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U.S. Department of State
95/07/20: Joan Spero on Amman Economic Summit
Office of the Coordinator for Business Affairs


                           INTERVIEW OF JOAN SPERO
                    UNDER SECRETARY OF STATE FOR BUSINESS,
                      ECONOMIC, AND AGRICULTURAL AFFAIRS
                        ON USISíS WORLDNET TV PROGRAM
                          WITH BUSINESS LEADERS IN
                    TEL AVIV, JERUSALEM AND CASABLANCA
                               JULY 20, 1995


MR. FOUCHEUX:  Hello, and welcome to Worldnet's "Dialogue," I'm Rick 
Foucheux.  Today, for our worldwide audience, and for guests standing 
by in Tel Aviv, Jerusalem, and Casablanca, our subject will be the 
upcoming Amman economic summit, which is being referred to as an agenda 
for peace, development and investment.  Joining us here in our 
Washington studios, we are pleased to have as our special guest today 
Joan Spero.  She is the undersecretary of state for economic, business, 
and agricultural affairs.  Ms. Spero, welcome once again to Worldnet's 
"Dialogue."

MS. SPERO:  Thank you.

MR. FOUCHEUX:  It's a pleasure to have you with us.

MS. SPERO:  Thank you.

MR. FOUCHEUX:  I understand you have some opening comments for us?

MS. SPERO:  Yes.  I'd like to spend a minute, if I may, Rick, talking 
about the Middle East-North Africa economic summit, which is our topic 
for today.  I am delighted to be here, delighted to have a chance to 
talk to all of you in the Middle East about this Middle East-North 
Africa economic summit, which will take place on October 29 through 
October 31st in Amman, Jordan.

As a co-sponsor of the Amman summit, we in the United States would like 
to share views on the summit's potential and its opportunities for 
advancing regional development.  And I welcome this opportunity to 
explain why we encourage government and business leaders to attend and 
to participate in the summit.

The Amman summit is tied closely to the Middle East peace process.  
Peace and security are closer to realization today than at any time in 
modern history.  The progress made by the parties in the region over 
the past four years is quite simply remarkable.  On all fronts there is 
a clear sense of momentum.  Peace and security are essential for the 
economic development of the region.  At the same time, peace cannot 
last without concrete benefits for the people of the Middle East and 
North Africa -- benefits that are only possible through increased 
trade, investment, and entrepreneurship.  As you in the audience know, 
the Middle East and North Africa have a wealth of resources.  The 
region has a well educated population of over 100 million people, a 
rich culture and history, enormous natural resources, and critical 
transportation routes.  Yet regional conflicts, as well as statist and 
protectionist economic policies, have prevented the region from 
realizing its economic potential.

The Amman summit can serve as an impetus for economic change.  The 
summit will gather senior government and business representatives from 
nearly 60 countries dedicated to advancing business development.  The 
concept for the summit is public-private partnership.  The private 
sector must provide the entrepreneurial talent, investment capital, and 
technical expertise for development.  The public sector, for its part, 
must improve the economic environment for liberalizing trade policies, 
reducing regulation, privatizing industry, and improving the investment 
climate.

I am a former executive myself from the private sector, and I know that 
the primary concern of business people is to make sound and profitable 
investments.  That's why the summit organizers are laying the 
groundwork for business and economic development opportunities at the 
summit.  Let me tell you their goals.

First, moving forward on regional institutions:  a development bank for 
financing regional and private sector development, a business council 
and a tourism board, all with regional governmental and private sector 
participation.

Secondly, encouraging regional states to liberalize their economies and 
to develop a free-market approach to development.

Third, deepening contacts between both government and the private 
sector, and within the private sector itself.

And, finally, preparing actual development projects in the region.  We 
expect that there will be an emphasis on projects involving more than 
one country.

Now, to achieve these goals, the parties have decided that the Amman 
summit should be smaller, more focused, and more oriented toward the 
private sector than was the Casablanca summit.  Plenary sessions will 
focus on the four major themes of the summit:  trade and industry, 
infrastructure, investment and finance, and the economic environment.  
Project briefings, roundtables, and industry-specific workshops in the 
nine key sectors will provide opportunities for business people, as 
well as government decision-makers, to exchange experiences, pursue 
opportunities, and follow up on projects.

Both President Clinton and Secretary of State Christopher are 
personally committed to the success of the summit.  Secretary 
Christopher will lead the U.S. delegation, which will include our 
Commerce Secretary Ron Brown, and other senior U.S. government 
officials.

We in the United States have no illusions that prosperity will come 
quickly or easily to the region.  The road to development and regional 
cooperation is a difficult one.  However, Amman will provide 
opportunities and incentives to start the process.  We encourage you to 
join the efforts. We want your participation in and support for the 
summit, and for the economic development of the entire region.

I think I've spoken enough.  What I'd welcome now is an opportunity to 
take your questions and to hear your views.  So thank you.

MR. FOUCHEUX:  All right.  Let's get to the questions and comments from 
overseas.  We begin first with a question from Tel Aviv.  Go ahead 
please in Tel Aviv.

