b i t t e r l e m o n s. o r g
    October 31, 2005 Edition 38                       Palestinian-Israeli crossfire
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  The Wolfensohn mission
  . Stronger administration backing        by Yossi Alpher
The long-term infrastructure projects Wolfensohn advocates need not be affected by current concerns over security.
. A fate foretold        by Ghassan Khatib
We are now living the situation the World Bank warned against last year.
  . A preliminary assessment        by David Brodet
Wolfensohn now finds himself as but one more in a long chain of figures who have fallen victim to the conflict.
. A message to us all        by Mohammad el-Samhouri
We all need to take a hard look at where things stand now and how we can proceed before it is too late.

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Stronger administration backing
by Yossi Alpher

The Wolfensohn mission is the product of a careful American policy calculation. But if it doesn't receive stronger administration backing, it will fail, thereby denying us all one of the more attainable fruits of Gaza disengagement.

The Bush administration endorsed PM Ariel Sharon's disengagement plan because that initiative appeared to be a feasible means of improving the situation without requiring any heavy American policy investment. This reflects the current US order of priorities in dealing with the Middle East: first, getting out of Iraq without leaving behind a fiasco; second, deterring Iran from going nuclear; third, democratic reform in the region. The Israeli-Palestinian conflict appears to be no higher than fourth on this list, insofar as an administration effort to actually solve the conflict would mandate a far larger investment in American energies and prestige, require a more viable Palestinian partner, and divert important diplomatic resources away from more pressing commitments elsewhere in the region. Besides, such an effort could easily fail (like all its predecessors), with negative ramifications for the higher-priority aspects of US post-9/11 Middle East policy.

Accordingly, appointing senior and prestigious emissaries like James Wolfensohn and General William Ward appeared to be a solid and relatively cost-free way of ensuring the success of disengagement--which is, to be sure, a partial, one-sided measure, but a potentially win-win-win endeavor (for Israel, the Palestinians and the US) nevertheless. Indeed, the US currently defines its primary objective with regard to the Israeli-Palestinian conflict as making disengagement work economically and politically in the aftermath of the Israeli withdrawal, rather than encouraging a second disengagement or roadmap-based peace talks. That Wolfensohn came to the region under the aegis of the Quartet does not in any way diminish from the administration's responsibility for his mission.

That mission is foundering. The declining security situation, lack of effective Palestinian governance and leadership, and Israeli indifference have all been cited by Wolfensohn himself as reasons for the lack of progress. Can the administration exercise its influence and assist?

Frankly, there is not a lot that outside powers can do to help the Palestinians get a grip on their security situation. General Ward has not been particularly effective in reorganizing the Palestinian security network. Putting US pressure on Syria to expel the Islamic Jihad leadership from Damascus might help a little, by way of weakening the Palestinian terrorist organization that is currently doing the most security damage. But this will be of limited efficacy as long as Iran backs Islamic Jihad.

Nor can the US do very much to improve Palestinian leadership. Under current circumstances it can hardly even pressure Sharon to release prisoners in order to bolster the status of President Mahmoud Abbas, when we see recently released prisoners at the forefront of new terrorist acts against Israeli civilians, and when gunmen supposedly loyal to Abbas are leading the parade of Palestinian lawlessness. Perhaps, when the huge Palestinian (and American) gamble of encouraging Hamas to take part in elections is behind us, we will see--as Abbas argues--an improvement in the security and governance situation. And perhaps not.

The security situation also overshadows considerations concerning the Erez and Karni crossings, i.e., land links between the Gaza Strip and Israel, as well as the attempts to activate an immediate Gaza-West Bank safe passage convoy arrangement and the problems surrounding the Rafah crossing between Egypt and Palestine. In all these areas, Wolfensohn's efforts are severely constrained by security circumstances over which Washington has little influence.

But there is one area where Washington can apply some pressure, in this case on the Sharon government, to get things moving and enable the Wolfensohn mission to begin to show some success: long-term transportation infrastructure projects. Even if an immediate safe passage link is currently impossible due to security concerns, there is no viable reason to prevent the launching of a long-term project for a permanent link, in the form of a sunken or elevated road and/or railway. If security concerns remain paramount five or ten years from now, when the project is completed, Israel can always refuse then to open the road. Meanwhile, the planning and construction of such a link will reflect a graphic commitment by all concerned to the unity of the West Bank and Gaza, which is a minimum necessity for the eventual emergence of a viable Palestinian state--which, in turn, is ultimately the only way for Israel to remain a Jewish and democratic state.

