the Palestinian Authority, available revenue resources, and
idJitional needs for donor support. These talks aimed at an
.agreement on a financing framework which will form the basis
for nn effort by the United States to raise additional funds
from donors to plug the gap over the next six months.
In addition to the financing framework discussed in
wa;;hinqton, we have also proposed an understanding between the
Palestinians and donors laying out the responsibilities of each
r;i()c in this new assistance effort. We have presented a draft
"t Miis understanding to the PLO and are awaiting their
response. Israeli undertakings as part of this effort would be
contained in a separate letter. If they accept our approach,
we will circulate the text to the main donors and put in motion
a process to formally approve the document and undertake an
effort to raise the necessary funds. Continued donor support
would depend on the Palestinians and Israelis doing their part
in terms of revenue collection, transfer of taxes collected in
Israel, and cooperation as outlined in the Gaza-Jericho and
early empowerment agreements.
The financing framework agreed in Washington covers
requirements for the Palestinian Authority in Gaza-Jericho,
including the police, early empowerment in the West Bank, and
three urgent project activities for the six months between
October 1994 and March 1995. The overall basis figures are as
f o 1 lows :
Expenditure $234.50 million
Revenue Collections 76.90
Currently Available 32.63
New Funds Required 124.97
We have not yet begun the process of targeting specific
amounts for individual donors. Previously, the U.S. pledged
$25 million from our $100 million annual contribution for
start-up costs, divided between the World Bank's Hoist Fund and
direct funding for the police. We expect that our contribution
to this new effort would be at roughly the same magnitude. We
have found that, without a significant U.S. pledge, we are
unable to leverage the required amounts from other donors.
I understand that earlier this month a donor's meeting in
Paris with Israeli and Palestinian representatives fell apart
before any decisions on funding were reached.
What was the original agenda for this meeting?
What happened at this meeting?
Did the collapse of the meeting essentially reflect a
dispute between the Israelis and Palestinians over
donor funding of projects in Jerusalem?
Did the donors take a position in this dispute?
Did the agreement signed by Foreign Minister Peres and
Chairman Arafat in Oslo the following week resolve
this dispute to all parties' satisfaction?
When will the donors reconvene to take up the business
that was sidetracked in Paris?
What impact will this delay in donor funding decisions
have on the Palestinian Authority's ability to
f unct ion?
Does this incident in any way reflect a lack of
coordination among the donors, or a lack of
coordination between the donors and the Palestinians?
How can these problems be corrected so future
donor meetings are not similarly disrupted?
ANSWER 3 :
On September 7-9, the World Bank attempted to hold a
Consultative Group meeting in Paris of all donors. The meeting
w.Ts in>i intended as a new pledging session; it had been called
rinvcinl months earlier to deal with development issues and help
mntcli (Jonors with development projects presented by the
I'a li':.l 1 in ons .
While the need to focus on longer-term development issues
still existed, the attention of the parties had shifted -
primarily because of the August 29 Israeli-Palestinian
agreement on early empowerment - to the more urgent question of
start-up costs. However, the donors were not prepared to offer
new pledges in Paris for start-up costs because they did not
have all the budget information prior to the meeting.
The immediate problem in Paris, however, was an investment
program of development projects presented by the Palestinians.
This Palestinian document included a number of proposed
projects in Jerusalem, which the Israelis believed should be
excluded from the formal assistance effort linked to the peace
process. Despite efforts by the U.S. and other delegations to
mediate this dispute, the parties were unable to agree and the
World Bank cancelled the meeting.
We understand that the problem which arose in Paris about
Jerusalem projects was resolved by the agreement reached by
Arafat and Peres in Oslo not to bring before the donor
community those political issues on which Israel and the PLO
are not in agreement.
