THE ECONOMICS OF PEACE.

Author:Martin, Josh
 
FREE EXCERPT

The Wye agreement contains provisions which will create more favourable conditions for trade with and investment in the Palestinian territories. It may also provide the basis for allowing billions of dollars in foreign aid to finally begin moving into the territories.

Although the primary elements of the Wye agreement signed by Israel and the PLO address a land-for-peace deal, its true impact for Palestinians may be found in the economic provisions of the agreement, and the political impact those provisions may have on the fractious Palestinian community.

Above all, the economic provisions of the Wye agreement could enable the PLO to finally begin delivering the long-promised economic benefits of independence. While critics have said that PLO Chairman Yasser Arafat settled for too little, several diplomats close to the negotiations point out that economic benefits from the agreement could reduce the popular strength of Hamas and other Palestinian groups opposed to any such negotiations.

Like the PLO before it, Hamas has drawn its strength from Palestinian youth facing bleak economic prospects. Unemployment among those under 25 is estimated at more than 30 per cent. And the average income of a Palestinian worker is less than one-tenth that of his Israeli counterpart.

Creating jobs and boosting living standards has been impossible because the Palestinian territories have lacked basic infrastructure (phone service, roads, air and sea transport etc.) needed to develop the economy. Production has also long been stymied by often arbitrary Israeli controls both within the territories and over export activities.

Under the Wye accord, Israel relinquishes control over an additional 13 per cent of West Bank territory, in exchange for revision of the PLO Charter (eliminating language calling for destruction of the state of Israel) and agreement of a CIA-coordinated security cooperation and anti-terrorism programme.

But it is the economic provisions of the Wye agreement which could ensure its success, by giving Palestinians a clear economic stake.

The Wye agreement's provisions include:

* the "timely" opening of the Gaza Industrial Estate (which is expected to have linked free trade zone activities);

* inauguration of service at the international airport at Gaza;

* active negotiations to construct a sea port at Gaza.

Under agreement timetables, these provisions could be accomplished before the end of 1998, thus realising key goals long sought by the...

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