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UNITED
NATIONS
A

        General Assembly
A/49/15
9 January 1995

Original: English

United Nations Conference
on Trade and Development

Report of the
Trade and Development Board

Volume II

(First part of the forty-first session)


...
II. ACTION BY THE TRADE AND DEVELOPMENT BOARD ON SUBSTANTIVE ITEMS OF ITS AGENDA
...
UNCTAD's assistance to the Palestinian people (agenda item 7)

Item 7. UNCTAD's assistance to the Palestinian people

At its 852nd (closing) meeting, on 30 September 1994, the Trade and Development Board took note of the report by the UNCTAD secretariat entitled "Developments in the economy of the occupied Palestinian territory, with special reference to external trade" 15/ and decided, in response to paragraph (c) of General Assembly decision 47/445 of 22 December 1992 to draw the attention of the Assembly to that part of the report of the Board on its current session which reflected the Board's discussions under the item (for the discussion, see extract from the report of Sessional Committee II reproduced in annex IV to the present report).

...

___________

15/ TD/B/41(1)/3.


ANNEX IV

Discussion in the Trade and Development Board on agenda item 7 on UNCTAD's assistance to the Palestinian people*


1. For its consideration of this item, the Trade and Development Board had before it the following documentation:

"Developments in the economy of the occupied Palestinian territory, with special reference to external trade: report by the UNCTAD secretariat". a/

Consideration in Sessional Committee II

2. The Director of the Division for Economic Cooperation among Developing Countries and Special Programmes stated that the deliberations on the item were being held at a crucial time in the history of the peoples of the Middle East. She had great pleasure in supervising the secretariat's programme of assistance to the Palestinian people at that important stage. She hoped that all delegations concerned would support the secretariat in its task. The Palestinian authority needed the full support of the international community to fulfil its mission. She hoped that in the deliberations on the item, delegations would offer their support, points of view and advice, which the secretariat would carefully consider in further developing its programme of assistance to the Palestinian people.

3. In his introductory statement, the Chief of the Special Economic Unit examined major elements of the new policy environment created by the signing by Israel and Palestine of the landmark Declaration of Principles on Interim Self-Government Arrangements and the subsequent agreements, assessed the implications of main challenges facing the nascent Palestinian self-government authority regarding the revival and sustained growth of the Palestinian economy and reviewed the nature and extent of international assistance to the occupied territory.

4. He stated that the Protocol on Economic Relations signed by Israel and Palestine on 4 May 1994 as part of the Agreement on the Gaza Strip and the Jericho Area constituted the main component of the new policy environment. It provided a real and immediate opportunity for the Palestinian people and their nascent government authority to elaborate appropriate policies, establish and build credible institutions and implement urgent programmes aimed at guiding the process of structural transformation in the occupied territory during the five-year interim period. It covered cooperation in nine areas of Israeli-Palestinian economic relations, reflecting the foresight and determination of both parties to recognize each other's independent rights and needs and to join forces on an equal basis in order to promote the development of their two societies in harmony and peace. Significant developments had also taken place in the policy environment affecting Palestinian economic relations with its historic Arab partners, expanding yet further the scope for Palestinian-Arab economic cooperation in the coming years and paving the way for the reintegration of the Palestinian economy in its traditional markets.

5. The Palestinian economy in general and its trade sector in particular continued to feature a weak, fragmented and poorly articulated productive base, composed mainly of small-scale production and marketing units. Where attempts had been made in recent years to revive and expand the productive sectors, the absence of an indigenous policy-making mechanism, regulatory bodies, and financial and manpower capacities, coupled with a range of other constraints, had prevented coordination in the formulation and implementation of required policies and measures. Vigorous policy measures were called for to help expand outputs, diversify trade and exploit complementarities. The Palestinian authority was expected to address itself to those and other priority areas of the economy during the interim phase.

6. The pressing needs on the ground and the challenge of securing the peace called for commensurate international action and support. International investors had shown keen interest in participating in the revival and reconstruction efforts and had made initial commitments to that effect. Some components of the assistance programme launched by the international community in favour of the Palestinian people had also begun to materialize, including financing part of the current budget deficit of the self-government authority as well as about one-third of the 1994 Palestinian public investment programme. These developments constituted hopeful signs for the realization of immediate and longer-term development objectives.