Long-term safe passage should be Wolfensohn's flagship project. The international financing is attainable. It is hard to imagine any convincing argument on Sharon's part, if seriously pressured by the Bush administration, justifying further delay.

The same goes for the Gaza seaport. It represents a highly visible international commitment to Palestinian statehood and economic viability. Financing is assured. Again, Israel's very real security concerns can be dealt with before the port opens, three or four years from now.

Both Bush and Sharon profess to be committed to the establishment of a viable Palestinian state. The Wolfensohn mission was intended to exploit disengagement in order to further that goal. The long-term infrastructure projects Wolfensohn advocates need not be affected by current concerns over security and Palestinian governance. Bush has to make this point to Sharon in a way that enables Wolfensohn to show concrete results for his efforts.- Published 31/10/2005 © bitterlemons.org

Yossi Alpher is coeditor of the bitterlemons family of internet publications. He is former director of the Jaffee Center for Strategic Studies and a former senior adviser to PM Ehud Barak.

A fate foretold
by Ghassan Khatib

There has never been a lack of envoys, mediators or international missions to the Palestinian-Israeli conflict. The latest in a long line is James Wolfensohn and his mission as Quartet envoy to oversee coordination of the Gaza disengagement.

Wolfensohn, however, has set himself apart. He is highly respected by both the Palestinian and Israeli sides, not just due to his status as former head of the World Bank with extensive knowledge and experience of the conflict. Equipped with the detailed studies of the World Bank and other international agencies, Wolfensohn pulled together a capable and experienced team that included experts on the internal Palestinian situation, and which worked extensively on the ground rather than conduct its mission from a distance.

Respected also by the White House, Wolfensohn was able to impose his famous six-point agenda on the two sides as well as on the Quartet members. Indeed, the only criticism of Wolfensohn's mission from the Palestinian side in the beginning was that it was not extensive enough. The Palestinians would have liked to have seen his mandate relate to the implementation of the roadmap as a whole, and not be limited to the disengagement. This is a logical enough position given that the Quartet's support of the disengagement plan was conditioned on it signalling the beginning of the implementation of the roadmap.

And yet, for all that, there is a real sense that the mission is in danger of floundering. Last December, the World Bank, then still headed by Wolfensohn, presented a series of papers in an international donors conference in Oslo detailing what steps were needed to support the Palestinian economy. In one of these papers, the Bank warned that if the disengagement from Gaza was not accompanied by a dismantlement of the closure regime in the West Bank and Gaza and between the West Bank and Gaza and the outside world, then the disengagement would only result in further economic deterioration. No amount of international aid, the paper added, could create economic recovery as long as the Israeli restrictions on the movement of persons and goods within and from Palestinian territory continue. Wolfensohn and his Quartet team put the removal of restrictions on movement at the top of their six-point agenda.

It has had little effect. And frustration at the failure to affect the Israeli position and practice on this issue was expressed in Wolfensohn's report to the Quartet that was recently reported in the media. A little over two months since the Israeli withdrawal from Gaza, and almost a year after the Oslo donors' conference, we are living the situation the World Bank warned against. Israel has tightened rather than eased restrictions on movement. The Rafah crossing continues to be closed, and Erez virtually so. The most important crossing, the Karni crossing for cargo, now ships on average less than half the containers that passed through there before the withdrawal. The economic deterioration thus continues, any new investment is discouraged and unemployment and poverty levels are on the up. Gazans feel they live in a large prison on the Mediterranean and the political and security situation grows ever more unstable.

Wolfensohn brought with him a structured and institutionalized style that enabled him to gain a proper and detailed understanding of the situation. His advice to the Quartet members has added weight as a result. There is no doubt that the Palestinian side needs to do more in terms of internal security in order to contribute to the success of his mission, but by putting up unnecessary obstacles to his mission, ultimately it is Israel that is discrediting itself. Yet, what is still lacking is the necessary political will on behalf of the international community to truly empower Wolfensohn to implement his program. If the international community does so, it will help both Palestinians and Israelis.- Published 31/10/2005 © bitterlemons.org

Ghassan Khatib is coeditor of the bitterlemons family of internet publications. He is the Palestinian Authority minister of planning and has been a political analyst and media contact for many years.

