Old wine in new bottles? U.S. economic plans for Palestinians recall past efforts

JERUSALEM/GAZA (Reuters) - Several major projects in U.S. President Donald Trump’s $50 billion economic blueprint for Israeli-Palestinian peace mirror previous proposals stalled by conflict, analysts said on Sunday.

The plan, spearheaded by Trump’s son-in-law Jared Kushner, calls for the creation of a global investment fund to boost the Palestinian and neighboring Arab state economies with some 179 infrastructure and business projects.

Shaul Arieli, a former Israeli peace negotiator, said many were not new.

“Most of the plans have already been presented under the Obama administration,” said Arieli, now an analyst at the Economic Cooperation Foundation think-tank that advocates for a two-state solution to the Israeli-Palestinian conflict.

In an interview with Reuters, Kushner said the plan’s authors had studied why previous peace efforts had failed in formulating a fresh initiative.

“We tried to take the good things they did and then come up with a new approach to try to bring this forward,” he said.

The plan, presented in a slick 40-page document, aims to cut the Palestinian poverty rate in half and double the amount of drinkable water in the Palestinian territories but some of the ideas require Israeli agreement and have been knocking around for decades.

“Even by the lowest threshold of anticipation – offering innovative economic prospects – this plan fails to impress,” said Tareq Baconi, an analyst with the International Crisis Group.

The Trump administration’s decision to release the economic portion of its peace plan without any discussion of political solutions has prompted a mixture of derision and exasperation among Arab politicians and commentators.

However, Mohammad Abu Jayyab, a Palestinian economist in Gaza, said the plan might still work.

“Chances of it getting implemented are there: the Gulf money and the influential American policy and the regional satisfaction to achieve common interests,” he said.

Under the plan, a proposed $5 billion transportation corridor - a highway and possibly a rail link - would be built between the West Bank and the Gaza Strip, crossing Israel.

Gaza and the West Bank are around 35km apart at their closest point. However, they are divided not just by geography but by long-standing and bitter divisions between President Mahmoud Abbas’s Palestinian Authority (PA), whose power base is in the West Bank, and the PA’s Islamist rival, Hamas, which controls Gaza

A 47km long “safe passage” through Israel between Gaza and the Hebron in the West Bank was envisaged by interim peace deals in the 1990s. Proposals included railroads, tunnels, elevated roads and a monorail.

But the ideas went nowhere, stymied by political upheaval and bloodshed, three wars between Israel and Hamas and the collapse of Israeli-Palestinian peace talks in 2014.

“There are two areas with Palestinians in them. They have been saying for many years, ‘let us pass, we can’t pass through roadblocks every day, give us a different logistic infrastructure’,” Israeli cabinet minister Tzachi Hanegbi said on Sunday.

“It will be relevant, and I definitely think it should be relevant, when Gaza ceases to be a pro-Iranian realm of terror. That means, it is not relevant now nor in the foreseeable future,” he told Israel Radio.

The plan also entails upgrading facilities at key crossing points along Gaza’s border, including with Egypt. Citing security concerns, Egypt has often kept its Rafah crossing closed, cutting off Gaza’s main gateway to the world.

The Kushner plan proposes a $590 million upgrade to Gaza’s sole power plant. The enclave has suffered for years from unreliable electrical supply, with daily, prolonged blackouts the norm. Within a year of the project’s implementation, Palestinians in Gaza would receive at least 16 hours of electricity per day.

Before the proposal’s publication, Qatar was already in talks with Israeli officials about building a new power line from Israel to Gaza, which the Gulf nation would help to fund. The new line would provide 100 megawatts to Gaza, which currently gets a total of 120 megawatts from Israel, short of the 500 megawatts to 600 megawatts that Palestinians say the blockaded enclave needs.

The Kushner plan also includes $1.2 billion in loans and private sector financing for gas-fired power plants in Hebron and Jenin in the West Bank.

The Palestine Investment Fund (PIF), which is the PA’s sovereign fund, is the lead investor in an ongoing initiative to build a power plant in Jenin. PIF says the power plant requires $600 million in capital, which matches the figure quoted in the Trump team’s proposal.

A cornerstone was laid for the project in late 2016 and PIF and its partners have issued bids for the plant’s construction.  According to documents reviewed by Reuters, project shareholders will finance $180 million, with “$420 million from international development and finance institutions”.

Even if the project is fully financed and built, it cannot be operated without a gas supply, which requires Israeli approval, according to a source with knowledge of the matter.

The U.S. plan calls for channeling “significant investments” into infrastructure to increase water supply in Gaza, including desalination facilities aiming to double the amount of potable water available to Palestinians, per capita, within five years.

The Palestinian Water Authority, in partnership with international institutions including the European Commission (EC), the European Investment Bank, the Union for the Mediterranean, the Islamic Development Bank and World Bank, has already prepared a comprehensive and integrated investment program for the Gaza central desalination plant.

In 2018, the EU said it had received €456 million in international financial support for the project.

Work still has not been carried out, but the EC noted in April “substantial progress” in ongoing discussions between the PA and Israel on the entry of building materials to Gaza. Israel maintains tight controls on Gaza imports, saying some material might be used to build weapons.

The Trump team’s proposals include $1 billion in grants, loans and private sector financing for the development of a natural gas field offshore of Gaza. The gas field is currently fully-owned by the Palestine Investment Fund (PIF).

PIF estimates the field’s development would cost $1 billion, which matches the figure quoted in the Trump team’s proposal.

Plans to develop the field have been put off several times over the past decade due to Palestinian political disputes and conflict with Israel, as well as economic factors, analysts say.

In 2018, Shell relinquished the 55 percent stake in the field that it took over as part of its acquisition of BG Group in 2016, after struggling to find a buyer. PIF then became the field’s sole owner. It is searching for an operator and buyer for a 45 percent stake.

Gaza Marine, located about 30 km (20 miles) off the Gaza coast between the giant gas fields Leviathan and Zohr, respectively in Israeli and Egyptian waters, is estimated to hold over 1 trillion cubic feet of natural gas.

Gaza Marine has long been seen as an opportunity for the cash-strapped Palestinian Authority to join the eastern Mediterranean gas bonanza.

Source: Reuters

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