7. Now that the process of reform and reconstruction had begun, and pursuant to the provisions of General Assembly resolution 48/213, the UNCTAD secretariat had joined the rest of the United Nations system, and the international community as a whole, in welcoming the opportunity that recent developments had afforded to act more effectively in extending assistance to the Palestinian people in their time of greatest need. To that effect, the UNCTAD secretariat had initiated an integrated programme of technical assistance in favour of the Palestinian people. The programme covered areas where the secretariat had established operational capacities and addressed such specific areas as export diversification and trade development, customs and trade facilitation, trade statistics, debt management, external financial flows and investments, domestic financial markets, insurance and transport, as well as the regulatory framework affecting those areas and the business environment in general. The overall aim of the programme was to contribute to Palestinian institution-building in the above areas and enhance the capabilities of the self-government authority.

8. He concluded that the secretariat would soon hold consultations with the Palestinian authority and other relevant parties on the proposed programme. Similarly, it intended to discuss it with the United Nations Special Coordinator in the Occupied Territories, in addition to its current and future work programme on the Palestinian economy. It was hoped that after these consultations the proposed programme would receive wide support at both the bilateral and multilateral levels, including sources that had made commitments to the reconstruction and development of the Palestinian territory over the interim period.

9. The representative of Palestine expressed his appreciation for the in-depth and objective secretariat report, which provided important future guidelines for developing the Palestinian economy and improving the living conditions of the Palestinian people. He thanked the secretariat and the Special Economic Unit for their considerable and concrete efforts in this regard.

10. The world accorded great attention to the need for improving economic and social conditions in the areas under the Palestinian interim self-government authority, in the light of the circumstances created by Israeli occupation and the destruction of the economic and social infrastructure. Consequently, many States had hastened to provide financial support and technical assistance to establish a new infrastructure, promote the revival of Palestinian economic and social development, and participate in establishing a just and lasting peace after the suffering of the region as a whole for many years. However, that willingness had been confronted until now by political obstacles which had impeded the implementation of pledges of support, as in the recent Paris meeting of donors when the Israeli delegation had refused to consider Jerusalem as part of the territory occupied in 1967, thus excluding Palestinian development projects proposed for that part of the occupied territory. Other political factors had also played a role in impeding the implementation of international assistance to the Palestinian people.

11. He stated that the major challenge facing the Palestinian people, in addition to that of economic and social development, was to secure international support based on a clear recognition of the aspirations of the Palestinian people and their national rights in their homeland. Support for the independent future of the Palestinian people was necessary to achieve the long-term aim of peace, security and stability for all peoples and States of the region. Therefore, he expected the international community to play an important role commensurate with the basic needs of the Palestinian people. That required donors' full coordination and their active participation in rebuilding the infrastructure, developing the economy and relieving Palestinian society from the sufferings of years of occupation. That placed a special and increased responsibility on the Special Economic Unit and UNCTAD in providing assistance to the Palestinian people. In concluding, he reaffirmed his appreciation and support for the findings of the secretariat report, including the proposals it contained for technical cooperation activities.

12. The representative of Israel noted with satisfaction that, on year after the signing of the Declaration of Principles, a great distance had been travelled and progress had been made, notwithstanding the many problems yet to be solved. While political issues could not be resolved if the economic dimension was disregarded, no progress could be made on the economic front as long as political differences remained. Israel was fully aware of the necessity for economic development in Gaza, Jericho and the rest of the West Bank. It was imperative for the success of the peace process that the standard of living in these areas be raised and that there be an economic take-off.

