As we told you last week, there is a lot of optimism coming out of the latest report to the Ad Hod Liaison Committee (AHLC). While the peace talks are (rightly) dominating the headlines and the public’s attention, economic progress is one of the most important backdrops for the discussion. According to the International Monetary Fund, real GDP growth in the first half of 2010 was 9 percent in the West Bank and 16 percent in Gaza. All of this data, along with Israel’s own observations, were compiled into this report which was delivered to the AHLC by Israel’s Deputy Foreign Minister, Danny Ayalon. Here is what the Deputy FM had to say to the AHLC:


I would like to offer the gratitude of the Government of Israel to Norway, the Norwegian Foreign Minister Mr. Jonas Støre for chairing this donor meeting.

This gathering is especially important given the re-launching of direct peace talks.

I would also like to thank the United States, former Prime Minister Blair for their leadership and efforts to re-launch these direct, bilateral talks. In addition, I am pleased to be here with Prime Minister Fayaad, UN Under-Secretary-General Pascoe, and many others.

The renewal of these bilateral negotiations without preconditions is an important and long overdue step.

Israel’s commitment to peace

Israel remains committed to a comprehensive Middle East peace based upon the principle of two states for two peoples, one Jewish, and one Palestinian.
President Obama reaffirmed this vision at the White House ceremony marking the re-launching of negotiations on September first. In those remarks, the President reiterated his commitment to, and I quote: “The emergence of an independent, democratic and viable Palestinian state, living side by side in peace and security with a Jewish state of Israel and its other neighbors,” end quote.

We believe in an agreement based on two states for two peoples; an agreement that recognizes Israel’s right to live in peace and security with its neighbors as a democratic, Jewish state; an agreement that puts a total end to the conflict with a finality of claims. Such an agreement will create a successful foundation for the future of Israelis, Palestinians and all in the region.

However, in order to reach a solution, Israel, the Palestinians and the Arab states, must make painful compromises. Israel has already shown that it is prepared to make these though decisions. Examples include calling for a two state solution, easing restrictions on the ground despite security risks, and taking the unprecedented step of imposing a 10-month moratorium on building in the Jewish communities in Judea and Samaria.
We are here to further support this process together with the Palestinian Authority and the international community. Together, we can create a new political, economic and security reality for the benefit of all in our region.

This will not be easy.

The increased threat of terrorism, in tandem with the renewal of talks, threatens to undermine the endeavor of cooperation between the parties, as well as the prospects for peace. As such, terrorism is a common danger. We will not succumb to this threat nor will we gamble with Israel’s security. What we will do is continue to take the calculated risks necessary for peace.

Unfortunately, the danger of resurgent terrorism remains. Earlier this month, on a main road where a number of checkpoints were previously removed, four Israeli civilians were brutally murdered, shot at point blank range, execution style, in a barbaric terrorist attack. Tyla Imes, Yitzhak Imes, Avishai Shindler, and Kochava Even Chaim, were innocent civilians, killed because they were Jewish. In their wake, they leave seven orphaned children. Kochava, in fact, was pregnant.

Despite such painful attacks and setbacks, Israel refrained from restoring those checkpoints and will continue to strive to implement our commitment to ease restrictions, security permitting, in the Palestinian territories, in order to support the Palestinian economy.

Economic growth

Since our last report at the Madrid Donor’s conference in April 2010, the Palestinian territories continued to experience strong economic growth. According to IMF estimates, real GDP growth amounted to 9% in the West Bank and 16% in Gaza in the first six months of 2010. These growth rates are all the more remarkable against the backdrop of continued economic turmoil around the globe.

Israel’s measures

Israel took significant measures to support economic activity in the Palestinian territories in the West Bank.

Throughout this period, Israel continued to ease restrictions on movement and access, including the removal of 60 additional roadblocks and facilitating the entry of growing numbers of Israeli Arabs into West Bank cities, thereby contributing to increased job opportunities and economic activity.

Israel took major steps to improve capacity at commercial crossings, including extending hours of operation, as well as physical upgrades to increase the capacity of these crossings in order to accommodate more passengers, materiel, and exports.
Other measures were taken to facilitate Palestinian business activity and economic growth, a comprehensive list of which is included in our latest report to the AHLC.

These measures reflect our commitment to:
• strengthening the Palestinian Authority;
• increasing security cooperation;
• assisting in capacity building and developing PA institutions towards the establishment of a future democratic Palestinian state;
• supporting the well-being of the population;
• facilitating movement and access, and;
• creating a more attractive environment for investors.

By taking these actions, we have helped bring about dramatic economic growth on the West Bank in recent years.

We are aware of the desire to take further steps in this regard and are willing to consider additional measures, some of which will hopefully be addressed in the context of direct negotiations between the parties.

