Washington Report on Middle East Affairs, March 1998, Page 60

Waging Peace

MIDDLE EAST INSTITUTE SPEAKER PROVIDES GRIM LOOK AT CURRENT STATUS OF IRANIAN WOMEN

On Nov. 14 the Middle East Institute of Washington, DC hosted speaker Azar Nafisi, a visiting fellow at the John Hopkins Foreign Policy Institute and a former professor of English literature at Tabalabaii University of Tehran.

In her talk, Ms. Nafisi provided a deeply pessimistic view of the current status ofwomen in Iran. She noted that most people considered the last election a triumph for women and youth who contributed to the victory of newly elected President Mohammad Khatami. That is not true, she said, because President Khatami's government is mostly a figurehead, with the real power still with Ali Akbar Hashemi Rafsanjani and other hard-line religious leaders.

Iranian women are linked together in the cause of freedom because of the limitations placed on them by society and the government, Ms. Nafisi said. She described the government's attitude toward women as one of "warring with God and corruption on earth." In fact, she said, highly educated former government officials have been executed for not wearing a veil. One such victim was a former minister of higher education who had been the first woman elected to parliament in the 1960s.

Women want the right to be visible, Ms. Nafisi said. It is not a question of wearing or not wearing a veil, but how much space and opportunity a person is afforded that is important to the women of Iran.

At the beginning of this century, Iranian woman turned to British women to help them gain their freedom and rights, Ms. Nafisi said, but the British women felt even they did not have the rights the Iranian women were seeking. During that much earlier era Iranian society was vibrant, but going through labor pains as it emerged into a new life. Today women are fighting again for rights they once had, not for rights that they did not have.

Ms. Nafisi said that the ruling now is that a girl has reached the age of maturity at 9, down from 15 years of age. After the fall of the shah and the crackdown on "Western ideas," dress and culture also gained in importance. It took two years to re-implement the wearing of the veil. In the beginning there were protests. Iranian women did not want to go backwards, losing the rights they had, she said.

It was a woman in the government at the cabinet level who began the process of returning to the wearing of the veil. The theme was that Iranian women were more modest than Western women and the veil became the central issue. Soon the buses were segregated but, ironically, taxis were not.

Classrooms were segregated. A man could not teach unless he was married. One of the male teachers who worked with Ms. Nafisi at the university was given one month's leave without pay to get married or be expelled from university teaching.

Clothing standards are in force not only for women, but also for men and boys. There are "vice squads" that enforce the rules and demand entry to private homes. Girls and boys are not allowed to socialize or interact with each other if they are not related. People can be arrested for infringements of these rules.

Women are not allowed to wear makeup even in their homes and can be arrested for having makeup with them in their purses. Virginity tests still are given. In fact, Ms. Nafisi said, girls and boys do not enter the same door of the school, including the universities. Women must go through a small door and are searched head to toe, while the boys go through the main door.

Girls also can be expelled from school for running, talking loudly, laughing or singing, Ms. Nafisi said. She added, however, that there now are some signs of "subversion" such as a little hair showing, a little light-colored lipstick. The slogan "personal is political," has become very real for women.

Women formerly participated in the government, but no longer do so, Ms. Nafisi said. What is most dangerous to the government, she speculated, is inside the government itself. The government bureaucracy no longer believes in itself totally, and there is a lot of disillusionment among the rank and file. Ms. Nafisi said that women are becoming more politically aware, and the more the government seeks to regulate the social issues, the more society will rebel. Iranian society has been polarized because of a government that has become totally based on theological beliefs.

The result is that young people, who have less than the previous generation, have become more cynical. There also is more corruption, and prostitution is on the rise and becoming worse.

Ms. Nafisi told of one student who wrote, "If I cannot do or say what I want, how can I feel like an Iranian?"

"We do not have any dreams," another said. "What does the right to vote have to do with the right to chose the color of one's clothing?"

—Carol M. Farmer

MCGOVERN LEAVES MIDDLE EAST POLICY COUNCIL FOR FAO AMBASSADORSHIP

Sen. George McGovern, outgoing president of the Middle East Policy Council, was presented a book of testimonial messages at a Jan. 21 farewell party in the National Capitol building. Pictured above are his successor, former U.S. Ambassador to Saudi Arabia Chas. Freeman, Jr., MEPC executive director Richard Wilson and Ann Joyce, editor of Middle East Policy, the council's quarterly journal. Among speakers at the Capitol ceremony offering reminiscences about the senator were Robert Pelletreau, former assistant secretary of state for Near East affairs, and former Secretary of Defense Frank Carlucci, a long-time member of the MEPC board. David Hamod, representing U.S. business groups overseas, presented Senator McGovern with a plaque recognizing his services to U.S. interests in the Middle East.

The MEPC was founded in 1980 as the American Arab Affairs Council by three recently retired U.S. Information Agency foreign service officers, George Naifeh, Isa Khalil Sabbagh, and Richard Curtiss. It underwent a name change when Senator McGovern, the Democratic Party presidential candidate in 1972, took over as MEPC president six years ago. Senator McGovern, who has humorously pointed out that he gave President Bill Clinton "his first job" as a regional organizer for the McGovern presidential campaign, has accepted a Clinton appointment as U.S. ambassador to the U.N. Food and Agriculture Organization (FAO) in Rome.

—Richard H. Curtiss

SAAD EDDIN IBRAHIM CITES CHALLENGES TO DEMOCRACY AT MIDDLE EAST INSTITUTE

In the Arab world's gradual evolution toward democracy, American University in Cairo professor of political sociology Saad Eddin Ibrahim sees television as a positive factor and a bankrupt U.S. foreign policy as a negative one. Speaking Nov. 17 at the Middle East Institute in Washington, DC, Professor Ibrahim listed both the challenges to the Arab world becoming more democratic, and the factors making such a development inevitable in the long term. One challenge is that some Arab regimes are becoming more autocratic, with some leaning toward despotism. Among positive factors is that extremist ideas, not just Islamist extremism but also imported Western panaceas, have fallen out of favor with the local population.

