Session 1: 16 January

Dr. Caio Koch-Weser, Vice-President of the World Bank, The Middle East and the International Community: The Economic Challenges.

Since the early 1980s, there has been no per capita growth in the Middle East. Even the formerly wealthy oil exporting countries face increasing problems. One quarter of the Middle East and North African population lives in poverty. Unemployment averaging 20% is a major problem, especially for the younger generation. With a population growth of 2.5-3%, a doubling of the population is expected within the next 20 years. The current situation of the water quality and the lack of resources, as well as the environment, is critical. The main cause of these problems is the lack of investment due to factors such as the high risk and low efficiency prevailing currently in the region. Reforms to encourage economic growth need to be:

• rapid and related to population growth;
  
• accepted by and involve the population;
  
• achieve macro-stability which will have to include better management strategies, fiscal prudence, as well as the development of debt management.
  
• environmentally sustainable;
  
• focused on and encourage the private sector to be the engine of growth. This could be achieved by reducing restrictions such as economic protection and developing markets towards free trading.

Regional cooperation basically means Arab-Israeli cooperation. The main function of the EU consists of being a potential market for goods and a region for emigration. The EU can also play a major role in cooperating between and building up institutions, as well as connecting EU-MENA institutions

Session 2: 17 January

Prof. Dr. Werner Weidenfeld, Bertelsmann Foundation Europe and the Middle East

The current peace efforts in the Middle East have to be translated into political and economic reforms in order to reach cooperation and integration between the states involved The multilateral negotiation groups, discussing common problems such as water, environment and arms control, are the first step towards regional cooperation. To reach a new Middle East, EU policy cannot only consist of continuous financial contributions but must also mirror its political responsibility: the EU has to unite the foreign policies of its members towards a clear strategy, based on a EU-MENA partnership. Socio-economic improvements in the Middle East imply:

• relief from immigration pressures for Europe;
  
• weakening of Islamic fundamentalists, including their network Europe;
  
• better handling of mutual environmental problems;
  
• a stable southern flank;

Discussion: What can Europe Contribute to Peace and Integration in the Middle East?

Helmut Schaefer, Deputy German Minister of Foreign Affairs It is crucial that the peace process is made visible, that is that people have to experience (positive) changes and perceive the achievements of the ongoing peace process accordingly.
Dr. Usama al-Baz, Chief of the Bureau for Political Affairs of the President of Egypt
The EU has to identify the issues which concern the Middle East in particular, such as fundamentalism and its socio-cultural background, Jerusalem, Palestinian national rights, self-determination etc. and to formulate a common agenda on which to base its policy.

HE Hikmet Cetin, Member of Turkish Parliament, Former Minister of Foreign Affairs
Iraq has to be included into the peace process because of its strategic importance. Its reintegration into the Middle East, as well as into the world community, is important for the development and stability of the whole region. Turkey has good relations with the Middle East and is the bridge to Europe at the same time. It has supported the peace process and has participated in multilateral working groups on refugees, regional cooperation, and arms control.

Europe's role in developing the New Middle East should include the following:

• encouraging the peace process;
• active involvement as at the Casablanca summit;
• participation in the Regional Development Bank;
• coordinating regional economic policies;
• supporting Gaza's development efforts;
• offering expertise and knowledge;
• establishing a Council on Security and Cooperation in the Middle East (equivalent to the CSCE) which could evolve from the present multilateral groups to build a framework for cooperation in economic, political and security issues.

Bassam Tibi, Professor of Political Sciences, University of Goettingen, Germany
The peace process can be seen as the follow up to the Gulf War and the events in its aftermath. Three basic lessons have been learned from the war:

• There has been a shift from pan-Arabism to regional cooperation.
• Regional cooperation cannot succeed without involving all the states of the region, including Israel, Iran and Turkey (i.e. non-Arab states)
• To support regional dynamics, the EU and the USA can play an important role, but they must not undermine the genuine dynamics of the Middle East.