QUESTION:  Good afternoon from Tel Aviv.  My name is Dan Gilamon (sp).  
I am chairman of the Israeli Chamber of Commerce, and I am a veteran of 
the Casablanca economic summit, as well as many other economic summits 
and conferences.  And what I would like to share with you is some 
skepticism we private sector businessmen have developed over the recent 
months about the efficiency and practicality of these summits.  There 
seems to be a lot of talk and a tremendous amount of good will, but at 
the end of the day very little substance.  And what I feel very 
strongly is that we should all make a real effort for Amman to be Amman 
I, rather than Casablanca II.  Casablanca served its purpose as far as 
staging a very historic opportunity for Israel and its neighbors to 
legitimize economic conduct and business discussions. But it did not 
focus enough on the private sector or on business.  And I believe that 
in order for Amman to be a real business success, much more effort 
should be paid to preparing it properly, match-making the potential 
partners, identifying real projects -- including small ones, rather 
than mega-projects and government projects -- and networking, so that 
when we get there we will really meet the people with whom we can 
ultimately do business. And what I was really wondering is that seeing 
that there are still some difficulties in discussing real business 
ventures between Israeli and Arab businessmen directly, how can the 
U.S. facilitate, and even package, such projects and discussions, and 
prepare them so that when we get there we can really talk business and 
do business?  Thank you.

MS. SPERO:  Let me thank you.  Those are really excellent comments, and 
I have to say those are exactly the kinds of comments that I have 
heard, that Secretary Christopher and others have heard, as we have 
consulted the U.S. private sector.  We have been talking to them a lot 
about what would be useful for them.  I come from business -- I know 
about total quality management -- you're supposed to ask the customer, 
and that's what we have been doing.  We have heard exactly what you 
have said.

What others have said to us is that Casablanca was important in the 
sense that the meeting itself was the message, but that in Amman we 
really have to go beyond that and to make it user friendly for 
business.  Let me tell you some of the things we're trying to do.

First of all, we heard that there were too many government speeches in 
Casablanca -- not that it wasn't important, but that in Amman they want 
more opportunity for networking, for small meetings, focus on 
particular sectors, focus on particular countries and the opportunities 
in those countries.  So the agenda itself is organized in a very 
different way.

Secondly, in Casablanca there was a large crowd.  And, again, for that 
meeting it was very useful.  Here the participation will be much 
smaller.  It will be more selective -- business people from industries 
who have real interest in doing business in the Middle East.  So there 
will be more focus, there will be a more business-oriented agenda, 
there will be a smaller group. And, finally, there will be, if you 
will, more capacity to serve the business customer.  For example -- I 
don't know if you are familiar with the Davos World Economic Forum, 
which is hosting the Amman summit, and also hosted its annual meeting 
in January, late January in Switzerland.  They're going to be using 
some of the techniques that they used in Switzerland:  an e-mail system 
so that the business people can set up appointments with each other; 
small rooms and free time for conferences.  So the promoters and the 
organizers of the event have taken on board the comments that you are 
making, and I think are working very hard to make it business friendly 
and productive.

Perhaps I could also try to answer your second question, which was what 
is the U.S. government doing, in particular what are we doing to try to 
promote dialogue between Arabs and Israelis.  As I mentioned before, we 
have been actively consulting our private business sector, and we have 
formed a group that consists of our Commerce Department and of our 
State Department and private sector people, to try to see where they 
see the business opportunities, and what role government might be able 
to play in facilitating those business opportunities.  So we are 
starting with our own private sector, and trying to encourage them to 
get involved, and trying to see that whether through our embassies, 
through our trade facilitation programs, through our own ability to 
network, we can promote business interests.  So we're on the case.

MR. FOUCHEUX:  Thank you very much, Tel Aviv.  We'll be getting back to 
you soon.  Jerusalem is standing by now with their first question.  Go 
ahead please in Jerusalem.

QUESTION:  (Off mike, technical difficulties.)

MR. FOUCHEUX:  Jerusalem, here's a note from our studio in Washington. 
We're having a hard time picking you up on the microphone there in 
Jerusalem. I believe my producer is telling me you're on the wrong 
microphone.  Is there any way that you could move over to another 
microphone in the room, just so we could hear you a bit better here in 
Washington?

QUESTION:  Good afternoon from Jerusalem -- (technical difficulties).

MR. FOUCHEUX:  All right, Jerusalem, we're having a bit of a problem 
hearing you still in our Washington studios, so we are going to move 
along to our next post in Casablanca for their first question.  
Casablanca, are you up and running and ready to come in with your first 
comment or question for us?

QUESTION:  Yes, good morning.  It seems to be that there are high 
expectations, but also at the end of the day there hasn't much been 
done.  In our eyes as observers since the Casablanca summit, there are 
-- there cannot be peace -- this cannot be achieved without any 
economic interests.  As you know, there are no permanent enemies.  
There are no permanent allies.  There are only permanent interests.  
And for the upcoming Amman summit, I would like to make a concrete 
proposition.  Coming from the business, you well know, Ms. Spero, that 
concrete suggestions count much.

I would like to propose that the Amman summit studies and takes into 
consideration the current proposition, which is that the World Bank or 
the U.S. government or other governments concerned, finance with low -- 
very low interest rates, and low interest rates and good facilities, to 
any joint venture between Israeli and Arab businessmen, but -- 
(inaudible) -- specifically small business?  Because it seems to me 
that in Casablanca it was more of a big business affair than a small 
business affair, and I think small business would contribute a lot to 
the development of the area.  I am sorry, I have not introduced myself.  
This is -- (inaudible) -- chief executive officer of -- (inaudible).  
Thank you.

