Aide-Memoire. West Bank and Gaza. Emergency Technical Assistance Project. Jerusalem, June 21,2005

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1 Aide-Memoire West Bank and Gaza Emergency Technical Assistance Project Preparation Mission Jerusalem, June 21,2005 Introduction 1. A World Bank mission visited the West Bank and Gaza from June 7-21, 2005 to (i) support the work of the Palestinian Authority (PA) and counterparts from the Technical Committee on Withdrawals and the Withdrawals Communications Department preparing for Israeli disengagement from Gaza and parts of the northern West Bank and (ii) prepare the Emergency Technical Assistance Project (ETAP) in support of these activities. l This aide-memo ire presents the mission's findings and recommendations and defines a set of next steps for further preparation. Findings and Recommendations Progress to date 2. The Technical Committee on Withdrawals, which consists of six working groups, has undertaken commendable work since its inception a few months ago. For instance, plans have been worked out for the integration of water, electricity and telecommunications assets into existing Palestinian systems, complemented by proposed transfer arrangements from Palestinian regulators to service providers. Terms of reference for several studies have been drafted, e.g., for an environmental audit of the evacuated areas, forms for an inventory of public assets have been prepared, and a communications campaign targeting non-government stakeholders is underway. In addition, the Palestinian NGO Network has been organizing a series of workshops and conferences to debate various aspects of disengagement with a wide audience. Furthermore, legislation pertaining areas evacuated by Israel has been drafted for consideration by the Council of Ministers. 3. Bilateral meetings between the PA and the Government of Israel (Gal) have started. The PA has, however, not yet received information on settlements assets in sufficient detail to enable it to comprehensively plan for their future use. Furthermore, I The mission comprised Mmes./Messrs. Markus Kostner (Country Program Coordinator), Hege Wade (Operations Analyst), Sandra Giltner (Implementation Specialist, consultant), Reinhard Weise (Asset Management Specialist, consultant), Husam Abu Dagga (Operations Officer), Pierre Rondot (Senior Sector Specialist), Larry Hannah (Lead Economist), Khairy AI-Jamal (Sr. Operations Officer), Paul Prettitore (Legal Adviser), and Jamila Abdelghani (Communications Specialist.). The mission would like to thank the members of the Technical Committee, Palestinian Authority officials and non-governmental partners for the generous time and assistance provided during its visit ~/

2 PAlGOl coordination on security matters and PA internal coordination between the security and civilian aspects of the transfer, management and disposal (TMD) of the settlement assets are underway. 4. The official date for the start of settler evacuation is August 15. It is expected that the Israeli Defense Forces will complete withdrawal in early October. In the interim period GOI has indicated that Palestinians may visit the settlements to carry out an inventory of the assets that will be left behind. Settlement assets 5. The PA has finalized the regional plans for Gaza whilst municipalities have been developing their own plans for urban expansion; the mission recommends to consider these in the national planning effort. Absent complete information about the settlements, the PA has indicated that the final decision about the uses of assets will be taken upon inspection of each site. At the same time, agreements are emerging with regard to several types of assets: The PA estimates that only a fraction of land within the settlements in Gaza is privately-owned; roughly 575 dunums out of around 22,000 2 By contrast, land in the security areas around the settlements as well as in the northern West Bank is primarily privately-owned. The draft law on evacuated areas indicates that privately owned land would be restored to its former owner unless the PA determines its use for public purposes, in which case the owner would be compensated. In the meantime the mission recommends putting in place measures to ensure public land as well as private land until its disposition is administered in a transparent and efficient manner. sv The houses would be dismantled by GOI 3. An agreement is being worked out between GO! and the PA on how the houses will be demolished, who will clear the rubble, and where and how the rubble will be disposed of. GOI has indicated it will pay for these activities. The proper handling of hazardous materials (e.g., asbestos) is of particular concern. Against this background, the feasibility of transferring public infrastructure assets (water connections, etc.) and public buildings (e.g., schools) may need to be re-assessed. With regard to housing projects proposed by the PA and several investors in Gaza in the settlement sites and elsewhere, the mission noted that a housing policy is still under preparation by the Ministry of Public Works and Housing and that these projects do not seem to fit into the regional plans. The mission, therefore, recommends that no housing programs be started without a housing policy that maximizes benefits for all Palestinians. Short-term actions that can compromise long-term goals should be avoided. 2 Of which some 275 dunums are owned by Jews who purchased the land under the British Mandate. 3 US Secretary of State Rice was quoted as saying that "Israel and the Palestinian Authority agree that the settler homes in Gaza should be removed, therefore the parties will work toward a plan for destruction and clean up" (CNN, June 19, 2005). 2

