The Karni Industrial Zone is a product of the vision to develop industrial
parks between Israel and the Palestinian autonomous areas.
These parks will contribute to:
- Developing an industrial infrastructure in the autonomous areas.
- Reducing the unemployment rate by creating sources of employment.
- Reducing friction between Palestinian workers and the Israeli
population.
- Reducing home-to-workplace commuting time for workers.
- Strengthening ties with the Palestinians and strengthening the peace
process.
Parallel to the establishment the Karni Industrial Zone, work is in
progress to transfer the adjacent Karni Crossing Point to civilian use.
Location and Size:
The Karni Industrial Zone is located off the present Karni Crossing Point,
near Kibbutz Nahal Oz, on an area of 722 dunams, and is intended to employ
20,000 Palestinians (several thousand in the initial stage). It is located
to the in the area under Palestinian jurisdiction.
Bodies Involved in the Project:
The official body behind the project on the Palestinian side is the
Ministry of Industry, headed by Deputy Minister Adnan Samara and
Director-General Nasser Jabbar.
Project initiatives and operation are being conducted by the PADICO
company, headed by Dr. Amin Hadad.
Funding for the project comes from several sources:
- The PADICO company is investing 14 million dollars and providing loan
guarantees.
- The World Bank is investing 27 million dollars (1 million in capital
and approximately 26 million in various loans).
- The Bank of Europe is investing approximately 16 million dollars in
loans.
- The American Aid Agency is bestowing a grant of about 6.3 million
dollars.
- The Palestinian telephone company PALTEL is investing approximately 1.5
million dollars.
- Israel, as a donor, is investing about 7 million dollars in a security
infrastructure for the Karni Passage.
Status and Timetable
Groundworks are currently under way on both sides of the Karni Crossing
Point to level the ground At the industrial park site, concrete surfaces
are being poured to serve as a basis for industrial buildings and
storehouses.
The crossing point, in its new format, will begin operating on April 1,
1998.
By Palestinian estimates, the first factories can begin operating within a
few months, but in the absence of suitable infrastructure (electricity,
water, communications, sewage), it appears at this stage that these will
be sewing workshops rather than heavy industry - which are expected to
open after a year or more.
Operation of the Industrial Zone:
The PADICO company will be responsible for the operation of the industrial
zone, under a special procedure to be established for this purpose, which
will lease land or buildings to entrepreneurs.
The PA is establishing a special authority for industrial zones in order
to address the needs of investors and reduce bureaucracy.
Entrepreneurs and Investors:
The Palestinians and Israel wish to encourage Palestinian investors to
invest and create new sources of employment.
Israel has declared its willingness to provide benefits and dispensations
to investors in entry, stay and residence permits, according to need and
and subject to prior approval by security officials. Planning, work and
development teams will also receive benefits in the area of entering
Israel, subject to security approval, in order to facilitate proper
commercial activity.
It should be noted that the Palestinians are currently concluding
legislation of a law encouraging capital investments as well as an
industrial zone law, whose purpose is to legally define benefits for
entrepreneurs and investors.
The present Karni Crossing Point constitutes a central channel for
transporting merchandise to and from Gaza to Israel. The volume of
activity is currently about 250 trucks per day, about 60% of which
constitutes sales to Gaza and 40% purchases from Gaza.
Security Principles:
Israel insists upon three security principles:
- Inspection by Israelis
- Inspection within Israeli territory
- Inspection according to Israeli regulations
The inspection system will be determined by the type of factory, its needs
and the security official's decision. In any event, the rapid delivery of
merchandise to ports (for export) will be ensured, with no damage to the
merchandise.
Summary:
At the beginning of April 1998, the operation of the Karni Crossing Point
will be be changed to a new format under the auspices of the Israel
Airports Authority. Under this new format, the crossing point will provide
a solution for the conveyance of merchandise from Gaza in general and the
Karni Industrial Zone, in particular.
The Karni Industrial Zone should begin operating within a few months. It
is expected that the entrepreneurs will at the outset be Israelis and
Palestinians, and at a later stage, international as well.
While funding for the industrial zone exists in principle, disagreement
regarding the perception of security operation is preventing the signing
of a document of principles and the release of 10 million dollars from the
World Bank.
Both sides agree that Karni will receive preferential status as a
condition for its success.