MS. SPERO:  Thank you.  I think that is a very important point and a 
very good suggestion, both in terms of the financing and in terms of 
the small- and medium-sized businesses.  I think that you are right in 
saying that in many cases big business needs support in the form of 
financing or in an Amman-type summit less than the small- and medium-
sized businesses do. They have less capacity to network 
internationally, they have less access perhaps to finance, and 
certainly there are massive opportunities.  We also know, in the U.S. 
and elsewhere, that it's small- and medium-sized business that provides 
much of the employment, and that is a major issue in the Middle East.  
So I very much agree with your emphasis on the small- and medium-sized 
enterprise.

Let me make a comment about your financing point, if I may.  One of the 
institutions that we are working on now, and that we hope to have 
completed in -- and to be able to reach a political commitment for by 
the time of the Amman summit, is this Middle East and North Africa 
Development Bank.  Let me take a moment to comment about that bank, 
because it very much addresses the issue that you are raising.

The Middle East, in order to develop, is going to need capital.  It is 
going to need financing.  That financing cannot come solely or 
exclusively, or even primarily, from the government.  But what the 
government can do, along with the multilateral institutions, is to 
prime the pump.  Government can provide financing for projects that do 
not lend themselves to private sector development; and government, 
operating through multilateral institutions, can also try to act, if 
you will, as an investment banker, mobilizing private and public sector 
funds.  And that is the idea behind the Middle East and North Africa 
Development Bank.

The thought here is not to create another development bank like those 
that already exist in Asia, in Africa, and in Latin America; but to 
create a new and modern type of development bank.  What it would do is 
to have a relatively small level of capitalization -- we're talking 
roughly $5 billion, with maybe a billion and a quarter of paid-in 
capital.  But what that bank could do would be to mobilize the funding 
that is available through the World Bank, through the European 
Investment Bank, through various Arab and Gulf funds -- to package it, 
and to act as a merchant banker.  In addition, what we believe this 
bank can do is to foster, just as you suggested, regional projects.  
While national projects would not be excluded, the real emphasis would 
be on projects that would benefit more than one country.  And then 
finally, and I think this is really what would make this bank 
different, is it would have a heavy emphasis on the private sector -- 
not sort of try to reproduce the state-owned enterprises or state-led 
projects, as you suggested, but to encourage a flourishing private 
sector in the Middle East.

So we are very much looking at that issue.  I won't see that the Middle 
East Bank has been agreed yet or decided on yet; but it is a real 
possibility.  So I think that that could well be responsive to the type 
of need -- the very real need that you are suggesting.

MR. FOUCHEUX:  Thank you very much, Casablanca.  Let's return now to 
Jerusalem for their first question in this series.  Jerusalem, go ahead 
please.

QUESTION:  Good afternoon from Jerusalem.  This is Ibrahim Matir (ph) 
from Aneira (ph), an American PVO that funds development projects 
through U.S. aid.  From our experience with businessmen and what we 
learn on the ground, that the real issue is really deregulation.  The 
most important subject for them is the freedom of movement of goods and 
people.  This is we feel is the main hindrance to real economic 
development and trade and investment for the Palestinians in the West 
Bank and Gaza.  Therefore, we would appreciate if the issues of 
deregulation and issues of free movement of goods will come up for 
discussion at the conference in Amman.  And thank you.

MS. SPERO:  Well, first of all, I am glad that the mike is working, 
because you've raised a very important point, and I am glad Jerusalem 
was able to plug in.  And, once again, you are raising a very critical 
point. One of the goals of Amman is to try to foster greater commitment 
to deregulation, privatization, liberalization -- both at home and in 
international economic policies.

You know, for too long the Middle East countries have been focused 
exclusively on national development.  They have not focused on export-
led development, have not heavily focused on international markets.  
And to the extent that they've looked for international markets, those 
markets have largely been in Europe or the United States and outside 
the region.  Well, there has been a revolution in the world in thinking 
about development, and that revolution has to do with market-oriented 
policies.  Countries throughout the world are looking at where the 
success stories have come, and those success stories have been to a 
great extent in countries in Asia and in Latin America that have opened 
up their economies and have created a very positive environment for 
private sector development, for export promotion.

So the Middle East is on the verge -- I would say in stage one by and 
large of that revolution.  Many of the countries still have large 
state-owned industries, but Egypt, for example, and Israel for example, 
are moving toward private sector.  Many of the countries have had 
protected domestic markets. They are learning that those markets are 
too small, and they must look abroad.  So trade policies are gradually 
being liberalized.  And Amman of course is not going to make decisions 
for national governments, but what Amman can do is to put the private 
sector people together with the government people, so that the 
government people can understand how they can adopt policies, 
deregulatory policies, that will support foreign investment, domestic 
investment, and trade across borders.  So I hope that the private 
sector people coming to Amman will bring that message to the 
governments -- not only to their own governments -- I think that is 
taking place -- but also to governments throughout the region.

You know, the region has a long entrepreneurial tradition.  It has 
capital that has by and large flowed abroad instead of staying in the 
region. And this is an opportunity to take the talents of those Middle 
East entrepreneurs, to take the capital that has fled abroad, and bring 
it back with the appropriate government policy so that the region can 
flourish.  I hope that that will be -- it certainly is planned that it 
will be a major theme in Amman, and I hope those coming will reinforce 
that message that you are giving us today.

MR. FOUCHEUX:  Thank you, Jerusalem.  We'll be returning to you later 
in the program.  Let's go back once again now to Tel Aviv for another 
round of questions.  Tel Aviv, go ahead please.

