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Source: European Union (EU)
16 January 1998

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The role of the European Union in the Middle East peace process and its future assistance.
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DN: IP/98/37     Date: 1998-01-16


TXT: FR EN
PDF: FR EN
Word Processed: FR EN
ip/98/37

Brussels, 16 January 1998

The role of the European Union in the Middle East peace process and its future assistance.

The European Commission has just approved a Communication to the Council of Ministers and to the European Parliament on the role of the European Union (EU) in the Middle East peace process.  The aim of the document is to provide elements for a thorough debate within the EU on the present situation in the Middle East and the impact of the EU political and economic strategy for the region. The communication, therefore, provides an analysis of (i) the present situation of the Middle East peace process, (ii) the EU political and financial support to it, (iii) the interface with the Euro-Mediterranean partnership, (iv) the results of the EU economic assistance to the Palestinians, (v) the successes and shortcomings of the international aid effort and in its final part, (vi) the complementary role of the EU alongside the leading role of the US in the process.

Executive summary of the Communication

The Middle East peace process that was launched at the 1991 Madrid Conference raised great hopes of a comprehensive, just and lasting peace between Israel and its Arab neighbours.

The Madrid Conference did not produce immediate progress. Nevertheless, it succeeded in triggering the mutual recognition and establishment of direct negotiations between Israel and the PLO (Oslo channel). This led in turn to unprecedented regional progress towards peace, including the signature of a peace treaty between Israel and Jordan and the establishment of the Palestinian Authority as an interim stage pending the conclusion of a permanent Israeli-Palestinian peace treaty by May 1999.

The EU reacted to this historical opportunity by making available the largest international program of economic assistance to the peace process : ECU 1,680 million for the period 1993-97 (see page 1 of the annex). In parallel, the EU maintained its supportive complementary political role.

However, the political climate has changed during the last year and a half moving from unprecedented hopes for and steps towards a comprehensive negotiated solution to a general climate of regional instability and impatience and alarm among the international community. The reality is that the peace process is in a state of persistent deadlock. The European Commission's viewpoint is that there is no possibility to make real and credible progress in the peace process without full implementation of all commitments freely accepted by the parties.

This continuous lack of political progress has begun contaminating other international initiatives aiming at stability and prosperity in the region (i.e. MENA, the Middle East and North Africa Economic Forum). Despite the heavy investment in material and economic resources made available by the European Union and the international community at large, it has become clear that regional co-operation and integration cannot make any headway unless there is real progress towards a solution of the Arab-Israeli conflict.

The Doha Conference has been the latest and most glaring symbol of the paralysis of all multilateral Co-operation, with the big waste of financial and political efforts that it entails.

Most importantly for the EU, the crisis threatens the Barcelona process. Despite the fact that this forum for policy dialogue between the EU and its Mediterranean partners, launched in Barcelona in November 1995 has been the only where all regional actors have worked together over the last two years, it is clear that there is a growing contamination by the political crisis in the peace process of the activities emanating from the Barcelona partnership and of the accompanying measures of the Euro-Med Association Agreements.

As to the success and shortcomings of the international aid effort, the document explains that the international aid was to trigger sufficient private sector investment flows into the region, thereby truly improving the economic standards of the peoples in the region, notably the Palestinians. The EU massive programme of economic assistance seems to have failed to achieve its original goals. In fact, the opposite has happened: all Palestinian economic indicators point at a clear deterioration of living conditions (see tables in pages 2, 3 and 4 of the annex). To mention just a few :

- Palestinian per capita GNP has fallen by over 35 percent;

- losses due to closures have taken up to 7.4 percent of GDP per year;

- unemployment has doubled, from 20 to over 42 percent;

- private investment has plummeted to one fourth of what it was in 1993;

- yearly trade losses of up to almost US$ 300 million;

- delays in the implementation of donor-financed projects.

All this reflects that, in the economic sphere, the efforts made since the Washington donors conference in 1993 have failed; this has caused widespread international donor fatigue.

Nevertheless, the unprecedented effort by the international community, and in particular of the European Union, has not been in vain; it has yielded some valuable achievements.

On the one hand, it has been instrumental in keeping the peace process alive. It has helped in the establishment of a Palestinian institutional capacity that allows the Palestinian Authority to carry out its basic functions in a satisfactory way. On the other hand, it has substantially upgraded the Palestinian physical and social infrastructure. Furthermore, aid has prevented standards of living to go into a free fall due to very unfavourable economic conditions.