Economic and social planning that include all the different factions of the population need to take place before democratization of the Middle East can be realized, Prof. Ibrahim asserted. When regimes shut out the youth, the religious factions and others with differing opinions, the door is left open for terrorism to continue. Groups that are left out feel they are disenfranchised and have no peaceful outlets to seek changes.

Tracing the evolution of Middle Eastern governments since the breakup of colonialism, Professor Ibrahim said that when new leaders come to power, whether by a coup or a popular uprising, they come with an agenda. At first the claim is one of a liberator bringing social justice, economic development, consolidation of national independence and, of course, support for the liberation of Palestine. One of the major problems, he noted, is that human rights are not considered important enough to be discussed.

There are promises of more jobs, social development and better living conditions. However, as the new regime works to consolidate a strong power base, secret police and new press and media restrictions are soon put into place. Within 5 to10 years the new regime's power has increased, individuals freedoms have decreased, and brutalities against the general population have risen sharply as the regime starts to lose the popular support that accompanied its seizure of power. As the population realizes that the earlier promises are not being carried out, the regime becomes even more tyrannical.

As an example of such a regime, Professor Ibrahim cited Algeria. The government gained its power as a popular movement. However, all the promises of expansion of education and other services soon left the country deep in debt, and the World Bank imposed spending limits on the government. With the flow of money now out of control, popular programs such as subsidies for education, health services, and food were cut.

Riots began because citizens did not feel an identification with and participation in the government. Nor was there trust that the government would be able to fix the problems. In 1992 the Islamist faction was on the verge of winning 40 percent of the popular vote and 80 percent of the parliamentary seats. The old regime panicked and voided the election, triggering major upheavals that in five years have killed over 75,000 people.

Jordan has been somewhat more successful, in Professor Ibrahim's opinion. When the government was experiencing difficulties King Hussein and his advisers decided on a trial run of democracy. A parliament was established and the facts and figures were presented to the citizens of Jordan. With a sense of power and burden-sharing the population was informed and major problems with extremist groups were avoided. In the first election, 40 percent of the seats in the congress went to Islamic groups. In recent years the number of seats occupied by the Islamic groups has decreased.

Turning to his own country, Professor Ibrahim said that when Col. Gamal Abdel Nasser came to power in the 1950s, he was able to suppress the Muslim Brotherhood. After he died, Anwar Sadat allowed the Muslim Brotherhood some power in his government. However, they had their own agenda, more conservative in thought and practice, and ultimately were responsible for Sadat's death, Professor Ibrahim said.

Sadat's successor as president, Hosni Mubarak, included moderate Islamic factions in his government, but in 1990 decided that they were becoming very conservative and dangerous. What Dr. Ibrahim noticed was that as members of moderate Islamic movements are squeezed out of power, the ultra-conservatives start to take control and try to return to the "old" fundamentalist ways. He said, however, that if Islamists are included in the government process, they have a tendency to become more moderate.

The West is interested in oil and clients, but not in true democratic or equal partners to work with, Professor Ibrahim said. The United States seems to have "crises" with Iraq, Iran, Egypt, and Saudi Arabia, but only a "problem" with Israel and its extremist prime minister, Binyamin Netanyahu.

Dr. Ibrahim observed that in fact the United States has problems with all of the countries in the Middle East. This, in his opinion, is the result of a bankrupt U.S. foreign policy.

For states to work toward democracy there is a need to make room for a civil society, which includes an educated middle class, ownership in the proceedings of the government and a growing media. Interestingly, Professor Ibrahim said that democracy has begun to flourish in the Middle East with the use of TVs and satellite dishes, which bring the outside world into people's homes. This illustrates, he concluded, that democracy does not come by order, but by process.

—Carol M. Farmer

BROOKINGS HOSTS PANEL ON ECONOMIC SANCTIONS

Conflicting views on economic sanctions were provided by four panelists at a half-day conference held by the Brookings Institution entitled "Economic Sanctions: Do They Work?" Speaking at the Dec. 3 Washington, DC panel were Brookings Director of Foreign Policy Studies Richard Haass, Kimberly Elliot of the Institute for International Economics, director of national security studies at the Nixon Center for Peace and Freedom Peter Rodman, and Michael Gadbaw, vice president and senior counsel for international law and policy for the General Electric Company.

Richard Haass, Middle East director at the National Security Council during the Bush administration and author of a recent article in Foreign Affairs entitled "Sanctioning Madness," began with a theme that was reiterated throughout the conference: "More often than not, economic sanctions are not desirable and they are not effective." He offered 10 reforms to help guide and improve the effectiveness of sanctions:

• Sanctions must be taken seriously and thought of as a form of intervention;
  
  
• When used, sanctions should be used multilaterally;
  
  
• Sanctions must be focused narrowly on specific goals and targets;
  
  
• They should not hold an entire relationship hostage, like Pakistan's nuclear program has done with U.S.-Pakistan relations;
  
  
• Sanctions must have humanitarian exemptions;
  
  
• Secondary sanctions should be avoided;
  
  
• There should be executive waivers of sanctions for national security reasons;
  
  
• States and local municipalities ought not to pass local laws that affect American foreign policy (for example, Maryland Governor Paris Glendenning's role in extradition requests for accused murderer Samuel Sheinbein);
  
  
• Sanctions ought to be accompanied by a cost/benefit report prior to their implementation;
  
  
• That report should be updated at least annually and should also include an analysis of the impact on the United States of the sanctions.

