a - -mi COMVIISSION OF THE EUROPEAN COMVIUNITIES 
C0M(93) 458 final 
Brussels, 29 September 1993 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 
EC SUPPORT TO THE MIDDLE EAST PEACE PROCESS 
EC SUPPORT TO THE MIDDLE EAST PEACE PROCESS 
Communication to the Council and the Par M ament 
1. Introduct ion 
With the breakthrough represented by signing of the Israeli/PLO 
Agreement the Middle East peace process has reached a critical phase. 
The relationship between Israel and the Palestinians is at the core of 
the Arab/Israel problem. The difficulties between Israel and the Arab 
neighbours may now begin to be resolved. A comprehensive peace 
settlement could be within reach if negotiations are pursued in all 
tracks of the Madrid framework. The signature of an agenda for 
negotiations between Jordan and Israel is an initial indication of 
this. 
However, the situation is not irreversible. Public opinion both in 
Israel and in the Occupied territories is volatile and could be 
influenced in the short term by extremist acts of violence and in the 
longer term by the failure to secure concrete economic achievements. 
The comprehensive nature of peace is not yet secured and the future of 
the Israel/PLO Agreement is therefore uncertain. 
For the future the success of the peace process will depend on two 
factors : 
the engagement of Israel, Syria and Lebanon in concrete 
negotiat ions; 
the perception by the populations concerned that the first steps 
towards peace are bringing an immediate improvement in material 
condit ions. 
On the diplomatic front there should be continued support for the 
process begun in Madrid, with emphasis now on Syria and Lebanon. 
On the economic front the time is now right for the EC, together with 
the international community and especially the Gulf countries, to 
embark on an ambitious co-operation programme which would embrace the 
economic development of the West Bank and Gaza, bearing in mind the 
need also for international efforts in favour of the region as a whole. 
The progress being made in the bilateral negotiations should have an 
impact on the multilaterals. The European Community, which has been 
called upon to play a leading role in this area, should take the 
opportunity offered by the new climate in Israeli/Palestinian relations 
to give an impetus to regional cooperation. 
The Community has built up experience of activities in the region as a 
whole and in the Occupied territories over a number of years and is now 
the largest aid donor to the territories (see details in annex 1). 
The present paper sets out the Commission's views on how the EC could 
lend its support to that process in dealing : 
with the most urgent and specific needs, to help the Palestinians 
succeed in their move towards autonomy; 
1 
with the global aspects of the region, to ensure that both Israel 
and the Mashrak countries derive positive and concrete benefits 
from the peace process. 
2. Future EC cooperation with the Occupied territories. Israel and the 
Mashrak countrles 
To ensure the success of the peace process it is essential that efforts 
to bring conditions in the Occupied territories up to a satisfactory 
economic level are accompanied by action to support the economic 
development of the region as a whole. 
(a) West Bank and Gaza 
For the years 1994-98, the Commission proposes that 500 Mecu be made 
available by the Community in the form of grants and long-term loans. 
Half of this amount would be charged to the Community budget and the 
remainder is expected to be provided through EIB lending (with 
appropriate guarantees from the Community budget). For statutory 
reasons, EIB participation in the assistance package would require the 
introduction of new legal and administration arrangements. EIB lending 
would therefore develop progressively after those arrangements have 
been introduced and until 1996 under the 1.8 billion ECU ceiling 
currently in place*1). 
The Commission considers this amount to be an appropriate contribution 
taking account of the overall needs and absorptive capacity of the 
Palestinians and the financial capacity of the Community. 
The World Bank has estimated on a preliminary basis the minimum capital 
requirements of Gaza and the West Bank to be in the range of 500-550 
million US$ per year (1994-2003). 
The Commission proposes that the Community should make a substantial 
contribution, the remainder to be forthcoming from other sources 
(Member States, other European countries, USA, Arab Gulf States, Japan, 
Canada, Australia, etc.). 