The U.S. quickly followed up by inviting Palestinian and
Israeli budget experts to Washington to discuss expenditure
requirements of the Palestinian Authority, available revenue
resources, and additional needs for donor support. These talks
aimed at an agreement on a financing framework which will form
the basis for an effort by the United States to raise
additional funds from donors to plug the gap over the next six
How did the Administration arrive at the $95 million figure
as an offset against the FY 1995 Israeli loan guarantees
â€” Does it represent the Administration's estimate of costs
the Israeli government has incurred in implementing the
- Please provide us with a breakdown of those expenses.
The $95 million figure is a recognition of the new economic
burdens imposed on Israel by the Declaration of Principles. We
arrived at the figure after discussions with the Government of
Israel, our own independent analysis, and subsequent
consultations with members of Congress. The figure reflects
some of the significant costs â€” such as for infrastructure and
logistics - Israel has incurred as it redeploys its forces in
Gaza and the West Bank and its other steps to implement peace
agreements with the Palestinians.
Do you believe Israel has suffered significant economic
hardship on account of its peace process-related expenses?
â€” Has Israel saved any money by not having to police the
entire Gaza Strip since May of this year?
â€” Hasn't Israel drawn on the loan guarantees more slowly
than expected? If so, why is that the case?
- Would the Israeli government have been able to borrow
enough to cover their peace process-related expenses
without the $95 million offset?
Israel has incurred significant and unanticipated costs to
implement the Declaration of Principles. The shortfall is of
such a magnitude that the Rabin Administration has submitted a
supplemental budget request to the Knesset.
Although in recent years the Government of Israel has
maintained its own police in Gaza (which have been withdrawn),
the "policing" function for the Gaza Strip was carried out
largely by the Israeli Defense Forces. The government should
be able in the long term to save the deployment costs of the
IDF brigade that had been stationed in Gaza. However, in the
short term, the GOI has had to cover increased expenditures.
These include costs associated with troop redeployment, as well
as continued security commitments to the settlements and in the
military installation area in the southern part of the Gaza
Israel has drawn upon the full amount ($3,563 billion) of
loan guarantees authorized for FY 93 and FY 94. The^Jsraeli
government also has plans to begin drawing on the loan
guarantees just authorized for FY 95. The rate at which the
GOI is utilizing the loan guarantees has been somewhat slower
than anticipated because of the necessity of establishing new
allocation mechanisms and of analyzing the potential financial
impact of the guarantees on the Israeli economy.
The intent of the peace process offset was to ensure that
the momentum of the peace process continues and positively
affects the entire region. In this process, Israel has
committed itself to taking significant risks for peace. The
Administration has repeatedly stressed that it is the intent of
the United States to reduce those risks as much as possible.
I understand that last year, only $6 million of the $437
million deducted from Israeli loan guarantees reflected Israeli
government spending in East Jerusalem?
â€” Is that correct?
- Does that mean that we calculated that the Israeli
government spent only $6 million in non-security
expenditures in Jerusalem in the previous year?
â€” What portion of this year's deduction of $311 million
reflects Israeli government spending in Jerusalem?
â€” Is that a dollar-for-dollar deduction, as it is for the
â€” There is a great deal of construction going on these
days in East Jerusalem. How much of this construction
â€” What is the Administration's position on extensive
privately-funded construction in Jerusalem?
â€” What effect do you think this construction is having on
the peace process?
AN S WEP 6;
The deduction from loan guarantee authority referred t<
above reflects a calculation based on government infrastructure
development expenditures. The deduction from FY 94 loan
guarantee authority was in the range of $6 million. The amount
deducted from FY 95 loan guarantee authority is of a similar
size. The loan guarantee deductions apply to all GOI
non-security expenditures in areas not under Israeli
administration prior to June 5, 1967.
Housing construction continues to take place in East
Jerusalem. We cannot gauge its pace in comparison to previous
years. This construction is privately financed. Since it is
not carried out by the governnient, it is excluded from the
Israeli government's 1992 decision to freeze government-
financed settlement construction. Under the Loan Guarantees
for Israel Program, deductions are based on governmental
non-security expenditures. There are no deductions for
Settlement expansion is a complicating factor in the peace
pioccnr.. The Administration would like to discourage this
act i V 1 ty .