Peter Rodman began by saying "the Europeans should be ashamed of themselves" for their relationships with Iran. He asserted that, despite differences in opinion on either side of the Atlantic Ocean, "sometimes the Americans have a point." He said that U.S. sanctions against the Islamic republic "have effectively helped deny Iran technology and cash," which has "kept Iran off-balance."

"The business perspective starts with the costs," Michael Gadbaw began, and sanctions have created an environment where American business "is losing [its] position in emerging markets." Gadbaw warned that the United States is "creating a false dichotomy between [its] commercial and other national security interests," by suggesting that the former are separate from the latter. "We're indulging our appetite for sanctions far beyond their justification," he cautioned.

Kimberly Elliot, who participated in a recent study that analyzed 115 cases of economic sanctions from World War I to 1990, said "sanctions generally are not very effective." And sanctions can be very costly. According to estimates by the Institute for International Economics, U.S. sanctions against 26 countries between 1990 and 1995 cost the United States some 200,000 export-related jobs, and $15 to $19 billion in the American economy. "Sanctions are an instrument of policy, not a policy themselves," she added.

—Shawn L. Twing

CMEPEC HOSTS PRESIDENT YASSER ARAFAT

The Center for Middle East Peace and Economic Cooperation hosted an evening reception for Palestinian Authority President Yasser Arafat at the Willard Hotel in Washington, DC on Jan. 22. It was the day on which the Palestinian leader held a scheduled meeting and press conference with President Clinton in the morning. However, Arafat returned to the White House in the evening for a second meeting and then proceeded directly to the reception in his honor, which was attended by Democratic Rep. Jim Moran (D-VA), Israeli Labor Party Knesset Member Yossi Beilin, American Jewish and American Arab peace activists, retired U.S. diplomats and Washington, DC media executives. Looking exhausted when he arrived accompanied by director Hassan Abdul Rahman of the Palestine Information Office in Washington, DC, Hani Masri of Washington, DC and Marwan Kanafani of the Palestinian Authority, Arafat thanked CMEPEC chairman S. Daniel Abraham and CMEPEC president Wayne Owens for the reception, and expressed the hope to an enthusiastic and emotional audience that his visit to Washington would advance the cause of peace.

The CMEPEC was established in 1989 by Slim Fast Foods chairman Abraham and former Utah Congressman Owens, who since then have made many visits to Arab states and Israel. Vice chairman since 1990 has been Dr. Stephen Cohen. A 1997 addition to its board is Sara Ehrman, former senior political adviser at the Democratic National Committee and a former official of the American Israel Public Affairs Committee.

Each year the CMEPEC sponsors a "Consultation on the New Middle East," which brings business leaders and policy makers together for off-the-record meetings, and also a "Retrospective on the Peace Process," a public forum where leading policymakers from the Middle East and the U.S. exchange ideas.

—Richard H. Curtiss

CPJ CRITICIZES MEDIA CENSORSHIP IN AZERBAIJAN AND ARMENIA

In 1986 President Mikhail Gorbachev unleashed glasnost and along with it, the power of the free press in the Soviet Union. After the fall of the Soviet regime, these forces are shaping democracy in the resulting independent states. However, according to the Committee to Protect Journalists (CPJ), some of the republics, including Azerbaijan, Armenia and other Central Asian/Caucasus republics, have failed to protect and promote the free press.

A CPJ report showed that more journalists were killed from 1992-1994 in Tajikistan than in any other country, prompting CPJ director William A. Orme Jr. to send Nicholas Daniloff, director of journalism at Northeastern University, to the Caucasus to investigate freedom of the press there, particularly state censorship in Azerbaijan and Armenia. Daniloff, a seasoned journalist, was selected for the assignment because of his broad experience with the Soviet Union during the Cold War. Upon his return he prepared a study entitled Paradoxes in the Caucasus: A Report on Freedom of the Media in Azerbaijan and Armenia, which was presented Jan. 15 at the Smithsonian Institution's Wilson Center for Scholars in Washington, DC. The study calls on the "governments of Armenia and Azerbaijan" to "respect freedom of the press and provide guarantees so that journalists may work freely and safely, without fear of reprisal." At the same time, however, Daniloff's study calls on the U.S. government to rethink its own foreign policy prohibition on "direct granting of U.S. aid to government organizations in Azerbaijan," as laid out in Section 907 of the Freedom Support Act. According to the CPJ, this act "has had a deleterious effect because it impedes the provision of U.S. government-sponsored English-language instruction to most Azerbaijani universities and prevents the United States from inviting Azerbaijani journalists who work for state media to participate in professional programs."

Daniloff's report related press restrictions in both Muslim Azerbaijan and Christian Armenia to the outbreak of war between them after the collapse of the Soviet Union. In the Nagorno-Karabakh region of Azerbaijan, Armenian nationalists rebelled. In 1992 Nagorno-Karabakh then became the catalyst for conflict between Azerbaijan and Armenia, which has yet to come to a resolution, although there is a standing cease-fire.

Prior to the 1992-1994 conflict, according to the CPJ report, the press was almost completely uncensored. But when Heidar Aliyev, a former member of the Soviet Politburo and first secretary of the Azeri Communist Party, was elected president of Azerbaijan he changed the law on the mass media to allow military censorship. The Azeri government felt that censorship was vital to the success of its war effort, because the Armenian army had the strong support of the Russian government. According to CPJ, there were 428 incidents of censorship in 1996 within the Azeri media.

Despite censorship of the print media, however, the Azeri government has a surprisingly good record dealing with the broadcast media, Daniloff reports. In fact, the Azerbaijan News Service (ANS) has been allowed to operate largely without any interference from censors. Since the Azeri government does not jam foreign television, Azeri citizens also have access to uncensored Russian and Turkish television.

