FOR ECONOMIC COOPERATION BETWEEN PALESTINE, TURKEY AND ISRAEL ANKARA FORUM FOR ECONOMIC COOPERATION BETWEEN PALESTINE, TURKEY AND ISRAEL

Industry for Peace Initiative Union of Chambers and Commodity Exchanges of Turkey tepav Economic Policy Research Foundation of Turkey Industry for Peace Initiative East Jerusalem, 04 September 2007

TOBB Industry for Peace Initiative Agenda The time for speeding up and diversifying the Ankara Forum process Progress recap for the Erez Project Feasibility approach and results Site selection for another industrial estate project Conclusions & immediate steps to be taken

TOBB Industry for Peace Initiative How to move from here? There is an urgent need to diversify Ankara Forum’s activities Political developments hampering progress on the ground: credibility is at risk. Gaza townhouse meetings on the agenda supposedly at this stage. Quartet’s new involvement, Blair’s appointment Back to working with PIEFZA How to start diversification? Parallel project in the West Bank TOBB-BIS to apply for at least two projects SME development and vocational training programs in line with investment promotion activities Any role for border crossings. PPP projects possible?

Ankara Forum meetings First meeting in Ankara (April 2005) TOBB Industry for Peace Initiative Ankara Forum meetings First meeting in Ankara (April 2005) Second meeting in East Jerusalem (June 2005) Third meeting in İstanbul (September 2005) Fourth meeting in Tel Aviv (January 2007) Fifth meeting in Washington, DC (March 2007) Sixth meeting in East Jerusalem (September 2007)

Progress with the Erez Project TOBB Industry for Peace Initiative Progress with the Erez Project Ankara Forum decision (June 2005) Pre-feasibility report completed (August 2005) TOBB-BIS company established in Istanbul (November 2005) MoUs signed between PNA-Turkey and Israel-Turkey (January 2006) Engineering projects completed (February 2006 - May 2006) Investment promotion started OECD Forum in May 2006

New developments Draft agreements prepared (February 2007) TOBB Industry for Peace Initiative New developments Draft agreements prepared (February 2007) Concession agreement Security and trade facilitation protocol Observers joined Ankara Forum (June 2007) World Bank and the US Chambers Feasibility report for Erez completed (July 2007) Palestinian general manager appointed (August 2007) Naser Jaber, former DG of PIEFZA Company registered in Ramallah (August 2007) Certified support from the Israeli side for tax and customs regulations (August 2007)

Why our project is different? TOBB Industry for Peace Initiative Why our project is different? The island concept – our new approach for industrial development Effective service delivery (infrastructure, regulatory environment) Well secured island Well connected island Focus on Turkish companies diversifying their activities. The status of Palestine in producing for US and Arab markets Sustainability issue-not a charity project. Business dialogue mechanism as a problem solving device

Feasibility concept of Erez TOBB Industry for Peace Initiative Feasibility concept of Erez Scenarios based on security Minimum security (30 guards with low wage, 3 vehicles) Maximum security (300 guards with high wage, 16 vehicles) Scenarios based on demand (time it takes to reach 45 medium sized tenants) Scenario 1: 4 years Scenario 2: 7 years Scenario 3: 9 years

Feasibility results Economic return is greater than financial return TOBB Industry for Peace Initiative Feasibility results Economic return is greater than financial return Economic returns include benefits to the Palestinian economy (direct and indirect job creation) Project is economically feasible under every scenario This implies there is a rationale for public-private partnership However, project is financially feasible only under minimal security scenario This implies there is a need to compensate the security budget (PPP)

Economic assessment under lowest demand, maximum security TOBB Industry for Peace Initiative Economic assessment under lowest demand, maximum security

TOBB Industry for Peace Initiative Financial assessment results under minimum security+low demand, and maximum security+high demand negative

How to move forward in the West Bank? TOBB Industry for Peace Initiative How to move forward in the West Bank? Conceptual framework will be similar to Erez island concept Need to select a site, or sites? Two proposals from former PIEFZA plans Jenin / Jalameh Tarqumia / Tarqumia Gathered some initial information, but need more thorough analysis for decision making

Comparision of two canditate sites TOBB Industry for Peace Initiative Comparision of two canditate sites Jenin Tarqumia Land disputes problematic possible Operational crossing exists Special access road Easy, 2 km Harder, 5 km Off-site infrastructure No Security conditions Hard Calmer Involvement of “others” Yes (Germans, Italians) Border disputes Maybe Palestinian control B+ B zone

Who should make the site selection? TOBB Industry for Peace Initiative Who should make the site selection? Erez example is good Relevant PA authorities have to provide the land for industrial estate development To foster the decision making process of the PA authorities it might be good to have a committee to a prepare site comparison note committee should coordinate with authorities towards pre-feasibility Previous pre-feasibility studies Tarqumia by USAID Jenin by KfW

TOBB Industry for Peace Initiative Where are we now? Erez scheme will be mostly applicable to the new project in West Bank Private access road concept, joint security cooperation, investment promotion in Turkey This will save us time and help us move faster However, there are critical differences, which were not in Erez—need for donor funding. Private land/Land ownership problems / disputes Off-site infrastructure Lower security considerations

Conclusions – Moving forward TOBB Industry for Peace Initiative Conclusions – Moving forward It’s now important to increase visibility and presence of the Ankara Forum on the ground Establishing an Ankara Forum office Location: East Jerusalem We need an action plan for the next 2 years Activities in SME development, vocational training, border modernization, capacity building for chambers, youth programs A committee to prepare the action plan Liaison with Quartet Office and General Dayton’s team A committee for West Bank site selection