Speech by H.E. President Yassir Arafat
To the Consultative Group
Frankfurt, Germany
5 February 1999

My dear friend Dr. Kemal Dervis , Chairman of this CG

Distinguished Participants,

Dear friends,

Ladies and Gentlemen,

Allow me, at the beginning, to express my thanks to the German government, as holder of EU presidency and the principal European participant and host to this important meeting. This meeting brings together a distinguished gathering of representatives of countries present here to reaffirm their own, and the international community’s, support of the Palestinian people, in the process of rebuilding Palestine, and in their continuous quest to achieve a just, lasting and comprehensive peace not only in our unstable region, but also in the whole world.

Allow me also to give a special thanks to the World Bank, to its president Mr. James Wolfensohn, and to Dr. Kemal Dervis for the excellent work they have doing over the years in the development of the Palestinian society.

Allow me also to extend my gratitude to the Government of Norway, co-chairman of this meeting, which endeavoured tirelessly to ensure continuous support for our Palestinian people, and for the peace process, through its dedicated chairmanship of the Aid Coordination Process from the beginning. I would also like to express my thanks to 91 all friendly countries who supported us, especially the United States, Japan, Russia, China, countries of the non-aligned movement, and the Arab countries.

Mr. Chairman

Dear Friends

We meet here in the heart of Europe in one of its major financial and economic capitals, Frankfurt, to continue the important work that was begin in Washington on the 30^th of November last year, by cordial invitation of H.E. President Bill Clinton and hosted by the American government. The conference, which set out to offer support to the Palestinian people in the building of their economy, following the success at Wye River, a conference that cleared the way for the resumption of the peace process between ourselves and the present Israeli government. You all attended the Washington conference, and committed yourselves to the donation of over 3 billion US dollars. Adding this amount to the aid pending from the amount you committed yourselves to in the last five years, the total would be sufficient to fund the ambitious plan we presented to you yesterday for developing the Palestinian economy in the next five years.

I truly cannot but express my thanks and gratitude to all of you, for what you have disbursed in the past, pledged future, and to what commitments you may add in this important meeting.

You have generously participated in lifting the suffering off our people, who have endured many decades of hardship and occupation. Your support had a tangible effect during the past five years, shown in our ability to establish institutions, and to build the infrastructure that was destroyed by the occupation. We have also established a modem governmental system and the foundations for a modem economy. Your support also contributed to the Palestinians' steadfastness and ability to continue pursuing the peace process for the benefit of the Palestinian and the Israeli peoples, the Middle East and the entire world. Security, stability and peace are vital factors for the achievement of economic prosperity, but they also require a successful, effective economy as a real foundation for the achievement of security and peace. It is not possible to imagine the success of our striving for peace without the two together: politics and economics.

Mr. Chairman,

Dear Friends,

I am honored to address you in this important meeting. I feel confident that at the end we will succeed in our noble endeavour to achieve a lasting and just peace in our region, by working with our Israeli neighbours to create this mutual peace that will undoubtedly result in prosperity for our two peoples. Our optimism, in spite of all the difficulties facing us, is based on the evidence provided by all opinion polls carried out. These polls have shown that the vast majority of Palestinians and Israelis still believe in peace as the sole strategic option to realize the dreams and ambitions of the two peoples' children, men and women. We are aware that striving for peace is a difficult and strenuous matter, but the difficulties found in a hundred days of negotiations are a hundred times better than the violent confrontation and bloody conflict of one day. I assure you that despite all the difficulties we are facing due to the suspension of negotiations and delays in the implementation of commitments, we still reaffirm our total commitment to all signed agreements. We will not permit anyone to go back from the road of peace which we consider a strategic option for 91 our people, and we will do all in our power to oppose and outlaw all those who call for violence, extremism and terrorism. We also extend our hands in cooperation to all who dedicatedly work for the success of peace through real partnership, mutual respect, the conducting of negotiations based on good intentions, and the accurate implementation of and commitment to all that is agreed upon.

Whoever chooses to look at the half-filled cup shall see a nation in the process of rebuilding its country on its own land, and achieving in under five years many feats that would have seemed unattainable. You have all undoubtedly participated in realizing those achievements, and for that you have our deep gratitude and appreciation.