Meanwhile, in the Armenian capital of Yerevan, the media are largely controlled by a government with attitudes reminiscent of the former Soviet leadership. According to the CPJ, the Armenian constitution of 1995 includes a "list of vaguely worded prohibitions" on the media. In cases of violations, the constitution "provides for a three-month shutdown of a journalistic enterprise." Under the pretense of protecting vital government secrets, therefore, the Armenian government has engaged in censorship of the printed press and regulates television "by a loyalty system that is censorship in all but name."

The CPJ report quoted a statement from the Yerevan Press Club's newsletter that "1996 was a record year in the history of independent Armenia in terms of violation of freedom of speech and of the press, as well as the rights of individual journalists."

CPJ director Orme concluded the presentation by stating that the Daniloff study is important because "if Armenia and Azerbaijan wish to be accepted into the community of European democracies, as they say they do, then both governments must end these censorship practices and provide solid legal safeguards for an aggressive, independent news media."

—Kenton Call

IRAN ONE STEP CLOSER TO BALLISTIC MISSILES

According to leaders of the National Council of Resistance of Iran [NCRI], the largest Iranian political opposition group, in 1997 the Iranian regime "managed to build medium-range missiles and to increase their range to 1,400 kilometers." At a Jan. 7 press conference at the National Press Club in Washington, DC, an NCRI spokesperson quoted an anonymous NCRI source within the Iranian regime as having reported that "We have obtained the technology that we need. All we need now is time."

The NCRI reported that in recent weeks Iranian engineers with the assistance of North Korean and Chinese missile experts have overcome a problem with the engine valve on the Shahah 3 missile. The improved engine technology enables the Iranian military to strike Middle East neighbors Israel, Turkey, Saudi Arabia and the Arab states of the Gulf with missiles carrying a payload of 1,000 kilograms armed with conventional explosives, chemical agents or nuclear materials.

The NCRI press conference came on the same day that CNN's Christiane Amanpour interviewed Iranian President Mohammed Khatami on national television, an interview that many thought could signal a new era of U.S.-Iranian relations. Khatami's interview attracted widespread attention because he said he had a new "message for the American people." The NCRI alleged that the new message Khatami would like to share with his own people is that Iran is well on its way to becoming a nuclear power capable of a exerting a much larger international influence.

The Shahah 3 missile project is being developed under the auspices of the Revolutionary Guards Corps (RGC). According to the NCRI, the RGC has successfully completed a prototype with the improved engine and is planning to mass produce 15 additional missiles. The NCRI said Iranian engineers have successfully manufactured the fuel section, the tail and a significant part of the warhead. However, they have yet to produce a successful guidance system. Therefore, the missiles are highly inaccurate. The NCRI speculated that, lacking a good guuidance system, the Iranian government may seek foreign assistance (perhaps Russian) to overcome the problem.

Dozens of North Korean and Chinese missile experts presently are stationed at the Hemat missile complex in the suburbs of Tehran, the NCRI spokesperson said. Korean and Chinese technicians as well as 350 Iranian agents who have been trained in North Korea are feverishly working to complete the deadly weapons technology.

Since Khatami's unexpected victory in October 1997 over the candidate supported by Iran's leading religious leader Ayatollah Ali Khamenei, the international community has been waiting for a sign to see which direction the now seemingly divided Iranian government will take. The NCRI maintains that "Tehran has neither the intention nor the ability to moderate its behavior," and the "means of deterring Khatami" is "firmness."

—Kenton Call

CNI CALLS FOR OPEN HEARINGS ON AID TO ISRAEL

"We should have a full-scale debate after hearings are held on the subject of phasing out aid to Israel. It should not be a secretive negotiation between a few members of Congress and the Netanyahu government," said Paul Findley, chairman of the Council for the National Interest, on Jan. 29. He was referring to the visit of Israel's finance minister, Yaakov Neeman, with House Appropriations Committee Chairman Robert Livingston (R-LA) and Operations Subcommittee Chairman Sonny Callahan (R-AL).

"Waiting two years to start the phase out and then extending aid for another 10 years after that is intolerable, especially in view of the continued seizure of Arab land and building of housing for Jewish Israelis only on that land," Findley said. "U.S. aid and assistance to Israel undermines the peace process. Everyone knows it, everyone talks about it. Nobody is doing anything about it," the 20-year veteran ex-congressman noted.

He said that there should be full-scale revelations about the Israeli aid program, in his opinion, with hearings and witnesses testifying as to what has been done with the $84 billion so far expended directly from the U.S. Treasury with little if any of the accountability required from other countries receiving U.S. aid.

Furthermore, if aid to Israel is extended for 10 more years after the beginning of the next century, Israel will have received more than $110 billion from U.S. taxpayers for "making peace." In fact, the aid has become as great an obstacle to peace as settlement building.

Finally, if aid is extended for another 12 years as called for in the initial proposals from Israel, it means extending aid to Egypt the same length of time. That means expending some $40 billion after 1998 just on these two countries.

The ex-congressman called for an immediate full congressional hearing on aid to Israel and Egypt with a full panel of witnesses, not just those friendly to Israel's present government.

—Eugene Bird

MEI AND WORLD BANK EXAMINE MIDEAST PRIVATIZATION

 "Privatization and Liberalization in the Middle East and North Africa" was the title of a half-day conference hosted by the Middle East Institute and the World Bank on Dec. 11, 1997, at the World Bank in Washington, DC.

MEI president Roscoe Suddarth began with opening remarks on the general state of privatization and liberalization in the Middle East. Although it is not perfect, he said, the Gulf Cooperation Council countries all have stock exchanges except for the United Arab Emirates, which does have a strong privatization program in place. In addition, Egypt's bourse is doing well, Saudi Arabia has privatized its ports, with the electricity grid to follow soon, and Egypt, Jordan and Lebanon will be privatizing their telecommunications systems in the near future, Ambassador Suddarth reported.