QUESTION:  Good afternoon.  My name is -- (inaudible) -- and I am a 
correspondent for international affairs -- (inaudible) -- the Israeli 
business newspaper.  And my question is this:  The private sector 
already said that the money is ready to invest in the area.  It was -- 
(inaudible) -- three months ago something like this.  The only 
precondition that the private sector had was a unified framework of 
regulations and laws.  This is a concern especially to the JRV projects 
between Jordan and Israel.  They have said that they are not ready to 
start investing or financing projects unless they know exactly what are 
the regulations.  Is there any progress concerning this matter?

MS. SPERO:  Well, again, it is a very important point.  Business has a 
number of prerequisites for productive investment.  One of course is 
peace and security.  Business is going to feel much better about moving 
into the region as peace spreads and as the region stabilizes.  In 
addition, as you point out, there has to be predictability.  Business 
likes as much predictability as possible, so they need to know what the 
investment laws will be, they need to know what the regulatory regime 
will be.  But, beyond that, they are going to want to know things like 
pricing policies:  What are the pricing policies going to be for 
electricity and for water and for other natural resources?

So there are several ways to approach this.  One of course is at the 
national level.  And many of the governments in the region are moving 
to modernize their laws about foreign investment -- their tax laws.  
Jordan is one example.  There is legislation now being discussed now in 
Jordan that would open up foreign investment, that would modernize the 
tax regime, and basically make Jordan much more user friendly for 
foreign and private investment.  So things can be done at the national 
level.

In addition, there is the possibility of cooperation across national 
boundaries.  And this is exactly as you mention, the Jordan Rift Valley 
dialogue that is going on between Jordan and Israel right now.  And 
that will be a major theme at the summit.  There are incredible 
possibilities in that area that range from tourism and parks in the 
Dead Sea, to electricity, water facilities, possible airports and 
transportation facilities at Eilat and Aqaba for example.  And there 
has been a recent suggestion that all that could be facilitated by 
developing a common regime, common rules of the road, for investment, 
for taxation, for cooperation.  So that would be another way to promote 
business.

Let me mention one final area where there might be cross-border 
cooperation to promote business.  Another idea that has been discussed 
is the development of industrial zones between Israel and the 
Palestinian Administration.  Those have a great appeal, because they 
could promote investment, they could encourage employment, which is a 
major issue in Gaza and the West Bank, and they would provide for 
cooperation between Israel and the Palestinians.  Again, that would be 
an example of a cross-border regime, where you would have tax rules, 
infrastructure development and regulations.  So that is yet another way 
to promote investment.  I think it is a very exciting possibility.  And 
I think, again, it will be a possibility that should and will be 
discussed in Amman.  We should be doing everything we can to promote 
appropriate national policy changes, and what I would call government 
joint ventures, wherever possible.

QUESTION:  My name is David Lipkin (ph), and I am from -- (inaudible) -
- newspaper.  You have mentioned the Gulf countries' money, that you 
want them to participate in a bank.  But there are rumors that they are 
not on the way to coming to participating in the Amman conference.  
What are you doing to have them participate in the Amman conference?

My second question is about the Middle East bank.  As we know, the 
Europeans are opposing the bank -- mostly Germans.  And now this -- 
(inaudible) -- meeting in Moscow a working committee.  What are the 
chances of you changing the European's attitudes toward the bank?

MS. SPERO:  Well, again, two good questions.  Let me comment first on 
the Gulf.  The United States has been encouraging the Gulf states to 
come -- not only have the business people come, but to have the 
government leaders come.  In addition, Jordan is taking initiatives 
vis-a-vis the Gulf states to encourage them to come.  I know that the 
foreign minister visited Saudi Arabia recently; I gather that meeting 
went quite well.  I gather there is the talk about improving diplomatic 
relations.  And that political initiative, which really is an adjunct, 
a corollary if you will to the peace process, I think will create a 
more favorable environment for business transactions.  So a number of 
us are in dialogue with the Gulf states -- both people from the region 
and from outside the region, in encouraging their participation.  So I 
am optimistic.  There was representation in Casablanca, both of the 
business sector and of government officials of the Gulf, and we are 
very hopeful that they will also come to Amman.  We have to recognize 
that there have been sensitivities in those relationships since the 
Gulf War, but we should look at Amman as an opportunity.  It is an 
opportunity to reestablish an important government and business sector 
dialogue between Jordan and the countries of the Gulf.  So I am 
optimistic about that.

Now, you also asked about sort of where are we in the Middle East 
Development Bank.  And you are very well informed:  there is a meeting 
going on, even as we speak, in Moscow.  It began today, and will go on 
tomorrow.  We really made a lot of progress in the concept of a Middle 
East Development Bank.  I want to emphasize that this was an idea that 
came from the region.  It came from the Palestinians, Egyptians, 
Jordanians and Israelis.  And that is one of the reasons that the U.S. 
has been very supportive and very responsive.  It isn't -- it hasn't 
been quite often in recent history that those four parties have gotten 
together, developed a plan, and said, "Please support us" -- it's often 
been the other way around.