We have seen reports that the Israelis intend to build a
new settlement in East Jerusalem with 8,500 housing units
called Har Homa .
â€” What can you tell me about these reports?
â€” Would the proposed settlement involve building Israeli
housing on expropriated Palestinian land?
- Would the building of such a settlement violate Prime
Minister Rabin's commitment not to build any new
settlements, which he made at the time of the loan
- What effect would the building of such a settlement have
on the peace process?
Plans to move forward with this settlement have been
postponed indefinitely due to legal challenges from both
Israeli and Palestinian landowners. The case remains before
the Israeli High Court. The proposed settlement involves land
expropriated from both Israeli and Palestinian landowners in
1990. On October 13, the Jewish non-governmental organization
"Shalem" filed a petition in the High Court on behalf of
Palestinian landowners seeking to overturn the expropriation.
An assessment of whether or not a settlement at Har Homa
would violate Prime Minister Rabin's policy not to build new
settlements would depend on the specific arrangements for
construction, which are not known at this time.
Settlement expansion is a complicating factor in the peace
process. The Administration would like to discourage this
act ivi ty .
In July when Israel's Deputy Defense Minister Mordechai Gur
was asked by a parliamentary coiranittee whether the Israeli
government supported expanding the municipal boundaries of
Jerusalem to the east, to incorporate the West Bank settlement
of Ma 'ale Adumim, he said, "We recognize the vital interest in
unifying Ma 'ale Adumim with Jerusalem. I can tell you that we
want to, but you know the international constraints.
Basically, the bigger Jerusalem is, the better are our
options. We have a problem. We have a commitment which the
Prime Minister is particularly sensitive to, and that is the
credibility in our relations with the U.S. in general, and the
President in particular."
- What is your assessment of Minister Gur's statement?
- Do you agree with his assessment that an expansion of
the municipal boundaries of Jerusalem by Israel would
damage Israel's relations with the U.S.?
â€” How would the Administration view an attempt by Israel
to expand Jerusalem's municipal boundaries to the east?
We consider Deputy Defense Minister Gur's statement to be
an expression of his personal views. An assessment of the
impact of a possible expansion of Jerusalem on U.S. -Israeli
relations would depend on the circumstances at the time.
The final status of Jerusalem is to be determined in the
permanent status negotiations as agreed upon in the Declaration
I have seen references by Israeli senior government
officials to the term "Greater Jerusalem" to refer to a ring of
West Bank settlements surrounding the city?
- Have we sought an explanation from the Israeli
government on the precise meaning of the term "Greater
- If so, how have the Israelis responded?
- Does this term imply an Israeli intention to further
expand the municipal boundaries of Jerusalem to
incorporate areas of the West Bank?
â€” In you opinion, what would be the implications of such a
policy for the peace process?
ANSWER 9 :
We have not sought an explanation from the Israeli
Government on the precise meaning of the term "Greater
Jerusalem" although we have discussed the issue informally. No
fixed geographical definition has generally been offered, as is
the case when the phrase has been used by the media.
Greater Jerusalem is sometimes understood to refer to the
municipal boundary unilaterally established by Israel in June
1967. It sometimes also includes some of the Jewish
settlements to the north, south and east of that line.
The implications for the peace process of a policy to
expand the boundaries of Jerusalem would depend on the
circumstances at the time.
A bill has been introduced in the Israeli Knesset by
members of Prime Minister Rabin's Labor party that would
require a super-majority of 70 votes to approve any withdrawal
from the Golan Heights.
â€” What do you think are the chances that the Knesset will
pass this bill?
- What impact do you think the passage of such a bill
would have on the peace talks with Syria?
Six Labor Knesset members have introduced legislation
mandating a special majority to approve withdrawal from the
Golan. After meeting with Prime Minister Rabin in late
September, the six Knesset members agreed not to press ahead
with their bill or to bring it to a vote in the plenum without
Labor faction approval.