3 There have been several initiatives to arrange for the transfer of greenhouses (and a dairy farm) should the settlers receive compensation for the capital mvestments'. These proposals foundered on the donors' unwillingness to provide compensation to settlers which the PA considers is illegal by international law. The PA has mandated the Palestine Investment Fund to manage the agricultural assets in the Gaza Strip pending their final disposals. GOI and the PA may need to agree on the continued provision of water and electricity to the greenhouses. Regarding industrial production it may be feasible to revive the Erez Industrial Estate. The mission recommends carrying out a thorough feasibility before this decision is taken. By contrast, the small industrial zone in Neve Dekalim, which is adjacent to the Khan Younis refugee camp, may be dismantled. Institutional arrangements 6. The mission did not aim to assess the effectiveness of the evolving institutional set-up but considers strong coordination and communication essential for a successful TMD process. The mission has been impressed by the work carried out by the Technical Committee and the Communications Department despite the fact that Technical Committee members representing all concerned PA entities are not assigned full-time to carry out their tasks. The mission recommends determining the institutional arrangements once the TMD processes have been worked out in greater detail and a better appreciation is gained how many assets will eventually be left behind. Project preparation 7. The mission finalized the Project Preparation Advance in the amount of US$1.1 million; it became effective in late June. This Advance, which covers the period until November 30, 2005, will help the Technical Committee and Communications Department recruit technical and administrative staff, acquire essential equipment, contract consultants for a wide range of activities (the mission helped conclude terms of reference for various urgent consulting assignments), undertake a study tour to Germany, and intensify communications activities, among others. It also contains support to the Ministry of Finance for asset privatization and to the Ministry of Planning for monitoring the implementation of the regional plans after disengagement. The Advance complements assistance provided by UNDP for the Committee's offices in Gaza and Ramallah; this assistance focuses mainly on the provision of equipment and office space. 8. Project pre-appraisal is planned for August, presentation to the Board of Directors for November. Possible components include assistance for overall coordination, managing the TMD and privatization processes, undertaking technical studies pertaining to settlement assets as well as tasks that will foster economic recovery (trade facilitation, 4 The total area under Israeli cultivation in Gaza is around 6,600 dunums, of which 3,800 dunums are greenhouses and the remainder open fields. An estimated 4,000 workers (mainly Palestinians, but also from Asia) are employed. The annual production is estimated at over US$l 00 million. S It should be noted, however, that Palestinian farmers are constrained by Israel's closure regime. Without easy access to outside markets the agricultural potential in Gaza cannot be realized. 3

4 customs, Gaza-West Bank link, etc.), and carrying out communications activities. The current arrangements for project implementation (Technical Committee and Communications Department) and financial administration (Ministry of Finance) should be reviewed during pre-appraisal regarding their effectiveness. Next Steps 9. Given the limited time available before settler evacuation, the mission recommends focusing on essential activities with proposed responsibilities, including: a. Commissioning critical consultancies (management support, privatization support, TMD and environmental audit procedures): terms of reference have been drafted and several contracts have already been signed; Technical Committee, Ministry of Finance. b. Taking policy decisions for issues requtrtng urgent attention (including the administration of public land and future land use); Technical Committee (preparation of policy notes), Ministerial Committee (decision). The mission has undertaken to prepare initial drafts. ~ Administering land in the evacuated areas: in addition to setting up the two special courts as per the draft law pertaining evacuated areas, decisions need to be made as to (i) the extent land ownership will be recognized based on prior usage of land for agricultural purposes, (ii) the application of fast-track procedures, and (iii) whether public land will transfer to the PA as public land, or to municipalities as municipal public land. ~ In the absence of any knowledge about the state of the (productive) assets after settler evacuation the mission recommends basing the decision on the future use on the following parameters: (i) Does the asset fit into the land use plan? (ii) Is the continued use of the asset environmentally neutral? (iii) Is the asset in a marketable condition or can it be brought to this state without significant investments? (iv) Will the asset benefit the local economy and create jobs? (v) Can the asset be secured prior to privatization? Should one or more of these conditions not be fulfilled it may be preferable to properly dismantle the asset. c. Holding bilateral technical discussions with GOI on the continued provision of water, electricity and telecommunication services after settler evacuation. Clarification may be required which of these public infrastructure assets GOI were willing to leave behind when the houses will be destroyed. The discussions should lead to the preparation of new contractual agreements as needed; Technical CommitteeiWorking Group on Infrastructure and Public Utilities. d. Establishing Palestinian asset verification and inventory teams: terms of reference and inventory forms have been drafted. Teams are being created; these should consist of relevant PA entities, bearing in mind the need to keep the 4

5 overall group size at manageable levels. They should training; Technical Committee/Working Group Management. also undergo adequate on Transfer and e. Establishing environmental audit teams: the mission recommends to pursue a progressive or "stepwise" process that samples data and determines further action in areas with suspected environmental contamination, rather than a full and detailed environmental audit. Terms of reference for an environmental consultant preparing the audit process and training the teams have been drafted. The environmental audit teams should coordinate with, but operate independently from, the asset verification and inventory teams; Technical Committee/Working Group on Land and Assets. f. Intensifying outreach activities to the general public to inform the population of the PA's proposed actions and thereby helping to ensure security of the settlement sites. The Communications Department has prepared a manual that outlines related tasks and responsibilities. Activities could usefully build on work undertaken by the Palestinian NGO Network, municipalities and others. The PA has given assurances that there will be no inciting information in the materials and messages used; Communications Department. g. Linking civilian planning and security planning: The planning process for securing the settlement sites after IDF withdrawal should take into consideration the proposed uses of the assets, the arrangements for their interim management pending final disposition, the timetable for disposal, and planned access by the general public to the sites. Involving municipalities in the planning process would be beneficial; Technical Committee/Working Group on Transfer and Management. August 6,