Vice president Kemal Dervis of the World Bank spoke next, noting that in contrast to the economic stagnation in the Middle East from the early 1980s to the early 1990s, since 1995 a recovery has begun, led by the private sector. He noted, however, that the East Asian crisis has had ripple effects around the world, including the Middle East.

The lesson, Dervis said, is that the role of government needs to be strengthened in order to regulate financial markets in a professional and not politically motivated way. He said the East Asian crisis will allow countries in the Middle East and North Africa to learn from Asia's mistakes.

Keynote speaker Masood Ahmed of the World Bank expanded upon effects of the East Asian financial crisis on Middle Eastern countries. Ironically, he said, after the 1995 Mexico bailout, the World Bank pointed to East Asia as having the fundamentals to weather economic downturns.

Comparing economies in East Asia and the Middle East, Ahmed said there are lessons that can be learned to avoid a recurrence of such problems. Excessive private-sector borrowing occurred in East Asia for investments, especially in real estate, which often were not sound. The resulting loan defaults created a crisis of confidence in the region. Ahmed stressed the importance of regulating the financial sector, with the core problem in East Asia being weak and distressed financial institutions.

Another problem in East Asia, according to Ahmed, has been the link between banks and private-sector corporations, with weaknesses exacerbated by lax supervision and regulation. Ahmed said that in the Middle East and North Africa connections between banks and private enterprises will be under closer scrutiny now.

The first panel, entitled "The Prospects for Economic Liberalization" was moderated by Ambassador Paul Hare, vice president of the Middle East Institute, who noted that liberalization signals the retreat of the patron state.

Panelist John Page of the World Bank began his presentation with the revelation that 10 to 15 percent of the total labor force in the Middle East and North Africa is out of work at any given time. At the same time, he said, opportunities for higher education have increased in the region. Noting that the economic history of the region has been very checkered over the past three decades, he said the past several years have seen the beginnings of a sustained turnaround, with growth rates of 3 to 4 percent per year expected within the next 5 to 10 years. Jordan and Tunisia can expect to go far higher, Page said, with growth rates of 6 to 7 percent per year quite possible.

Page related a recent resurgence in investment in the region to aggressive efforts by many Middle Eastern and North African nations to provide access to primary and secondary education for their young people. As a result, those under 40 are very competitive in the modern employment market, while older individuals are largely unable to compete in today's business world because of high illiteracy rates and their lack of technical skills.

This demonstrates that true economic liberalization is dependent upon quality education for all sectors of the population in the Middle East and North Africa, Page pointed out. Page highlighted the integration agreements by many countries in the region with the European Union, including Egypt, Jordan, Morocco and Tunisia, which are already in the final stages of their respective agreements. As good omens for the future, he cited Jordan's call for bids to privatize 40 percent of its telecommunications market, and also talks on the establishment of an Arab Union. In conclusion, he said that by the year 2000 hardware issues (infrastructural improvements) and international trade issues can be resolved, while software issues (education and institutional change) will take longer to overcome.

Panelist Iliya Harik of Indiana University began his remarks by criticizing welfare and subsidization programs as hindrances to liberalization. He said that unless there is massive deregulation, there is little hope for privatization. He said also that the entrepreneurial classes in countries where authoritarian leaders took power were destroyed.

Harik stated that even Egypt and Tunisia have not been as successful with political liberalization as is believed. In Egypt, he said, President Hosni Mubarak has not ruled for even a day without emergency laws in place in the country. As for Tunisia, Harik said, its press is controlled by the government, opposition members are jailed and the people are afraid of political involvement.

Harik said outside intervention in relation to human rights abuses in the Middle East is very limited. He also charged that the United States looks uneasily at prospects for democratization in the Middle East, since it is generally assumed that any popularly elected government in the Arab and Muslim world would be of an Islamic nature. Harik charged that the United States sees Islam as a monolithic entity along the same lines as it formerly regarded Soviet communism. He criticized such thinking as unproductive.

Dr. Harik also charged that the West was pleased that the Turkish military removed the democratically elected Islamist government last year. He said the U.S. fears that any freely elected Islamic government in Algeria would never relinquish power once it was attained. He thus concluded that political liberalization is not in the cards for the region right now. He ended his remarks by noting that the Iraqi people suffer because the West did not remove Saddam Hussain when it had the chance.

At this point World Bank vice president Kemal Dervis registered his displeasure with Dr. Harik's remarks because World Bank member nations had been criticized in the presentation. Dervis also said economic and political matters should be kept separate in forums such as the current conference.

The second panel, entitled 'Privatization Initiatives," was moderated by Mary Jane Deeb, editor of the Middle East Journal, who opened with the remark that she was happy to hear more positive news on the prospects for privatization and liberalization in the Middle East than in the two previous MEI/World Bank conferences. She said the West now regards the Middle East and North Africa as new emerging markets.

John Waterbury of Princeton University, who is also the new president of the American University of Beirut, began by stating that although Masood Ahmed had cited problems with banks in the developing world as a new situation, such problems have existed for a long time, and have not been addressed by international organizations like the World Bank in the past. In reference to the earlier remarks by Kemal Dervis concerning Dr. Iliya Harik's presentation, Waterbury stated that the political profession is diminished if the economic sphere is separated from it.

Waterbury said privatization is the real issue in the Middle East, with there being no reason why public and private enterprise should perform differently. Noting that losses are tolerated indefinitely for political purposes, he said private enterprise transfers losses from taxpayers to investors, as opposed to public enterprise, which hits taxpayers hard in periods of economic slowdown. Risk-taking, according to Waterbury, goes from being mandatory in nature to voluntary, as privatization takes hold.

Taking Egypt as a case study, Waterbury said the public sector employs 55 percent of all non-agricultural workers in the country. When the Suez Canal, the Aswan High Dam, the petroleum sector, railroad, ports and airports, as well as the Mediterranean-Nile River Canal were taken into account during the mid-1980s, $50 billion to $70 billion worth of assets were in the Egyptian public sector.