A preliminary assessment

by David Brodet

James Wolfensohn, former president of the World Bank and a respected statesman and businessman, took upon himself a near impossible mission when he special economic emissary of the Quartet. His mission was to generate an economic dimension to the government of Israel's unilateral disengagement plan and to stabilize, with the help of economic components, the new political reality in Gaza in its post-occupation independent status.

The strategy was clear: an improved economic situation in Gaza would, on the one hand, bring about stabilization of the political-security situation there, and on the other, serve as a positive example and incentive for all parties to take additional steps.

The Wolfensohn plan comprised a number of components that appeared to be both simple and vital for the economic advancement of Gaza: 1) creating links between Gaza and Israel, Egypt and the West Bank; 2) generating immediate employment by maintaining the hothouses and operating the Erez industrial zone; 3) producing a commitment on the part of the international community to provide broad financial support in order to create an economic infrastructure and sources of employment not only in Gaza but in the West Bank as well; and 4) encouraging the Palestinian Authority to manage its economic, civil and security policies with efficiency and transparency.

The plan thus presumed close links with Israel, considerable international aid, and the existence of a rational PA. The following assessment of the plan is preliminary, and addresses a period of less than two months following disengagement. It might have been advisable to wait a bit longer, but in the present reality it could be beneficial to offer a few insights in the hope of enhancing the plan's chances of success.

First, we address the links between the Gaza Strip and the outside world. The reality of the first two months has been particularly hard, with Gaza partially closed and passages to Israel, Egypt and the West Bank not providing the minimum input needed for stabilizing the economy.

The link to Egypt has not been regularized. Israel's hasty departure from the philadelphi road, without agreed and binding arrangements for the passage of goods and people, generated confusion and unhappiness in all quarters. Israel feels its interests have been damaged by Egyptian and Palestinian failure to supervise the passage of goods and ordnance. If this situation continues, Israel will be pushed to break the customs envelope and create separate customs regimes for Gaza and the West Bank, with all that this entails both politically and economically. Nor are the links to Israel working; the Erez and Karni passages are partially closed, reflecting the unstable security reality. As for the link to the West Bank, here too the security situation and acts of violence are preventing realization of Wolfensohn's proposal regarding the escorting of regular convoys between Gaza and the West Bank.

The closure of Gaza means the removal of a foundation stone from the economic plan. In practice this prevents not only future economic growth, but even the minimal standard of living that prevailed in Gaza prior to disengagement. Accordingly, the primary mission is undoubtedly to create conditions for opening the Gaza Strip to the passage of goods from all sides.

Turning to the need to create immediate sources of employment, Wolfensohn's initiative to purchase the hothouses and turn them over to a Palestinian company was unique and praiseworthy. About 80 percent of the hothouses were transferred to the Palestinians, facilitating the creation or preservation of some 3,000 jobs in agriculture. But the fly in the ointment is that the lack of clarity in the Gaza-Israel link is liable to sabotage any chance of exporting the hothouses' agricultural produce, while at the same time preventing supply of production inputs such as fertilizers. Thus, despite the welcome initiative and the private financial generosity (including by Wolfensohn himself) involved here, the considerable effort invested will be for naught unless the proper transportation links, internal and external, are arranged. Meanwhile, the initiative to reopen the Erez industrial zone is proceeding at a snail's pace.

Third, the unstable security situation and uncertainty regarding internal governance are discouraging international initiatives to invest in the economic projects considered vital in order to create jobs for a population that maintains the highest birthrate in the world and has a current unemployment rate of some 40 percent. Nor are the public projects involving infrastructure and welfare making progress. The flagship project--constructing a port in Gaza--is delayed. The infrastructure projects require links at this stage with Israel (the Ashdod port) or the West Bank (the Bethlehem stone quarries). The danger in delaying projects assigned to the international community is that its attention will be diverted to other regions that have urgent needs.

Finally, Israel's departure from Gaza in favor of an independent Palestinian regime has not, thus far, produced a stable and efficient government that can exercise authority and generate the necessary conditions for moving the economy forward and creating confidence, both internal and external. The test for Palestinians is clear: maintaining governmental responsibility with all that this entails. This means leadership.

