DOCUMENT A/1847

3 December 2003

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Security in Europe and stabilisation in the Middle East

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Document A/1847

3 December 2003

Security in Europe and stabilisation in the Middle East

REPORT¹

submitted on behalf of the Political Committee²
by Mrs Durrieu, Rapporteur

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¹ Adopted unanimously by the Committee on 1 December 2003.

² Members of the Committee: Mr Martínez Casañ (Chairman); MM Pangalos, Hancock (Vice-Chairmen); MM André, de Assis, Mrs Azevedo, Mr van Baalen, Mrs Bolognesi, Mr Delattre, Mrs Delvaux-Stehres, Mr Duivesteijn, Mrs Durrieu, MM Floros, Goutry, Guardans I Cambó, Höfer, Hörster, Liapis, van der Linden (Alternate: Van Winsen), Lintner, Marshall (Alternate: Lloyd), Masseret, Nazaré Pereira, Mrs Paoletti Tangheroni, MM Piscitello, Poty, Provera, Puche Rodríguez, de Puig, Rizzi, Rochebloine, Roth, Ms Tritz, Lord Tomlinson, MM Versnick, Vis, Wilkinson.

Associate members: MM Akçam, Ates, Benediktsson, Çavusoglu, Fajmon, Mrs Grabowska, MM Hegyi, Kaminski, Kasal, Kobielusz, Livanelli, Marthinsen, Nemeth, Pelc, Tabajdi, Width, Wojciechowski.

N.B.: The names of those taking part in the vote are printed in italics.

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RECOMMENDATION 737¹

The Assembly,

(i) Considering that the European Union will be a close neighbour of the Middle East in the near future and that the instability of this region compromises the security of Europe;

(ii) Considering the importance of the many historical, cultural and economic ties between Europe and the countries of the Middle East, which have already led Europe to become actively involved in the region by including it in the Barcelona Process and by establishing the instruments for a new neighbourhood policy;

(iii) Aware that settlement of the Israeli-Palestinian conflict is essential for peace and stability in the Middle East;

(iv) Taking the view that the procedure used for the Madrid Peace Conference, with its Palestinian, Syrian, Lebanese and multilateral tracks, should remain the reference for an all-inclusive peace settlement in the region;

(v) Considering furthermore that the achievements of the 1993 Declaration of Principles (Oslo I) and the 1995 Taba Agreement (Oslo II) are essential building blocks for any future peace settlement;

(vi) Taking the view that in this context due consideration should also be given to the Arab Peace Initiative, taken in Beirut in March 2002, which provides one of the keys to a global settlement of issues outstanding between Israel and the Arab countries;

(vii) Considering the importance of the implementation of the road map as proposed by the Quartet (the United States, Russia, the European Union and the United Nations), a process which ground to a halt following the renewed outbreak of violence in August 2003;

(viii) Considering that the October 2003 Geneva Accord, through which the initiating parties sought to pursue the Taba negotiations that were suspended in 2001, has had the merit of reviving public debate on a peace agreement and proving that the Israeli and Palestinian peoples are capable of finding representatives who can negotiate with each other responsibly on a basis of mutual trust and together propose a global settlement of all their problems;

(ix) Recalling the involvement of the international community and the UN Security Council in the Middle East conflict and regretting that despite all their commitment and endeavours, as reflected by numerous resolutions, they have never succeeded in bringing about a just and equitable settlement of the conflict;

(x) Taking account of the position of the various Arab countries and welcoming the stance taken by Jordan, which is helping to promote peace and stability in the region by taking advantage both of the close relations it enjoys with the other Arab countries and of its strategic alliance with the United States;

(xi) Aware that Jordan is making a serious effort towards democratisation and economic reform, while protecting itself against the potential risk of a "Jordanian-Palestinian confederation" and the threat represented by a surge in radical Islam;

(xii) Noting and regretting the political and strategic stance of Syria, which purports to be an observer standing back from the debate when in actual fact it is directly involved in events on the ground through its presence in Lebanon and its declared support for "radical movements";