13. The first steps of the programme set out in the Declaration of Principles had already been implemented. So far as the Palestinians' control over their economic activities was concerned, a start had been made in establishing the necessary infrastructure. The Protocol on Economic Relations between Israel and the Palestine Liberation Organization (PLO) defined a framework of powers for the Palestinian authority during the interim period, which was to apply immediately to the Gaza Strip and Jericho area, and at a later stage to the rest of the West Bank. The Protocol was a complex and detailed document which empowered the Palestinian authority in a range of fields: imports and customs; monetary and financial issues, including taxation; labour mobility and social insurance; the free movement of agricultural and industrial goods between the two sides; insurance issues; and tourism.

14. He considered that a start had been made, but in order to make it possible for the Palestinians to achieve economic self-sufficiency, it was incumbent on the world community to make available as much aid as possible. That included expertise and technical assistance, preparation of economic projects and financial assistance. The United Nations had a major role to play and UNCTAD's potential contribution might well be a valuable one. UNCTAD's views on the matter were reflected in its report and in the many studies referred to in paragraph 77 of that report. While refraining from comment on the specific proposals contained in the report pending further study, Israel welcomed and encouraged all assistance efforts offered in an objective and impartial spirit. In the context of United Nations assistance, a crucial role was to be played by the Special Coordinator, whose tasks included ensuring that the various United Nations agencies active in the development of the territories would complement and not duplicate each other.

15. International donor States had pledged nearly $3 billion for the period 1994-1998. Those funds were needed both for Gaza and Jericho as well as for the financing of early empowerment elsewhere. Small amounts had been made available to meet immediate expenses even though the funds were not primarily intended for that purpose, but rather for projects aimed at making the areas self-sufficient. Donor countries had been reluctant to transfer funds until fundamental operational transparency and accountability had been achieved - a requirement basic to all systems.

16. He recalled that, at the donors' conference held earlier in the month, certain political difficulties had arisen because the initial set of Palestinian proposals had contained references to Jerusalem, an issue not to be dealt with until a later stage according to the Declaration of Principles. The difficulty had been resolved through a declaration that the two sides would not bring before the donor community those political issues that were unresolved between them. An unofficial meeting of the Ad Hoc Liaison Committee was to be convened as soon as possible in Paris. That meeting would endeavour to cover the urgent needs of the Palestinian authority, including early empowerment, and subsequently to focus upon the longer-term development needs of Gaza and the West Bank.

17. He believed that in an interdependent world, all development must be regional development. That was recognized in the Declaration of Principles and, in the context of this approach, Israel was attempting to encourage projects of a regional nature, financed by private and public investment. The success of the forthcoming summit conference to be held at Casablanca, at which a package of potential regional projects would be presented, would be a major boost for the economic development of the region. In concluding, he called upon all States and international organizations to contribute to the peace process for the benefit of the Palestinians themselves and the Middle East as a whole.

18. The representative of Norway, after thanking the UNCTAD secretariat for the well focused and balanced document on the item, stated that the last year had witnessed unprecedented progress in the Middle East peace process. The Declaration of Principles and subsequent agreements had a clear potential for promoting social and economic development, including trade expansion, in the autonomous Palestinian areas. In order to achieve that, however, the international community must be willing to mobilize the financial resources necessary for infrastructure, institution-building, start-up and recurrent costs. The Palestinian authority was currently facing serious economic problems, especially in financing recurrent costs. In that critical situation, every effort must be made to speed up international assistance to meet the most urgent short-term needs. Failure to do so could endanger the prospects of long-term development.

19. As Chairman of the Ad Hoc Liaison Committee, Norway was continuously involved in the international assistance efforts. During informal consultations at Oslo on the occasion of the first anniversary of the signing of the Declaration of Principles, Israel and the PLO had agreed on a number of undertakings. Of particular importance, they had undertaken not to bring issues of political disagreement before the donor community in future. That should induce donor countries to speed up disbursement of their pledges. Norway had pledged $150 million in assistance to the Palestinian people.

20. Norway welcomed the UNCTAD secretariat's initiative to undertake an integrated programme of technical assistance to the Palestinian people, to be carried out in cooperation with UNDP. The areas singled out - trade, transport, finance and investment - fell well within UNCTAD's field of competence. The programme must be coordinated with that of other bodies and institutions involved, and the secretariat should maintain close cooperation with the United Nations Special Coordinator in further elaborating and implementing the programme.