So we have been working very actively with the other supporters of the 
concept of the bank, and you are right to say that a number of the 
European countries have been skeptical.  They have argued that what we 
really need is what we call a Middle East-North Africa financing 
mechanism and maybe we don't need a bank.  We have been coming closer 
and closer.  The Europeans I think are recognizing that a bank could 
provide important opportunities for financing, for mobilizing the 
private sector, that a bank does not need to be a large institution 
with marble corridors and huge bureaucracies, but that it can be lean 
and mean, it can do co-financing.  And so I think increasingly they -- 
not all of them, but many of them are becoming more responsive to the 
concept of the bank.

At the same time, we in the United States, Japan, Canada, others who 
have supported this concept, recognize that you can't start a bank 
overnight, and that what you might want to do is to start very quickly 
with some kind of financing institution or financing mechanism that 
could do feasibility studies, pre-feasibility studies, technical 
assistance as you run up to a bank.

So what I see happening is that the two concepts are gradually merging; 
and I won't say that we are there yet, but what the negotiators are 
talking about, and the experts are talking about in Moscow, is whether 
or not it is possible to merge these two efforts.  We'll see.  The 
United States really believes that we want to go ahead, if we can come 
up with a plan that suits our interests -- and that is making sure it 
is financially sound, that it is responsive to the private sector, et 
cetera, et cetera -- then we're prepared to go ahead with those 
countries that are prepared, and those that don't want to go ahead 
obviously won't go ahead.

So I remain an optimist.  We have really come a long way, but I will 
not pretend that we have bridged all the gaps yet.

QUESTION:  Good afternoon again, Ms. Undersecretary.  It's Dan Gilamon 
(sp) again, chairman of the Israeli Chamber of Commerce.  First of all, 
I would like to express to you my appreciation for our own personal 
effort and interest in the region.  I had the opportunity of listening 
to you present the Casablanca summit in Davos last January, and in 
Casablanca itself, and I value your input very, very much.

I would like to take this opportunity to address a comment made by the 
gentleman from Jerusalem, our Palestinian colleague.  And I would like 
to tell him that we at the Israeli Chamber of Commerce, and the Israeli 
private sector and business community as a whole, are very conscious of 
the need to do away with as many regulatory and other obstacles as 
possible in order to facilitate trade, joint ventures, and a normal 
business activity between ourselves and the Palestinians.  I think it 
is in both our joint interests to see the standard of living and the 
quality of life in the Palestinian Authority rise as quickly as 
possible, because I also believe the higher the standard of living the 
lower the level of violence.  And therefore I would like to offer the 
Palestinians to engage with us as quickly as possible in an ongoing 
dialogue where they will address to us the problems that they are 
facing today so that we can try and address our own government and 
other bodies in order to make it easier, more accessible, and more 
pleasant to do business together.  We have had a very, very important 
meeting in Cyprus with Palestinian business leaders and businessmen two 
weeks ago, where some of the problems were addressed, and we would like 
to continue this dialogue in order to improve the conditions for 
business so that we come to Amman as partners with feasible business 
ventures discussed between us.

And the other point I would like to make -- my Palestinian colleague 
did not mention it -- be we know it's in the air, and I would like to 
make it clear.  There was some sense -- and there is some apprehension 
I think in the Palestinian world, and maybe in the Arab world, of what 
is termed Israeli economic domination and the fear of Israeli economic 
domination.  And I welcome the chance and the opportunity to state 
unequivocally at this satellite dialogue that not only doesn't Israel 
have any aspirations or any willingness or any capacity of dominating 
anyone; we know how important it is to manifest and demonstrate that 
there is no such intention.  And, therefore, we would be very happy in 
any joint venture discussed to include any foreign partner and even to 
take a minority share just in order to make it happen and to alleviate 
any fear or suspicion that may arise.  Thank you.

MS. SPERO:  That is a very welcomed comment, and I appreciate your 
frankness in all of this.  It has been a bit of an undercurrent, as you 
said, as to whether regional cooperation isn't somehow going to mean 
that the Israelis will either have all the advantages or be dominant.  
And I think the more that you can take exactly that message that you 
have just given to your colleagues and to your potential partners -- 
not only the Palestinians -- the Jordanians, the Egyptians, Moroccans 
and others -- I think the more successful Amman will be.  So can I 
encourage you to take that message quite broadly?  I know there is no 
intent, but I know that there has been this undercurrent.  I don't know 
if our Jerusalem colleague would like to comment on that or not.

MR. FOUCHEUX:  Well, our Jerusalem post is next.  Thank you, Tel Aviv, 
for those questions and comments.  We move now back to Jerusalem for 
another series of questions and comments from our participants there.  
Please go ahead in Jerusalem.

QUESTION:  Good afternoon.  My name is -- (inaudible) -- I am a 
Palestinian -- (inaudible).  And I have two questions -- one for Dr. 
Spero and one from my good friend Mr. Dan Gilamon (sp) from Tel Aviv.  
The first question.  Ms. Spero, you are talking about free trade and 
liberal policies for economic development by encouraging investment of 
the private sector.  But we see here in Palestine the economic stakes 
are against us, by having more constraints and closures, and thus 
adding more difficulties for us, which discourages investment in our 
country, and increases unemployment, therefore adding up to more 
tension and despair.  How can the international community help to ease 
such constraints in order to help our trade and economic development?

MS. SPERO:  Well, I know this is a very big concern.  And here the 
problem we are facing is the question of security and the Israeli's 
natural, and valid, and important concern about acts of terrorism, and 
their very important need to ass much as possible protect their 
citizens from those kinds of acts of violence.  So how do we address 
that problem?  Well, several ways.  One is of course the more that the 
Palestinian administration can assure that acts of violence do not 
originate in Gaza or the West Bank, the more that we can improve the 
security and the peace situation, of course that is the fundamental way 
to improve the flow of people and of goods.