The Community's approach should focus on two complementary aims : in 
the short term, capitalising on projects already under way and which 
bear fruit in 1993/94, to give visibility to EC co-operation; in the 
medium term, to contribute to the economic normalisation of the 
territories : 
Projects already under way which could be easily extended are 
in the fields of housing, small credit and assistance for 
business and small and medium-sized enterprises, solid waste 
removal, sewage, Gaza hospital; to these could easily be added 
construction of classrooms, completion of industrial parks set 
up by the Israeli civil administration (see annex 2 for 
projects under immediate preparation); 
in the medium term EC resources should contribute to improving 
the economic and social infrastructure (housing, schooling, 
water supply, sewage). At the same time they should help the 
Palestinians to rapidly generate urgently-needed employment, 
in particular by providing a modern infrastructure for private 
(1) EIB loans on the horizontal cooperation facility of the 
"Redirected Mediterranean Policy" 
business activities (telecommunications, road connections, 
electricity, industrial estates, etc.), and by creating an 
environment favorable to the development of small and medium-
sized enterprises. 
Financial cooperation could be channelled through the future 
Palestinian Council. This is in accordance with standard practice 
in the Community and Member States. 
In order to enable the Palestinians to handle large amounts of 
international assistance, the Commission considers it important to 
help them to establish the requisite technical and financial 
machinery, a planning and financing authority (which might be 
designed along the lines of the Lebanese Council for Development 
and Reconstruction). 
The Commission is prepared to put at the disposal of the 
Palestinians the necessary technical assistance. 
Coordination between donors is necessary. It is the Commission's 
view that the Community, as the main financial contributor, should 
seek to play a central role in this coordination. 
In the Commission's view, it will suffice to set up, in the context 
of the Regional Economic Development Working Group (REDWG), a sub­
group entitled "Palestinian and Economic Development Working Group" 
(PEDWG), in which all donors would participate, with the World Bank 
being fully involved. This Group could meet regularly once every 
3 months in the beginning and later twice every year. 
The Commission's representative in the territories should take up 
his position shortly, together with his staff of technical 
assistants. 
(b) Israel and the Mashrak countries 
The necessary focus on Gaza and the West Bank should be 
complemented by increased Community cooperation with the region as 
a whole. 
There must be an appropriate balance between the Community's 
substantial assistance in favour of some 4 million Palest inians*1) 
on the one hand, and 80 million people living in Egypt, Jordan, 
Lebanon, Syria and Israel on the other hand. 
In its communication on "Future Relations and Cooperation between 
the Community and the Middle East" (COM (93) 375), the Commission 
has set out its long-term vision. 
It has proposed a dual approach: 
the need for the Community to help the countries of the region 
(including the Palestinians) to step up their regional 
cooperation; 
(1) including the Palestinians in the region assisted by UNRWA. 
3 
the need for the Community to upgrade its contractual relations 
with each of the countries of the region if they so desire. 
Regional Cooperation 
The Community could offer these countries a substantial volume of 
technical and financial assistance for regional cooperation. Since 
1992 the Community has already done so. Under the new 
Mediterranean policy for 1992-96 it has set aside considerable 
budgetary and loan resources for regional cooperation in the 
Mediterranean in general (Maghreb, Mashrak, Turkey).(2^ 
Due to the absence of peace and therefore cooperation, only a small 
amount of these resources have been used so far in favour of the 
Middle East. 
The prospect for peace will open new possibilities for cooperation 
in the region. There will be, in the years to come, new 
requirements for the financing of appropriate intra-regional 
infrastructure (roads, telecommunications, etc) and water and 
energy projects, etc. 
The Commission believes, therefore, that the Community should be 
ready to announce its willingness to underpin that process through 
making available, as part of a wider international action, 
appropriate finance and through offering its know-how on regional 
cooperation. 
Especially in the longer term, it would be useful to examine ways 
to promote Joint management of regional strategic resources and 
infrastructures. This could prepare the ground for the 
establishment, when conditions permit, of a Regional Community for 
water, energy and infrastructure. To this end, the Commission has 
set up a working group to study the principles which could underpin 
this idea and the ways to assist in its long term implementation. 
Furthermore, the Community has a specific role to play in promoting 
regional cooperation among the political and intellectual decision­
makers of the region. To this end, the Commission intends to step 
up its own efforts to organise seminars, workshops, etc., in order 
to bring together leaders of the Middle East countries, as the 
Commission has done with the Israelis and Palestinians in the years 
1989-93. 
The Community is ready to invite regional parties to exchange 
views on the priorities for regional cooperation over the coming 
years. 
Until 1995-96, financial resources will be made available within 
the context of the Mediterranean Policy to meet the initial 
priorities. In addition, the EC will look further ahead at the 
possible need for additional budget and loan resources, in order 
to allow the necessary long-term planning to proceed. 
