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The Aix Group was formed in 2002 under the auspices of the Université Paul Cézanne-Aix-Marseille III in France, and in coordination with Aix Group: the Peres Center for Peace in Israel and DATA Center for Studies and Research in Palestine. In 2005 the Aix Group, headed by its five Steering Committee members, The Aix Group's previous began its third stage of research after identifying the following four Economic publications include the issues of major economic importance with respect to final status Economic "Economic Road Map" negotiations: (1) Economic cooperation in Jerusalem under different (2004), as well as “Israel Dimensions of a Two-State and Palestine: Between scenarios; (2) The economic aspects of resolving the question of Disengagement and the the Palestinian refugees; (3) Cooperation on infrastructure issues; Agreement Between Economic Road Map” and (4) "Fast Track" issues (examination of topics of contemporary Dimensions of a Two-State Agreement Between (2005). importance) including Palestinian labor in Israel, transitional trade Israel and Palestine www.aixgroup.org arrangements and the development of the Jordan Valley. The Aix Group held dozens of meetings, three conferences, and ongoing inside consultations which included the participation of Israeli, Palestinian and international experts, academics, members of economic organizations, Jerusalem and officials from international institutions. The Aix Group is publishing its extensive analysis with the hope of providing key decision-makers Refugees within the region and internationally with a solid basis from which to make future decisions regarding final status issues. The chapters presented in this Cooperation in book take into account Palestinian, Israeli, and international perspectives, Infrastructure ensuring that the research and analysis are as impartial as possible. Fast Track > Palestinian-Israeli Trade Relations > Palestinian Labor > The Jordan Valley Secrétariat of the Aix Group Centre d’Economie Régionale, de l’Emploi et des Firmes Internationales (CEREFI) Université Paul Cézanne - Aix-Marseille III, France Tel. : + 33 4 42 21 60 11 Fax: + 33 4 42 23 08 94 E-mail: aix-group.cerefi@univ-cezanne.fr Israel Coordination and Administration of the Aix Group - Israel The Peres Center for Peace, 2 Hashalom Road, Tel Aviv 67892, Israel Editors: Tel: + 972 3 56 80 680 Fax: + 972 3 56 10 680 E-mail: [email protected] and Arie Arnon Saeb Bamya Coordination and Administration of the Aix Group - Palestine Palestine DATA, Manger Street, Bethlehem, Palestine Tel: +970 2 27 43 343 Fax: +970 2 27 43 369 E-mail: [email protected] ISBN 978-965-91035-2-2 9 789659 103522 November 2007 Economic Dimensions of a Two-State Agreement Between Israel and Palestine Aix Group Arie Arnon and Saeb Bamya (Eds.) November 2007 Foreword The Aix Group The Aix Group is a unique working group that researches, produces and disseminates position papers which seek to identify economic scenarios and suggest economic recommendations in order to promote win-win outcomes for Palestinians and Israelis. The group includes Palestinian, Israeli and international economists, academics, experts, and policy-makers, as well as officials who are participating as observers. Formed five years ago under the auspices of the Université Paul Cézanne- Aix- Marseille III in France, and in coordination with the Peres Center for Peace in Israel and DATA Center for Studies and Research in Palestine, the Aix Group has been chaired by Prof. Gilbert Benhayoun from Université Paul Cézanne. The Group is headed on the Israeli side by Prof. Arie Arnon of Ben-Gurion University of the Negev, and on the Palestinian side by Mr. Saeb Bamya, an economic adviser to the Palestinian Federation of Industries, and former Deputy Minister of National Economy. First Stage of Research: The Economic Road Map (2004) In the belief that a sound economic context is essential to building sustainable peace between Palestinians and Israelis, the Aix Group published its first joint Palestinian-Israeli-International position paper in January 2004, entitled the “Economic Road Map”. The joint research paper examines optional models for long-term Palestinian-Israeli economic relations, and is written with Stage III (permanent status arrangements) of the Quartet’s political Road Map in mind. The research assesses future policy options in the trade, labor, fiscal, monetary and investment policy areas. 