The domestic political situation in Israel is always
subject to sudden change. This makes it difficult to provide a
meaningful prediction of the chances of passage for this piece
of legislation. Similarly, any effort to assess the impact of
this proposed legislation on Israel's peace talks with Syria
would be mere speculation.
QUESTION 11 :
I would like to hear more about the U.S. role in the
To what extent are we involved in the bilateral
discussions on boundaries, water, and security?
Has the U.S. put any bridging proposals on the table:
Have the parties requested that such a role be played
by the U.S.?
What role has the U.S. played in outlining a joint
economic development plan for the Jordan Rift Valley?
What is the current status of the
U . S .- Israel i-Jordanian Trilateral Economic Committee?
Can we expect a full peace treaty by the end of 1994?
The U.S. is actively involved in the Trilateral Economic
Committee. Those issues which the parties wish to bring into
thp trilateral framework are dealt with in that context. Other
issues, such as boundaries, water and security remain in the
bilateral negotiations. The U.S. is not involved in the
bilateral talks. We have not offered any bridging proposals,
i\oi have the parties requested that we do so.
The Trilateral Economic Committee is making important
prociress on several fronts. Expert-level meetings were held
October 10-13 in Israel, and are scheduled to meet October
17-:^n in Amman. The parties recently reached agreement on a
innnaqcÂ»ment framework for the Jordan Rift Valley master plan and
.TIP (liscu.ssina the establishment of a bi-national Red Sea
Maiiii'^ Peace Paik. We expect a full peace treaty by the end of
QUESTION 12 :
The reference in the Washington Declaration to Jordan's
historic role administering the Muslim holy sites in Jerusalem
has caused tension between Jordan and the Palestinians.
Would you clarify your understanding of this reference?
What impact do you believe this reference will have on
the Israeli-Palestinian track?
What role are we playing to help the parties reach an
How can the Palestinians" fears of being cut out of
any role in Jerusalem be addressed?
If these fears of the Palestinians are not addressed,
what effect do you think it will have on the peace
AN SWER 12:
The Washington Declaration states that "Israel respects the
present special role of the Hashemite Kingdom of Jordan in
Muslim Holy shrines in Jerusalem. When negotiations on
permanent status take place, Israel will give high priority to
the .Tordanian liistoric role in these shrines." In addition the
two sides liave agreed to act together to promote interfaith
relations amona the three monotheistic religions.
Jordan and Israel are simply acknowledging past practices
renarrling Jordan's role with respect to Islamic holy sites in
Jeiusalem. We do not view this as an attempt to pre-judge the
<MitcMine of the final status negotiations, which will address
this issue. Wp will support whatever the parties agree to. We
have iirqed the Palestinians and the Jordanians to work together
on ir-.sups of mtitual concern.
I understand that in August, the land-based ship
inspection regime in Aqaba was inaugurated.
What is your assessment of the effectiveness of
the new inspection regime so far?
Is the new regime as effective as the old one in
preventing the import of products that are
prohibited from reaching Iraq?
How do the numbers of ships turned away under the
new regime compare with those turned away under
the old regime?
Are the Jordanians satisfied with the impact that
the new regime has had on shipping traffic to
How is the new regime being paid for?
ANSWER 13 :
We are pleased with the new land-based arrangement
with Lloyd's Register. Officials from the U.S. and UK
embassies have visited Lloyd's facilities and have
indicated that the new regime is working very well. We
believe this arrangement is as effective as the MIF.
Inspections on shore can be performed in a more thorough
fashion as there is greater access to bulk cargo. It can
also be performed more expeditiously. In a briefing to
members of the UN Security Council, Lloyd's
representatives indicated the amount of ship traffic
arriving in Amman is at roughly the same level as one year
ago. The new regime is paid for through a UN escrow
Saudi Arabia participates in the multilateral peace talks,
but apparently without the enthusiasm demonstrated by several
of the smaller Gulf states.
How would you characterize the Saudi attitude toward
the peace process?
Has their role in the multi laterals been constructive?
