1. Proposal: A Four Stage Economic Development and Infrastructure Plan

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Project Locations in Context of Middle East

 

Existing Conditions

 

Free Industrial Zone and Deepwater Seaport

To create sustainable, secure employment and expanded business opportunities for Palestinians, mainly from the Gaza Strip, as well as new housing and improved infrastructure in Gaza, upgraded transportation and communications links within Gaza and between Gaza and the West Bank, and strengthened Palestinian governmental institutions; this by:

• Establishment of a joint “Free Industrial Zone” at the border between Egypt and the Gaza Strip;
• Construction of an offshore deepwater seaport and large artificial island – within Palestinian jurisdiction off Rafah and Khan Younis – connected by causeway to the mainland;
• Construction of a secure underground rail link connecting Gaza and the West Bank, designed for the transport of commercial containers headed for the seaport as well as for the secure flow of passengers and messages;
• Strengthening of regional planning and development processes, to promote broad oversight of the project and also to guide implementation of other related projects, including major infrastructure improvements and the development of culturally-sensitive, sustainable housing communities.

The project is being undertaken: in response to the expressed needs of Palestinians, particularly in Southern Gaza; consistent with the Economic Road Map submitted by Palestinian and Israeli economic experts, including past and present government officials meeting on an unofficial basis, in January 2004; subject to endorsement by local authorities; and in furtherance of UN Millennium Development Goals and Agenda 21.

We believe the project is in the interests of Palestinians, Egyptians, Israelis and all others with a stake in stability and prosperity in the Middle East, over both the short and long-term.

In the words of World Bank President James Wolfensohn: “Without an economic revival, today’s Palestinian youth face a gloomy future, and their desperation will endanger any peace process. After ten years of concerted efforts to build a viable Palestinian economy, we are running out of opportunities. We cannot afford to let this one pass us by.”

2. Project Components

The greater part of the project will be undertaken over nine years in three overlapping phases—with Phase One commencing as soon as becoming feasible and widely accepted locally. Phase Four will be on-going. It is important to act quickly, starting before the end of 2005.

The components are:

Phase One

Construction of a 4-6 square km “Free Industrial Zone” initially located mostly in Egypt along the Gaza-Egyptian border--northeast of the former Sinai settlement of Yamit --with planned expansion across the border into Rafah in Southern Gaza. Workers would come primarily from Gaza—with related vocational training centers located at existing sites in Rafah, Khan Younis, and Gaza City as well as on-site in the industrial zone.

Initially, products of the free industrial zone would mainly be exported overland via Port Said. From here, one destination would be dedicated facilities in Genoa or other Southern European ports providing direct distribution to the European market. Another destination would be ports in the United States in accordance with duty-free, quota-free arrangements put in place following the Oslo Accords.

As the situation warrants, exports would increasingly be made from the Gaza International Airport, a ‘Roll-On, Roll-Off’ facility and a deepwater seaport in Gaza.

Major upgrades would be made to existing infrastructure in Rafah, Khan Younis, and on the Egyptian side of the border proceeding hand-in-hand with construction of the free industrial zone; these, to include significantly raising transportation, road, power, sanitation and water treatment standards in the general area. Infrastructure improvements will also be required as development of the airport and proposed seaport goes forward—as well as the more immediate upgrading of existing facilities to house the training centers.

Why Start in Egypt?
Locating the free industrial zone initially in Egypt is done principally to address important security concerns and because of the urgent need for visible, new employment opportunities for Palestinians—and other hope-inspiring benefits--as the disengagement proceeds. Major foreign investors will not come unless there is security and effective overall management—as well as a guaranteed source of labor not interrupted by border closings. The failure of the Erez Industrial Park demonstrates this. Reportedly, there were no new investors in Erez once the intifada began in September 2000. Israel announced its intention to close Erez in June 2004. Similarly, while the Palestinian-operated Gaza Industrial Estate (GIE) remains open, employment levels there are very low compared to the initial World Bank target; and attracting major investors has been problematic. Egyptian leadership in the Arab world is a major asset that could make the critical difference.

