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Yale Accords Research
Any agreement for the future of the Middle East needs to ensure that the region is not only politically, but also economically viable. Economic cooperation between the region's nations can further both political and economic stability. Political peace negotiations and economic cooperation lead to each other. A first step towards working together on economics and trade issues is a consensus among the regions of the nation that multi-lateral joint economic projects are necessary. The problem of high costs, the question of who should carry these costs, the matter of which projects to choose, the difficulty of determining whom specifically the projects benefit, all present significant barrier to the actual implementation of various projects of economic cooperation. Some such projects of economic cooperation in the region are already underway or being proposed. These are described below as an example of possibilities for the future. There is a discussion between representatives of the private sector in Israel and Jordan to build an industrial free zone near the Jordan River border crossing at the Sheikh Hussein Bridge. Jordanian government already approved the allocation of land for this project. This industrial park upon completion can be recognized as a Qualified Industrial Zone for the purpose of free trade with U.S. The costs for the projects are unknown at this time, my own estimate based on information about the size of the park is a minimum of 50 million US $, but it could be many times that sum. The Palestine Development & Investment Company is developing an industrial estate (the Gaza Industrial Estate or GIE) at the Karni crossing, the main commercial transfer point with Israel. The 50-hectare GIE is designed to provide full infrastructure development and support services. The GIE is located 3 km from Gaza City and about 1 hour from the Ben Gurion International Airport. The World Bank estimates that economic benefits deriving from this project if it is implemented include: creation of over 50,000 jobs, annual sales of products that will be manufactured in the GIE in the amount of approximately $790 million US, annual exports of about $400 million, approximately $80 million foreign currency received. The cost of the projects is about $72 million US. Israel has already tentatively approved the project and allocated $14.5 million for funding. This project is still in its planning stages, but the fact that Israel already allocated money for it, should serve as an indicator that it is likely to be implemented. Tourism has an important role in Israeli economy, and in the economy of the whole region. Receipts form foreign tourism totaled about 2.7 billion US dollars and were about 2.8% of Israeli GDP in 1997. It is obvious that terrorist attacks in Israel are detrimental to tourism, as a matter of fact in 1998 tourist demand decreased by over 6% as compared to 1997 a relatively more peaceful year. Besides the need for relative military détente there is also a need for the expansion of tourist capacity. That is what the projects below are aimed at. The Jordanian Aqaba Regional Authority has prepared a Master Plan for tourism development in the Aqaba region. Hotels are being built in Aqaba Town, hotels and tourist villages for Ras Al Yamaniya, hotel and holiday home complex in Qabous Village. Eilat-Eilot region also plans to increase hotel capacity and sports facilities, such as golf courses and resorts. The Jordan Valley Authority adopted a plan for the development of approximately 25,000 bed units in Suweimeh, Zara, and el Mazara. Estimated cost for improvements of the tourist industry in the three cities is $27 million. Long-term expansion costs are over $350 million. There are three possibilities for joint tourism ventures between Israel & Jordan in the Dead Sea region:
There are considerably fewer proposals for tourism expansion projects than there are proposals for cooperative projects in any other sphere. So the delegates are encouraged to do independent research in this area and come up with their own proposals. Next we would like to move to the sphere of agriculture and the joint projects there. There is also a proposal that involves a technology transfer from Israel to establish a fruit and vegetable grading, packing, and cold store plant in the southern Ghor Esafi region of Jordan. The plan will service approximately 6,500 hectares of developed farmland (individual owned), the plant will be initially managed by an Israeli company on a three-year contract, with a renewable extension. The plant will benefit not only the Israel private sector, but the Jordan agricultural export industry as well. The approximate cost of the project is $2.8 million US. Several agricultural projects may be implemented in the SouthEast Mediterranean (SEMED) region, which encompasses southern shore of Israel, the Palestinian Authority, and North Sinai. All of them are still in the planning stage:
