Printed copies of this publication, and back issues, can be obtained from:<\/p><\/div>\n
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Âé¶¹APP Secretariat<\/i><\/p><\/div>\n\n
Division for Palestinian Rights<\/i><\/p><\/div>\n\n
Room TB-08006 D<\/i><\/p><\/div>\n\n
New York, New York 10017<\/i><\/p><\/div>\n\n
Fax: 212-963-4199<\/i><\/p><\/div>\n
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The economic road map by the Aix Group of economists<\/strong><\/p><\/div>\n\n
Aix-en-Provence, France, January 2004<\/p><\/div>\n
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The text of the executive summary of the paper entitled “Economic road map: an Israeli-Palestinian perspective on permanent status”, prepared by the Aix Group, consisting of Palestinian, Israeli and international economists, is reproduced below:<\/i><\/p><\/div>\n
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Executive summary<\/strong><\/p><\/div>\n\n
ECONOMIC MAP<\/p><\/div>\n
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This paper, prepared by a non-official group of Israeli, Palestinian and international economists, aims to establish an economic counterpart to the Road Map for peace. The paper concentrates on economic arrangements associated with Phase III of the Road Map, since the group believes that the economic content of Phases I and II can only be determined correctly if a clear vision of permanent status arrangements first exists.<\/p><\/div>\n
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In accordance with the Road Map, the paper assumes the emergence of a two-State solution embodying Palestinian economic sovereignty, unambiguous borders and the conduct of economic relations in a spirit of cooperation and mutuality. The group’s economic vision of permanent status is based on economic arrangements that will seek a convergence of Palestinian living standards with those of Israel and promote independence in economic policymaking while acknowledging economic interdependency.<\/p><\/div>\n
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Central to our discussion is a recognition that future Palestinian economic strategy can no longer afford to rely so heavily on the export of labour and remittance income. It is unlikely that the number of Palestinians working in Israel will again approach historical levels; moreover, domestic Palestinian production and exports are compromised by the upward pressure on domestic wages and prices exerted by higher Israeli wage levels.<\/p><\/div>\n
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The group assessed future policy options in the trade, labour, fiscal, monetary and investment policy areas.<\/p><\/div>\n
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Trade<\/strong>. The group recommends a free trade area, consistent with World Trade Organization (WTO) protocols. We believe that a free trade area between a Palestinian state and Israel is likely to be feasible and efficient, as well as to offer exploitable development opportunities. It would provide Palestinians open access to the Israeli market, with Israel continuing to be a key trading partner. At the same time, a free trade area will allow the Palestinian state to diversify its trade relations and implement development policies conducive to economic growth and prosperity. A free trade area will be most efficient if accompanied by a friendly system of rules of origin. Israel would grant the Palestinian state, as a developing economy, the option to temporarily protect selected sectors.<\/p><\/div>\n<\/p>\n
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Labour<\/strong>. The group recommends the establishment of designated border passages through which labour flows would be unencumbered, while subject to regulation through taxes and\/or permits. Palestinian workers should be given preferential access to the Israeli labour market, as compared to other foreign workers, reflecting the lower negative externalities for the Israeli economy. In addition, work permits should be granted to and held by individuals, not contractors. Although the Israeli labour market will play a diminishing role in Palestinian development, its importance in an orderly economic transition is significant.<\/p><\/div>\n<\/p>\n
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Fiscal policy. <\/strong>Under a free trade area, each country would run an independent international customs policy, but would not impose duties on goods originating in Israel\/the Palestinian state (with certain exceptions as defined under the agreement). To minimize smuggling, indirect tax policy needs to be closely coordinated, and VAT and other indirect tax rates (excises, purchase taxes) should only diverge marginally, if at all. Double taxation should be avoided since this would discourage cross-border economic activity. Accordingly, there is a case for applying lower income tax rates to Palestinian workers in Israel as compared to those applicable to Israelis or other foreign workers. Alternatively, Israel should continue to remit to the Palestinian state a large portion of the income tax it levies on Palestinians working in Israel, as well as any social security deductions.<\/p><\/div>\n<\/p>\n
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Monetary policy<\/strong>. We recommend that the restrictions embedded in the Paris Protocol preventing the Palestinian Monetary Authority from issuing Palestinian currency be lifted in Phase II (whether or not the PA then decides to create a new currency). At present, the Palestinian Authority does not receive revenue from issuing and circulating a currency, and this raises the possibility of the PA sharing the revenue derived from the issuance of Israeli shekels while the current currency system continues. The two central banks should consult over the supervision of branches and subsidiaries operating within each other’s jurisdiction.<\/p><\/div>\n<\/p>\n
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Investment. <\/strong>The group recommends that both countries accord one another’s investors and investments national treatment – with some exemptions in cases that bear upon special national interests. The future economic agreement should permit full repatriation of revenues and income, should preclude the possibility of double taxation, and should address expropriation and regulatory matters pertaining to facts and disputes created after its entry into force. Donors can contribute to cross-border investment by establishing funds that can be used to build equity positions in Palestinian firms and to create joint ventures with Palestinian partners, as well as by continuing to offer risk insurance and guarantees to investors.<\/p><\/div>\n<\/p>\n
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The introduction of these new economic arrangements will require intensive bilateral cooperation. This would be facilitated in particular by the establishment of a Joint Israeli-Palestinian Economic Committee, as well as by regular dialogue at experts’ level to exchange views on all areas of economic policy. The establishment of an Israeli-Palestinian Development Fund should be considered; this institution could play a major role in encouraging a variety of joint activities, such as industrial estates, business ventures for domestic and external markets, tourism projects and joint public\/private infrastructure initiatives.<\/p><\/div>\n
