Economics and Development

Recommendation on Steps to be Taken With Regard to Palestinian Economic Development Needs in Relationship to Israeli Security Needs

See Also:
IPCRI Israeli-Palestinian-Jordanian Trade Conference
IPCRI Agricultural Trade Conference

In July 1996, immediately following the Israeli elections, IPCRI held a series of closed roundtable meetings to discuss the probable results of the elections on the peace process. In IPCRI's assessment, little progress would be made politically, however, there would probably be a lot of possibilities for improvement with regard to more "liberal" policies regarding the development of the Palestinian economy. With that in mind, IPCRI prepared a policy document that was widely circulated amongst Israeli government and security officials. The following contains experts from that document.


1. The development of the Palestinian economy is a precondition to the advancement of peace and is therefore, desirable from the point of view of Israel's security needs. Conversely, economic stagnation (or worse) poses a potential threat to Israel's security interests, questions the legitimacy and the ability of the PA to rule, and discourages Palestinian public support for the peace process.

2. Palestinian economic development is in Israel's interest not only from the point of view of the peace process but also from the point of view that it is sound economics. A Palestinian economy with more disposable income will purchase more goods from its nearest neighbor - Israel. Just as the United States advocated a policy of strengthening the economy of Mexico, so must Israel be interested in a strong economy next door.

3. A strong Palestinian economy will enhance the image of the regional economy which will encourage more foreign investment in Israel , in the Palestinian Territories themselves and in the other regional neighbors.


An Israeli-Palestinian security subcommittee should be established to address Israeli security needs in the context of Palestinian economic growth.


Closures in general create very negative impacts on the Palestinian economy.
Closures prevent the movement of laborers, the movement of goods, imports and exports are damaged, companies cannot meet deadlines of contracts, investments are frozen, and no new investments are seriously considered.

Closures, when determined to be absolutely necessary, should be very limited in scope and in time.
In general, it is recommended that the policy of closure be phased out as soon as possible. This method of guaranteeing Israel's security needs is a detriment to Israel's longer term security needs in that they raise the level of distrust and dissatisfaction with the peace process within the Palestinian territories. Closures are not hermetic and terror organizations can easily penetrate the closure without very much effort.


The record shows that long-time employees Palestinian laborers have not been a security risk to Israel. Employees who are married and have children and who are above a certain age (ca. 28) have almost never proven to be a security risk at all.

Laborers should be granted long term work permits.

2. Labor provider companies of Palestinian labor should be established by Palestinians. These labor contractors would be certified by an appropriate branch of the Palestinian security, which will develop criteria for laborers in conjunction with the Israeli security.

3. It is possible to establish private sector based transport companies which are licensed by the proper security authorities (Israeli and/or Palestinian) for the specific purpose of transporting laborer to and from their jobs in Israel.

Work permits for laborers working in Israel should be issued for a period of one-year at a time.


Palestinian businessmen should be granted permits allowing them to enter into Israel and to travel between the West Bank and Gaza in their own vehicles.

The Israeli government should create a policy that treats non-Palestinian laborers brought into Israel as value added imports with their wages subject to VAT. This would create a policy of economic dis-incentives that would discourage employers from hiring foreigners instead of Palestinians.


The major crossing points (Erez for example) should be turned over to private security companies which are supervised and licensed by the security forces of Israel. Private companies would be more professional than reserve soldiers. The companies have an economic motivation to be thorough and efficient and will have their contract under review annually so that the incentive will be in place to do the best job possible.

The Israeli security authorities should create standard operation procedures for security clearance at crossing points for the Palestinian security. Israel should provide the Palestinians with detailed specs on technology required as well as the kind of procedures and precautions are required to guarantee that once clearance has been given, the vehicle or individual in question is "clean." Israel should help to provide the Palestinian side of the crossing points with the latest technology and procedures even if there is a financial cost to Israel in doing so.

Israel should provide in-service training to "border" security personnel from the Palestinian side to guarantee that procedures are kept at high standards and are at the levels that Israel demands and requires. This kind of "in-service" training will also increase the cooperation between the sides and the sense that both sides are serving the same purpose.

Modern and efficient methods for checking people and vehicles entering and exiting the check points should be established. These methods should include those used at every major airport in the world, eg, metal detectors, x-ray machines for packages and bags, explosive sniffing dogs, chemical detection machinery, etc.

Individuals should be equipped with sophisticated documents, eg. magnetic cards with pictures which cannot be easily counterfeited. Trained personnel at the checkpoint will examine the cards and place them through the automatic card reader. The cards should contain the necessary and relevant security information, e.g., place of employment, hours of employment, age, name , ID -number, validity of the card, amount of time (years, months) at place of employment, family status, etc. The cards could be issued jointly by the Israeli and Palestinian authorities.

The crossing points should enable rapid and efficient crossing. Minimal contact between Israeli personnel and Palestinians who have the right to cross should be the general policy. The main point is to get the workers to their place of work as fast as possible without risking Israel's security.

Vehicles with permits should be checked efficiently, without delay and according to established operating procedures.

Sealed containers can be given certificates at the time of loading which will allow for rapid and efficient delivery to the destination in Israel or beyond.

In general, the trend for the movement of goods entering Israel should be in the direction of sealed container transports.

Rail lines must be the longer term solution for transhipment between the two Palestinian territories and from the Palestinian territories to export markets.

Foreign investors and foreign companies must be guaranteed closure-proof guarantees so that their investments can be realized.

Foreign investors and foreign companies must be guaranteed slim and swift procedures for importing sophisticated and complex supplies in order to construct and run their projects.

Crossing points could be diversified and specialized for certain kinds of movement. There could be crossing points for people without vehicles, others for agricultural goods, another crossing point for industrial goods and trucks, etc.

All goods imported via Israeli ports should be allowed to move freely and without delay into the Palestinian territories after clearing the ports.

Palestinian clearance customs agents should be licensed.

Import and Export procedures are extraordinarily complex and should be simplified and made more efficient. This should be handled by the Israeli-Palestinian subcommittee on economic and customs matters.

The Israeli-Palestinian legal subcommittee under Oslo should be convened with the aim of encouraging and aiding the Palestinians in drafting new and modern legislation for taxation, banking, and investment.

Israel should encourage joint ventures involving Palestinians, Israelis and foreign investors.

The new government must open up Israel's economy to competition from outside of the region, because the economy has been too centrally planned and controlled, and because open markets mean fair and open competition by ending protectionist policies. The Palestinian economy must be allowed to participate in that competition, and Israel must open its markets to Palestinian products and services.

A full cooperation agreement of mutual recognition of standards should be immediately signed between the Israeli Standards Institute and the Palestinian Standards Institute.

Israel should encourage and allow Palestinians to market in neighboring states.

Israel should implement a policy of offering special incentives and benefits for Israel companies entering into joint ventures with Palestinians.

Israel should immediately engage in corrective legislation to afford Israeli investors the same benefits in the industrial zones which will be offered to all other investors, eg legislation on non-double taxation with the Palestinians.

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