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Last Updated: Tuesday, 27 January, 2004, 12:13 GMT
Palestinians get economic roadmap
The security barrier being built by Israel
Could the barrier hamper economic recovery?
Close economic co-operation between Israel and a future Palestinian state are key to peace, a new proposal says.

The three-stage "economic roadmap" drawn up by a group of Israeli and Palestinian academics calls for a free trade area between the two.

It is intended as an unofficial complement to the US-backed political roadmap, launched in June 2003.

But the scheme's authors warn current conditions could render hopes of economic development null and void.


The scheme - developed in co-operation with the World Bank, International Monetary Fund and European Commission - is the result of two years of collaboration between Israeli and Palestinian scholars, from institutions both within Israel and the occupied territories and elsewhere.

"The economics of peace-building have not been granted sufficient importance by policy makers," said Gilbert Benhayoun, professor of economics at the University of Law, Economics and Sciences of Aix-Marseilles III in France.

A Palestinian boy throwing a stone at an Israeli army bulldozer
Three years of intifada has cost both sides dearly
"The plan helps fill a vacuum and the ideas put forward can contribute to bringing the parties together."

Its aim, its authors say, is to make peace possible by laying out plans for both sides to recover from the economic devastation caused by three years of conflict.

For Israel, the late 1990s tech-fuelled boom evaporated into recession, with lengthening jobless queues and a government budget deficit swelling to crisis proportions.

For the Palestinians, the three years of Intifada have seen the number of people living on less than $2 a day triple to 60% of the population, according to the World Bank.

Pain on both sides

Part of the problem for Palestinians is that border closures - and the barrier being built by Israel - have cut off most of the jobs in Israel on which most Palestinian families used to depend.

The plan unveiled this week is designed to reopen the door but regulate the flow, since in the past Israeli employers often relied on cheaper undocumented workers.

Its three stages begin with a "rescue phase", during which Israel should ease travel restrictions, allowing goods and workers back in, and restart transferring tax revenue to the Palestinian Authority (PA).

The second phase would see the PA retaking economic control over the borders of a provisional economically viable state, which would become a reality in the third phase.

At that time a Free Trade Area would come into being, allowing Palestinian workers preferential but limited access to jobs in Israel ahead of other foreign workers.

But participants in drawing up the plan sounded a note of caution, warning that the barrier being built was a key sticking point.

"If the construction of the wall continues, there will be nothing to talk about on economic terms," said Saeb Bamya, Director-General of International Affairs at the PA's Ministry of National Economy and a member of the drafting team.

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