What have the Saudis done to help the Palestinians
cope with the start-up costs associated with
establishing self-government in Gaza and Jericho?
ANSWER 14 :
Saudi Arabia is a key supporter and participant in peace
As a member of the Steering Group, Saudi Arabia has
represented the GCC and taken part not only in
individual working groups but also in the guidance of
the entire multilateral process.
Saudi leadership was a major factor in producing the
September 30 GCC decision to abandon enforcement of
the secondary and tertiary boycott and to support
moves in the Arab League to do away with the boycott
The recent statement by the Saudi Council of Ministers
- their cabinet â€” on the peace process was one of
the most forward-leaning and positive expressions of
commitment to the process we have seen from any of the
The Saudis have decided views on the interrelationship of
the multilateral and bilateral tracks and have held, in
particular, that the focus of progress in resolving the
Arab-Israeli conflict should remain in the bilateral
negotiations. These positions have not, however, interfered
with Saudi participation in the multilateral talks.
The Saudis have been particularly involved in discussions
with the U.S. and other parties on draft declarations for the
steering group and for the Arms Control and Regional Security
(ACRS) group. The U.S. view is that the Saudis are more
engaged in the multilateral track and that their interventions
in the various talks have been helpful and provide a focus for
continuing dialogue on several important issues.
The Saudis have been important contributors to programs to
assist the Palestinians in the West Bank and Gaza. The Saudi
government pledged $100 million for Palestinian aid at the
October 1993 Washington conference. They provided $10 million
to the Hoist fund specifically to address Gaza-Jericho start-up
costs, and $5 million for Palestinian police. We understand
that the Saudis also fund Palestinians directly.
It is my impression that the Lebanese feel left out of
the process at the moment because of all the focus on the
What can be done to engage the Lebanese in the
peace process more directly, even before a
breakthrough on the Syrian track?
What impact does the consistent, low-level
violence between Israeli troops and Hizballah
have on the peace process?
Are we encouraging the Israelis to show restraint
in this area?
What are we telling the Lebanese and Syrians
about this matter?
AN SWER 15 :
We have worked hard with both the Lebanese and Israeli
governments in an effort to seek common ground on the
issues which divide them. We continue to believe that a
joint military commission to begin work on the questions
of security and withdrawal is in the parties' best _
interests and feel progress towards these goals can be
achieved independently of developments on other tracks.
Violence in south Lebanon has, in the past, distracted
from progress in the peace process. However, as the
parties themselves have made clear such violence cannot
stop the process.
We encourage all parties with influence in southern
Lebanon to exercise restraint in the interest of peace.
Kuwaiti spokesmen said September 19 that Kuwait is willing
to accept an Iraqi proposal to establish an international
committee to look into the issue of approximately 600 Kuwaitis
who are missing and believed held in Iraq?
What do you know about such a proposal?
Will the ICRC be involved?
Does the administration support this proposal?
What is your assessment of the current state of Iraq's
cooperation on the detainees issue?
How would Iraqi cooperation on this issue affect our
consideration of the easing of sanctions?
The Administration supports the decision of Kuwait to agree
to an ICRC proposal for a "technical" committee to take up the
issue of Kuwaiti detainees. Such a committee, which has the
endorsement of our coalition partners, would operate under the
auspices of the ICRC.
For the first time in three years, the Iraqi GoveTnment
recently admitted that it had information on some of the
Kuwaiti MIAs. According to the ICRC, Iraqis have now produced
information on 45 of the MIA files. The ICRC suggested the
formation of a technical committee of experts to study the
remaining individual files.
We believe that such a committee is the best way to ensure
that Baghdad accounts for the missing Kuwaitis - one of its
obligations under the UNSC resolutions. UNSCR 687 requires
thai Raqhdad cooperate with the ICRC and facilitate its access
to all MIAs still unaccounted for.
The ICRC has accepted our offer of an experienced U.S.
military officer to serve as an adviser to the technical
â– â€¢'iirini Â» t oe .