(xiii) Noting that a result of this "strategic isolation" Syria is not taking any initiative, but has merely stated that it agrees to follow any decisions taken by the Arab countries;

(xiv) Noting that in strategic terms Syria is nonetheless at the centre of a region in which stability will not be restored until the Israeli-Palestinian problem and the current problems in Iraq are resolved, with Syria too showing commitment to the solutions found;

(xv) Regretting the decision of the US Congress to adopt the "Syria Accountability Act" which, if implemented, could be counterproductive in its effects;

(xvi) Supporting the EU's policy of seeking closer ties with Syria, inter alia through the conclusion of a Trade Cooperation Agreement within the wider framework of the Barcelona Process;

(xvii) Concerned about the situation in Lebanon, whose institutions and political parties are apparently not yet able to manage the country without substantial outside intervention, Syria being a case in point, and noting that this situation raises serious doubts about the extent of Lebanon's sovereignty;

(xviii) Noting that the problems of the Golan Heights and southern Lebanon warrant the Syrian presence but also that of Hizbullah, which is in total control of the area;

(xix) Aware of the extremely precarious situation of Palestinian refugees living on Lebanese territory, for the most part in camps and conditions of abject poverty, with no social or civil rights and very limited access to basic social services, particularly public health facilities and education;

(xx) Aware too that, in any future peace agreement between Israel and the Palestinians, a solution to the refugee problem that resulted in the permanent settlement on Lebanese territory of all the Palestinian refugees currently living there could upset the fragile balance between political and religious groups, and noting in this connection that the 1943 National Pact between Maronite Christians and Shiite and Sunni Muslims would appear to prevent domestic conflict and perhaps civil war breaking out in Lebanon;

(xxi) Taking the view that because of these specific problems concerning not only the Palestinian refugees but also the Golan Heights, Lebanon should be directly involved in any negotiations on a global solution;

(xxii) Welcoming the EU's policy of a renewed general dialogue with Iran, which is allowing the Union to play a useful and effective role in the crisis over Iran's nuclear programme;

(xxiii) Approving the EU's efforts to arrive at a Trade Cooperation Agreement with Iran, the conclusion and implementation of which depend closely on progress in the areas of political dialogue and counter-terrorism;

(xxiv) Noting that it will probably take time to stabilise the domestic situation and restore peace and security in Iraq;

(xxv) Considering the United States' decision to speed up the process of drafting an interim constitution and hand over power to a provisional government in Iraq by 1 July 2004, with the attendant dissolution of the Coalition Provisional Authority;

(xxvi) Deeming it important to give the primary role in this process to the United Nations, thus conferring legitimacy on multilateral efforts to provide the conditions for security and the reconstruction of the country;

(xxvii) Taking into consideration the positions of the protagonists in the Israeli-Palestinian conflict and welcoming the Palestinian Prime Minister's intention to call a truce including a ceasefire, but taking the view that this will be possible only if Israel makes a serious effort to support such an initiative by ending its policy of targeted attacks and its incursions into Palestinian towns and villages in the occupied territories;

(xxviii) Taking the view that the proposed truce must be accompanied by effective implementation of the road map drawn up by the Quartet;

(xxix) Recalling that the establishment of Israeli settlements in the occupied Palestinian territories constitutes an infringement of international law and has led to serious violations of the rights of the Palestinians living in those territories;

(xxx) Taking the view that Israel's aggressive settlement policy, combined with the building of the security fence, is an obstacle to any real possibility of creating an independent, viable Palestinian state and that this policy is fomenting the conflict;

(xxxi) Considering that an immediate step towards restoring security and stability in the occupied territories means that Israel must cease work on expanding its settlements, persuade Israeli citizens to stop migrating to those settlements, call a halt to the building of new by-pass roads and commit itself to withdrawing to the borders fixed in 1967;

(xxxii) Considering that the right of a country and a people to put up proportionate resistance to an occupying power should not in itself be considered to be an act of terrorism;