21. The spokesman for the European Union (Germany) thanked the secretariat for its timely and comprehensive report and welcomed the most recent developments in the Middle East peace process, which had taken on a new quality since the signing of the Declaration of Principles. The European Union, both as a community and on an individual country basis, was actively participating in the five multilateral working groups of the Middle East peace process on the subjects of regional economic development, water, environment, refugees and arms control and regional security. He described the central elements of the Joint Action to Support the Middle East Peace Process, which had been adopted by the European Union's Council of Ministers on 19 April 1994, and which contributed a clear demonstration of the European Union's support.

22. By virtue of its budgetary contributions alone, the European Union was already the major donor in Gaza and the West Bank. In the light of the positive developments in the Middle East, aid from the European Union's budget in 1993 had been raised by 20 million European currency units ($25 million) to a total of 90 million ECU ($110 million). For the period 1994-1998, a total of 500 million ECU (more than $600 million) in direct aid had been budgeted. Half of this sum was being provided in the form of non-refundable subsidies, and the other half in the form of loans from the European Investment Bank.

23. The European Union recognized that UNCTAD's studies on the state of economic development in the occupied territories over many years had contributed to the awareness of both sides of the need to resolve the question of the occupied territories peacefully, and had thus made some contribution to the Middle East peace process. With progress in the peace process and the setting up of multilateral working groups and the donor Ad Hoc Liaison Committee, there was no an adequate structure for the promotion of support by the international community for economic development in the occupied territories. UNCTAD could make its contribution in the fields where it had comparative advantages, within the framework of these bodies and in close concert with them.

24. The European Union was resolved to continue its support for the Middle East peace process and, so far as possible, for economic development in the occupied territories.

25. The representative of Japan stated that Japan welcomed the signing of the Declaration of Principles as a significant step forward and a contribution to the peace process in the region. Recognizing that it was essential for the international community to support this agreement actively and promptly, Japan had announced its intention to extend about $200 million in assistance to the Palestinians over the coming two years. The assistance included grant aid for food and medicine and concessional loans for infrastructure. His Government had initially disbursed approximately $50 million through multilateral institutions as assistance for the development of the West Bank and Gaza. This assistance included the construction of temporary housing for refugees, improvement of garbage collection, provision of medical equipment, infant vaccination, improvement of water supply and sewage treatment and the partial coverage of certain administrative expenditures.

26. One of the crucial tasks of the Palestinian interim self-government authority was to maintain law and order in the Gaza Strip and Jericho area. Japan condemned any act of terrorism by extremists opposing the peace process and hoped that the recently installed Palestinian police forces would function effectively. Another important task for the Palestinians was to cover the initial expenses of the interim self-government. Japan had decided to extend an additional $9 million over and above the assistance already extended for administrative expenditures. In that connection, he appealed to the Palestinian authority to make every effort to reduce future budget deficits. Any Government had to be supported by taxes; he hoped that the Palestinian authority would progressively build up its tax collection capacity. Japan was prepared to offer a training course to help build up a Palestinian tax authority.

27. The establishment of the Palestinian interim self-government had enabled Japan to extend its bilateral assistance directly to the Palestinian authority. Japan had dispatched a project-finding mission in July 1994 to study the fields of infrastructure, education and medical care. Medical care was a field on which Japan had focused careful attention with a view to upgrading living conditions in the occupied territories. The Government of Japan urged the Palestinians to do their utmost to make their organization more effective in receiving aid and in implementing projects. With regard to technical assistance, Japan had accepted Palestinian trainees in the fields of administration, environmental protection and vocational training and would continue to offer training in the 1994 fiscal year.

28. He added that the provision of economic assistance to the other neighbouring countries in the region was no less important and Japan had pledged aid to Egypt, Jordan and the Syrian Arab Republic.

29. The representative of Egypt stated that this item was being deliberated at an important stage which called for the pooling of efforts to establish the bases of the Palestinian people's economy and future prosperity. The signing of the Declaration of Principles by the Israeli and Palestinian sides and the subsequent Cairo Agreement manifested the spirit of cooperation and the desire for peace of both parties. This constituted a basis for further progress towards peaceful coexistence and the achievement of a just and comprehensive peace in the Middle East.