There is a plan for a cooperative project to upgrade the entire route between Irbid and Haifa to a double carriage highway and to construct interchanges along the route at important junctions. The interconnection between Israeli and Jordanian road systems will be created at the Sheikh Hussein crossing point (a bridge) and linkage to the Palestinian Authority will be possible at the city of Jenin. The northern linkage will provide access for Jordanian & Palestinian exports to the Mediterranean port of Haifa. For Amman and centers in the vicinity, the direct link to the Mediterranean would be significantly shorter than the existing connection through Aqaba & Red Sea. The estimate cost of the project is 200 million dollars. There are two projects directed towards the improvement of bridges across the Jordan River. Israel has already invested $3.3 million in upgrading the capacity of the existing Sheikh Hussein Bridge across the Jordan River. The total cost of renovating the bridge to the desired parameters is about $11.6 million. Jordan is upgrading the Allenby/King Hussein bridge to a two-lane facility, in order to help with the traffic between Amman and Salt to Jericho, Jerusalem, & Tel Aviv. The cost of the project is $22.8 million. Two additional border crossings are proposed to facilitate the development of the Jordan Rift Valley region. One, at the southern tip of the Dead Sea and the other at the Central Avara Region. The first one will serve the needs of the following: Collaborative potash $ mineral mining and processing activities between Israel Dead Sea Works INC. and Jordan Potash Company
There is currently a proposal for a railway connection between Haifa and Mafraq. This alignment will enable both regional transport to the Haifa port and access to the international railways via Jordan. The project will link Haifa to the Jordanian railway network by the way of Beit She'an and a railway bridge at the Sheikh Hussein crossing to Irbid and Mafraq. At Mafraq it will connect to the existing old Hejaz railway connecting Amman & Damascus. The construction of the railway involves building 130 km of track in Jordan and 70 km of track in Israel. The railway can be constructed in parts. The cost of the whole railway is $250 million. Finaly, there is a proposal to build an Aqaba-Ein Netafim road. All sides and the US have agreed that there is a need to build a road connecting Jordan, Israel, & Egypt. This road is designed to bypass the cities of Aqaba and Eilat providing a link between Aqaba and Ras al Naqab, Egypt via Israeli territory. This link would provide the shortest time and distance link from Cairo and Suez to Aqaba and Saudi Arabia. The proposed road would meet up with the already existing Arrava highway near the Aqaba-Eilat Peace Airport. The primary benefits to be gained are as follows:
These multi-lateral projects in the areas of manufacturing, tourism, agriculture, and transportation in our opinion comprise significant possibilities of economic development of the whole Middle Eastern region, and stimulate the various nations to peacefully cooperate with each other. It will be up to the delegates to decide which of these projects should be implemented, how are they to be financed, and whether or not all interested parties will agree to the benefits and consequences that each project carries. Economic cooperation is by far not the only economic incentive to peace. There are others. One of these is free trade and comparative advantage. Certain facts about the current status of trade in the region are provided below. Beginning in 1948 the members of the Arab league maintained a trade boycott against Israel. This includes not only the prohibition on importation of Israeli produced goods into the member countries, but also the prohibition on individuals to deal with any foreign firms that may contribute to the economic development of Israel. In 1994 several Arab nations decided to lift some of the tertiary measures of the boycott. However, Syria and Lebanon are still enforcing the boycott. If the boycott could be lifted completely both sides could benefit. Israel could import the much needed oil and coal, while the Arab states could get many manufactured non-durables and capital goods, diamonds, etc.
What sorts of joint economic projects between Israel and her Arab neighbors can benefit the region as a whole? Should a committee or institution exist to oversee these? Should scientific and technological cooperation between Middle Eastern nations accompany economic cooperation? Should the international community (America, or the U.N.) help sponsor these kinds of projects? Do these take priority over other kinds of economic aid to the region? Can Lebanon and Syria be persuaded to end their trade boycott with Israel and open economic relations? What systems can encourage labor exchange between Syria, Lebanon, Jordan, Egypt, Israel, and a potential Palestinian state? Should Israel and other nations in the region help stimulate the struggling Palestinian economy? How so? |