(xxxiii) Condemning any act of terrorism directed against unarmed and unprotected citizens;

(xxxiv) Recalling that it will not be possible to ensure lasting peace and security in the region and bring the human suffering to an end unless all the countries directly concerned, in particular Israel, Palestine, Jordan, Syria and Lebanon, reach agreement on a global settlement of the conflict which has now been raging for over 50 years and which also involves the Golan Heights and the sensitive and painful issue of the refugees living, very often in camps, in the countries bordering on Israel;

(xxxv) Recalling that demographic trends in the area stretching between Jordan and the Mediterranean are bound to upset the balance that still makes the political solution of two states existing side by side within the borders fixed in 1967 a possibility, and the Israeli Government and the Palestinian National Authority must quickly conclude a peace agreement based on the two-state principle, which implies immediate withdrawal from the settlements and the demolition of the security fence;

(xxxvi) Recognising that each country and the international community must take on responsibility for the Palestinian refugees, whose right of return is a fundamental principle that must be complied with, as is the right to compensation, and stressing that the refugee problem is a political, economic and above all a human issue;

(xxxvii) Aware, however, that permanent settlement in provisional host countries, particularly Jordan and Lebanon, is problematic, that settlement in third countries is uncertain and that it is therefore necessary to find a pragmatic way of implementing the right of return without destabilising the countries in the region;

(xxxviii) Expressing the opinion that if the two parties are unable to implement the road map effectively within a reasonable timeframe, the only alternative would be intervention by the international community, a clear mandate for the United Nations and the deployment of a multinational force tasked with restoring security and stability in the region;

(xxxix) Noting that such intervention could improve security and stability in Europe and the world as a whole and that settlement of the Israeli-Palestinian conflict would also be an effective contribution to the fight against terrorism;

(xl) Considering that such a mandate should include the establishment of a civilian task force to help the Palestinian National Authority establish democratic, transparent and effective institutions capable of governing a viable Palestinian state;

(xli) Emphasising that the critical attitude of Europeans towards the policy of Israel and its present government as regards the Israeli-Palestinian conflict and towards its policy as regards the occupied territories in particular should under no circumstances be construed as a new form of anti-Semitism,

1. To redouble its efforts to convince both the Israeli Government and the Palestinian National Authority that it is urgent to reach a two-state solution, immediately resume implementation of Phase I of the road map and prepare for the international conference referred to in Phase II, which will take account of the solutions proposed in both the Arab Peace Initiative and the Geneva Accord;
2. To work actively, should it prove impossible to resume implementation of the road map, for intervention by the international community, for a clear mandate to be given to the United Nations and for the deployment of a multinational force tasked with restoring security and stability in the region, taking care to ensure that such a mandate makes provision for the establishment of a civilian task force to help the Palestinian National Authority establish effective democratic institutions capable of governing a viable Palestinian state;
3. To ensure compliance in any event with the right of return of the Palestinian refugees, which is a fundamental principle, as is the right of compensation, taking account nevertheless of the need to find a pragmatic way of implementing this right of return without destabilising the countries in the region;
4. To continue its efforts to ensure that power and sovereignty in Iraq are transferred to the Iraqi people as soon as possible, while doing everything in its power to prevent the country from disintegrating and falling prey to regional warlords, and taking into account the member states' obligations under UN Security Council Resolution 1551.

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PREFACE

Israel

In Tel Aviv

H.E. Mr Gérard Araud, Ambassador Extraordinary and Plenipotentiary of France in Israel

Mr Amram Mitzna, Leader of the Israeli Labour Party

Mr Elie Barnavi, Former Ambassador of Israel in France

Brigadier General Schlomo Brom, Negotiator of the Geneva Initiative

Mr Yossi Alpher, Director of the Bitterlemons NGO

In Jerusalem

H.E. Mr Régis Koetschet, Consul General of France in Jerusalem

In Ramallah

Mr Rafic al-Natsheh, President of the Palestinian Legislative Council

Mr Nabil Chaath, Minister for Foreign Affairs

Mr Yasser Arafat, President of the Palestinian National Authority

Mr Abu Ala, Prime Minister of the Palestinian National Authority

Jordan

H.E. Mr Jean-Michel Casa, Ambassador Extraordinary and Plenipotentiary of France in Jordan

