September 16, 2001 No. 4

The Peaceful Development of the Golan Heights

September 16, 2001 | By Dr. Nimrod Raphaeli*
No. 4


The Peaceful Development of the Golan Heights

At a time when peace between Israel and Syria seems so remote, it is encouraging to note that some optimism still prevails. The following is an excerpt from an internal World Bank document written three years ago by an Arab economist and international water expert. The document underlines the environmental and economic potential inherent in the peaceful development of the Golan Heights.

"…the plateau is a unique and important world heritage. The Golan Heights is the home of the three important springs which form the Jordan River. The Dan Spring is located in Israel proper, the Hasbani Spring is west of the plateau and runs through the Druze area of Syria. The Golan is also the heart of the watershed of the Yarmuk River, which forms the boundaries between Syria and Jordan and the only remaining hope to solve the water problem of the Jordan Valley at least for the short run."

"The plateau is the center of origin for the Mediterranean agriculture and has made historical contributions to our civilization for more than ten thousand years. The region is the original home of most domesticated temperate grains, including the domesticated wheat, barley, lentil, chickpea, several vegetables and fruit trees, especially olives, figs, and almonds and several forest trees and shrubs. Some of the earliest known varieties were cultivated in the region, and form a unique asset for the world stock of plant genetic resources."

"With [external funds]…, a portion of the plateau (about 20%) could be developed into an international peace park for the conservation of bio-diversity, could protect the head water of the Jordan and the Yarmouk River and rehabilitate the watershed and its wild life which dominated the region in each generation."

"…For the Syrians, the benefits… would include the growth in tourism, and investment in infrastructure in the Druze community which has suffered and its families split between Israel and Syria since 1948, and the general economic development of the Southern region of Syria. Syria will be the center of an important scientific effort to conserve, study and share important genetic assets and environmental resources of value to mankind."

"For Israel, the benefits would include the environmental protection of the precious sources of water supplying the head of the Jordan and Yarmouk rivers, including the development of the ravaged watershed surrounding Mount Hermon, and the development of an international center for water and environmental research and development. Currently, only 10% of the total annual rain is absorbed into the land of the Plateau and 9% flows on the surface and forms wadis [ravines] and streams. The development and efficient management of the watershed could double the amount of water (about 150 million M3) which feeds the underground aquatic reservoir and the surface run off (about 135 million M3) which follows into the river bed and wadis."

Special News: LEBANON

Lebanon: Economic Collapse Unless Political Understanding is Reached

High-level international economic sources were quoted to the effect that, as a result of widespread arrests among Christians opposed to Syrian presence in Lebanon, the country could face economic collapse. They were also quoted as saying that the Central Bank will lack the resources in the long-term to continue to support the Lebanese lira which has come under considerable pressure in the last two weeks.

Other Economic News


Largest White Cement Factory Opens in Sinai

The largest white cement factory in the world, built in Sinai, has begun production this week. It will produce 410,000 tons of white cement annually.
Source: al-Ahram, September 4, 2001.

Smuggling Threatens National Industry

In Cairo and Alexandria, authorities confiscated a large quantity of garments suspected to be of foreign origin. The Minister of Interior warned against the dumping of smuggled Chinese garments that threatens national industry.
Source: al-Hayat, September 3, 2001.

President of Egypt Air Denies Buying Israeli Spare Parts

The President of Egypt Air explained that most of his orders are placed primarily with American companies (and some European companies) who use some spare parts of Israeli origin. He added that Egyptian markets are full of imported American and European goods of Israeli origin.
Source: al-Hayat, August 31, 2001.


Iran Accuses US of Fanning Iran/Azerbaijan Tension

Iran accused the United States of fanning tension between Iran and Azerbaijan over their territorial dispute in the Caspian Sea by supporting the Azerbaijani side. Iran has threatened to use force to expel Azerbaijani ships from disputed Caspian waters.
Source: Middle East Economic Survey, August 20, 2001.