As discussed below, a joint Palestinian-Egyptian free industrial zone would also facilitate Palestinian development of an export base that is relatively independent of Israel, as called for by the Aix-en-Provence Group in the Economic Road Map.

Moreover, joint operation would permit Palestinians to take advantage of Egyptian expertise in the establishment and operation of Free Trade Zones and industrial parks. Egypt has seven Free Trade Zones and forty industrial zones. Egypt has an established legal framework for such areas and experienced managers and trainers capable of working closely with Palestinian managers and trainers who have not had the same opportunities as the Egyptians.

So – mindful of the serious need for action no later than 2005 -- we propose starting on the Egyptian side of the border and then expanding into Rafah district as the security situation improves.

It should also be noted that the Sharon Government, as part of its published disengagement plan, states that it will, together with Egypt, “examine the possibility of setting up a joint industrial zone on the border between Israel, Egypt and the Gaza Strip.”

Phase One Timing: 2005-2008.

Phase Two

Phased construction of:

(a) A 5-6 km causeway into the sea to serve as a temporary free port – with roll on, roll off capacity -- serving the Free Industrial Zone and as a construction road for Phase 2b uses: the site of the causeway is to be determined, but tentatively envisioned as extending out from Al Mawasi in the southern Gaza Strip in either Rafah or Khan Younis --see illustration;

to be followed by:

(b) A connected deep water free port serving the Free Industrial Zone and other commercial sites in Gaza and, later , the West Bank and also a 2 square Km artificial island providing culturally sensitive zones for small neighborhoods, desirable housing, markets, cultural facilities, waterways, pedestrian green spaces and open public spaces.

After completion, an estimated population of 40,000 people would find very good living conditions here. Development is to be highly responsive to climate and environmental concerns--and to the management of water.

Phasing would also include related mainland development, including major infrastructure improvements such as transportation links to the Free Industrial Zone and to the Gaza terminus of the West Bank-Gaza tunnel connection discussed below. Mainland development would also include the use of former Israeli settlements after withdrawal. (See housing discussion under Phase Four discussion below.)

According to the World Bank in June 2004, “If a satisfactory security protocol can be established, a seaport in Gaza, provided it is accessible to West Bank businessmen and efficiently run by a private operator, is likely to be competitive – particularly if initiated as a ‘‘Roll-On, Roll-Off’’ facility, which could be built in relatively short time and for as little as US$15-20 million.”

Note: The Gaza seaport abandoned in 2000 after two months of work is widely criticized for its poor location. In the words of the World Bank in June 2004: “there is no need for the [new] facilities to be located on the same site as the abandoned port project.” In particular, it is necessary that there be agreement that the site is suitable for a deepwater port.

Apart from proximity to the Free Industrial Zone, locating the seaport and residential island in Al Mawasi in either Rafah or Khan Younis keeps the construction at a distance from the ecologically sensitive Wadi Gaza (Valley of Gaza) which begins in the Hebron Mountains and descends into the Sea south of Gaza City. An Al Mawasi location would also interfere less with existing populations and is consistent with optimizing existing transportation links to the proposed tunnel terminus as well as to the Free Industrial Zone.

Nevertheless, the final siting of Phase Two is to be determined.

Phase Two Timing: 2007-2014.

Phase Three

Construction of a tunnel connecting Gaza and the West Bank by secure rail – designed for the secure transport of commercial containers as well as for the secure flow of passengers and messages, including a direct cargo link from West Bank manufacturing and agricultural centers to the newly constructed seaport in Al Mawasi -- with planned links to Northern Gaza, Jordan and Eastwards; potentially, also to Israeli exporters. The tunnel would help make a contiguous Palestinian entity a reality, thereby, significantly contributing to successful Palestinian statehood. A tunnel could also be used to accommodate high-speed communication links between Gaza and the West Bank, consistent with UN Millennium Development Goals.

