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"As is" reference - not a United Nations document

Source: United Kingdom
17 September 2007


Today, the Government launches a new report The Economic Aspects of peace in the Middle East which analyses the necessary conditions for economic progress in the Occupied Palestinian Territories.

The Foreign Secretary said:

'The starting point of the British Government's approach is clear.  There can be no lasting solution without security for Israel and a just settlement for the Palestinians.    So the UK is unstinting in its support for the principle of a two-state solution.  We are determined to support all those in the region who are committed to peaceful progress towards this goal. 

'But we also need to recognise the importance of economic issues.  History has shown that the political, security and economic aspects of conflict are interlinked.  By giving people an economic stake in their own future we will support the forces of moderation.

'Those of us from outside the region must tread with some humility. Outsiders cannot in the end substitute for local leadership and reconciliation. But we can and must offer practical support. It is in that spirit that the British government is launching this report.

'I am grateful to Ed Balls and Jon Cunliffe, the co-authors of the report, for the work they have done, and hope it will help to inform other policymakers and businessmen who are working to secure peace in the Middle East."

Douglas Alexander, the Secretary of State for International Development, said:

'This  report is an important contribution to our understanding of the economic challenges involved in advancing peace and stability in the Middle East. The report recognises the need for the easing restrictions on the movement of Palestinian people and goods. Israel and the PA need to act urgently to fulfil their obligations in order to achieve this.'

In summarising the report Ed Balls said:

'Bringing prosperity to the Palestinians and security to the Israelis is critical to the stability of the region and the world. We need to build a dividend of peace that will itself entrench that peace and create a new prosperity that would make a return to past conflicts all the more costly.

'The Palestinian economy must diversify and reduce its dependence on Israel. But given the historic links between Israel and the Palestinian Territories, there is no medium-term solution to Israeli security without a Palestinian economic relationship with Israel, including trade in goods, reliable access to raw materials and some labour mobility too.

'So in our report, we have tried to identify the key economic building blocks which have to be put in place to arrest further deterioration and set out a detailed economic roadmap to what must be our goal - a vibrant Palestinian economy, trading with its neighbours, with the region and with the world, and providing employment and prosperity for all its citizens.'

Jon Cunliffe said:

'The high, and noticeably increasing, levels of poverty, unemployment and instability that Ed and I have seen on our four fact-finding trips to the region convince me that there can be no sustainable peace without economic growth and the growth in employment that is necessary to give the Palestinian people a real stake in their future.'

Based on the rationale that a viable Palestinian state, living in peace and security with Israel, requires the creation of a sustainable Palestinian economy, the report sets out the five key five building blocks needed for sustainable economic progress in the OPT:

    • The economy needs to be stabilised by reducing public expenditure - specifically the public wage bill - which could be temporarily underpinned by donor-funded employment and investment programmes;
    • A stable relationship needs to be established between the Palestinian and Israeli economies to provide a reliable framework for private sector led growth;
    • The right balance must be struck between short-term security and allowing movement and access, which are necessary for prosperity and security for the future;
    • The Palestinian economy must diversify its trade links and improve its access to global markets; and
    • The private sector needs to be supported by enhancing the investment climate.
Notes To Editors:

The report was commissioned by Gordon Brown for G7 Finance Ministers in September 2005 but publication was delayed by the deterioration in the Middle East Peace Process witnessed in the last 18 months.

Ed Balls (MP) is the Secretary of State for Children, Schools and Families. Jon Cunliffe is the Prime Minister's advisor on International Economic Affairs and Europe. When the report was commissioned in 2005, Ed Balls was MP for Normanton, and Jon Cunliffe was the Managing Director of HM Treasury Macro Economics and International Finance Directorate.

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