Economic Dimensions of a Two-State Agreement Between Israel and Palestine

314 Pages·2010·3.95 MB·English

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Economic Dimensions
of a Two-State Agreement
Between Israel and Palestine
Vol II:
Supplementary Papers
Aix Group
Arie Arnon and Saeb Bamya (Eds.)
June 2010

Preface
The Aix Group is a unique working group of Palestinian, Israeli and
international economists, policymakers, academics and private sector
representatives that researches, produces and disseminates position
papers which seek to identify economic scenarios and suggest economic
recommendations in order to promote win-win outcomes for Palestinians
and Israelis. The Group is accompanied by Israeli and Palestinian
official observers, who not only share their thoughts with the Group,
but have, time and time again, incorporated some of the Group’s ideas
and recommendations into both their national policies and approaches to
the negotiation table, thus making it a typical Track II economic forum.
Indeed, in light of the deteriorating political circumstances of the region,
the Aix Group has stood tall as one of the only forums of dialogue and
cooperation where members of the two sides continue to meet and engage
in rational discussions related to common concerns.
Formed eight years ago under the auspices of the Université Paul Cézanne
- Aix-Marseille III in France and in coordination with the Peres Center for
Peace in Israel and DATA Center for Studies and Research in Palestine,
the Aix Group is chaired by Professor Gilbert Benhayoun from Université
Paul Cézanne. The Group is headed on the Israeli side by Professor Arie
Arnon of Ben-Gurion University of the Negev, and on the Palestinian
side by Mr. Saeb Bamya, former Deputy Minister of National Economy.
Over the course of more than two years, the Aix Group exchanged ideas
on various economic aspects of a possible permanent resolution within an
overall two-state agreement. As in the previous works of the Aix Group,
we had to imagine a political solution which seemed to some observers,
and sometimes even to members of the Group itself, as a very remote
possibility. Still, we assumed throughout the work, with all the reservations
we had, that an agreement acceptable to the two peoples will be reached.
Only in that context do the Group’s detailed discussions and findings
make sense. Thus, we would like the reader to assess the arguments in the
following pages with the expectation that a permanent political agreement
on all dimensions is still very much attainable.
i
Acknowledgements
This book summarizes the major points of our discussions. However,
by no means does it reflect the views of the supporting institutions,
project coordinators and meeting participants. Nevertheless, the
Aix Group would like to thank the following institutions for their
substantial contributions, strong support and dedication to the
peace process in the Middle East, and without which the fourth
stage of research, much like those which came before it, would not
have been possible:
The World Bank
The French Ministry of Foreign and European Affairs
Agence Française de Développement, France
The General Council of Bouches du Rhône, France
The Regional Council of Provence-Alpes-Côte d’Azur, France
The Embassy of Finland in Israel
The Representative Office of Finland, Ramallah
For their valuable efforts and hard work, the Aix Group would also
like to thank:
Bashar Abu Ghanam, former Palestinian Project Manager, Data Center
for Studies and Research
Saher Al-Sous, Palestinian Project Manager, DATA Center for Studies
and Research
ii
Barak Greenapple, former Israeli Project Manger, Business and
Economics Department, The Peres Center for Peace
Edan Raviv, Israeli Project Manager, Business and Economics
Department, The Peres Center for Peace
Adi Ashkenazi, former Director of the Business and Economics
Department, The Peres Center for Peace
Yoav Stern, Director of the Business and Economics Department, The
Peres Center for Peace
Colette Lescure, International Coordinator of the Aix Group, Université