But, given the current situation, let me tell you what we in the United 
States have been doing.  We have been talking to our counterparts in 
Israel, as well as with the Palestinian administration, to see how one 
could, given the controls, make them as painless as possible.  And one 
recognizes that there is pain and there is problems -- there are 
problems created for business.  So we have been talking to the Israelis 
about increasing the number of checkpoints, about developing techniques 
so that the checkpoints are not as cumbersome, and overall trying to 
speed up the process.  We have done that not only for people, but also 
for goods, because I know that has been a major issue.

So how can you meet the valid security concerns of the Israelis while 
minimizing the disruption, recognizing that there is disruption?  In 
the longer term, as I said, the real solution is going to be peace and 
security. But there is, I would say, another approach, and that goes 
back to the industrial zones that I talked about.  One of the major 
concerns, particularly in Gaza, is employment.  And while the numbers 
have increased quite significantly from below, in terms of workers 
going from Gaza to Israel, still there is large unemployment in Gaza, 
and there is a real need to find jobs for people.  There are two ways 
to do that.  One is to do it in Gaza, and there we can think about 
business projects and opportunities that will require infrastructure 
development.  And you probably know that the United States, Europe, 
Japan and others, are spending a lot of money and a lot of time trying 
to develop the infrastructure of Gaza.

And then there is this concept that I mentioned earlier of industrial 
zones.  Those industrial zones could be opportunities for exports.  
They could be opportunities for significant employment.  They won't 
happen overnight.  But I think it is a concept well worth exploring.

So there are multiple ways.  We are engaged with the Israelis and the 
Palestinians in multiple efforts.  It won't be solved overnight.  But 
you are absolutely right:  It is a problem that we must address.

QUESTION:  My second question is to Mr. Dan Gilamon (sp).  As you know, 
Mr. Gilamon (sp), here in Palestine we need all business opportunities 
and commerce and trade opportunities to add up to employment 
opportunities and job creation.  One of the difficulties we have with 
the Israeli business community is they don't want to let go their 
franchises and agencies for the West Bank and Gaza.  I am very happy to 
hear that the Israeli business community is interested to help us and 
to cooperate with us.  Why then they don't realize the new fact that 
Palestine now is a new entity, that we are creating our own separate 
economy, that we are after economic development not only for our own 
sake, but also for the sake of the Israelis -- to have peaceful 
neighbors for them, to have economic development in our countries? And 
one of the most immediate jobs is to give back these franchises for the 
globals and multinationals which we have been struggling for the last 
two years to get it back.  Why -- what do you think you can do to help 
us convince our Israeli friends that for the West Bank and Gaza they 
should not object to us getting these franchises and agencies back in 
order to start working here and create new jobs for our unemployed 
people?

MS. SPERO:  I think it was directed at Tel Aviv.

MR. FOUCHEUX:  Mike, if we could switch back to Tel Aviv briefly -- the 
question was for Mr. Dan Gilamon (sp), and I am sure that he was 
listening in Tel Aviv, and perhaps he has an answer for our friend in 
Jerusalem.  Can we bring Tel Aviv --

QUESTION:  Good afternoon, Danny, and I was listening very carefully, 
and it's not the first time that I hear Mr. Esah (ph), my good friend 
Daniel Esah (ph), mention this problem.  And I share with him the 
feeling that possibly the quickest and maybe easiest thing to do, 
rather than set up factories or joint ventures, is to try and establish 
retailing and marketing and franchising outlets for international and 
multinational companies.  And I think that there are really two answers 
to that.

One is that ultimately the answer lies with the multinationals and the 
international companies themselves.  It is very much up to them who 
they want to represent them in a certain region, who they want their 
agent or their franchisee to be; and it is ultimately a matter for 
dialogue or for negotiation between the person in Gaza or in Ramallah 
or in -- (inaudible) -- or in Tel Aviv with his principal.

But beyond that, so as not to sound naive, I realize that there is a 
lot of scope for discussion and cooperation between Israelis and 
Palestinians also in this regard, and I believe that the answer 
ultimately lies not only in deciding whether it will be a Palestinian 
or an Israeli who will be the agent or the representative for the 
region, but rather to try where possible -- and we are all businessmen, 
and we try to achieve things that are possible and make business sense 
-- to embark on joint ventures in this very sector, to try to bring 
together people who either have the franchise or aspire to have it, and 
to try to see whether there is a way of having a joint venture whereby 
the franchise for the entire region will be jointly held by an Israeli 
and a Palestinian, maybe with some kind of market segmentation.  This 
is something which we have suggested before.  And I would very much 
welcome a meeting between anyone -- and obviously Mr. Esah (ph) 
himself, but others as well, and Israeli agents and representatives, to 
try and see how we can reach some kind of accommodation which would be 
based on understanding and cooperation rather than dispute and 
competition.  I think the key word ultimately will be "coop-petition" -
- cooperating while competing.  Thank you.

MR. FOUCHEUX:  Thank you very much, Mr. Gilamon (sp), and thank you in 
Palestine.  I must say it's gratifying to be part of a dialogue between 
the two cities, at least technologically.  Let us return once again to 
Jerusalem for more questions or comments for our guest, Ms. Joan Spero.  
Please go ahead once again in Jerusalem.

