuation of the successful Erez/Karni model. The Israeli government has expressed its willingness to finalize the location of the first industrial zone in the West Bank. Donor countries are also involved in this process and have expressed an interest in financing the building of the required infrastructure for such a West Bank Industrial Zone.

Secondly, in addition to the industrial zones, Israel is committed to improve and to expand the crossing points and international passages. It has been decided, and the decision is all ready being implemented, to hand over day-to-day operations at the crossing points from military personnel to civilian professionals, under the auspices of the Israel Airport Authority. In doing so, Israel attains to ensure a situation in which Palestinians using the crossing points will be received with dignity and be caused only minimum delay. This civilian approach will also be applied to the passage of goods so as to provide for enhanced transfer of goods produced in the P.A. to markets in Israel, the Middle East and abroad.

The Israeli government is committed to improve and expand the volume of trade passing the crossing points and international passages. Accordingly, it has all ready invested over 1.5 million dollars in the improvement of the infrastructure at the Raffah Passage so as to facilitate a more speedy and efficient transfer of goods back and forth from Gaza to Egypt. In addition, Israel has expressed its willingness to enlarge the Allenby Crossing Point in order to provide for enhanced passenger and cargo capacities.

The new cargo terminal at Karni, being built today by Israel coordinated with the P A., will be an example of this approach. In 1997 alone Israel is donating 7 million dollars towards the development of the security infrastructure at the Karni cargo terminal so as to enable greater efficiency and speed in the flow of goods.

Thirdly and finally, today more than 50,000 Palestinians are employed by Israelis. Israel is willing to increase the number of permits for Palestinians according to market demands and even to allow some of them to stay in Israel on a weekly basis, subject to security criteria. Moreover, so as to facilitate the employment of Palestinians workers inside Israel, and to favor Palestinian workers over other foreign labor options, Israel proposes a new plan to safeguard the flow of Palestinian workers into Israel even in times of security tension. This plan calls for cooperation between Israel and the P.A. in the creation of a new preferential passage status which will enable the continuous entry of scores of thousands of workers into Israel on a daily basis.

These measures have all been designed in order to limit the influence of the security factor on the economic situation in the P.A. It is our hope that by helping to make the economy in the territories less susceptible to the strict security measures that we are forced to implement, following terrorist attacks, the foundation will be laid for continued and sustained economic growth. Only such a growth, which will bring result in the flourishing of the private sector in the P.A., will bring to the people of Gaza and the West Bank the feeling that peace brings very tangible benefits and that the peace process serves the interest of all parties.

Huge challenges confront us as we approach the end of 5 years of donors' commitment. By restoring confidence, by laboriously bricklaying trust and goodwill, by crystallizing our common vision, we Israelis and Palestinians will be able to make substantial progress and, on the path of peace and hope, we will be able to maintain the support and to encourage further involvement of the donors.