Mr Zeid Rifaï, President of the Jordanian Senate

Mr Fayez Tarawneh, Vice-President of the Jordanian Senate

Prince Faysal, Chief-of-Staff of the Jordanian air force

Mr Faysal Fayez, Prime Minister of Jordan

Mr Marwan Muasher, Jordanian Minister for Foreign Affairs

Syria

Mr Patrick Pascal, First Counsellor, Ambassador of France in Syria

General Moustapha Tlass, Syrian Defence Minister

Mr Mahmoud Al-Abrache, President of the People's Assembly of Syria

Mr Wallid El-Mouallem, Syrian Deputy Minister for Foreign Affairs

General Hassan Turkmani, Chief-of-Staff of the Syrian armed forces

Lebanon

H.E. Mr Philippe Lecourtier, Ambassador of France in Lebanon

Mr Jean Obeid, Lebanese Minister for Foreign Affairs

Mr Mahmoud Hammoud, Lebanese Minister for National Defence

Mr Jamil Al-Sayyed, General Security Director

Mr Richard Cook, Director of UNRWA in Lebanon

Mr Salim Nasr, Director of the Lebanese Centre for Policy Studies, Tayyar Center

Visit to south Lebanon and to the French contingent of UNIFIL.

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EXPLANATORY MEMORANDUM

submitted by Mrs Durrieu, Rapporteur

1. The Middle East covers an area that can be said to stretch from Egypt to Iran. The Near East is a smaller region comprising, inter alia, those countries directly involved in the Israeli-Palestinian conflict (Israel, Palestine, Jordan, Syria and Lebanon).
2. There is no doubt that the Israeli-Palestinian conflict is the root cause of the region's instability for 50 years. Today, the problems arising out of the conflict have been further complicated by the situation in Iraq. All these factors are prolonging the conflict, fomenting terrorism and adding to instability.
3. Europe's security is directly affected by the instability, first because of its geographic proximity and also as a result of the EU's imminent enlargement. Greece, Cyprus and Malta stand at the gateway to the Near East.
4. There are many historical, cultural, economic and political ties between the Near East and the various European countries.
5. All European states are endeavouring to maintain stability in the region, some through cooperation with UNTSO (the United Nations Truce Supervision Organisation), which has a mandate to supervise observance of the truce, and through their participation in UNDOF (the United Nations Disengagement Observer Force) on the Golan Heights, and UNIFIL (the United Nations Interim Force in Lebanon), which patrols the blue line between Israel and Lebanon.
6. The European Union is involved in many cultural and economic programmes and is also a member of the Quartet (United States, United Nations, Russia and the EU) which took the "road map" initiative in the most recent phase of the peace process.
7. All these reasons justify the choice of this report at this stage and make it necessary to take stock of the latest developments in a conflict which has many ramifications.

1. Introduction

8. On 24 June 2002, President George W. Bush acknowledged for the first time that the Israeli-Palestinian conflict could only be settled by a two-state solution, a declaration which was welcomed by the EU and many others.
9. In December of that same year, the Middle East Quartet, consisting of the United States, the United Nations, Russia and the EU, agreed on a new peace plan, baptised the "road map" (see Appendix I). Although copies of the road map were distributed to the Israeli Government and the Palestinian National Authority (PNA), official publication was delayed because of the 28 January 2003 general election in Israel, the war in Iraq and the insistence of both Israel and the United States that the Palestinian Prime Minister should first take office.
10. Bowing to pressure exerted by the international community, the Palestinian Legislative Council voted on 10 March 2003 to create a new post of Prime Minister, which would result in less power for President Yasser Arafat. This was one of the United States' main conditions for taking a renewed interest in the peace process. Prime Minister Mahmoud Abbas and his cabinet finally secured the approval of the Palestinian Legislative Council on 29 April and the next day the Middle East Quartet embarked on the road map.
11. The road map is a programme consisting of different phases which aims to achieve "a final and comprehensive settlement of the Israeli-Palestinian conflict by 2005 ... (based on) ... an independent, democratic and viable Palestinian state living side by side in peace and security with Israel and its other neighbours".