We began a march, step by step, towards the realization of freedom and self-determination for our people on our holy land. Through a process of free, inclusive and direct elections we set in motion a process of establishing a democratic government with an elected president and parliament. In record time we established private and public sector institutions, and a civil society. We built many schools, institutes, hospitals, banks, ministries, factories, farms, scientific and technological research institutes. Political parties were formed, as well as public associations, law and security institutions, planning and monitoring committees geared towards the implementation of the rule of law through pluralism, participation, and ongoing self-improvement in order to ensure citizens' rights.

Many of you have participated in the construction and inauguration of the Gaza international airport, and will soon take part in the construction of our seaport. Factories have started functioning at the Gaza Industrial Zone, while Bethlehem looks like a huge workshop busy day and night preparing the city for Christmas celebrations later this year. It will be an event which the whole World will celebrate with us, commemorating the end of two thousand years since the birth of Jesus Christ.

As a result of your financial support we were able to re-build and rehabilitate our country's electricity and water networks, and to establish waste water purification plants to enable the water to be reused in the major cities of the West Bank and Gaza Strip. New roads were built, most notably in Gaza and West Bank cities, local and rural institutions were developed 'm addition to the erection of numerous schools, hospitals and public clinics.

We began all of the above from scratch, in a homeland that saw the building of not one school or hospital in the thirty years of occupation, except what UNRWA provided in the refugee camps. We were heirs to ruined roads and a railway system whose rails were pulled out; no seaport, airport or window to the world; a limited piece of land; and a scant water supply. Yet, with your backing, we have laid, with shining hope and optimism, a firm foundation for a better tomorrow for our neighbours and ourselves.

We have travelled a long way to arrive at our present situation, and the world stood with us, supervising and supporting us as a success story in the achievement of freedom, peace, and a historic reconciliation between the Palestinian and Israeli peoples, to attain a just, comprehensive and lastingpeace in the Middle East. It is vital, here, that I bring to mind Mr. Yitzhak Rabin, my partner in creating the peace of the brave, for which he paid his life. I would also like to mention my second partner Mr. Shimon Peres who continues to exert

dedicated efforts to make peace between our two nations.

Mr. Chairman,

Honored members,

Friends,

This is not the place for complaining and agonizing, and yet, besides our optimism and our numbering of achievements, we cannot but put before you the challenges and difficulties that face us. The past five years have seen severe complications and difficulties that have managed to exacerbate the suffering of the Palestinian people. It form you that in spite of all the achievements that I grieves me to in have mentioned the Palestinian economy has suffered a continuous decline in areas such as income, private consumption, private investment, and employment over the past five years. Our current budget deficit has continued, while the size of the civil service has grown in an effort to create compensatory job opportunities to ease the severity of the serious unemployment problem caused by the policy of closure. This policy has cost us over 10 million dollars a day, according to international reports.

I hope that you can all differentiate between the two types of closure we are subject to: The first is the temporary comprehensive closure that the Israeli forces impose following a particular military or terrorist operation. Such acts have been greatly reduced due to the vigilance and care taken by our security forces as well as their cooperation with Israeli, American and European security organizations. Added to that is the improvement of their levels of competence through training and the acquisition of experience thanks to your help and the passage of time. The second type of closure, however, is the ever-present Israeli policy of restriction and constraints.

It is precisely this pervasive system of restrictions on freedom of movements to persons and goods that I refer to here. This policy is being imposed by the Israeli government on our borders with Israel, between the two parts of our homeland, the West Bank and Gaza, and between ourselves and our Egyptian and Jordanian neighbours, regardless of whether there has been any security operations or not. There are, in addition, oppressive restrictions being placed on our utilization of land resources classified as Area C, and water resources whether of the River Jordan, aquifers, or anywhere else. You have all endured with us these restrictions when implementing various types of projects. While million-dollar ring roads criss-cross our land to connect settlements together, swallowing up thousands of kilometres squared in the process, we are unable to simply build a road linking together two West Bank villages, not to mention cities.

I invite you to witness for yourselves the consequences of this system on the ground. We are unable to install between our cities and villages electricity cables, water pipes, sewage treatment or waste water purification plants. It is impossible to drill for wells, construct industrial zones, build a seaport or expand the airport without Israeli agreement that requires years of despotic procrastination, prohibition and pomposity.