In the 1970s, Waterbury noted, the structure of ownership within the Egyptian economy was closer to Poland and Hungary than to Tunisia, Jordan or Turkey. Now the Egyptian economy is a strange amalgam of elements that include a small private sector as well as an informal sector which accounts for as much as 20 to 25 percent of economic activity, with the private sector growing in relation to the public sector.

During the 1980s, the Egyptian government boosted tax revenues, inflation dropped, interest rates rose, and tariffs came down to a degree, Waterbury said. He also stated that agriculture has become a dynamic sector of the economy. Even with all of this seemingly encouraging news, Waterbury stated that privatization is still occurring at a slow pace. To illustrate the extreme volatility of the modernization efforts underway in the Egyptian economy, Waterbury noted that since the Luxor massacre in November, the Egyptian Stock Exchange lost 10 percent of its value. Waterbury closed by revealing the remarkable fact that Egypt has $120 billion in reserve, while inflation and the deficit were both down in 1996.

The final speaker of the day was Jamal Saghir of the World Bank. He began by stating that privatization in the Middle East and North Africa is a must, not just a possibility. He noted that most countries in the region have launched privatization programs in the last decade, starting with Tunisia, which subsequently slowed. Algeria started shortly thereafter, according to Saghir, but its civil war slowed that program as well. He said that nations in the region often lacked the political will to privatize, and intellectuals in the region tended to be statist in nature, resulting in a slow approach to privatization. Nevertheless, he said, tourism, real estate and banking have been fields in which privatization efforts have accelerated in recent years, with Egypt, Morocco, Kuwait and Tunisia the leaders of privatization efforts in the region.

—Michael S. Lee

GEOFFREY ARONSON DISCUSSES "SETTLEMENT UPDATE" AT MEI

Geoffrey Aronson, director of the Foundation for Middle East Peace and editor of the Report on Israeli Settlement in the Occupied Territories, discussed Israeli settlement policies and activities before an invitational audience at the Middle East Institute in Washington, DC on Jan. 26.

The government of Israeli Prime Minister Binyamin Netanyahu has approved a map that is distinguished by "the restoration of entitlements and subsidies for both personal and business investment to most settlements in the West Bank, Gaza Strip, and Golan Heights," Aronson said. According to the new map, most settlements have been classified as "Area of National Priority—A" or "Area of National Priority—B." "A—Area" settlements are entitled to the most generous benefits while "B—Area" settlements are entitled to a lower level of benefits. Other settlements are excluded from benefits because they have been deemed "too prosperous." Subsidies for housing, education, teachers and social workers are available to A and B status settlements.

The reclassification of settlements has affected the housing market in the settlements, making settlement housing in all areas of the West Bank more attractive during 1997. As a result, 1,560 West Bank housing units were sold in that year. According to Aronson, "The use of mortgages for settlement housing among new immigrants has increased by 84 percent over 1996. "The Israeli government is using the growth of the Israeli population as an excuse for the settlement expansion, he explained.

—Raja Abu-Jabr

WORLD BANK HOSTS CONFERENCE ON INVESTMENT ISSUES IN THE WEST BANK AND GAZA

Investment potential in the West Bank and Gaza was the subject of a day-long Washington, DC conference organized by The Multilateral Investment Guarantee Agency (MIGA) and the National U.S.-Arab Chamber of Commerce (NUSACC). The Nov. 13 conference, entitled "Safeguarding Foreign Investments in the West Bank and Gaza," was introduced by Saleh S. Jallad, vice president for treasury and insurance for Consolidated Contractors International Company SAL, who described the meeting as a partnership between the World Bank and the international private sector in the development of the West Bank and Gaza.

James D. Wolfensohn, president of The World Bank Group, followed with opening remarks in which he noted that he had taken a special interest in the Palestinian people in the West Bank and Gaza since assuming the presidency of the Bank. He said the Bank's two-fold objective there is alleviation of poverty and promotion of economic development, which he described as the key to a lasting peace in the region. Wolfensohn noted that by concentrating on infrastructure development the Bank Group is creating jobs and developing projects, with two million man days of jobs created in the West Bank and Gaza within the past year alone.

He said the World Bank has worked through its partner MIGA to develop an insurance program to stimulate investment in a region where conflict is still commonplace. The key points to remember are that the Palestinians have a real future, with the prospect of good business opportunities from now into the future, Wolfensohn said. So far, MIGA has established a trust fund for the Palestinian Authority of $10 million, as the normal procedures for providing investment insurance in emerging economies had to be amended in view of the fact that Palestine is not yet a sovereign state.

Wolfensohn went on to state that grant funding to the territories is larger than ever before, with $2 billion raised and close to $1 billion spent. He finished his remarks by stating that all of this has been done with a real sense of commitment on the part of the World Bank Group.

The first speaker was Akira Iida of MIGA, which will be going operational shortly for the West Bank and Gaza. He said his organization's trust fund was tripartite in nature, with the World Bank, the Palestinian Authority, and MIGA being the signatories. In addition to the World Bank's contribution of $10 million, Japan is expected to invest $5 million.

The second speaker was Saleh Jallad, who noted that private investment in the West Bank and Gaza is dependent upon such variables as the availability of foreign exchange and the effect of local conditions on labor and unemployment. Out of a total population of 2 million, 500,000 are in the labor force. Unemployment in recent times has gone up to 50 percent and is never less than 20 percent. The overriding reason for the creation of the MIGA trust fund in the West Bank and Gaza, according to Jallad, was that while investors are accustomed to financial risks, they are not nearly so prepared for political risks.