(2) 360 Mecu per annum EIB loans and 65 Mecu per annum, on average, 
budgetary resources. 
Upgrading EC bilateral relations 
The 1975 EC/Israel Cooperation Agreement, providing essentially for 
free trade between Israel and the Community, should be replaced by 
a new Agreement. In particular it should open new areas in the 
fields of trade, services and cooperation in a wide range of 
sectors (in particular science and technology). To this end, the 
Commission submits a proposal for Negotiating Directives and hopes 
that the Council will speedily act upon these. 
The EC should be prepared to respond positively to any wish by 
Egypt, Jordan, Lebanon and Syria to embark on a new dialogue with 
the Community. 
More particularly, in order to help the Arab countries of the 
region to enter into free trade with Israel and among themselves, 
it might be helpful if the Community, at the same time, embarked on 
a process leading to the establishment of a free trade area with 
these countries in the foreseeable future. 
It is not possible to negotiate an international agreement with the 
West Bank and Gaza; however, ways should be found to arrive at a 
structured relationship between the EC and the Palestinian self-
government, covering all aspects of cooperation with them. 
3. In conclusion, the Commission calls upon the Council and the 
Par Iiament: 
to endorse these general guidelines, which are designed to 
underpin the on-going Peace Process; 
to note that the Commission will make further specific 
proposals as and when necessary; 
to keep the matter under regular review within the appropriate 
institutional set-up. 
COM/93.458-5 
- 1 -
ANNEX 1 
COHUJNITY AID TO THE OCCUPIED TERRITORIES 
1. Background 
Up until 1980 the Community aid to the Palestinian population, whether 
inside or outside of the Occupied territories, was limited to the 
refugees. From 1971 on there had been a cooperation with UNRWA which was 
and still is formally translated into Conventions. Between 1971 and 1980 
the total amount of this aid was $ 132 million. In 1981 a new approach 
for the benefit of the Palestinian population started consisting of 
direct Community aid under different budget lines which until 1986 
reached a total of ecu 8.98 million. From 1987 on there has been a 
specific budget line (now Article B7-406) for direct development aid to 
the territories. 
2. GuidelInes 
Community action Is based on the 1980 Venice declaration: support of UN 
Security Council resolutions 242 and 338; the right of Palestinians to 
self-determination-, the right of all states in the area to live in 
security and peace. 
The 1986 Council guidelines defined the main principles of the Community 
attitude towards the Palestinian population and Israel with regard to 
the territories. 
The priority areas are the following: 
- small-scale employment-generating projects or measures In the 
agricultural and industrial sectors, in particular by giving support 
to measures in the agricultural sector which would increase food 
self-sufficiency 
- education/training, particularly in the vocational and technical 
fields; 
- upgrading of local Palestinian institutions, such as Arab-run 
Municipalities, Universities and Colleges, professional 
organisations, etc. particularly through linkages with similar 
institutions in the European Community, In-country training, 
seminars. 
In the 1989 European Council declaration of Strasbourg the Community and 
its Member States strongly confirmed their previous position and 
emphasized their commitment to support the Palestinian population in the 
territories. Education and health were singled out as areas to which 
particular attention should be devoted. 
3. Description 
Community aid to the Occupied territories has five main headings: 
Ù 
- 2 -
(i) Aid to refugees through UNRWA. This takes place mostly through 
contributions to the regular UNRWA budget, which are spent on 
education, health and food aid programmes. In the years 1971 to 
1992 this aid amounted to about ecu 518 million. It is for all 
refugees, even those who are not living in the Occupied 
territories. Since the latter represent approximately 38 percent 
of the total, it is estimated that under this heading aid to the 
territories amounted to about ecu 197 million for 1971-1992. 
(ii) Aid through co-financing with European NGOs. In 1979-1992 the 
total amount contributed by the Commission was ecu 12.8 million. 
This was equivalent to a 38.6 percent contribution to projects 
for a total value of over ecu 33 million. 
(iii) Direct development aid under budget lines B7-406 and B7-701 
amounted in 1991 to ecu 70 million (including ecu 60 million 
exceptional aid) and in 1992 to ecu 17 million (including ecu 5 
million exceptional aid). The figure for 1993 is ecu 35 million 
(including ecu 20 million for new actions). The total amount 
devoted to these lines from 1987 up to 1993 is ecu 139 million. 