Wolfensohn brought to our region good will, a proven track record from public and private endeavors, and exceptional international connections. He received the backing of all actors in the region and beyond, and formulated a precise plan for dealing with the challenges. He now finds himself, along with his sponsors, the Quartet, as but one more in a long chain of figures over recent decades who have fallen victim to the syndrome of an extended and complex Israeli-Palestinian conflict.

Hopefully, the situation will improve in the near future, Wolfensohn's luck will improve, and we'll all benefit from his plan.- Published 31/10/2005 © bitterlemons.org

David Brodet is former director general of the Ministry of Finance. He headed the Israeli delegation that negotiated the Paris protocols in 1993-94.

A message to us all
by Mohammad el-Samhouri

James Wolfensohn seems to understand well the inextricable link between politics and economics. His 10-year tenure as president of the World Bank, a job he held until his present appointment as the Quartet's envoy to coordinate the Israeli withdrawal from the Gaza Strip, has obviously taught him how tangible improvements in economic conditions in conflict-ridden areas can help solve political problems. Palestine is no strange place for Wolfensohn, and it is definitely not an exception to this fact.

In an economy that has, over that past five years, lost a third of its output (GDP), 40 percent of its per capita income, two-thirds of its private investment, and more than half of its exports; and, as a result, left two-thirds of the population poor and over a third of its workforce jobless; in such an economy, something has to happen to change the downward trend to help provide hope and create a different environment conducive to dealing with all outstanding political issues. Wolfensohn seems to understand the devastating impact of the Israeli closure policy and of the restrictions imposed on movement of Palestinian trade and people. He has devoted most of his time over the past few months since he took this job to mediate between the parties to reach mutually agreed solutions.

Wolfensohn posited a "six plus three" agenda, which is basically a combination of several outstanding items related to access (i.e., border crossings between the Palestinian areas and Israel, territorial link between the Gaza Strip and the West Bank, internal closures in the West Bank, the Rafah border crossing between Gaza and Egypt, and the seaport and airport in Gaza), internal Palestinian matters (including governance and fiscal discipline), and a couple of "leftover" items in the ex-settlements areas (mainly the rubble from demolished settlements and the greenhouses). A satisfactory resolution to all of these issues is indispensable for economic recovery in the Palestinian areas, and a prerequisite for any progress in the conflict.

The issue of border crossings with Israel is mainly related to the need to introduce new and modern technology, upgrading infrastructure on both sides of the border, and, most importantly, adopting a different management system that is written, monitored and agreed to by the parties, all in order to gradually move away from, and eventually dismantle, the present outdated, time consuming and costly "back-to-back" system and replace it with a "door-to-door" system whereby Palestinian interests in fast and free cargo crossing are adequately met without compromising Israeli security concerns.

In Rafah, at the Gaza-Egypt border, the issue is somewhat different. The Palestinian position is that in post-disengagement Gaza, the Palestinian side should have full functional control over their side of the terminal and allow goods and people to cross without a physical Israeli presence, but with the help of a third party to monitor the operation to ensure effective conduct and compliance with the terms of the semi-customs union arrangements with Israel (i.e., the terms of the Paris protocol). The Israeli position is entirely different. The Israeli government initially wanted to move the border crossing further south; about three kilometers from its current location, to a tri-border-point called Kerem Shalom (or Karm Abu Salem in Arabic) at the Palestinian-Israeli-Egyptian border, in order to maintain its total control over the entry and exit of both people and goods. This, the Israeli government said, is essential to preserve the customs union arrangement with Gaza.

A compromise is currently in the making between all concerned parties (the Palestinian side, Israel, Egypt and the Wolfensohn team) whereby passengers entering and leaving Gaza will be allowed to use the present terminal at Rafah, monitored by a third party, without any Israeli physical presence, while cargo trade transaction to and from Gaza will be conducted through the Kerem Shalom border crossing currently under construction. The details of this deal are expected to be finalized and made public within a short period of time, barring any last minute surprises.

As regards the abandoned settlements and their infrastructure, before the Israeli settlers were removed from Gaza, an estimated 4,000 greenhouses were operating, mainly in the ex-Gush Qatif settlement bloc. About 2,500 of these greenhouses were left behind as a result of a financial deal reached with the settlers. Some greenhouses were left in good condition, others were damaged to varying degrees. The Palestinian side has allocated $34 million of its own money and established the Palestinian agriculture development company to make use of the greenhouses. At present, 1,500 greenhouses have been replanted and about 2,000 jobs were created. So far, so good. But the future of this enterprise lies in the hands of the Israeli side. Seedlings, fertilizers, and pesticide come from Israel. Energy and water needs all depend on Israeli supplies. The first harvest season is fast approaching (November 20), and exports of produce need a quick exit to consumers in Europe. If fast, unfettered access is not guaranteed through border crossings, we will be faced with a serious problem. So far, there have been no assurances of any kind. This illustrates how crucial the access issue is for the future of any business in Gaza.