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The transitional period requires, above all, a vigorous effort to stimulate Palestinian economic recovery. This can only be done by restoring movement and predictability in transactions. Three basic ingredients are required to achieve this: (a) an unencumbered flow of goods across borders and within the West Bank and Gaza; (b) an unencumbered flow of persons within the Palestinian Territories, coupled with a flows of workers to Israel, which regains some stability and predictability; and (c) the continued uninterrupted flow of fiscal transfers from Israel to the Palestinian Authority. The meaning and operation of a Palestinian state with provisional borders, as envisaged under Phase II, needs thorough exploration, since it will serve as the precursor to full economic independence. Phase II arrangements must realistically be based on a “Paris Plus” formula – that is, the full implementation of the modified Paris Protocol. Phase II arrangements should include measures that ensure territorial viability, i.e., the creation of internal contiguity and the inception of economic control over external borders. Steps should be taken to denote emerging sovereignty, including the right to issue currency and the granting of observer status in the International Monetary Fund (IMF), the UN, the World Bank and the WTO. Attention should also be given to the development of institutions that will reinforce cooperation and resolve disputes.<\/p><\/div>\n
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Statement by the EU High Representative for the Common Foreign and Security Policy<\/strong><\/p><\/div>\n\n
at the meeting with leaders of the Geneva Initiative<\/strong><\/p><\/div>\n\n
Brussels, 2 February 2004<\/p><\/div>\n
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\t<\/span>EU High Representative for the Common Foreign and Security Policy Javier Solana met on 2 February 2004 with Yasser Abed Rabbo, member of the PLO Executive Committee and former Minister of Information of the Palestinian Authority, and with Yossi Beilin, member of the Knesset and former Minister of Justice of Israel, both current leaders of the Geneva Initiative for peace in the Middle East. On the occasion, Mr. Solana made the following statement:<\/i><\/p><\/div>\n<\/p>\n
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I want to commend both Yossi Beilin and Yasser Abed Rabbo for this important initiative for peace in the Middle East. I welcome all civil society initiatives of this nature and I am convinced that the agreement they signed in Geneva last December will bring new impetus to the Middle East peace process.<\/p><\/div>\n
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The Geneva Initiative, promoted simultaneously by Israelis and Palestinians, has led to a very intense, healthy and timely debate on both sides about the many issues related to the current conflict. This has helped to press forward possible answers for achieving peace in the region.<\/p><\/div>\n
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The European Union remains firmly committed to the solutions laid out in the Quartet’s Road Map. The efforts of all those involved in the Geneva Initiative are an important complement to the formal negotiations.<\/p><\/div>\n
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Comments by the Minister for Foreign Affairs of Ireland after his meeting<\/strong><\/p><\/div>\n\n
with the promoters of the Geneva Initiative<\/strong><\/p><\/div>\n\n
Dublin, 11 March 2004<\/p><\/div>\n
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The Minister for Foreign Affairs of Ireland, Brian Cowen, met on 11 March 2004 with the promoters of the Geneva Initiative, Amram Mitzna and Yasser Abed Rabbo. At a press conference after the meeting, Mr. Cowen made the following statement:<\/i><\/p><\/div>\n
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I am pleased to welcome this joint Israeli-Palestinian delegation to Dublin today and to hear first hand about what is known as the Geneva Initiative or the Geneva Accord.<\/p><\/div>\n
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I want to thank Mr. Mitzna and Mr. Abed Rabbo for their comprehensive briefing.<\/p><\/div>\n
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The Geneva Accord is a welcome development and demonstrates that rational discourse from civil society on both sides is possible.<\/p><\/div>\n
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The fact that the Initiative discusses solutions to final status issues, such as the right of return of Palestinians and the future of Jerusalem, is very positive and welcome.<\/p><\/div>\n
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The Quartet Road Map, we believe, contains all the elements for a permanent solution. As the Presidency of the European Union, we are working with the other members of the international Quartet to advance the implementation of the Road Map and the fulfilment by both sides of their obligations under the Road Map.<\/p><\/div>\n
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Any further international initiatives, therefore, must be in the framework of the Road Map, and we recognize that the Geneva Initiative complements what the Quartet is doing to implement the Road Map fully.<\/p><\/div>\n
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Conclusions of the Presidency of the European Council<\/strong><\/p><\/div>\n\n
Brussels, 26 March 2004<\/p><\/div>\n
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The European Council met in Brussels on 25 and 26 March 2004 for its annual meeting. The following are excerpts from the conclusions of the Council’s Presidency on the Middle East peace process:<\/i><\/p><\/div>\n
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V.\t<\/span>International situation<\/strong><\/p><\/div>\n<\/p>\n
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Middle East Peace Process<\/strong><\/p><\/div>\n<\/p>\n
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51.\t<\/span>The European Council expressed its deep concern at the situation in the Middle East and the deepening of the Israeli-Palestinian conflict, following in particular the extrajudicial killing of Hamas leader Sheikh Ahmed Yassin. While having repeatedly condemned terrorist atrocities against Israelis and recognized Israel’s right to protect its citizens against terrorist attacks, the European Union has consistently opposed extrajudicial killings, which are contrary to international law. The present cycle of retaliatory violence has caused widespread suffering and loss of life, has inflamed the situation and is taking the parties ever further from a negotiated settlement.<\/p><\/div>\n