Phase Three would include projects at both ends of the tunnel. It would also facilitate major infrastructure improvements, including a direct link between its Gaza terminus and the deep water seaport.

Prior to completion of the tunnel, the use of secured convoys could be resumed, as recently recommended by the World Bank. According to the Bank: “Convoys could consist of tractor-trailers carrying sealed containers, following appropriate pre-shipment inspection and scanning. Eventually it might be possible to relax the use of convoys, relying instead on electronic means to monitor container movements (e.g. GSP-linked transmitters or transponders), with obligatory reporting stations along the route.” While consistent with the objectives of this project, we believe a secure rail link is a better long-term solution. The positions of past Israeli governments indicate that it would be feasible politically under the right conditions.

As noted above, secure access of West Bank business to the proposed seaport is important to the success of the seaport as a profitable entity.

Site: To be determined. Initial discussion to be based on the track set out in Prime Minister Barak’s 1999 proposal to construct an elevated road twenty-five miles long between Beit Hanoun in Gaza and the village of Dura, near Hebron, in the West Bank.

Phase Three Timing: 2009-2012.

Phase 4

Strengthening of regional planning and development processes, to promote broad oversight of the project and also to guide implementation of other related projects, including major infrastructure improvements and the development of good, sustainable housing.

Note: Phase Four is to be on-going, commencing together with the start of Phase One in 2005.

For the project fully to succeed, effective planning on a regional scale will be critically important; this, consistent with Agenda 21. For example, the economic impact of the tunnel alone clearly would have a major impact on the entire Gaza strip as it is today—as well as the West Bank. New economic venues and their development will require new roads, new power supplies and new rail systems within the West bank and the Gaza Strip. They would be necessary and expected. New population movements would suggest an adjustment in other infrastructure elements like housing, schools and neighborhood centers and, accompanying these growths, will come the planning of new water sources and water distribution and treatment facilities—infrastructure which, for example, the local residents of Rafah and Khan Younis today are in desperate need. International dimensions of the project must also be effectively addressed.

Moreover, it is expected that this project will spur other, related projects such as desert land reclamation, macro projects to address water resources on a regional basis (such as the Marks-Moavenzadeh project), the planned use of former Israeli settlements after withdrawal particularly for Palestinian housing, and also the possibility of manmade islands for Israeli residential or commercial uses, perhaps including a new airport off of Tel Aviv.

The need for a master plan for the region is evident—and is increasingly being brought front and center as the preliminary stage of the project proceeds. Indeed, it seems apparent that moving forward with this project is likely to accelerate such planning. This is a key objective.

The project will specifically be undertaken in such a way as to support current efforts underway by the PA Planning Agency and the UNDP to empower a Middle East Regional Development Council as well as other relevant initiatives.

Phase Four Timing: 2005-Continuing.

3. Assessment Criteria

Preliminary and on-going evaluation of the project is to be made based on the following key criteria:

• The sustainable employment of Palestinians, especially 15-24 year olds
• New vocational training opportunities
• Economic growth, specifically revenue generated in Southern Gaza,
• Gaza, the West Bank, and Egypt
• A sustainable increase in per capita food consumption
• Increased private investment levels
• Timeliness
• Technical proficiency of later proposals
• Quality of life for specific groups of people in the region based on survey data
• Infrastructure improvements, initially in Rafah and Khan Younis
• Palestinian “ownership” of the project
• Environmental impact
• Political stability in Gaza and the West Bank, including strengthened governing institutions and planning processes
• Regional stability.

Assessments for each of these criteria are to be an important part of the project’s feasibility study.

4. Estimated Costs:

The project, as noted, would be implemented in four overlapping phases.

Excluding lease costs and other government transfers, the development and construction costs of the project are currently estimated at:

Urban Outline

Agricultrual Land Protection

Existing Water Considerations

Master Plan Land Use

Infrastructure Improvements

Green Edges