Progress in these talks will enable us to make further advances on the ground, bringing us closer to fulfilling the vision of a future with open borders and free movement of people and goods, similar to other regions in the world.

Gaza

Unfortunately, we continue to face a dangerous situation in Gaza, which continues to be ruled by Hamas, a terrorist organization, recognized as such by nearly everyone in this room, that violently seized power over three years ago and poses a severe threat not only to Israel’s civilian population, but also to the people of Gaza, the Palestinian Authority, and the region.

Hamas, backed by Iran and Syria, seeks to derail the peace process by increasing terror attacks against Israeli civilians. As such, the international community must maintain its insistence that Hamas must fully adhere to the Quartet principles if it wishes to be part of any negotiations and part of the future.

The threat remains clear and immediate. Hamas, along with other Palestinian terrorist organizations, continues to target Israeli population centers with rocket fire on a daily basis.  Only days ago, Hamas rockets struck adjacent to residential areas and a nursery school full of children in Ashkelon. Supported by Iran and other enemies of peace, Hamas continues its massive smuggling of dangerous arms into Gaza and has fired rockets from Sinai at Eilat and Akaba, threatening Israel and neighboring countries. Hamas continues to hold Gilad Shalit hostage for over four years, denying him his most basic human rights and exhibiting its inhumanity for all to see.

Despite this situation, Israel has undertaken a major policy decision to ease the economic situation in Gaza and liberalize the system by which civilian goods enter the Strip.Israel is committed to expediting implementation of the June 20th Cabinet decision as quickly as possible. We are working intensively with the international community and the PA to improve the economic situation for the civilians of Gaza.

We have enacted restrictions only on weapons and certain dual-use items included on a controlled items list based only on security considerations and international practice.

Despite such security challenges, we have expanded operations at the existing land crossings, already doubling the capacity at the Kerem Shalom crossing compared to 2009, and we are preparing to further double its capacity by mid-2011.

The progress in implementation has, in fact, been very rapid, outstripping the Palestinian demand for goods. We are currently accelerating the approval of international projects in Gaza in consultation with the PA. And today, I am pleased to announce that we have authorized 15 additional projects with 4 more under review, for a total of nearly 70 projects in Gaza.

Last week during his monthly briefing to the Security Council, UN Special Coordinator for the Middle East peace process, Robert Serry, praised the, “genuine headway” made by Israel in approving international projects and hailed Israel’s cooperation in this regard. Serry concluded that Israel’s measures helped generate 16% growth in Gaza in the first half of 2010.

While Israel will continue to facilitate the entry of goods, we have little choice but to maintain the current security regime to prevent the flow of terrorists and arms in and out of Gaza. We call on the international community to join us in efforts to stop the illegal arms smuggling to Gaza, in accordance with UN Security Council resolution 1860 and the Quartet Statement of June 21st 2010. In that same statement, the Quartet also urged, and I quote, “all those wishing to deliver goods, to do so through established channels so that their cargo can be inspected and transferred via land crossings into Gaza,” end quote.

The Quartet emphasized that there is no need for unnecessary confrontations, and called on all parties to act responsibly in meeting the needs of the people of Gaza. While we work together to improve Gaza’s economy, it is vital that the international community and the Donor’s Conference, in particular, reaffirm the Quartet’s call to act responsibly and to prevent provocative actions.

In this respect, unauthorized flotillas, some of which are being planned as we speak, seek only violence, escalation and instant media headlines in an effort to delegitimize Israel. Such confrontational action must cease. While we appreciate the growing cooperation with the PA, several areas of major concern remain: at the highest levels, official Palestinian incitement continues, including the glorification of terrorists.

There cannot be an economy of peace without a culture of peace, nor can there be a lasting peace without teaching coexistence.  The international assistance given in good faith to the Palestinians must not be diverted to stoking the flames of hatred and terrorism. Instead, donor funds should be invested in building a foundation of peace.

Unfortunately, the PA continues to intensify its boycott campaign against Israeli products as it fuels worldwide efforts to delegitimize Israel in the international arena. This is unacceptable and must stop. Instead of pursuing political warfare that seeks to delegitimize Israel, those in the region should invest in building a foundation of peace that promotes a culture of acceptance, tolerance, recognition, and trust between our two peoples.

Excellencies, Ladies and Gentlemen,

While we recognize the progress made so far, we also know that much work remains to be done. We are pursuing a dual track of capacity building and economic growth, while at the same time pursuing a negotiated solution on the political level.

These two tracks are complimentary and support each other as we move forward. It is my hope that if all in the region demonstrate courage, perseverance, and vision, peace is within our reach.

Thank you

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