Conflict resolution in the Middle East has to be handled on a regional/local basis, without the involvement of alien powers. The imbalance between population growth and economic development for example, is a political issue for which a political- economic solution has to be found. This necessarily has to be done by considering the cultural backgrounds of the countries concerned. The needs of the new Middle East can only be met with the help of external/international support. External support can be crucial in solving problems, but it must be left to the people concerned to address the conflict. The frame of reference has to be taken into consideration. The Middle East peace process is broader than the Arab-Israeli conflict. The whole Mediterranean area should be involved in the peace process since it involves all kinds of security related issues.

Rachid Driss, President of the Association of International Studies, Tunis
One of the questions most often raised, is whether the peace process is irreversible. On the contrary, the process is currently in danger of collapse. Unless two conditions are met, no progress in the peace process will occur: first, the establishment of a Palestinian state, including the solution of the issue of Jerusalem and second, that Syria joins the process. Regarding the developments in the Middle East, the role of Europe is as follows:

• The European countries should coordinate their policies towards the Middle East in particular and towards international problems/issues in general. In other words: a united policy and position is necessary.
• Europe should cooperate with the countries concerned, for example regarding the process of institution building. The idea of institutions growing out of the current multilateral groups is good, but needs lots more work and elaboration, such as the integration of Syria and other states currently excluded.

Prof. Dr. Udo Steinbach, Director of the Orient Institute, Hamburg This conference gives the general impression of optimism, but the reality is quite different. There are many obstacles on the road to peace, and if they cannot be eliminated, fundamentalism will increase and thus make any further progress even more problematic.

Session 3: 18 January

HE Dr. Ruud Lubbers, former Dutch Prime Minister The end of the cold war especially, has created many new conditions and has re- shaped the political landscape. A look at South Africa shows major political changes in that country. However, the developments there cannot be compared to the Middle East. Approaches and starting points, such as market economy and democracy are good and right, but one should not forget the traditional and cultural background of the Middle Eastern countries.
Institution Building as a Challenge for Israelis, Palestinians, Jordanians and Syrians.

Dr. Nabil Sha'ath, PA Minister of Planning and International Cooperation
Currently, Palestine is in limbo, between occupation and non-occupation, where the final status is not clear yet. This situation has the following implications:

• problems for the process of institution building;
• denial of stability, territorial integrity, security and statehood for the Palestinian people;
• collective punishments, such as the Israeli closure policy, cause continuous setbacks;
• Palestinians are losing their faith in the peace process due to the ongoing settlement policy;
• denial of free borders, including air and sea, make the peace process lose its credibility; economic restrictions imposed by Israel prevent Palestinians from benefiting from the new situation (for example, all imports and exports have to be channeled through Israel, which limits exports particularly, in quite a destructive manner).

On the other hand, some achievements have been made. Everything that has happened since the emergence of the PA has happened in a very short time. When the PA entered Gaza, it proved that it was capable of taking charge of Palestinian affairs and that it had the will to do so.

Positive factors for the Palestinians are :

• the well educated manpower inside and in the diaspora at their disposal, which can provide experience, knowledge and contacts;
• throughout the long struggle Palestinians have been, to a great extent, self-sufficient;
• in their efforts to build a state they are beginning at square one, therefore they do not have to face or tackle existing restrictive structures, for example regarding the economy.

Against this, there are several negative factors affecting Palestinian development:

• the Palestinian community is an "intifada society" formed by the experience of killings, injuries, arrests etc.;
• infrastructure in terms of railways, sewage etc. is almost non- existent;
• a high percentage of the population are refugees;
• Palestinian society has a problematic demographic structure: 54% of the population in Gaza, is under the age of 15 years. Infrastructurally, the Gaza Strip is not prepared accordingly, and most problematically, there is no employment potential in which to absorb the increasing labour force;
• economic development is restricted by not having an air or sea port at their disposal;
• uncertainty about the implementation of the DoP and the subsequent agreements undermines popular support.

As far as Europe is concerned, in its role as the most important donor, supporter and promoter of peace for Palestine, it should focus on better coordination in trade relations, increasing investment, funding joint projects and providing loan guarantees.

Prof. Dr. Shlomo Avineri, Hebrew University of Jerusalem; former Director-General of the Israeli Ministry of Foreign Affairs
The major problem on the Israeli side is that the government is not backed by a majority, holding only 56 out of 120 seats in the Knesset. Nevertheless, it is hoped in Israel that the current peace process will lead to stability and integration in the region.