(iv) Aid to promote direct Palestinian exports from the territories 
to Community markets. 
The Community has reduced import levies for certain Palestinian 
agricultural products from January 1993 to zero. 
(v) Emergency and exceptional aid interventions In 1992 the 
Community approved a contribution of ecu 5 million towards 
running costs of Palestinian hospitals. They will be disbursed 
in 1993/1994. In December 1992 the Community approved 6,000 T of 
wheat flour for the Gazan refugees through UNRWA and in June 
1993 an additional amount of 6,000 T of wheat flour, 600 T of 
rice and 600 T of sugar were approved for refugees and non-
refugees of the Gaza Strip. 
7 
- 3 -
ANNEX 2 
PROJECTS UNDER PREPARATION BEFORE 
THE END OF 1993 FOR GAZA AND THE WEST BANK 
MECU 
Solid waste disposal in Rafa and Gaza City 2.5 
Sewerage in Gaza Strip 10.0 
Universities and Community Colleges, West Bank & Gaza 15.0 
Technical assistance and studies 5.0 
Establishment of local public TV and radio authority 2.0 
Various infrastructures (energy, transport and 
communications) 0.704 
Cooperation networks (local governments, 
universities and media) 2.30 
Economic co-operation in the private sector 0.65 
Support for the electoral process 4,0 
Humanitarian aid*1) 6.0 (estimate) 
Total : 48.154 
The current housing programme will also be accelerated, leading to 
increased Job creation. 
(1) a Commission evaluation team is currently in the Occupied 
Terr itorles. 
< 
LE SOUTIEN COMMUNAUTAIRE AU PROCESSUS DE PAIX AU PROCHE-ORIENT 
Fiche Financière 
1. INTITULE DE L'ACTION 
EC support to the Middle East Peace Process 
(Assistance financière aux Territoires de CisJordanie et de Gaza) 
2. LIGNE BUDGETAIRE CONCERNEE: Poste B7-406 
3. BASE LEGALE: néant 
4. DESCRIPTION DE I'ACTION 
4.1. Objectifs spécifiques de l'action 
En vue d'améliorer les conditions de vie de la population 
palestinienne, l'action vise le financement de 
l'Investissement et des frais de fonctionnement dans les 
domaines de l'infrastructure, de la production (agriculture, 
pèche, l'industrie) des services (incl. tourisme), du 
commerce extérieure, du développement urbain et rural, de la 
santé, de l'environnement, du développement des instituton 
et administrations, de la formation et de l'enseignement. 
Elle permet égaIement I'ass i stance techn i que nécessa i re pour 
l'exécution de telles aides et le coût de l'instruction et 
de suivi des projets. 
4.2. Durée 
1994 - 1998 
4.3. Population visée par l'action 
Les actions sont destinées à la population palestinienne des 
Territoires de Cisjordanie et de Gaza. 
/Au4/oux 1H2/TTI HA*** I «93 1 
5. CLASSIFICATION DE LA DEPENSE (B7-406) 
END 
CD 
Types de recettes visées: néant 
6. TYPE DE LA DEPENSE/RECETTE (B7-406) 
Subvention à 100 % 
Aucun remboursement n'est prévu 
L'action proposée n' implique aucune une modification du 
niveau des recettes. 
7. INCIDENCE FINANCIERE 
7.1 Mode de calcul du coût total de l'action pour l'exercice 1994 
Le montant proposé en engagements tient compte de l'expérience 
acquise dans le passé, des besoins évidents et de la capacité 
d'absorption des institutions concernées. Il reflète aussi 
l'engagement de la Communauté è développer son soutien en faveur 
des Territoires Occupés, la déclaration du Conseil Européen de 
Strasbourg des 7 et 8 décembre 1989, et les orientations de la 
reunion informelle des Ministres des Affaires Etrangères à Aeden 
Biesen les 11/12 septembre 1993. 