Oil Prices not Satisfactory

Iraqi Minister of Oil Amer Muhammad Rashid described current oil prices as unsatisfactory and not meeting the aspirations of the producing countries. He expects prices to firm up because of the approaching winter season and corresponding increase in demand. Under OPEC rules, when the price of oil falls below $22 per barrel for 10 consecutive days, the organization reduces its production by 500,000 b/d. If the price increases above $28 per barrel for 20 consecutive days, it increases production by 500,000 b/d.
Source: al-Thawrah, September 4, 2001.

New Large Finds of Oil and Gas

Dr. Albdul-Rahman al-Jabouri, head of the Oil, Energy and Mines Committee revealed that his country has already discovered huge quantities of oil and gas in the western desert while on-going explorations continue. He said the finds "will strengthen Iraqi political position and change the balance of power in the region."
Source: al-Ittihad, September 6, 2001.

Iraqi-Syrian Relations – Another Perspective

Last week this report devoted its special focus to "Iraqi-Syrian Relations." Abdul-Rahim al-Rahimi, an Iraqi writer residing in London, adds an interesting dimension to Iraq's eagerness for rapprochement with Syria. He emphasizes Iraq's "ambition" and its "attempts to embroil Syria in a comprehensive war with Israel…" It is the Iraqi regime's belief that such a war will end its isolation by making it appear as "a hero" if the war achieves "unexpected victory" but if the war ends in defeat the regime would say "we are not the only defeated ruler amongst you!"
Source: al-Hayat, August 31, 2001.


French Company (Vivendi) to Build Desalination Plant in Israel

Vivendi announced in Paris that a consortium of companies, including a subsidiary, Vivendi Waters, and two Israeli companies has won a tender to build a desalination plant in Ashkelon, Israel and with it the right to sell the water for 25 years. The plant will desalinate 50 million M3 annually, sufficient to satisfy the needs of a city of 700,000 people.
Source: Asharq Alawsat, September 6, 2001.


Kuwait to Liquidate Investments in Jordan

The Kuwaiti Investments Authority plans to liquidate its investments in Jordanian banks and businesses as part of its plan to restructure itself.
Source: al-Hayat, September 2, 2001.


Qaddafi Freezes the Expenditure of Petroleum Revenues

On the 30th anniversary of the Libyan coup d'etat,Muammar Qaddafi launched a strong offensive on corruption, threatening "arrests and executions" of those involved in it or those acquiring illicit wealth. He proposed to keep oil revenues frozen until he ascertains that "they will be [used] for the public good." He added: "Everyone of us has enough clothing and food to use until we reach an understanding on the utilization of the petroleum wealth."
Source: al-Hayat, September 3, 2001.


Loss of Palestinian Economy Estimated at $7 Billion

A PA Ministry of Finance official stated that the direct and indirect losses to the Palestinian economy during the first year of the Intifada stood at $7 billion. At the same time, the budget deficit has reached $371 million. The biggest losses were sustained by industry, facilities, tourism and agriculture. The average daily loss is estimated at $20 million.

With regard to the flow of foreign contributions, the official said that the total payments made by the Islamic Bank (which keeps a trust fund for Arab contributions to the Intifada) were $425 million, or $45,000 a month. Of this amount, $30,000 goes to the payment of salaries and $15,000 in support of the PA administration. Because of the Intifada fund, others donors have ceased making contributions with the exception of the European Union which advances the PA 10 million Euros per month (approximately $9 million).

The Israeli Government has refused to reimburse the PA tax rebates that have accumulated to $800 million. Israel wants to use the unpaid rebates to compensate Israeli victims of the Intifada.
Source: al-Ayyam, September 2, 2001.

Palestinian Economist Offers A Strategy for Action

Professor Khaled abu-Qumsan offers a short, and long-term, strategy to deal with the Palestinian economy which is facing a major collapse. In the short-term, the economic policy should preserve whatever accomplishments were made and introduce a new policy to address unemployment which has reached more than 50% of the labor force. He proposed that no cash payments should be made to the unemployed. Rather, they should be incorporated into rebuilding what was destroyed by the Israeli military. Local banks should expedite their loans procedures, particularly to the productive sectors.