European societies at the outset of integration had much more closely related economic structures; their economies were more complementary than it is the case for Palestine and Israel. The economies of Palestine and Israel are not complementary and thus, integration is restricted: only vertical, not horizontal integration is possible. While the historical background of the European societies was one of mutual hostility, their relations were nowhere near as traumatic as the is the case with the Palestinians and Israelis. When European countries began the process of integration, democracy had already existed in each of the member countries to a certain extent. For Palestine, as well as for its Arab neighbours, efforts towards democratisation have not yet been convincing.

Dr. Ziad Fariz, Advisor to HRH Crown Prince Hassan bin Talal of Jordan In order that the peace process continues successfully, the following requirements must be met:

• economic relations have to be established and all trade restrictions such as administrative barriers and boycotts are to be lifted;
• economic cooperation should lead to a reduction of income and other disparities in the countries of the region;
• economic cooperation should not be to the disadvantage of any country and should foster prosperity and social stability;
• special financial programmes and a regional development bank should be established for the mobilisation and allocation of financial requirements. Such a bank would be crucial for the promotion of trade and investment in the countries of that area. Furthermore, it could finance common infrastructural projects in the region and could establish contacts with other regional and international institutions. In consolidating macro-economic stability, it also would serve to encourage the private sector.

Discussion

Martin Kobler, Head of the German Representative Office, Jericho. The starting point of the establishment of the PA was not easy: it was accompanied by the unrealistic expectations of the Palestinians, as well as the international community. Since no governmental structures had existed before the arrival of the PA, the building of its infrastructure started from scratch. What made the Palestinian case more difficult is the fact that the Israeli Civil Administration did not provide an institutional and legal framework on which the Palestinian administration could be based.

On the other hand, in the short period since the PA has taken responsibility, some positive facts have to be mentioned:

• infrastructural problems, under the given difficult demographic and economic situation (especially in Gaza), have been handled well so far, and many institutions, such as the ministries and special councils, have been set up (17 ministries, 12 councils and a well organised police apparatus are now operating in the autonomous areas);
• the international community has allocated considerable funds;
• coordination mechanisms such as the ad hoc liaison committees have been successfully established;
• the Palestinians are highly educated and have a high level of manpower and expertise at their disposal.

. Dr. Mahdi Abdul Hadi, Head of PASSIA, Jerusalem After having already heard pessimistic and optimistic perspectives on the current situation of the Palestinian-Israeli track earlier at this conference, it is time now to suggest a more realistic approach. Contrary to the impression given in the media, the conflict is not over! In fact, not even chapter one has been concluded yet, and this is Rabin's mistake whose policy consists of meaningless phrases, portions and testimonies. Currently, the peace process can be defined by the following problematic circumstances:

• The Palestinians inside the territories have on their agenda the refugee issue, the performance of their national assembly, and other issues whose solution is of major concern.
• Rabin is not willing to stop land confiscation and settlement expansion.
• The Jerusalem question, including related topics such as the closure, settlement expansion, isolation from the rest of the West Bank, and the attempt to minimise Palestinian population, is one of the most important issues in the entire Palestinian-Israeli conflict, but is still neglected.

Rabin is obsessed with the coming Israeli elections, and makes sure he is seen as an international peacemaker, signing treaties here and there in order to improve his image, yet, he is totally ignoring his commitments to the Palestinians. Furthermore, he is obsessed with the settlement issue, although it is widely known that the settlers won't vote for him anyway, whether he supports their interests or not. For the time being, the Palestinians have to accept these circumstances because they are weak. It should be made clear that there will be no Palestinian Authority without Jerusalem, which is part of the Palestinian Territories; the settlers within Jerusalem's boundaries are as illegal as their counterparts elsewhere in territories. To achieve a better future for both sides, Jerusalem has to become an open, free city with a shared sovereignty. Unfortunately, there is still a big gap between the Israeli and Palestinian perception [on the question of Jerusalem].

Dr. Muhammad Shtayyeh, PECDAR, Ramallah When talking about the continuously stressed Israeli security concern, it should be made clear that this security concern is mutual. The Palestinians have a major interest in security as well. Unfortunately, this is widely and generally ignored.