30. Expressing appreciation for the report by the secretariat, she added that, among other issues, the report pointed to the shortcomings in official data on Palestinian economic performance since 1988. The Palestinian national authority needed assistance in rectifying this situation and she welcomed the secretariat's specific proposals to strengthen Palestinian capacities with regard to foreign trade and related statistics. Statistical series on other sectors of the economy not included in the secretariat proposals should also be covered by the programmes of assistance of the donor countries and specialized international agencies.

31. The report also noted an interesting relation between official aid pledges and the possibilities for increased foreign private investment. This would provide an impetus to sustained growth of Palestinian economic capacities and job creation, the latter being crucial to a smooth transition. She welcomed the pledges already made by donor States and hoped that international aid flows would reach the occupied territory as soon as possible. In particular it was important to cover the deficit in the Palestinian government budget for 1994, to enable the transitional government to shoulder its vast responsibilities, something that it could not bear alone.

32. She affirmed the need for coordination of the efforts of all involved, including the United Nations agencies, within the overall framework of the aims and priorities set out in the Palestine Development Programme. For its part, Egypt had repeatedly affirmed its support for the Palestinian transitional authority in order to enable it to face the challenges in all spheres. A first step in Egyptian-Palestinian economic cooperation and the reintegration of the Palestinian economy with its traditional markets had been taken with the signing of the Agreement on Economic and Technical Cooperation between Egypt and Palestine on 24 January 1994.

33. In concluding, she welcomed the secretariat's proposals for a programme of technical cooperation in fields where UNCTAD had established competence and experience. In cooperation with the Palestinian side, areas should be identified where this programme could be complemented by other international cooperation programmes to achieve the aim of sustained Palestinian development.

34. The representative of the United States of America congratulated the UNCTAD secretariat and the Special Economic Unit for its objective and balanced report. In the years to come, the document would be a standard reference on the great progress made in assessing the Palestinian people's needs with regard to their economic development and the progress made by several countries in moving towards peace in the Middle East. The report contained thoughtful proposals for a programme of technical cooperation which seemed very welcome. It appeared to be based on a careful matching of UNCTAD's expertise and capabilities with the trade and development needs of the territories in question.

35. He added that there was a need for thorough consultation with other donors, the intended beneficiaries and the Special Coordinator. He looked forward to hearing from the secretariat how it expected cooperation on the programme with the United Nations Development Programme (UNDP) and with the Special Coordinator to evolve. The United States Government had played its part in promoting the Middle East peace process, and it looked forward to hearing from the UNCTAD secretariat about its plans for the longer-term development of the occupied territories. He recognized that UNCTAD had a role to play, aside from the efforts of the various countries involved in dealing with the many economic and political problems that remained.

36. The representative of China noted that the secretariat had undertaken extensive research over the years and presented detailed reports on the subject of the occupied Palestinian territory. The present report not only highlighted recent economic developments in the occupied territory but also presented proposals for technical cooperation activities. He expressed appreciation to the secretariat for its proposals and its work in accordance with relevant General Assembly and UNCTAD resolutions on the subject. He hoped that the Board would give the proposals serious consideration.

37. The agreements signed by Israel and Palestine provided the basis for peace in the Middle East and guaranteed the economic development of the people in a stable and peaceful environment. The Palestinian national authority faced many problems in the task of improving the living conditions of the Palestinian people but he was confident that, with adequate international support, the Palestinian people and the Palestinian authority would meet these challenges. He hoped that the UNCTAD secretariat would continue to contribute to this process.

38. The representative of the League of Arab States expressed his deep appreciation to the staff of the Special Economic Unit for their continued work. The report before the Board constituted a comprehensive and wide-ranging document which was satisfactory from all angles, especially in its technical and economic aspects. From an initial examination of the report, it was possible to perceive the long-term economic and social implications for the Palestinian people of the work of the Unit. Therefore he reaffirmed the requests made at previous sessions of the Board to support and strengthen the work of the Unit with additional expertise.