A Palestinian may spend years applying for a license to build on his own land. If, tired of the delay, he went ahead and constructed a home for his family, the Israeli occupation authority proceeds to demolish the place. On the same piece of land, though, Israeli settlements are erected within months, swallowing up Palestinians' land with no right of appeal, no restrictions, conditions or sense of sharing. A farmer or manufacturer in Gaza cannot sell his products in the West Bank, and the West Bank producer has no opportunity to reach the Gazan market. You may not be aware that a million Gazans are denied prayer in either AI-Aqsa mosque or the Church of the Holy Sepulchre in Jerusalem. It is as if we are in the cities and villages of the Addle Ages within warring principalities, and not one nation in a single homeland involved in a peace process with our neighbours. It is not feasible, ladies and gentlemen, to build an economy in such an environment of siege, restriction, prohibition, and land expropriation. What magnifies the pain and suffering is that we are a multi-talented and able people who have achieved our continuity, even while displaced, by the acquisition of knowledge and experience, and the building of institutions, as well as practicing free trade and encouraging individual initiative. We have a government committed to freedom of trade and the free market system and individual initiative. It is a government that perceives its role as builder of the infrastructure, schools and institutes, and in ensuring a suitable environment for the success of the private sector in the development of production. The Palestinian Authority has signed an association agreement with the European Union and EFTA countries, as well as free trade agreements with the United States, Canada, Jordan, Egypt and others, in order to realize free trade and free passage opportunities. We are unable, however, to achieve such freedom due to the ongoing and pervasive policy of restrictions imposed by the Israeli government, five years on from the start of the peace process.

Mr. Chairman,

Dear Friends,

I beg your pardon for what I was obliged to elucidate above, and I add that it would have been possible, within those past five years, to have completed implementation of the political agreement that was born in Oslo, and signed 'm Washington. That agreement had stipulated the termination of all final status negotiations, as well as the implementation of all the requirements of the interim period, prior to 4^th May 1999, a matter of weeks from now. It would have been our obligation to present you at this meeting with the economic plan for lasting and comprehensive peace. You are all aware, however, how negotiations have been stalled and commitments postponed. Even the implementation of the Wye River Memorandum, achieved in late 1998 with great assistance from the American President Bill Clinton, and tireless involvement of his Majesty King Hussein - for whom we all pray for his life today - has been delayed. Their purpose was to counteract previous delays and speed implementation so that we may be in time for that momentous promised date, when we would have completed all the provisions of the agreement, as well as the creation of our independent Palestinian state.

In spite of all this, we continue to be committed to the peace process, to sustainable development, security and stability. Added to that is what is even more important: the continuity of the historic reconciliation between the Palestinian and Israeli peoples.

Yesterday, you had the opportunity to looked at our new and ambitious five-year development plan. This Plan puts forward projects worth 4.5 billion US dollars, each exemplified by flexibility and the aspiration for a peaceful future, with a serious and studied construction of institutions, development of the physical and social infrastructures, and support of the industrial, agricultural, tourism, trade, and service industries of the productive private sector.

This is no short-term rehabilitation and renovation plan, but one that is long-term and aims to effect the change from a stagnant economy to a productive and exporting economy; one that develops technologies and human resources, creates a surplus that allows the most needy to benefit from social welfare programs, and preserves the environment for future generations. This is the economy of peace, one that achieves freedom and independence, in addition to cooperation and association with our neighbours.

The development of this plan coincided with numerous procedures to institute better management of our current revenues and expenditures, as part of the general budget for 1999 together with the five-year development plan. We have brought in many laws to guide the work and ensure the finest planning, control and accoprocedures. These laws will also create an environment suited to the development of the private sector. That is why, dear friends, we are in need of your continuing support.

We would like you to accelerate the implementation of the projects you have committed yourselves to, both in the past and the future.

We would like you to stand by us in the Aid Coordination Process, where the AIHLC stands at the forefront, in order to continue follow-up of the Tri-Partite Action Plan (TAP), and to ensure speedy and successful implementation of agreed projects.

We would like your support in our effort to end the policy of restrictions and impediments imposed on our borders, land and water resources, and economy, so that we may build an economy capable of creating employment, development, and prosperity for our people, as well as safeguarding peace.

And, finally, we are always in need of your assistance to realize a lasting and comprehensive peace, freedom and independence for our people, and coexistence with our neighbours, by achieving a commitment to finish what we have begun, and to implement what we have committed ourselves to in order to build a future for ourselves, our neighbours and all our children.

Ladies and Gentlemen,

Dear Friends,

I thank you again in the name of my people and that of the Palestinian National Authority for all that you have offered and all that you have committed yourselves to offering.