HE Claude Cheysson, former French Minister of Foreign Affairs An acceleration of the peace process is very important. Strategically, that requires a refocusing of the problem and the finding of a political solution. The necessity of a Palestinian state is already determined by the fact that it implies the basis for a general solution of the Palestinian problem.

Eberhard Rhein, Director of the Mediterranean and Middle East, European Commission.
Regional cooperation cannot exist or succeed unless it is built on a basis of mutuality. This goes for the EU as well as for the potentially emerging Middle East community. Fields of possible cooperation are numerous; in the area of energy, for example, a common electricity grid could be developed which connects the power supply of all countries in the region. To realise and implement regional cooperation, the awareness of interdependence has to be raised as well.

Nabil Sha'ath
The idea of joint Israeli-Palestinian actions and Europe's role in activating them is generally good but cannot work as long as the Palestinians are still dependent on Israel. In this regard, the first step has to be to gain more independence, then further relations can be built on interdependence based on mutuality. The present situation which only witnesses Palestinian dependence alongside Israeli hegemony cannot provide the essential preconditions for economic or other cooperation between the two sides.

Caio Koch Weser
Firstly, the new development paradigm of an economic-social policy with the private sector as engine of growth should be pursued as soon as possible. And secondly, the Middle East and North Africa area should be warned of taking too Eurocentric a view, by ignoring the potential of intra-regional cooperation.

Claude Cheysson
Israeli attitudes contribute to the PLO's loss of credibility inside the territories. Furthermore, the PLO has no Arab state supporting it. A look at the Palestinian diaspora makes it even more doubtful whether the implementation of the DoP or even more than this (state of Palestine, an open Jerusalem as capital of two states) is possible. What aggravates these circumstances is the continuous Israeli settlement policy and the unsolved problem of the settler's withdrawal. There should be an uncompromising demand that the DoP be implemented. Public opinion is crucial in order to convince current as well as potential future decision-makers of the importance of implementing the agreements according to what has been signed.

Prof. Dr. Walter Sommerfeld, Phillips University, Marburg; President of the German-Iraqi Society.
In the framework of all that has been said in this conference, there is one thing to remember: Iraq is part of the Middle East and crucial for a comprehensive and lasting conflict solution in the region. Iraq has also considerable educational and manpower resources and an advanced programme for women's promotion. Furthermore, Iraq has a huge economic potential.

HE Nasser Bin Hamad Al-Khalifa, Head of the Qatari Delegation to the Regional Economic Development Working Group.
With regard to the Gulf Cooperation Council's (GCC) member states, in terms of trade, the GCC is much more oriented towards the Far East than the Middle East. The GCC is out of the aid-business but is ready and willing to cooperate with both MENA and the EU, if it is beneficial for everybody in the region.

Prof. Dr. Abdessatar Grissa, Consultant to the World Bank. When talking about the prospects of EU-Arab economic cooperation, firstly, the Arab world itself should be looked at. Arab economic integration faces numerous difficulties and obstacles. In 1990, the Arab world had an average population density of 16 persons per km2, but - economically more relevant - a very low GDP density per km2, of only $25,300 in 1990 against $2,5 million in the case of the 12 EU states. The Arab world cannot be generalised and neither can their markets. Mutual intra-Arab trade is limited and occurs mainly between the Gulf countries in the form of petroleum re-exports. The low level of intra-Arab trade cannot be explained solely by the structure of their production but goes back to the inefficiency of their infrastructures and communication systems, their lack of information about each others economies and needs, the extent of their geographical area, and their political antagonisms and hostilities. The Arab countries have hardly any internal integration, either vertically (between domestic and export sectors) or horizontally (between their different regions), which greatly hinders the development of trade relations with each other. All these obstacles to mutual trade are aggravated by the fact that Arab countries have a huge lack of information about each others economies, production structure and development strategies as well as partly fundamental ideological differences. What they need most urgently and as premises for economic integration, is comprehensive and better education, more private sector initiatives, and better factor allocation.

The conference concluded with an agreement to hold regular conferences in the future on topics such as security and regional economic cooperation.