3 Economic Dimensions - Israel and Palestine Second Stage of Research: Israel and Palestine: Between Disengagement and the Economic Road Map (2005) In May 2005, the Aix Group published its second joint position paper, entitled, “Israel and Palestine: Between Disengagement and the Economic Road Map”. In this research paper, the Aix Group analyzes the risks and benefits of the unilateral Disengagement Plan from Gaza and the northern West Bank implemented by Israel in summer 2005. The potential outcomes resulting from the disengagement are examined, as is the potential effect of the disengagement on the revival of the Palestinian economy. Additionally, there is an assessment of the conditions that must exist in order to link the Disengagement Plan with the optimal solution for long term economic relations between the two countries, as presented in the “Economic Road Map”. Third Stage of Research: Economic Dimensions of a Two State Agreement between Israel and Palestine (2006-2007) In November 2005, the Aix Group began its third stage of research. Building on its experience and findings, the Group identified the four issues of major economic importance that are included in this book: (1) Economic cooperation in Jerusalem under different scenarios; (2) The economic aspects of resolving the question of the Palestinian refugees; (3) Cooperation in infrastructure issues; and (4) “Fast Track” issues (examination of topics of contemporary importance) including Palestinian labor in Israel, transitional trade arrangements and the development of the Jordan Valley. The findings of the Aix Group’s research emphasizes the importance of considering economic issues in this conflict and in its solution, and further serves to provide key decision-makers within the region and internationally with a solid basis from which to make decisions regarding final status issues. Importantly, the information presented in this book takes into account Palestinian, Israeli, and international perspectives, ensuring that the research and analysis is as impartial as possible. For more information on the Aix Group and to download previous publications, please visit the Aix Group’s website: www.aixgroup.org. 4 Acknowledgements The Aix Group would like to thank the following institutions for their substantial contributions, strong support, and dedication to the Peace Process in the Middle East, through which the third stage of research of the Aix Group has been feasible: The European Union1 The French Ministry of Foreign Affairs The World Bank The International Development Research Centre, Ottawa, Canada (IDRC) The General Council of Bouches du Rhône, France The Regional Council of Provence-Alpes-Côte d’azur, France For their valuable efforts, without which the project could not have been completed, the Aix Group would also like to thank: Smadar Shapira, Representative of the Peres Center for Peace in Benelux and Former Director of the Business and Economics Department, The Peres Center for Peace Racheli Levkovich, Israeli Project Manager, Business and Economics Department, The Peres Center for Peace Bashar Abu Ghanam, Palestinian Project Manager, DATA Center for Studies and Research in Palestine Colette Lescure, International Coordinator of the Aix Group, Université Paul Cézanne Aix-Marseille III, France Ronen Leshem, Director of the Business and Economic Department, The Peres Center for Peace 1 Disclaimer: This book has been produced with the assistance of the European Union. The contents of the book are the sole responsibility of the Aix Group and can in no way be taken to reflect the views of the European Union. 5 Economic Dimensions - Israel and Palestine Members of the Aix Group Israelis Internationals Palestinians Prof. Arie Arnon Prof. Gilbert Benhayoun Mr. Saeb Bamya Head of the Israeli Research Chairperson of the Group Head of the Palestinian Team, Dept. of Economics, Department of Research Team, Economic Ben-Gurion University Economics, Advisor to the Palestinian University Paul Cezanne - Federation of Industries Dr. Ron Pundak Aix-Marseille III Dr. Samir Hazboun Director General, The Researcher Economist Peres Center for Peace DATA Studies Researchers and Researchers and Participants Participants Prof. Joseph Zeira Mr. Joel Toujas-Bernate Prof. Salim Tamari Researcher Deputy Division Chief Researcher Dept. of Economics, Middle East and Central Jerusalem Institute Hebrew University, Asia Department Jerusalem International Monetary Dr. Saad Khatib Researcher Prof. Izhak Schnell Fund (observer) Researcher Dr. Bernard Philippe General Secretary, Dept. of Geography and Section Politique, Palestinian Federation of Human Environment, Tel- Economique, Commerciale, Industries Aviv University Delegation de la Dr. Suhail Sultan Commission Européenne en Mr. Alon Etkin Researcher Tunisie (observer) Researcher DATA Studies Economist Ms. Amy Schedlbauer Former Chief Economist, Adv. Fouad Hallak Mr. Sharon Hadad Negotiation Support Economist US Consulate in Jerusalem (observer) Department, Policy Ms. Edith Sand Mr. Jacques Ould Aoudia Adviser Economist Ministry of Economy, Mr.
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