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Summary: 27 November 2007, Annapolis, MD – Speech by Benita Ferrero-Waldner, European Commissioner for External Relations and European Neighbourhood Policy, "Institutional Reform and Capacity Building in the occupied Palestinian Territory", at the Annapolis International Conference on the Middle East
The EU is fully committed to Palestinian state building. Only an independent, democratic and viable Palestinian state can be a reliable partner for Israel and its other neighbours. The EU Action Strategy for the Middle East makes clear that the deployment of our activities is contingent on two factors.
Firstly, on close cooperation with both Parties. The Palestinian side needs to work hard to ensure security in the territory. To this aim, cooperation between the EU and the PA should be facilitated. The Israeli side needs to allow movement and access if the Palestinian economy is to develop and the private sector to fulfil its potentialities.
The second factor for success is the need for a genuine political perspective of a Palestinian state. Today we witness some initial progress on both accounts, but this cooperation will be needed all along the period after Annapolis.
Let me emphasise that we consider essential the ownership of reforms and development by the Palestinian Authority. EU support will be fully in line with the Palestinian reform and development plan, which lays out a vision on how to build an independent Palestinian state.
We welcome that the Palestinian Authority, after a hiatus of two years, is able again to set out realistic priorities for the Palestinians. For this I wish to thank PM Fayyad for his determination and to praise him for the excellent work carried out.
Now let me turn to the question of political perspective debated here today. I would like to raise with you three points: Palestinian state-building, support for the transition period and our assistance.
Security and the rule of law is an essential element of the governance agenda. Phase I of the Roadmap also refers both to Security and to Palestinian Institution-Building. This is because any progress towards state-building and economic development is intimately linked to an improvement in the security conditions.
Security service reform is a priority of the Palestinian Authority. For this reason, we will provide concrete support to the existing EU police mission (EU POL COPPS). Building up a professional police service that is accountable to the Palestinian people is key in restoring law and order to the Palestinian cities, starting with Nablus and eventually covering all of them.
Governance is one of the highest priorities for Palestinian state-building. Good governance means an enabling environment for building the institution of the state. We are prepared to provide support in this area and are ready to work on this with the Palestinian Authority and with Quartet Representative Tony Blair. The European Commission has been at the forefront of efforts to empower the Palestinian Authority via institution building and its chairmanship of the Governance Strategy Group.
We are ready to launch a customs revenue management project, which will integrate the Allenby crossing point into the overall Palestinian customs system. This of course requires the agreement of both parties to deploy Palestinian custom officials at crossing points. Trade facilitation will encourage increased private sector investment.
In all these issues, the burden sharing with other international donors is of a primary importance.
Support for the transition period
Another key area of institution building and good governance is reform towards sustainable PA finances. This reform is closely linked to the level of contribution of all donors to the PA budget, where the EU remains the largest contributor. In this context, we will support tax reform, and will assist in improving the revenue base, tax collection and public finance management.
The European Commission is also working closely with the Quartet Representative Blair who is doing a remarkable job as outlined by the announcement last week with Defence Minister Barak and Prime Minister Fayyad on Quick Impact Projects aimed at improving the living conditions of the Palestinian population. We should not forget that these Projects rely on partnership with Israel and the donors to remove existing restrictions. We hope that more projects may be added to the list as soon as possible.
I am encouraged by progress made on the implementation of the Gaza sewage project in Beit Lahia, where we contribute to the assistance which is urgently required to avoid a potential environment catastrophe. I was personally involved in the discussion of this project with Palestinian and Israeli Prime Ministers during my recent trip to the region.
We also intend to support the development of Jericho and the Jordan Valley. We can provide assistance to the trade integration of this area with Jordan, by upgrading key infrastructure around the crossing points of Allenby and Damyah over the Jordan River.
Building a Palestinian State involves resolving the status of Jerusalem. Phase I of the Roadmap clearly refers to Palestinian institutions in East Jerusalem. We are ready to step up our support to Palestinian institutions there, bearing in mind the needs of the citizens.
All these Projects can help create the proper environment for Palestinian businesses to flourish and assist in Palestinian state-building. However, we should also work in parallel on realising the essential pre-conditions for economic development. These were identified by the World Bank at the Ad Hoc Liaison Committee (AHLC) in New York in September and are still valid. They include:
First, movement and access of the Palestinians need to be facilitated. There is therefore an urgent need to return to the Access and Movement agenda. Checkpoints and roadblocks need to be removed.
Second, economic growth needs to be led by private sector. A Palestinian economy driven by the public sector is unsustainable. We must create conditions for private sector development.
And third, any serious options for a private sector led and export oriented economy must include Gaza. The issue of crossings needs to be tackled sooner or later.
In this context, I welcome some recent positive developments such as the Israeli decision to allow an export of cut flowers and strawberry from Gaza. I am pleased to see that the bilateral talks in preparation of this Conference have already helped to create a propitious atmosphere.
I hope that this is only a first step towards normalisation of commercial traffic in and out of Gaza. We feel the urgency to make all Palestinian people perceive the benefit of this process and the advantages to renounce the use of any violent means.
Finally, I would like to confirm that next year our support to the Palestinians will continue at a high level. We will unveil our plans at the Paris Conference in December, which I will co-chair. However, let me repeat once again that I wish for more equitable burden sharing with other international donors.
Finally, let me say some words about the future of the Temporary International Mechanism. PM Fayyad asked us to extend the TIM in 2008. We are ready to consider an extension of TIM for the first quarter, when the PA will face an important liquidity crisis. Yesterday, at the Quartet, we have agreed to extend the TIM for a further three months at PM Fayyad’s request.
This will probably be the last extension of the mechanism. As foreseen in the Phase I of the Roadmap, donors’ funds should be provided through the Palestinian Ministry of Finance's Single Treasury Account. We are working on the replacement of the TIM by a new mechanism that will build on our positive experience and adapting it to the new circumstances. This mechanism should be based on Palestinian ownership and open to all donors. At the upcoming Paris Conference we will discuss this issue further.