The third speaker was Richard Holmes, president of the National U.S.-Arab Chamber of Commerce. The Chamber works to promote a partnership between businesses in the United States and the Arab world. Its board consists of 24 Americans and 24 members from Arab nations. The Chamber currently is dealing with the sanctions placed on countries in the Middle East by the United States government which affect trade. He remarked that the Chamber also attempts to foster community building, with Chamber offices being located in the Middle East. He mentioned the opening of the Palestinian stock market in February, and the need for the opening of a seaport and airport in Gaza, as well as land routes to Egypt and Jordan from the West Bank as necessary for economic growth in the West Bank and Gaza.

The next group of speakers comprised the MIGA panel. Luis Dodero, vice president and general counsel of MIGA, described the trust fund concept developed by the World Bank and MIGA in order to conform to the rules that forbid insurance directly through MIGA to non-sovereign territorial entities. He said if MIGA co-insures, other insurers will participate, since MIGA is a part of the World Bank Group, giving it sufficient capacity to maintain foreign investment in the West Bank and Gaza. He said member nations of MIGA must have their governing institutions ratify membership to join and become shareholders in the organization. Over the course of the next year, $1 billion in capital will be disbursed to projects in the developing world.

Robert Rendall, MIGA regional manager, explained the MIGA mandate to promote foreign private investment in developing member countries. MIGA's assistance is twofold, providing political risk insurance to foreign investors and investment marketing and advisory services to developing host governments, he said.

Among risks to investors in the West Bank and Gaza covered by MIGA, Rendall listed an inability to convert from local currencies or outright expropriation; an inability to conduct business due to government interference, either Palestinian or Israeli; and war, civil disturbances, revolution, or terrorism, which could cause either physical damage or simply an inability to operate. Covered operations include start-up of a new business, expansion, modernization, and privatization.

According to Rendall, MIGA operational regulations within the West Bank and Gaza provide a $5 million limit per covered project. He noted that current MIGA-covered projects in the West Bank and Gaza include real estate, power generation and telecommunications.

MIGA senior counsel Srilal Perera opened his remarks by noting that MIGA has a local office in Aram, near Ramallah in the West Bank. He explained that the MIGA Trust Fund for the West Bank and Gaza was established in January 1997, with initial financing from MIGA member countries, the International Finance Corporation, the World Bank Group and $1.2 million from Sweden and $2.5 million from the Netherlands.

While Perera noted that in the West Bank and Gaza MIGA can only insure investors on a 1-1 ratio on losses incurred, as opposed to a 1-3.5 ratio in sovereign MIGA nations, he said that what MIGA is providing in Palestinian Authority-administered areas allows a degree of investor protection which otherwise would not exist.

Perera said MIGA also covers the threat of expropriation by Israel within the PA-administered areas. Another safeguard offered by MIGA comes in the form of protection from breach of contract issues, which would be of utmost importance in a business environment which is often devoid of legal recourse, where arbitration may not be available. Perera closed his remarks by noting that Palestinian nationals can procure contracts of guarantee if their investment comes from outside of the West Bank and Gaza.

The final MIGA speaker was Keith Molkner, a legal consultant for the organization, who described the myriad legal systems applied in the West Bank and Gaza. Both operate under Israeli military orders and some British Mandate statutory law, while the West Bank also applies Jordanian statutory law and Gaza applies Egyptian military orders—all of which have to be navigated by potential investors.

Since the advent of the Oslo accords, new complexities have arisen, Molkner said, with the West Bank and Gaza divided into three areas of administration, being designated as Areas A, B, and C. The Palestinian Authority has full control of civil matters in Areas A and B, with Area C being under the civil jurisdiction of Israel. The Palestinians have police control in Area A only, he explained. Palestinian investment law, which provides income tax holidays as investor incentives, is valid only in Areas A and B, according to Molkner.

Nigel Roberts, World Bank manager for the West Bank and Gaza, described challenges facing both the local administration and investors, stressing that without the private investment dimension, there would be little hope for economic growth in the affected areas. This was dramatized by his description of the Palestinian economy as being in a tailspin. He said per capita income levels are at their lowest point since 1980. Unemployment in the West Bank and Gaza combined rose from between 13 and 15 percent in 1993 to 30 percent in mid-1996, with the figure for Gaza reaching 50 percent. Within the region, per capita consumption is $2 per person per day, with 25 percent of the total population classified as poor. Forty percent of Gazans are in this category, according to Roberts.

Because of the continued closures in the West Bank and Gaza, and consequent emergency expenditures by the Palestinian Authority, the infrastructure investment ratio in the West Bank and Gaza has amounted to only 2 percent of GDP since 1993, compared to a 4 percent average in the rest of the developing world, Roberts said. In addition, imports fell by one-third during the same time period.

Roberts estimated the costs of closure from 1993 to1996 at $2.8 billion, including $1.5 billion in donor disbursements and $700 million in Israeli tax transfers.

He noted that 1998 will see the end of the five-year donor commitment to Oslo worked out at the first donor conference in the fall of 1993. Significant shifts in donor thinking have occurred since 1993, Roberts said, with a growing acceptance on their part that medium-term progress must be tailored to the continuation of the status-quo, with an overall feeling of less optimism and a growing acceptance of uncertainty.

Roberts said leaders involved in the Arab-Israeli peace process should review in early 1998 the economic relationship between Israel and the Palestinian Authority, revisiting the 1994 Paris Agreement and Customs Union talks. He said fundamentals for substantial economic growth in the West Bank and Gaza still in place include a high educational level, financial capital, a lack of debt and public-sector ownership, and a good tax system.

Roberts stressed that all of these positive factors are held hostage by the current dysfunctional economic relationship between Israel and the Palestinian Authority, evidenced by the continuing delay of a seaport and airport for Gaza, as well as new bridges and the opening of the Rafiah crossing. He presented several scenarios to invigorate the economic situation, including the labor intensive growth of manufacturing through free trade agreements with the United States and Europe, the Palestinian Authority serving as a gateway to the West and/or the East, a free trade agreement between the Palestinian Authority and Israel, and Palestinian Authority control of the borders for tax collection purposes.