In short, the international donor effort has ensured the survival of the peace process. It has also created the conditions that may allow the Palestinian economy to bounce back once obstacles for growth are removed.

In its final part the Commission Communication concludes that without the support of an important political and economic contribution, the continuation of the peace process, even in its present difficult state, would not have been possible. The economic goals sought in 1993 have not been reached. In the face of this grave situation the European Commission, in charge of the EU programme of economic assistance, believes that it is necessary to look for ways to continue the present financial assistance programme, which expires in 1998. However, while the Commission can make proposals in order to improve the situation, real advancement will only be possible if a number of conditions are met:


• On the bilateral side, the Palestinians must be allowed to exercise their right to economic development. Obstacles to trade and economic activity must be removed (i.e. the series of measures put in practice by Israel to seal off Palestinian territories from the outside world usually known as closures). If the Israel-PLO Paris Economic Protocol is to subsist, then closures cannot continue. • Furthermore, the Palestinians must have open trade access to the outside world including Israel. This must lead to a situation that will allow the full implementation of the EC-PLO Association Agreement. • The European Union should be willing to help Israel remove the obstacles to either solution through the Israel-EU Joint Dialogue mechanism as stressed by the conclusions of the recent Luxembourg European Council. However, the current discussions and studies undertaken under this framework on Palestinian labour, passage of goods and people, fiscal and financial issues, Gaza airport and harbour and medium and long-
term economic potential, cannot continue without any tangible results. The Joint Dialogue needs to make rapid progress towards eliminating all obstacles to Palestinian economic development. Failing this, the Joint Dialogue would have to be re-evaluated. • The European Union has reaffirmed its readiness to put all its political weight to the service of safeguarding the security of Israel. The security of the State of Israel and of its citizen is a central piece in the solution to the Middle East conflict. This is one of the reasons for the European Union's support to Palestinian economic development. Contrary to claims that Israel's security demands stiff restrictions on the Palestinian economy, Palestinian economic development will be Israel' s best security guarantee, both in the short and the long term. • In the multilateral fora, the EU, as chair of the Regional Economic Development Working Group (REDWG), should come up with concrete initiatives to revive the process of regional economic integration as
soon as progress on the bilateral tracks allows. Indeed, the stalemate in the Palestinian track has had a progressive paralysing effect on the Multilateral track. •- Coming to the regional dimension, and in particular the Barcelona process, a renewed EU effort to put an end to peace process contamination in the context of the development of the Euro Mediterranean goals is necessary. "Barcelona" represents a long-term strategy which is crucial to the future of both the EU and its Mediterranean partners. While it was born under a constructive phase of the peace process, its shared goals and the conditions that made it necessary are still there and are worth the effort in themselves.





• The idea launched in Malta of a mid-term review Ministerial Conference in 1998 must be given urgency so as to re-invigorate the process in order to prevent contamination by the peace process.

The Communication ends with a reference to the complementary role of the EU alongside the leading role of the US in the process. The document explains that the EU has accepted a role which is diplomatically and politically complementary to that of the US. This is an arrangement which has worked imperfectly so far and which can be improved to boost the effect of international community efforts to put the peace process back on track.

The Commission feels that if the European Union is to continue to be the basic economic foundation of the peace process, then what has happened until now should be taken into account. The role that the European Union has played so far should lead to the conclusion that the way in which the complementary efforts of the two allies is to be organised should be reviewed and then put to the consideration of the US, the Palestinians, the Israelis and the international community.

When submitting these proposals, the Commission does not understand them in any way as a challenge to the role of the US. The present determining role of the US, rooted in the past, will continue in the future.

Therefore, while the European Union should continue to support the crucial political role of the US, the complementarity that has guided the European Union role so far should be changed in two main ways:

· The European Union has so far played a constructive role. This role would be much improved if the parties and the US acknowledged the need for the European Union, both at Ministerial level and through its Special Envoy, to participate alongside the US in all fora set up to assist bilateral negotiations between the parties.

· The European Union has contributed by itself over half of the financial resources to the peace process. Because of this, it has more experience, wider links, and a considerable political capital. It understands that if the international assistance effort is to be renewed, it must be redefined. It is clear that the basic shareholder should be the key co-ordinator. Therefore, the international economic effort should be co-ordinated by the European Union on the basis of the Ad Hoc Liaison Committee model: Palestinians, Israelis, the Bretton Woods institutions, the United Nations and the active participation of key donors.

• Being by far the first donor, the European Union (Presidency and Commission) should play a substantially enhanced role in the co-ordination of international assistance, according to a formula to be negotiated with other donors. SignatureSignature.

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