The Economic Working Group (EWG) is a joint team of Israelis, Palestinians and international specialists and representatives organized by the Konrad-Adenauer-Stiftung and IPCRI. Ideas are developed in this framework through processes of consensus building reflecting the opinions and ideas of Israelis and Palestinians. The main aim of EWG is to develop policy proposals for the key decision makers in Israel, Palestine and in the International community on issues regarding the advancement of the peace process. The focus of this group is on economic issues and perspectives.

Aim of December 11 Meeting

The aim of this meeting was to come up with recommendations for the Paris Donors’ Conference to be held on December 17th, 2007 and how to make best use of the prospective funds. The Paris Donors Conference is an outcome of Annapolis, and is expected to answer the Palestinian government’s pledge for financial assistance. The assistance requested aims to cover the PA’s debts, and to enhance the development of the Palestinian economy in the coming two years (2008-2010). The Palestinians have drafted a substantial development plan which was submitted to the donors, and was presented during our December 11 Meeting.

The Palestinian Reform Development Plan (PRDP) 2008-10

The plan mentions several very important premises for carrying out the plan. Bringing the rule of law to the occupied territory and combating violence; managing the Palestinian internal administrative affairs and implementing institutional reforms in the PNA are important points mentioned in the document. The proposal acknowledges Gaza, and the 1.5 million people who live there as an integral part of the future Palestinian state, and sees reform and development in Gaza is an integral part of the plan for bringing stability and prosperity for all Palestinians in the occupied territory. The roles of the international community in supporting Palestinian development, and the role of Israel in taking immediate steps to halt the expansion of settlements, as well as to lift physical and administrative restrictions on movement and access, are issues that are emphasized in the document.

Many sectors of development are mentioned in the PRDP. Establishing good governance, justice, security and the rule of law are some of the first issues mentioned in the document. Fiscal reform, local government reform , social development in areas such as education, health , social protection, economic and private sector development, agriculture, tourism, industrial development, service provision, housing projects, public infrastructure development and many other sectors of development are identified.

Points of Criticism

One of the major points of criticism raised by the participants was the fact that the PRDP gives a huge list of good intentions trying to give the donors what they want to hear. It covers a wide range of sectors for development all of which are important for the prosperity of a Palestinian State; the question remains what is realistic to be implemented. It is of utmost importance to set definite priorities to generate a change.

Recommendations

In a longer presentation a set of four main priorities was suggested:

1. Reform of the Judicial system; a proper environment needs to be created for the enforcement of law
2. Creation of a national health service in the Palestinian authority
3. Development of education
4. Investment funds: the government should finance projects up to 50 % with insuring up to 50% ownership.

• It is important that a successful model for the Palestinian economy in the West Bank is overseen. Every effort should be made to make the West Bank model successful.

• The minimum wage law in the Palestinian Authority should be revised. A minimum wage of 1800 NIS won’t be satisfactory to maintain a good level of performance by civil workers.

• A government fund should be allocated for basic reserves such as sugar, corn, wheat and barley. These are the basic needs to stop the problem of shortage.

• A clear framework for the budget is needed to show the donors that the PA will take responsibility over the division of the budget.

• There is a need for foreign investment in infrastructure and other sectors of development to aid the private sector in the creation of new jobs.

• A farmers’ insurance fund should be set aside to avoid the scenario that occurred in Gaza this year. Farmers lost contracts and enormous amounts of money when the goods were stuck inside Gaza due to closures. As much as the PRDP seems like an impressive effort on the Palestinian side, it is still not sufficient to help the Palestinian well-being.

Challenges in the Face of the Palestinian Economic Development

The problem of access and movement remains to be one of the most difficult obstacles standing in the way of Palestinian economic development. The Gaza experience this past year, and the prevention of goods from entering in and out of Gaza posed great fiscal losses for Palestinian farmers and businessmen. Furthermore, the capacity of many of the crossing points is insufficient and time consuming for the transfer of goods. From the standpoint of the Israeli government, trust in the Palestinian security control should be built, in order for Israel to start easing access of goods. From the Palestinian standpoint, Hamas is a major threat that is standing in the way of changing the security situation in Gaza. Still, the PRDP mentions Gaza as an integral part of the Palestinian state that needs to be developed and reformed. The current closure is largely affecting the private sector. Hamas seems to be the least affected by the closure, as it continues to bring in income through taxing goods smuggled through the 120 tunnels underground.

Changes in the Palestinian Financial Monitoring System

The political leadership of Abu Mazen and Salam Fayad are trying to figure out ways to improve the image of the Palestinian society and its efforts. The PRDP is an example of a one agreed upon document that is a result of a joint group effort by various bodies in the Palestinian Authority. A new system of budgeting, monitoring, transparency and evaluation of the implementation of goals and targets, is being implemented. Maximum dissemination of information to the public and transparency will create more confidence in the Palestinian authority. From the Israeli government’s point of you, there is a desire to be exposed to the monitoring process. It is important that Israel ensures the money gets through to where it is supposed to go, and not be spent on terrorist activities.