Vu d'une part le reste à liquider dû 
5,0 ECUS fin 92 et d'autre part 
l'assistance aux territoires afin de 
l'accord intervenu entre Israel et 
une augmentation significative des 
paiement est demandée. notamment à un engagement de 
la nécessité d'augumenter 
contribuer à la réussite de 
I 'OLP le 13 septembre 1993 
credits d'engagement et de 
7.2 Ventilation par éléments du coût de l'action en MECU (B7-406) 
VENTILATION 
Assistance financière 
aux Territoires occupés de 
Cisjordanie et de Gaza Budget 
93 
15+20 Budget 
94 
50 Budget 
95 
50 Budget 
96 
50 Budget 
97 
50 Budget 
98 
50 Total 
250 
Les montants sont exprimés en écus courants 
7.3.: néant 
M 
7.4. Echéancier indicatif des crédits d'engagement 
(pour les actions pluriannuel les assorties d'unftEN) 
en MioEcus 
- Période d'application : 1994 - 1998 
Situation 
cumulée 
fin 1992 
(1) 
44 Budget 
1993 
15 + 20 APB 
1994 
50 . . _ 
PROGRAMMATION INDICATIVE 
1995 
50 1996 
50 1997 
50 1998 
50 T 
o 
T 
A 
L 
250 
8. DISPOSITIONS ANTI-FRAUDE PREVUES DANS LA PROPOSITION D'ACTION 
Dispositions antl-fraude 
Contrôles normaux de la commission 
9. ELEMENTS D'ANALYSE COUT-EFFICACITE 
9.1. Objectifs 
Object If(s) speciflque(s) : liens avec les objectifs plus 
généraux et les autres actions proposées dans la 
programmation financière Indicative 
En vue d'améliorer les conditions de vie de la population 
palestinienne, et de suporter le processus de paix dans la 
région l'action vise le financement de l'investissement et 
des frais de fonctionnement dans les domaines de 
l'infrastructure, de la production (agriculture, pêche, 
l'industrie) des services (incl. tourisme) du commerce 
extérieurs, du développement urbain et rural, de la santé, 
de l'environnement, du développement des institutions et 
administrations, de la formation, et de l'enseignement. 
Elle permet également I'assistance technique nécessaire pour 
l'exécution de telles aides et le coût de l'instruction et 
du suivi des projets. 
/M 
9.2 Justification de l'action 
- Coût; 250 MECU dans B7-406 pour 1994-1998 ce qui 
permettra à la Communauté de donner un support au 
processus de paix et une aide significative à des 
populations qui ne sont pas couvertes par les accords de 
coopération conclus avec les Etats voisins. 
- Effets dérivés (Impact au-delà de(s) object If(s) 
spéclflque(s): Les actions financées par cette ligne de 
crédit visent au développement et renforcement de 
l'autonomie institutionnelle et économique qui réduira la 
dépendance des ter!to ires vis à vis du financement 
exterleur. 
- Effets multiplicateurs (capacité de mobiIIsatlon d'autres 
sources de financement): L'efficatité des actions, de 
cette ligne budgétaire pourrait être multipliée par les 
efffets stimulants sur l'économie des Territoires Occupés 
qui attireront du capital local et international. De 
plus, la coordination avec d'autres donateurs 
l'influencera postivement les actions financées par 
cette ligne budgétaire. 
9.3 Suivi et évaluation de l'action 
Indicateurs de performance sélectionnés 
Des Indicateurs de performance spécifique sont établis 
pour chaque projet (par exemple: augmentation de la 
production en agriculture et du taux d'éautosuffisance 
al 1 mentalre, volume des exportations des territoires 
concernés). 
- Modalités et périodicité de l'évaluâtIon prévues 
Les principaux secteurs financés feront l'objet 
d'évaluations annuelles. 
Appréciât Ion des résultats obtenus 
Les résultats obtenu Jusqu a présent montrent que la 
dégradât Ion socio-économique a été ralentie par les 
actions précédents de la Communauté. 
/U 
9.4. Cohérence avec la programmation financière 
- L'action est-elle prévue dans la programmation financière 
de la DG pour les années concernées ? Oui. 
- Indiquez à quel objectif plus général défini dans la 
programmation financière de la DG correspond l'objectif 
de l'action proposée: apporter une contribution à la 
réalIsatlon des objectifs économiques et à la stabilité 
politique de la région. 
- Principaux facteurs d'Incertitude pouvant affecter les 
résultats spécifiques de l'action: La situation politique 
et sociale encore Incertaine. 
^ 
ISSN 0254-1475 
COM(93) 458 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-93-513-EN-C 
ISBN 92-77-59661-9 
Office for Official Publications of the European Communities 
L-2985 Luxembourg