In the long-term, the strategy should strengthen transparency, improve government administration, diversify the sources of income, focus on infrastructure projects (particularly the construction of a new power plant), and complete the programs for industrial parks.
Source: al-Hayat al-Jadeedah, August 30, 2001.

Arafat Orders Financial Assistance to Workers

Chairman Arafat issued a presidential decree providing for special grants to 21,000 workers in Nablus who have been hurt by the Israeli blockade. The assistance will consist of 500 shekel ($120) a month, retroactive from July. The Secretary General of Labor Unions called on those working directly at PA or one of its security branches not to register to receive the special grant (it was discovered previously that 250 out of 1500 who registered to receive the grants are employed by various government agencies).
Source: al-Hayat al-Jadeedah, September 6, 2001.


25.3% share of Agricultural Sector in GDP

In his opening statement at the joint Syrian-French symposium on "Cooperation in Agricultural Research," Syrian Prime Minister Dr. Mustafa Miro declared that the share of the agricultural sector in Syria's gross domestic product (GDP) was 25.3%. The Prime Minister underlined the problems of desertification and draught in Syria and indicated a daily shortage of about 356,000 M3 in drinking water.
Source: al-Hayat, September 3, 2001.

Syria Will Introduce VAT

In an effort to reform a complex tax system, the Ministry of Finance is proposing to introduce a uniform tax in the form of a value added tax (VAT). The introduction of VAT will compensate for the gradual reduction in custom duties (18-20% of revenues) as a result of Syria joining free trade agreement zones.
Source: al-Thawrah, September 4, 2001.

Syria Studies Two New Networks to Carry Iraqi Gas

Syria is considering the construction of two networks at a cost of $196 million to import Iraqi gas for the next 20 years, starting with the completion of the project in 2005. According to a tentative agreement with Iraq, Syria will import 6 million M3 daily through the first 5 years of the project rising to 12 million M3 daily later. However, the feasibility study shows that unless there is considerable increase in the consumption of gas in Syria, which currently stands at 1 million M3 daily, Syria will have to export the surplus gas. Syria considers the project strategically important because it will ensure the supply of future energy, particularly electricity, as well as for the production of petrochemicals.
Source: Asharq Alawsat, September 6, 2001.


Turkish Delegation in Baghdad to Discuss Pipeline for Natural Gas

A Turkish delegation visited Baghdad last week to discuss the construction of a gas pipeline connecting the two countries and, eventually, extending to the European gas pipeline. The story about the proposed pipeline goes back to an agreement signed by Iraq and Turkey in 1997 for the construction of such a pipeline. However, the construction had never started because the UN Sanctions Committee refused to authorize the purchase of certain pipeline equipment (It is not clear whether the Sanctions Committee has changed its stand). The cost of the pipeline is estimated at 2.5 billion with a capacity to carry 10 billion M3 a year. It will draw gas from five fields in Iraq with an estimated reservoir of 270 billion M3. At the same time, a delegation of 150 Turkish businessmen arrived in Baghdad on a direct flight from Ankara on board Turkish Airways to discuss business initiatives and opportunities.

These visits are taking place at a time when the Turkish Army has made deep incursions into Northern Iraq for a "search and destroy" mission against Kurdish rebels.
Sources: al-Quds, September 2, 2001; Asharq Alawsat, September 2, 2001; al-Hayat, September 2, 2001.

Globalization in the Arab World

In a speech at the al Ahram Foundation early this week, Mahmoud Ayub, the World Bank's special representative in Egypt, called on industrialized countries to reduce protectionist measures on the exports of developing countries. However, he told his audience that countries which have followed globalization have reduced custom duties by 34% compared with 10% reduction in countries which have not adopted globalization. The Secretary General of the Economic Unity Council pointed out that Arab investments abroad have exceed both local and foreign investments in the Arab countries. He called on Arab countries to cooperate with each other to face the challenges of globalization. He further called on Arab countries to improve the investment climate to attract foreign capital in order to deal with the unemployment of 10 million people, including 60% educated.
Source: al-Ahram, September 6, 2001.

*Dr. Nimrod Raphaeli is Senior Analyst of MEMRI’s Middle East Economic Studies Program.

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