Economic Road Map (2004)

This initiative, launched in Jerusalem on the 26th of January 2004, calls for economic cooperation and seeks a convergence of Palestinian living standards with those of Israel. The sides recognised that the economic road map would be relevant only after permanent status for a Palestinian state is arranged (Phase 3 of the road map). As reported by responsible from the plan, this would have received tacit support by many government officials (in contrast to the Geneva Accord).

The plan was drafted by a working group chaired by Gilbert Benhayoun, Professor of Economics at Aix-Marseilles III University. The ‘Aix Group’ (called upon the French city of Aix-en-Provence), comprises Israeli and Palestinian academics and senior officials, as well as European Commission, World Bank and French officials (all of them acting in a personal capacity). Aix Group meetings received support from the European Commission.

Dan Catarivas, deputy director-general for international affairs in the Finance Ministry and Gabby Bar (1), head of the Middle East department in the Industry, Trade and Labor Ministry, participated in the presentation, together with Saeb Bamya, director of international relations of the Palestinian Authority Ministry of National Economy and Samih el-Abid, deputy minister of planning.

The main recommendations of the Economic road Map include the following:

First stage:

– the establishment of designated border passages for Palestinian workers (with work permits being granted to individuals, not contractors);

– uniformisation of  indirect taxes, such as VAT, excise, and purchase taxes on all goods;

– transfer of the withheld taxes to the Palestinian Authority;

Second stage:

– intensive bilateral economic co-operation to be facilitated by joint institutions;

– Palestiniain Authoritries assume economic control over external borders;

– possible inclusion of the instauration of a Palestinian currency (although the unstable economic and political situation makes this option unlikely in the near future).

Third stage:

– The establishment of a free trade area between both states;

The transition period would be made up of a ‘rescue phase’ and the subsequent ‘re-establishment of a sound basis for economic development and growth’.

Notes:

(1) Catarivas and Bar served unofficially as observers in the meetings. An introduction to the road map stated that the views expressed do not necessarily represent the official government stance of either side.