In order for this to occur, he said, the Palestinian Authority must demonstrate capable and conservative fiscal management by restraining expenditures, containing growth of the public sector, encouraging competition, continuing development of the legal and regulatory framework in the West Bank and Gaza and implementing laws already passed.

Roberts said efforts are being made to develop the first industrial estate in Palestinian Authority-administered areas, as well as the creation of a housing mortgage market.

Up to now, Roberts said, diaspora Palestinians have been reluctant to invest because of uncertainty over the outcome of the Oslo process, lack of confidence in the Palestinian Authority, and the fact that business opportunities in the West Bank and Gaza offer considerably less profit than businesses currently operated by these Palestinians. He closed by briefly outlining the Bethlehem 2000 project, which the World Bank has funded during the past two years to help the municipality better manage its infrastructure, primarily for tourism.

Chief Counsel Hans Juergen Gruss of the World Bank Middle East and North Africa Division Legal Department told participants that in 1996 the World Bank teamed up with the legal faculty at Birzeit University in the West Bank to put all laws existent in the West Bank and Gaza from Ottoman times to the Palestinian Authority into a computer database to foster an environment more conducive to investor confidence.

The World Bank also has established a steering committee between the Palestinian Authority and the private sector and is developing training programs for judges to introduce them to modern business law practices, bankruptcy regulations and case management. The World Bank also is initiating alternative dispute settlement mechanisms while the legal system in the West Bank and Gaza is being overhauled.

The final panel of the day was made up of three officials of the International Finance Corporation, another arm of the World Bank Group. First to speak was Iyad Malas, manager of the IFC's Central Asia, Middle East, and North Africa department, who reported that of a total World Bank portfolio of $1.9 billion, $610 million in financing has gone to 43 projects in the Middle East.

IFC investment officer Tamara Lansky noted that the IFC provides technical support for small enterprises of five employees or less, a category into which 95 percent of businesses in the West Bank and Gaza fall. Three full-time IFC staff members work on medium-scale projects with total capital of $5 million or less. Of traditional IFC projects of $5 million and above, current projects are the Bethlehem Hotel and the Gaza power project.

Among other projects in which the IFC is involved, Ms. Lansky noted, are establishment of a housing finance institution through the IFC trust fund, improvement of the regulatory environment, and upgrading of the insurance sector to European Union standards. She cited as a current success story the opening within the past year of the Nablus Stock Exchange, one of the most modern in the region.

The final IFC speaker was Kunio Kikuchi, who highlighted the beginning of construction on the Gaza Industrial Estate, the first industrial zone within the Palestinian Authority-administered areas, which will allow Palestinian workers to be employed near their homes, free from the harassment of crossing the Israeli border checkpoints every day. Tenants are expected to be industrialists within Gaza, Israeli companies and finally international companies.

To finish the day, Salah Jallad made a few additional remarks concerning the Bethlehem Hotel and Herod's Pools project, which his contracting company is constructing. He warned that West Bank and Gaza unemployment can kill the peace process and reiterated that economic development is the only way to avert this tragedy.

—Michael S. Lee

PEACE FOR JERUSALEM...PEACE FOR OUR CHILDREN

The paths of three ordinary women—Michal Shohat, Jewish; Claudette Habesch, Christian; and Nahla Asali, Muslim—recently converged, not in Jerusalem where all three reside within a mere 10 minutes from one another, but in the United States where they came to speak directly to the American people about their quest for peace in a shared Jerusalem.

They reached some 5,000 Americans directly in churches, mosques, synagogues and community centers and millions more through airwaves and newspapers in a tour organized by Jerri Bird, president of Partners for Peace, and a remarkable network of dedicated coordinators in Minneapolis, St. Louis, Seattle, San Francisco, Atlanta, Roanoke, Baltimore, Princeton, Philadelphia and Washington, DC.

The message of the three Jerusalemite women throughout their tour was that a just solution to the Israeli-Palestinian conflict does exist, based on a shared and undivided Jerusalem serving as capital to two states, Israel and Palestine. All three believe that it requires only courage from their respective political leaders to devise the formula by which two seemingly divergent national aspirations can find common ground and secure for their children the thus far elusive peace.

Michal Shobat, born on a kibbutz to East European parents who emigrated to Israel in 1948, hopes that her 12-year-old daughter will not have to serve in the army, as have her two older children. Secretary of the Meretz Party and serving on Jerusalem's Municipal Council, Mrs. Shohat believes in a two-state solution, with Israel and Palestine coexisting side-by-side with recognized borders. "Both sides have suffered enough," she said. "Maybe it is up to us women to bring about this peace, because we give life, we don't take it."

Claudette Habesch, born in Jerusalem to Christian parents whose families have been in the Holy City for at least 300 years, seeks reconciliation. "We want reconciliation and peace. The process of rectifying the injustices must start today," she says, "so that tomorrow we have a permanent and lasting peace to be enjoyed by the Palestinian and Israeli children."

Nahla Asali, born in Jerusalem to Muslim parents who trace back their presence in the city 500 years, seeks the adoption of one simple principle: live and let live. "It breaks my heart to see the harmony of Jerusalem give way to a cacophony that silences the voices of reason. It is this voice of reason that we came here to give expression to," she said.

These women called upon Americans to send a message to their government, the co-signer on this failed agreement, that it is time for the United States to put aside domestic politics and act as the honest broker it professes to be.

Audiences saw the women not as representatives of their countries but as mothers and, in the case of Mrs. Habesch and Mrs. Asali, also as grandmothers, who do not want their legacies to be a perpetuation of suffering and who no longer want to see their children die.

—Lama Habal