39. He added that the League of Arab States supported and cooperated with all agencies of the United Nations system involved in providing assistance to the Palestinian people, especially at the present stage. The recent decisions of the League's Council of Foreign Ministers affirmed the solidarity of the League and its member States with Palestine. It was now necessary for donor States to fulfil their pledges to Palestine so as to enable the Palestinian national authority to begin implementing its development projects. There was also a need for the United Nations system, and particularly the UNCTAD secretariat, to fulfil its mandate towards the Palestinian people through, inter alia, strengthening the Special Economic Unit. He expressed support for the statement of the representative of Palestine and other speakers in this regard. In concluding, he said that the League would continue to provide the UNCTAD secretariat with all available data to help the secretariat in its work.

40. The Chief of the Special Economic Unit, responding to the questions raised by the representative of the United States of America, stated that preparations were under way to hold consultations with the Palestinian authority primarily on the substantive orientation and scope of the proposed technical assistance programme. Those consultations were also intended to cover the financial and other logistical needs of the programme. The process of consultation would be extended to include UNDP and other parties concerned. The objective at that stage would be to establish complementarities with other technical assistance activities, avoid duplication of effort and optimize resource allocation. In the light of those consultations, the proposed programme would be finalized and presented to possible sources of funding, especially UNDP. UNCTAD would endeavour to intensify its cooperation with UNDP in its work on the Palestinian economy, with emphasis increasingly focused on operational activities. Cooperation in that area would be governed by UNDP guidelines and procedures for its involvement in support of technical cooperation activities.

41. Regarding the UNCTAD secretariat's plans for the longer-term development of the occupied territory, he drew attention to the intersectoral project on prospects for sustained development of the occupied territory, under which more than 20 economic and social sectors had been investigated in depth. The implementation of that project had been made possible by the provision of specific resources following General Assembly resolution 44/174 and contributions of regional organizations, including the League of Arab States and the Arab Industrial Development and Mining Organization, for which the secretariat reiterated its gratitude. Based on the results of Part One of that project, which dealt with the current socio-economic situation and needs of the Palestinian people, and bearing in mind the implications of the Declaration of Principles and subsequent agreements as well as the needs of the Palestinian authority, the secretariat had drawn up the proposed programme of technical assistance described in the report. The secretariat was now occupied with two complementary activities dealing with the future of the Palestinian economy. The first activity comprised preparation of an intersectoral study on the future prospects of the Palestinian economy under different scenarios over the next 15-20 years. The study, which would constitute Part Two of the intersectoral project, would deal with such issues as the long-term requirements of independent development, macroeconomic issues of sustainable growth, scenarios of future development and policy variables, intersectoral issues and sustainable growth, and development of human resources. It was intended that the study should provide the basis for future action.

42. The second activity would aim at investigating the regional dimensions of the Palestinian economy, including resource endowments, stage of development, present and future development objectives, and strategies and policies in the Palestinian territory and its immediate neighbours. The study would identify complementarities on a bilateral, subregional and regional basis and provide strategy guidelines for exploiting them.

43. The secretariat would consolidate the findings of the two studies and establish guidelines for elaborating strategies for the long-term development of the Palestinian economy as well as its integration at the subregional and regional level. Action on the findings of the studies would be dovetailed with the proposed programme for technical cooperation described in the secretariat report, in order to ensure continuity and consistency of UNCTAD's assistance to the Palestinian people at present and in the long term. The secretariat would at all stages maintain close contact with the Special Coordinator as well as with UNDP and other parties concerned.

Action by the Sessional Committee

44. At its 2nd meeting, on 21 September 1994, the Committee took note of the report by the UNCTAD secretariat a/ and of the statements made during the formal debate on the item.


Notes

a/ TD/B/41(1)/3.



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* Included in the report of the Trade and Development Board to the General Assembly in response to the decision taken by the Board at its 852nd (closing) meeting, on 30 September 1994 (see chap. II, sect. B, item 7 above).



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