Despite previous understandings that Israel will pay for the removal of the rubble and help secure an exit for materials deemed hazardous, no agreement has yet been reached between Israel and the UNDP, which is entrusted with overseeing and administering the removal of the rubble. The delay in resolving this sensitive issue is troubling to say the least. No major development of the evacuated areas can be implemented until the issue is resolved.

As for the future use of land and future development projects in the evacuated settlements, we just began a serious discussion with the World Bank to see how best this land could be used to serve the needs of both the present population and the needs of the future generations. The reacquisition of this land after 38 years of occupation is a major asset for the Palestinian side, and we intend to do everything possible to use it optimally. Development of the evacuated areas in the northern West Bank is a different matter, and largely depends on whether this land will remain outside the domain of the PA (i.e., continue to be classified as Area C).

The international community has expressed its willingness to provide financial and technical assistance to develop the Palestinian economy, not just the Gaza Strip. The G-8 meeting last summer pledged up to three billion dollars a year over the next three years for that task. Last May, upon a request by Wolfensohn, the PA prepared a "Quick Impact Program" that included 35 projects covering a wide spectrum of areas (water, energy, housing, education, governance, private sector, etc.). A total of $750 million has been committed and will continue to be disbursed to fund some of these projects until the end of this year.

There has been no progress whatsoever on the issues of a Gaza sea- and airport or the Gaza-West Bank link. This is partly because all attention over the past few weeks has been centered on resolving the Rafah border crossing question, and partly because of the more-than-usual tenuous security situation that has prevailed since September 12. But the real reason, in my own assessment, is that Israel has never shown any genuine interest in seriously discussing these crucial access issues. Israeli policy here seems to be dictated entirely by the terms of its unilateral disengagement plan, which preclude any possibility that someday the Palestinian side may have its own international gateway to connect to the rest of the world or to have a real, direct and secure link between the Gaza Strip and the West Bank. On this last point, it is interesting to note that the Israeli disengagement plan does not include any reference to such a link, and that Israel has recently asked the World Bank and USAID to stop funding a study aimed at examining the best options for connecting the two parts of the Palestinian territory.

In Wolfensohn's own estimate, adequate progress has not yet been achieved on any one of these issues. Wolfensohn's frustration over the lack of tangible outcomes was made clear in his letter of October 17 addressed to the foreign ministers of the Quartet and to the Palestinian and the Israeli leaders. In the letter, Wolfensohn basically warned all parties of the potential adverse consequences of continued procrastination regarding taking hard decisions to advance the issues.

Wolfensohn's frustration is mainly targeted at Israel due to its slow handling of the serious proposals submitted by the World Bank and by his own team to find ways by which restrictions on the movement of people and goods can be relaxed, allowing more internal access within the Palestinian areas, and faster and less costly Palestinian trade with Israel and the outside world, without risking Israeli security interest in the process. His frustration comes basically out of the belief that continued restrictions will prevent any chance for economic recovery, thus opening the door for more deterioration in the economic conditions in years to come, with the grave attendant consequences of further deepening social and security rifts in Palestinian society, and complicating any real chance of finding a way out of this bloody conflict.

On the Palestinian side, and although there is a need to seriously address and confront the present chaotic environment in the Palestinian areas, it is important to realize that as long as the economic crisis continues, there is a limit to how much the PA can do. Both the present security situation and the feeble fiscal stance to which Wolfensohn referred in his recent letter to the Quartet, are a natural outcome of the sharp economic plunge that started five years ago as the product of the stringent and draconian Israeli measures that suffocated the Palestinian economy.

Wolfensohn's dissatisfaction with the way things have gone five months into his assignment is a message to all of us that there is a need to change old policies. And we all need to take a hard look at where things stand now and how we can proceed before it is too late.- Published 31/10/2005 © bitterlemons.org

Mohammad el-Samhouri is the general coordinator of the Palestinian technical committee overseeing the Israeli withdrawal from Gaza.

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