QUESTION:  (Inaudible) -- Hebron Chamber of Commerce.  Dr. Spero, as 
Palestinian entrepreneurs since Casablanca till now, we haven't seen on 
the ground any practical enterprises.  When shall we see it looks like 
these practical enterprises will be active on the ground.  Should Amman 
forum (seek ?) to overcome this problem?  Second, all parties visiting 
our chambers of commerce are intending to establish joint ventures -- 
they are assuring to us that they have political assurance to them 
through us to act in their enterprises.  How can we overcome this 
problem?  Thank you.

MS. SPERO:  Well, the desert, or the Middle East, will not bloom 
overnight.  Developing joint ventures, developing projects, be they 
small or large, will take time.  And I don't think we should kid 
ourselves that somehow overnight everything is going to change.  The 
example Mr. Gilamon (sp) gave about the lingering suspicion, that 
Israel might try to dominate the region economically, is an example of 
the kind of psychological concerns that continue and that are 
understandable after decades of conflict in the region.  In addition, 
concerns about security -- I would assume that Hebron is one of the 
areas where there is significant concern -- will continue to be very 
much in play.  So we shouldn't kid ourselves that all of a sudden by 
signing a peace agreement, or by having a teleconference, or frankly 
even by an Amman summit, everything is going to change overnight.  So 
we have to be realistic.

At the same time, there are several important things going on.  As I 
said, for Gaza and the West Bank, the so-called donors group -- the 
United States, Europe, Japan and others -- are working very hard at 
developing the infrastructure that will set the basis for development -
- working on sewage, working on roads, working on water.  All of those 
are prerequisites for investment.  At the same time, as we move along 
on that effort, we are also trying to encourage the process of private 
sector development.  Now, we have a saying in the United States -- I 
don't know how it works in the Middle East -- which is, you can lead a 
horse to water, but you can't make it drink.  So we are trying to lead 
the horse to water, and we can do that in a variety of ways.  We can 
try to develop the Middle East Development Bank, which will be for the 
private sector and for regional projects.  We can have the summit in 
Amman, as we had the summit -- not we, but the region did, in 
Casablanca -- to try to create opportunities for business people to 
come together. I look at this as not only an opportunity for encounter 
and for networking, as Mr. Gilamon (ph) put it, but also for marketing.  
It's an opportunity for the Middle East to tell the rest of the world 
that we are open for business.

So we can also find other ways to encourage the private sector.  The 
United States has just established a $250 million fund -- our Overseas 
Private Investment Corp., which will guarantee investments in the 
Middle East against political and other risks, and which will provide 
certain financing for the Middle East.  So that is why we are calling 
Amman a public-private sector partnership.  Government has a role to 
play; the private sector has a role to play.  We have to start the 
process.  But we shouldn't kid ourselves in thinking that everything is 
going to change overnight.  But, as we also say in the United States, a 
long journey begins with one step.

MR. FOUCHEUX:  Thank you very much in Jerusalem.  Let's return once 
again to our participants standing by in Casablanca for another round 
of questions there.  Please go ahead in Casablanca.

QUESTION:  Hello, I am -- (inaudible) -- a weekly newspaper in 
Casablanca. And I live with the experience of free trade in the Middle 
East, as I publish the daily newspaper of the Casablanca conference 
with an Israeli newspaper, a major one, which is Ha'aretz.  So I had 
the opportunity to live this experience as it was -- (inaudible).  But 
now I share the feeling of the president of the Chamber of Commerce of 
Israel.  I lived this big hope, and now I am living with a lot of 
skepticism, because we also -- all the people, all the Arabs, all the 
Europeans, all the Americans, all the Israelis who were in Casablanca, 
saw a lot of projects, a lot of ideas raising up, and now we don't see 
anything moving on.  I take the political -- the politicians and the 
states responsible for that, because -- and my question is to Ms. Spero 
-- because a lot of states provide a lot of things, especially money.  
And you know if you don't give money, if you don't put money on the 
table, you won't have anything, because you have all areas in the 
Middle East, and you will not have free trade if you have very poor 
areas -- the Gaza Strip and the Palestinian territories.  And there is 
no bank.  Everybody promised money for the bank, because a bank is the 
main tool of free trade and development.  And nothing is done.  So I am 
afraid that the Amman conference will be again just a conference for -- 
a political conference to say, Hey, we are here -- we want to do 
something, so push the peace process.

My other question is for the president of the Israeli Chamber of 
Commerce.  I would like to know if he is convinced he can set up free 
trade with the Palestinians and with Arab countries, knowing that the 
Israeli economy is very strong, he is close to Europe, and Arab 
territories are poor, and Jordan is poor, Egypt is poor, and their 
industries are very weak.  Do you think that you will build free trade 
with unbalanced economies?

MS. SPERO:  Shall I start first, Mr. Gilamon (sp)?  I think I disagree 
with you.  I agree with you in your point that there was great hope 
after Casablanca, and that we haven't seen many projects, we haven't 
seen as much action as we would like.  As I tried to describe in my 
opening remarks, as well as in my comments, we in the United States and 
the other sponsors of the Amman summit are trying to make it much more 
business focused, business friendly, oriented toward the practical 
business of doing business.  And that Casablanca was a landmark, but it 
was a landmark because Arabs and Israelis -- people from all over the 
Middle East, government and private sector, came together.  Now, as you 
said very clearly, in Amman people are looking for results -- business 
people want results.  And we are doing our best to try to assure that 
those results will come about.  So I agree with you on that.

