FOR Palestinian representatives at the Mideast peace talks, addressing economic issues has become essential to resolving territorial disputes.
While they are anxious to achieve "concrete results," including self-rule in the Israeli-occupied territories, they are also eager for economic rewards based on their participation in the peace process and resulting accords.
But while the West is responding with aid, Palestinians are critical of the way it is being delivered and Gulf states are reluctant to ante up.
"I call economic development the support system for the peace process," says Saeb Erakat, vice-chairman of the Palestinian delegation and a politics professor at An-Najah University in Nablus, on the West Bank. "How can you negotiate, after all, when the economic atmosphere in the occupied territories is so poor?"
Washington, the host for the talks, has worked hard to keep the process on track. Last week, the United States State Department announced plans to transfer $14 million directly to the West Bank and Gaza to help create job opportunities for Palestinians. Encouraged by the US, the European Community pledged another $6 million. And in late April, the US asked Saudi Arabia - the Palestinians' greatest benefactor in the past - to resume financial aid to the Palestinians to help ensure their return to the nego tiations table.
In order to maintain momentum, the US will follow through quickly on its commitment, says Peter Gubser, president of American Near East Refugee Aid, a nongovernmental organization that administers economic and social development projects in the West Bank, Gaza, and other areas in the Middle East. "The Americans want to spend it as quickly and as soberly as possible, and they are contacting groups that work in the area," he says.
BUT Mr. Erakat says the assistance is misplaced. The donors, he says, "want to create more cheap labor, but we have no money to cover the operating costs of our institutions - our universities, hospitals, churches, and youth organizations."
A United Nations report issued Monday points to dire conditions among Palestinians living in the territories. According to the UN Development Program (UNDP), their income has fallen 36 percent over the past five years, and unemployment has jumped to 40 percent. It also cited "a gross negligence of infrastructure."
The UNDP attributes the decline to economic disruptions caused by the Palestinian-organized uprising (intifadah) against Israel, the loss of roughly $450 million in remittances from Palestinian workers who were expelled from other Gulf states during the Gulf war, and some $750 million in aid cuts by Arab donors who were were angered by the Palestinian Liberation Organization's (PLO) strong endorsement of Iraq in the Gulf war.
Saudi Arabia, Kuwait, and the United Arab Emirates, countries which have poured the most petrodollars into Palestinian accounts, have turned off the spigot.
Although Saudi Arabia has announced its intention to send $100 million to West Bank and Gazan Palestinians, the outlook is bleak for marked increases in Arab states' donations, says Eliyahu Kanovsky, an oil specialist who has done extensive research on Middle Eastern economies. "The downward trend in the long-term price of oil implies that the financial situation in major Middle Eastern oil-producing countries will go from bad to worse," he says.
Saudi Arabia, which has been running large budget deficits, will continue to spend enormous sums on military preparedness. Mr. Kanovsky says the kingdom will step up oil production (thereby depressing the commodity's price) in order to finance its defense priorities, which were heightened by the Gulf war.
The Saudis will send the pledged money to Palestinians living in the occupied territories, as opposed to offering funds to be funneled through the PLO, as a strong indication that the Gulf countries wish to develop their own rapport with Palestinian residents. The move, says Mr. Gubser, is an effort to "whet the local Gazan and West Bank appetite for life without [PLO chairman] Yasser Arafat."
Kuwait, Kanovsky notes, "has eaten up most of its reserves, and the government has run on deficits for the last three years - the first in decades." And because Mr. Arafat rallied behind Saddam Hussein when he invaded Kuwait in 1990, the Kuwaitis cut off assistance to the organization and expelled almost all of the Palestinians working in the kingdom.
For its part, Israel has begun to spend part of an $80,000 fund for construction projects in the territories, according to an Israeli official. The purpose of the financing is twofold, she says. "One, is to help create jobs and improve the standard of living. The other is to somehow counteract the money coming into the territories from radical Islamic sources."
And Gubser points to long-term economic incentives for successful Israeli-Palestinian-Jordanian negotiations. He says open borders and working relations could mean "more rational use of water", increased revenues from tourism, and improved mobility of labor.