Quarterly Updates for (16 Feb 1995 — 15 May 1995)


The first meeting of the quadripartite (Israel, PA, Jordan, Egypt) committee on the repatriation of 1967 refugees ("displaced persons") established under Article XII of the Declaration of Principles was held in Amman on 3/7 (see Doc. B1 for the Jordanian-Palestinian definition of a "displaced person"). The meeting, originally scheduled for 2/26, was postponed on 2/21 by Israel, which apparently wanted additional time to consolidate its position in the face of previous coordination among Jordan, Egypt, and the PA on refugees last quarter (1/22, 2/4); a Foreign Ministry meeting to that end was held 3/2. The 3/7 meeting focused on the number of 1967 refugees eligible for repatriation. The PA gave a figure of 800,00 (1967 refugees and children); Israel suggested 220,000 (original refugees only). Israel refused a PA request to immediately allow 100 families to return as a confidence-building gesture, saying a slow, staged repatriation is needed to "prevent disruption and disorder."

The four parties agreed on the structure of the Continuing Committee, which will operate on two levels. The ministerial level will involve PA negotiator Nabil Shaath and the foreign ministers of Egypt, Jordan, and Israel and will meet every two to three months. The first meeting was held in April. The technicalevel will involve delegations composed of three permanent members from each party that will meet every three weeks. The first meeting, scheduled for 4/7, was postponed until 6/7.

Israeli-Arab Relations

The slow-down in the trend toward Israel's integration into the region that began last quarter continued into the spring.

On 3/7, Tunisia asked Israel to delay opening its interests office in Tunis, indefinitely delayed sending its own technical team to set up an interests office in Tel Aviv, and canceled its participation in U.S.-Israeli naval exercises. On 2/16, Qatar denied plans to open representative offices in Israel or to export national gas there. Oman also put off exchanging interest offices with Israel. Israeli officials blamed Syrian pressure for the setbacks. On 3/20, however, Tunisia said it would allow a team of Israeli agricultural experts to visit Tunis as part of an Israeli government training program aimed at strengthening ties with Arab states; and in Cairo on 3/20, Israeli Dep. FM Beilin and his Omani counterpart agreed in principle that the Arab boycott should end and they should cooperate in trade, agriculture, and aviation but did not agree to establish diplomatic relations.

Israeli-Egyptian relations improved this quarter. Egypt eased its criticism of Israel and voted for the modified NPT extension. In addition, 25 Israeli companies participated in the Cairo trade fair 3/18 for the frst time since 1987, and an Israeli parliamentary delegation visited the Egyptian cabinet 3/19. In Paris on 4/6, Israel and Egypt agreed to expand their bilateral discussions on a chemical weapons ban and nuclear disarmament into the multilateral group framework, where talks were to be upgraded to the foreign minister level.

On 3/27, Israel and Morocco opened interest offices in Rabat and Tel Aviv, respectively, making Morocco the third Arab country, after Egypt and Jordan, to establish ties with Israel. In early May, the Israel-Morocco Chamber of Commerce, the first binational, Arab-Israeli chamber of its kind, opened in Tel Aviv.

In early April, Israel expanded its third world assistance program to include Jordan, the PA, Tunisia, and the UAE. The program offers technical courses in agriculture, public health, water, and science.

Inter-Arab Highlights

The PA and Jordan concluded several agreements: on exchanging agriculture goods according to mutual needs and forming subcommittees for technical cooperation (2/16); on monitoring commercial banking in the o.t. (3/24); on passage of goods between the o.t. and Jordan (4/ 26, 5/2); on cultural cooperation (4/26); and a comprehensive trade agreement, replacing previous accords governing Palestinian exports to Jordan, allowing Jordanian exports to the o.t., and giving duty-free status to over 100 industial products (5/4). The HigherJordanian-Palestinian Joint Committee held talks 4/19 on improving coordination and implementing agreementsigned 1/26. Jordan also appointed a diplomatic representative to the self-rule areas 4/12. 

On 5/6, the Arab League foreign ministers condemned Israeli confiscations, called on the UNSC to do the same, and discussed the Dole initiative to move the U.S. embassy in Israel to Jerusalem. They called for and began organizing aformal Arab summit on Israeli land confiscations but dropped the plan after Israel suspended its 4/27 confiscation on 5/22.

Relations between Syria and Jordan continued to be cool in the wake of the signing of the Jordan-Israel peace treaty. On 5/8, Syria again declined Jordan's request to name its ambassador to Jordan and refused to host a visit of Jordanian FM Kabariti to Damascus to try to improve bilateral relations.

Regional Economic

Discussions continued this quarter on creating aMiddle East Development Bank (MEDB), formally proposed by Clinton on 10/26/94 and pursued at the Casablanca summit 11/94 and the meeting of financial experts hosted by the State Department 1/10-11. The experts' meeting resulted in the formation of the Task Force on Financing Institutions for Economic Development in the Middle East and North Africa, which would ideally meet monthly to work toward an ageement on the structure and purposes o- the MEDB. To date, the EU and the Gulf states (2/16) have resisted the idea of a capital-based lending institution while the U.S., Israel, Egypt, Jordan, and the PA have supported it.

At the task force's first meeting in Washington on 3/9, the U.S. stuck by its original proposal for an MEDB with a $5 b. capital base that would cofinance projects with the private sector and do project lending only. The EU, on the other hand, proposed a similar "financial intermediation organization" that would not have a capital base but instead would help states "repackage" their resources or find grant money to finance their own privatesector deals. A follow-up meeting was held in Amman (4/2), to discuss details of each proposal and draft articles on points of agreement for a future accord.

On 4/10, the 30 members of the Middle East Economic Summit steering committee met in Amman to discuss the follow-up to the 11/94 Casablanca meeting scheduled for 10/95. One should note that, while the memberships of the steering committee, the task force, and the Multilateral Working Group on Economic Development largely overlap, each group is separate and has its own mandate. Neither Lebanon nor Syria participate in any of them.

On 4/28 in Morocco, OPIC announced the creation of Middle East and North Africa Investment Fund to encourage private sector investment in the self-rule areas, Egypt, Israel, Jordan, Morocco, and Tunisia. Projects will focus on tourism, real estate, communications, consumer products, pharmaceuticals, and high tech industries. The fund's capital will be provided by U.S. private firms and guaranteed by OPIC. It is not meant to replace the MEDB.

A Christian Science Monitor report (3/ 30) showed that Israeli exports have risen 41 percent and imports 71 percent over the past five years as a result of the peace process. Asian markets, such as India, South Korea, and Japan, that were previously closed to Israel out of fear of offending oil-producing Arab states have opened up. Joint contracts, particularly with U.S. and German firms, have also grown with the unraveling of the Arab boycott.