Targeted Economic Projects

The Aspen Institute MESG members have reviewed the situation on the ground and discussed several tangible projects that could improve the business environment over the short- to medium-term.  Working groups were established, and have since become functional, to implement the following priority projects:

A. Middle East Investment Initiative (MEII)
B. Access & Security and Qualified Industrial Zones
C. RAND Arc Implementation Project
D. The US-Palestinian Public-Private Partnership

A. Middle East Investment Initiative (MEII): Investing in Peace

**News From the Signing Ceremony**

Since the second Intifada began in the West Bank and Gaza in September 2000, the Palestinian economy has virtually stalled, and gains made in the preceding decade have been nearly erased. But despite the grim overall economic situation, there is at least one sign of hope: small- to medium-size enterprises, which have in many cases survived, and in some cases grown. Comprising up to 90 percent of registered Palestinian businesses, these enterprises — light manufacturers of food products, stone and tile, and pharmaceuticals, for example — are nimble enough to adapt to rapidly changing circumstances, and if properly stimulated, could create tens of thousands of sustainable good jobs — which is critical to fostering stability. But they face many major challenges, one of which is a lack of access to credit.

To tackle this problem, the Institute has created the Middle East Investment Initiative, a nonprofit public-private collaboration between Palestinian, American, and European partners. Its central facet is a loan guarantee facility, which will offer local banks substantial loan guarantees as an incentive to re-engage in lending to this market. The Palestinian Investment Fund (PIF) has committed $50 million to this fund, and the Overseas Private Investment Corporation (OPIC) is providing $110 million, creating a $160 million fund. Through partner CHF International, the Initiative will also offer the banks technical assistance and much-needed market information. But its aims are not only economic; the ultimate goal is to help lift the standard of living for Palestinians — a critical precondition for an enduring peace in the region.

B. Access & Security and Qualified Industrial Zones (A&S QIZ)

The objective of this group is to diversify the number of points of passage between Israel and West Bank/Gaza, taking into account access points with Egypt and Jordan.  The goal is to facilitate regularized movement of goods through these crossings by using new technology to enhance security and expedite transportation routes. The developed concept will be an integrated system that will push back the security envelope and provide for a secure process, from the point of origin in Palestine to the port of destination, and will include security redundancy and enhanced communication between the Israeli and Palestinian sides.   In this effort, this committee will focus its energies on the crossings initially at Erez (in the north of Gaza, adjoining Israel), Rafah (in the south of Gaza, adjoining Egypt), and Jalame (in the north of the West Bank) for privatization and technological improvement.  The group will seek to harness the power of the international private sector to get goods flowing more efficiently in and out of Gaza and the West Bank, and thereby provide a lifeline to the Palestinian private sector all the while taking into account the legitimate security needs of Israel.  The A&S QIZ group is already functional and, in consultation with various private sector entities, is in the process of developing a white paper. 

C. RAND Arc Implementation Project (RAI)

The objective of this group is to work with RAND to actualize its Arc infrastructure project in the Palestinian Territories.  The RAND Arc project provides an effective organizing principle for the physical infrastructure and a medium run plan needed to ensure the economic and social success of a Palestinian state - directs international aid and private investment towards an integrated national development plan, rather than to countless disconnected projects.  Initially this entails identifying pilot micro-schemes for feasible parts of the RAND Arc in Gaza and the West Bank that can be implemented quickly by the private sector, are politically viable and can eventually be drawn into the larger Arc project.  This project will support and stimulate economic activity in the region and create something that demonstrates to all parties that there are tangible incentives to reaching resolution and benefits to achieving peace.

This project has received warm interest and support at the highest political levels of Palestinian society - CCC recently commissioned a study to examine pre-existing infrastructure and PA plans done by the various ministries, with the intention of comparing these with the RAND Arc; the study is being carried out by a Palestinian group and should be concluded shortly.  Technical studies have continued independent of the political situation so that credible options on costs, engineering, and implementation are available to political leaders when they are needed - these include closer analysis of the old Gaza rail right-of-way, and alternative routing strategies through the West Bank.

D. The US-Palestinian Public-Private Partnership

On December 3, 2007, President Bush, Secretary Rice and Administrator Fore announced a new US-Palestinian Public-Private Partnership focused on creating economic opportunity for the Palestinian people and helping to prepare Palestinian youth for the responsibilities of citizenship and good governance.

The U.S. private sector – both non-profits and the business community – is uniquely situated to contribute to these goals. By demonstrating to the Palestinian people that they are willing to work with responsible Palestinian leaders and institutions, the private sector will increase support for a Palestinian leadership committed to peace and willing to negotiate the political compromises required to reach this important goal.

This effort is a critical component in facilitating progress toward a two-state solution, wherein Israel and Palestine live side by side, in peace, security and prosperity.

This partnership builds on the work of the Middle East Investment Initiative (MEII). A public-private partnership between the Aspen Institute, Overseas Private Investment Corporation, and the Palestinian Investment Fund, MEII is a $228 million loan guarantee program currently operating in the West Bank to improve the livelihoods of the Palestinian people.