Paul Cézanne - Aix-Marseille III, France
Emmanuelle Moustier, Assistant to the International Coordinator of
the Aix Group, Université Paul Cézanne - Aix-Marseille III, France
iii
Members of the Aix Group
Israelis Internationals Palestinians
Prof. Arie Arnon Prof. Gilbert Benhayoun Mr. Saeb Bamya
Head of the Israeli Research Chairperson of the Group Head of the Palestinian Research
Team, Dept. of Economics, Ben- Department of Economics, Team, former Deputy Minister
Gurion University University Paul Cezanne - of National Economy
Aix-Marseille III
Dr. Ron Pundak Dr. Samir Hazboun
Director General, The Peres Researcher Economist
Center for Peace DATA Studies
Researchers: The Big Picture
Prof. Arie Arnon Mr. Saeb Bamya
Researchers: Refugees
Prof. Arie Arnon Mr. Saeb Bamya
Tamar Hacker Maysa Abu Awad
Former Member of the Israeli Economist
Delegation To the Paris Protocols
Dr. Sharon Hadad
Economist
Researchers: Territorial Link
Guy Ronen Dr. Samir Hazboun
Barak Greenapple Bashar Abu Ghanam
Former Project Manager, Economist
The Peres Center for Peace
Shimon Farang
Landuse Traffic and Roads
Planning Ltd.
Dr. Danny Tirza
Dan Teresa Initiatives Ltd.
Thomas M. Leitersdorf
Planning & Architecture, Ltd.
iv
Israelis Internationals Palestinians
Researchers: Jordan Valley
Itzhak Gal Mr. Saeb Bamya
Economist
Adi Ashkenazi Shawqi Makhtoob
Former Director, Economist
Business & Economics
Department
The Peres Center for Peace
Researchers: EU-MED
Joseph Zaira Saad Khatib
Department of Economics, Senior Policy Advisor,
Hebrew University, Jerusalem Carana Corporation
Alon Etkin Shawqi Makhtoob
Economist Economist
v
During two years of research, the Aix Group has held two international conferences as
well as dozens of meetings, to which individuals from different economic organizations,
ministries and academic institutions were invited to listen and to comment on the
work of the Aix Group. The following people, among others, have participated as
guests and listened to the Aix Group’s ideas and findings (in no particular order):
Israelis Internationals Palestinians
Dan Catarivas Bernard Kouchner Samir Huleileh
Director, Foreign Minister, France Managing Director,
Division of Foreign Trade Riad Al-Khouri Portland Trust
& International Relations, Visiting Scholar, Basem Khoury
Manufacturers’ Association of Israel Carnegie Middle East Center Head of Board,
Jimmy Weinblatt Joel Toujas-Bernate Palestinian Federation of Industries
Rector, Ben Gurion University Senior Resident Representative Azzam El-Shawa
Danny Arditi (West Bank & Gaza), Head of Board,
Brigadier General, Chairman, International Monetary Fund Al-Quds Bank
National Security Council Gracia Ignacio Bercero Ahmed Quray (Abu Ala)
Director,
Irit Ben-Aba Head of Palestinian Negotiating
Sustainable Development and
Head of Economic Affairs Division, Team
Bilateral Trade Relations
Ministry of Foreign Affairs
European Commission
Hezi Kugler
Farrukh Iqbal
Director General,
Sector Manager,
Ministry of
Middle East & North Africa Region
National Infrastructure
Social & Economic Development
Gabby Bar Department
Senior Regional Director, The World Bank
Middle East & North Africa Dr. Bernard Philippe
Ministry of Industry, Trade & Labor Delegation of the European
Commission to Tunis
Nicola Cobold
Deputy CEO,
Portland Trust (London)
Douglas Fraser
Canadian Special Coordinator
for the Peace Process
Jean-Michel Casa
Former French Ambassador in Israel
Christophe Bigot
Current French Ambassador
in Israel
Alain Rémy
Former French General Consul in
Jerusalem
Guillaume Klossa
Vice President, Evens Group
vi
Table of Contents
Preface i
Acknowledgements ii
Introduction: The Rationale and Assumptions
Behind the Aix Group Economic Analysis 2
The Big Picture: The Political and Economic
Alternatives Facing Israelis and Palestinians 9
A Framework for a Permanent Agreement
Concerning the Palestinian Refugees 45
The Territorial Link between the West Bank and
Gaza Strip: Examining the Alternatives 137
The Economic Development of the Jordan Valley 207
The Union for the Mediterranean: The Barcelona
Process and the “Two State” Solution 275