28 May 2008
Palestine Investment Forum “Met Its Goal,” U.S. Official Says
Conference outlined investment opportunities in West Bank and Gaza
Bethlehem, West Bank -- The three-day Palestine Investment Conference resulted in $1.4 billion in investment agreements and was “another important step toward economic self-sufficiency in the Palestinian Territories,” said U. S. Deputy Secretary of the Treasury Robert Kimmitt.
Kimmitt, who led the U.S. delegation at the May 21-23 conference in the West Bank city of Bethlehem, is the highest-ranking American official to make such a visit to Palestinian Authority areas since the outbreak of the second Palestinian Intifada (uprising) in 2000.
“This conference has met its goal, and that is to send a message that there are investment opportunities in the West Bank and Gaza, that they are here, open for investment, and that a good foundation has been laid,” Kimmitt told reporters at the conclusion of the conference attended by more than 1,000 business people and government officials from around the world.
“We're going to have more companies taking a closer look at investment in the Palestinian Territories as a result of this conference and of the investment climate established by the Palestinian Authority," he said.
PALESTINIAN ECONOMIC DEVELOPMENT
The conference was included in Prime Minister Salam Fayyad’s Palestinian Reform and Development Plan, a broad outline of the strategies his government proposed to international donors at the Paris conference of donors in December 2007.
The plan outlines key areas for both Palestinian action and international involvement:
• support for key economic sectors, including agriculture, real estate and tourism;
• investment in small- and medium-sized business growth; and
• expansion of international market access.
Backed by several corporate sponsors, including U.S. technology firms Intel and Cisco, the conference presented investment opportunities totaling $2 billion in Palestinian Authority areas. Conference organizers underscored these opportunities with descriptions of Palestinian economic strengths, such as its young and growing labor force, multilingual culture and unique tax and market-access incentives.
The geographic distribution of Palestinian areas also provides as-yet-undeveloped access to major tourist sites. Arab East Jerusalem abuts the Old City area, home to the Church of the Holy Sepulcher, the Western Wall and the Dome of the Rock. Yet only one-fifth of Jerusalem’s hotel rooms are located within East Jerusalem.
ECONOMICS OF PEACE
In addition to the potential profits for participating countries’ private sectors, international delegations at the conference highlighted the connection between economic development and the realization of a two-state solution to the Israeli-Palestinian conflict.
Swedish Minister for Trade Ewa Bjorling stressed the potential of a broader trade initiative to develop “people-to-people contacts.”
“Trade,” she said, “produces ties that reduce the risk of armed conflict.”
American officials expressed similar sentiments. Indeed, the U.S.-backed Annapolis process includes improving the situation on the ground as one of its three key tracks. (See "Support for Mideast Peace Goes Beyond Annapolis Conference.")
The United States sees the enhancement of Palestinians’ daily experience as an opportunity to build a kind of “public attitude insurance” against the risk of political violence, said Robert Mosbacher Jr., president of the Overseas Private Investment Corporation, who also attended the conference. Public support for sustained economic progress and decreased violence is an essential component of the U.S.-backed two-state solution covered in the Annapolis process. (See “Rice, Quartet Briefing on Israeli-Palestinian Peace Efforts.”)
U.S. Consul General in Jerusalem Jacob Walles sees a window of opportunity for substantial progress. He said the level of conference participation resulted from both Palestinian initiative and Israeli cooperation. Israeli facilitation of crossing hours and permits for Gaza business people ensured that both key project personnel and major investors could attend.
With the continuing strife between Palestinian political factions and the de facto Hamas government in Gaza, U.S.-Palestinian Partnership Chairman Walter Isaacson said this is a critical time to support moderate, progressive Palestinian movements. It is, he said, an opportunity to “help the good guys” who can lead the Palestinian people toward the development of a legitimate Palestinian state.
PALESTINIAN-LED EFFORTS
Meanwhile, Walles praised the Palestinian conference organizers for taking complete ownership of the conference organization, from designing the program to putting together the portfolio of projects. He said he saw this combination of a Palestinian-driven process and Israeli cooperation in Palestinian development efforts as representative of “a new spirit” of progress among both Israelis and Palestinians.
In his letter to conference investors, Fayyad said, “The Palestine Investment Conference promises to be a historic event. As the first high-profile investment conference ever held in Palestine, PIC-Palestine will jump-start a process of integrating Palestine into the global economy.”
This strategy of development promotion represents a significant shift from most foreign assistance to the Palestinian Territories since the outbreak of the second Intifada -- the conference moved beyond the legacy of emergency humanitarian aid and into Palestinian-driven development initiatives. As Russian Deputy Foreign Minister Alexander Saltanov summarized, “Give investments for the Palestinians, and they will raise their economy themselves.”
Kimmitt saw encouraging parallels between the Palestinian climate and the historical success of investment in the former East Germany. Many people, he said, were asking, “Why would we ever invest in former East Germany? Look at how difficult the infrastructure is, look at all the other challenges.” U.S. businesses were advised to go see for themselves, he said.
Many people invested in “what has now become a major high-tech development area; because the infrastructure was so outdated in East Germany, they actually just tore it out, put in new fiber-optic lines and so forth,” Kimmitt said. “I get the same sense again that businesses are coming here, U.S. businesses, and saying, ‘What is the opportunity?’ And the fact that the Palestinian Authority, working with the conference organizers, has been able to pull off this successful a conference, I think is going to send a message not just to those companies who are here but to those who will be in contact with us afterward.”
Isaacson summed up the conference message: Despite the obstacles, he said, the Palestinian Territories are “a good place to do business. It’s that simple. And this exciting conference shows the opportunities.”
A transcript of Kimmitt’s remarks May 21 at the conference is available on the Treasury Department Web site.
