[[Jerusalem Times: Opinion]]


May 22, 2006


This week in Israel….. Behind the news with Gershon Baskin


Will he or won’t he?


Prime Minister Olmert is in Washington waiting for his five hour meeting with President Bush and the White House senior staff.  The Prime Minister’s team that went to DC last week to prepare the visit obviously returned to Jerusalem with instructions to turn down the rhetoric on future Israeli unilateral steps.  The team, headed by the PM’s Chief of Staff new-comer Yoram Turbowicz, consisted of former Sharon chief of staff Dov Weissglass and special advisor Shalom Turgeman, met with the White House and State Department top officials to prepare the Olmert-Bush meetings.  Weissglass held a private meeting with Secretary of State Rice in which the Secretary urged the Israelis to take Palestinian Prime Minister more seriously. After returning from Washington, the messages coming from the PM’s Office were much more directed at Olmert’s commitment to meet Abbas upon his return from DC and the decision was made for Tzipi Livni and Shimon Peres to meet with Abbas at the World Economic Forum Meeting in Sharm el Sheikh.

In the past days, Olmert’s allies in Kadima have been much more upbeat about negotiations with the Palestinians than at any time since Olmert took over the PM’s office. But during an interview with CNN from Washington, Prime Minister Olmert said that Palestinian President Mahmoud Abbas was unable to speak on behalf the Palestinian people. ''Abbas is weak and has no support'', he said.  Shimon Peres today rebutted Olmert stating: “Abbas is the only address for negotiations”, Peres told Army Radio, "There is no one else. It is either Hamas or him. Since Hamas is out of the question, Abu Mazen is the only one that can be considered," he continued.

The Livni-Peres Abbas meeting received positive feedback from the Palestinian side, but no details were released by either the Palestinians or the Israelis. The Israeli delegation to Sharm el Sheikh also received a heavy dose of prodding and pushing towards negotiations with the Palestinian President by Egyptian President Mubarak and Abbas’ office made sure to emphasize Abbas’ public statements at the Economic Summit that he is fully authorized to negotiate with Israel and that Hamas has fully accepted that position.

In Washington, Olmert will have to make a commitment to the Americans that he will meet with Abbas, but at this time it is not clear if the meeting will be anything more than a photo-op.  Olmert’s position has been that there is no two-headed Palestinian Authority and until Hamas accepts the international conditions, he has no reason to meet with anyone from the Palestinian Authority.

Meanwhile, IPCRI has learned that there are government instructions against holding any meetings with anyone in the Palestinian Authority, from any level. The instructions apply to Israeli government officials, including professional civil servants and include a prohibition against meeting any PA officials including people from President Abbas’ office.  Kadima Members of Knesset have been given the same instructions. We received confirmation of these instructions from several MK’s and from several government ministries, including the Ministry of Defense, Foreign Affairs, and the IDF.

The PM’s PM Council

Prime Minister Ehud Olmert met this week prior to leaving for DC with opposition leader Benjamin Netanyahu. It was decided to create a forum of former Israeli heads of government to advise Mr. Olmert on diplomatic and other pathways with which to fight against the Iranian nuclear program. Olmert will be holding periodic meetings with former PM’s Netanyahu, Peres and Barak to gain their insights, advice and support on confronting the Iranian issue. 

The issue of Iran is likely to be a subject of discussion in all of the meetings in the US.  Olmert’s people have been suggesting that Iran is much closure to achieving weapons capability than is being reported in most of the Western media.  It seems that this is part of a media spin to take attention away from the main issue which was supposed to be part of the DC visit – the unilateral convergence plan.  The plan has been granted a new name by the PM’s spin people – it is now named “realignment” – apparently meant to be a plan to set Israel’s security borders for now and not necessarily Israel’s final borders.  Rumors are also afloat that Olmert will be forced to discuss the issues concerning the route of the separation barrier and that the US will push Olmert to moving the route once again closer to the green line in several areas.

The Sasson Report is Back

Amidst rumors and statements that former Defense Minister Mofaz signed authorization for the expansion of three unauthorized outposts and the development of a new settlement in the Jordan Valley, Haim Ramon, the new Minister of Justice announced that he will be heading a Government Committee to bring about the implementation of the Sasson Report findings – a committee appointed by and ignored by former Prime Minister Sharon.  The Sasson committee not only reported on the existence of 105 illegal outposts, the report also documented that of these, only 26 were built entirely on state land, 15 were built on privately owned Palestinian land and the rest were built on land whose ownership status was unclear. Sasson also reported that government ministries and other bodies had worked together to fund the illegal outposts, provide land, build housing and public buildings and provide roads, electricity and water.

Ramon indicated that while the Minister of Defense was directly responsible for planning the removal of the outposts, his committee would prepare legislation and by-laws which will take actions to prevent similar illegalities in the future and to take action against those who broke the law. The other members of the committee will include Foreign Minister Livni, Defense Minister Peretz and Internal Security Minister Dichter.

Israeli economic booms while Palestinian economy bursts

Economic indicators in Israel reported a huge unexpected growth in the Israeli economy.  At current levels, the economy is expected to grow at an amazing 6.5%. The biggest boom was of course in the high tech sector but there is also a significant increase in foreign tourism which also having an impact.  At the same time, the Palestinian economy on the other side of the separation barrier is crashing.  Israeli Bank Hapoalim was the first Israeli bank to announce that it was unilaterally canceling is correspondence agreements with Palestinian banks.  Bank Discount was fast to follow suit and the Mercantile Bank, owned by Discount will surely follow. 

IPCRI inquired with the White House if this policy has been lead or directed by US instructions.  In response to our inquiry, a very senior White House official responded: “This was a decision taken by Israeli banks. But they are acting in self-protection, because of US terrorism statutes. Transfers to and through Palestinian banks may seem to them too risky given that we regard every PA ministry as now under terrorist control.“  This answer confirmed for us that the initiative was taken by the banks themselves and not by the US or Israeli government. 


IPCRI has learned that senior IMF officials are working with the Bank of Israel Governor, Prof. Stanley Fisher to find a way to get the Israeli banks to rescind their decision which will be devastating for the Palestinian economy. Without the corresponding banking agreements with Israeli banks, Palestinians banks which conduct the trade between the private sectors of both sides will be incapable of facilitating any kind of modern trade. The Palestinian economy conducts nearly 90% of its trade with and though Israel.  Without having working banks, the Palestinian economy will be sent backwards to the beginning of the twentieth century.  Cash and carry is no way to conduct a modern economy, moreover, with Israeli banks out of the picture, there is already a cash crisis in the West Bank and Gaza with the Israeli shekel in short supply.  The Palestinians may try to convert their economy to be more focused on the Jordanian dinar, but Jordanian banks are likely to follow the advice of the Israeli banks.  If there is no quick solution to this problem, the Governmental or Bank of Israel will have to intervene. Without a quick fix to this problem, the entire private sector of the Palestinian economy will tumble like a house of cards.



Gershon Baskin is the Co-CEO of IPCRI – the Israel/Palestine Center for Research and Information.  www.ipcri.org