Let me tell you where I disagree with you.  I disagree with you in what 
I think was implied that somehow governments have all the answers to 
this, and what governments need to do is to put a lot of money into the 
Middle East.  Frankly that is not going to happen, and that is not the 
answer that should happen.  There is significant funding going to the 
Middle East now, from the United States and other developed countries.  
But I think it is unrealistic to expect that we are going to be able to 
persuade our legislatures, our congresses, and our people, to use 
public funds for development in the Middle East and North Africa.  We 
will continue to try to find ways to leverage our funds; but you in the 
Middle East need to understand that we have needs at home, and there is 
not a feeling that we should or can provide massive new flows.  Now, 
that's maybe the bad news.

The good news is that what we know from the history of economic 
development is that's not the way countries develop.  What governments 
need to do are two things.  First of all, governments need to get out 
of the way. Governments need to open up their markets.  They need to -- 
and that is something that we can do.  I know that Morocco for example 
is now engaged in trade negotiations with Europe.  You have a very 
critical market in Europe, and you're talking about how to open up that 
market more for your product. So that's one thing our governments can 
do.  Another thing your governments can do is to move toward this 
deregulation, privatization; and, again, I know that it is happening in 
Morocco.  So governments need not to get in the way; governments need 
to get out of the way.

Now, finally, the other thing that governments can do is to try to 
provide finance in those areas where the private sector will not do 
financing, or to try to provide incentives for the private sector to 
act. That is the idea of the Middle East Development Bank.  That is the 
idea of our OPIC, which guarantees private sector investment against 
political risk - - and there is political risk in the Middle East.  
That is the whole idea of the Amman conference.

So I think you have to decide what development works.  All the history 
shows us, all the economic analysis shows us, that large government 
projects funded by large government institutions and foreign aid, are 
not what create development.  And that is why the focus of the Amman 
summit is on the private-public sector partnership.

QUESTION:  I will try to keep my answer very short, so as to avoid the 
accusation of Israeli air time domination.  But I would like to say two 
things.  Firstly, I do believe that the answer to real economic 
cooperation in the region is in creating one economic entity between 
Israel, the Palestinians, and at least Jordan for totally free movement 
of goods, services, manpower, and capital.  It's a bit early to talk 
about an economic market of the Middle East, but I think least these 
three countries should enjoy totally free trade and free access.  And 
the other thing is that I would urge both the United States and the 
European Union to try to grant the Palestinians and the Jordanians, at 
least for the time being, the same market access and the same benefits 
that they give Israel in its free trade agreement, and to give the same 
kind of benefits to products that will come out of the industrial zones 
which are being discussed.  Thank you.

MR. FOUCHEUX:  Thank you again, Mr. Gilamon (sp), in Tel Aviv.  And we 
return finally to Casablanca once again for a final question from our 
participants there.  Please go ahead again in Casablanca.

QUESTION:  Okay, hello, I am -- (inaudible) -- economic news magazine 
and Moroccan TV.  I heard in the beginning you talking about the region 
of prosperity -- we were talking in the presentation about the Middle 
East and not Africa.  You answered to my colleague, the economist in 
Morocco, about negotiations which are engaged from Europe with Morocco, 
and I want to have your point of view about the -- (inaudible).  We 
talked a lot about the Middle East-North Africa, and I think personally 
that Europe has to act a lot for peace in this area, and we feel that 
the U.S.A. wants to act in this way, but that Europe doesn't enough, 
particularly in free trade.  And Morocco is not the only country who is 
concerned.  I think this whole zone is concerned.  And in this way we 
can -- (inaudible) -- to co-prosperity area, co-prosperity zones for 
peace and co-development.

MS. SPERO:  You're right in saying that Europe can and should play an 
important role. I must say that we have been working very closely with 
the Europeans in aid to the Palestinians, and I want to be sure that we 
are on the record as saying that the Europeans, both at a national 
level and at an EU level, have been quite generous.  So they are major 
donors to the region.

As you probably know, Europe is not only negotiating a number of trade 
agreements throughout the region -- they are going to begin 
negotiations with Egypt, I understand.  You have had ongoing 
negotiations with them.  So there is an opportunity for them also to 
provide a market.  And there are a lot of difficult issues, as you know 
-- agricultural concerns, smaller manufacturing -- these are tough 
issues that are going to have to be worked out.  We hope that Europe 
will be open for the markets, for the products of the Middle East.

And then finally I should add the European Union is looking toward a 
Mediterranean policy.  There will be a meeting in Barcelona later this 
year -- I believe in December -- where the Europeans and people from 
the Mediterranean countries, which really is the Middle East and North 
Africa -- will be getting together to talk about how they can build a 
more prosperous Mediterranean.  So I believe that Europe is looking to 
the Mediterranean.  I believe that there are opportunities for trade. I 
believe there has been assistance.  As you know, there are long-
standing ties -- Morocco and France, for example.  I note that your 
colleagues seems to have a French-language publication.  So there are 
very close ties there, and Europe can and should -- and I must say is 
playing a role already in the Middle East.

MR. FOUCHEUX:  And as we end today's program I would like to thank once 
again Undersecretary of State Joan Spero for being with us.  Some 
important issues, and we appreciate your time.  And our thanks as well 
to all of our friends in Tel Aviv, Jerusalem, and Casablanca, for their 
part in an interesting discussion.

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