2. Acceptance of the road map

12. Each of the parties directly concerned by the road map reacted differently. Shortly after its official presentation, it gave rise to two types of reaction on their part. The Palestinians declared full acceptance of it and Prime Minister Mahmoud Abbas stated in the Palestinian Parliament that "the road map must be implemented, not negotiated". He said that the PNA government would commit itself to the road map and honour all its diplomatic and security aspects provided Israel fulfilled its obligations. He saw the road map as a tool for bringing the state of chaos and armed conflict to an end and for enabling the Palestinians to exercise their right to self-determination and the establishment of a Palestinian state with Jerusalem as its capital.
13. Israeli acceptance took much longer but on 23 May 2003, Prime Minister Sharon announced that Israel agreed to accept the road map. This acceptance was accompanied by 14 reservations (see Appendix II). While the United States promised to address these reservations fully and seriously, it added that this promise should not be seen as an assurance that all Israeli demands would be met.

3. The Aqaba Summit

14. Acceptance of the road map by both parties was sealed at the Aqaba Summit of 4 June 2003. In his final statement Prime Minister Sharon underlined Israel's support for a two-state solution to settle the conflict. He reminded the Palestinians that there could be no peace unless the acts of terrorism and violence were brought to a halt. Furthermore, he promised the immediate removal of unauthorised settlement outposts and reaffirmed Israel's wish to live in peace with all its Arab neighbours.
15. Prime Minister Abbas emphasised the Palestinian commitment to the plan for bringing the Israeli-Palestinian conflict to an end. In his view, the various phases set out in the road map were in the national Palestinian interest. The Palestinian National Authority would therefore take all the necessary steps to reform its institutions and do everything in its power to stop the violence and terrorism once and for all.
16. Despite all the rhetoric, the first three weeks that followed the Aqaba Summit were marked by a spate of extremely violent incidents entailing many innocent civilian causalities. A major suicide bomb attack in Jerusalem and the assassination of a Hamas leader were examples of the increasing spiral of violence. However, this period also saw some positive developments. The government of Israel made a start on the removal of unauthorised settlement outposts and the PNA introduced its "100-Day Plan of the Palestinian Government". Nevertheless, the hopes the international community had placed in the road map were severely dented and many people began to write off this new peace initiative.

4. Parties start implementing the road map

17. On 29 June, Hamas, Islamic Jihad and Fatah announced a three-month ceasefire with immediate effect. However, they stated that it would only hold if Israel ended its policy of targeted assassination, released all Palestinian prisoners held in Israeli prisons and lifted the restrictions imposed on President Arafat.
18. The ceasefire saw the start of a relatively peaceful period and, despite some violent incidents, both sides exercised restraint, thus creating the window of opportunity needed to start implementing Phase I of the road map. The Israeli Government started to withdraw its troops from the northern part of Gaza and from the city of Bethlehem in the West Bank, leaving the task of security checks to the Palestinian security forces. It also dismantled some more unauthorised settlement outposts.
19. Although it was not required to do so under Phase I of the road map, on 6 August Israel released 336 of the estimated 6 500 Palestinian prisoners detained in prison. The released prisoners had been held without charge or had been convicted of relatively minor offences. But this initiative, which Israel intended as a sign of goodwill, provoked disappointment among the Palestinians because of the thousands of prisoners who were not released.
20. Sadly, Prime Minister Sharon did nothing to freeze settlement activity as required by Phase I of the road map and even publicly refused to do so. In the meantime, Israeli colonists established new, unauthorised outposts which outnumbered those demolished by the government. At the same time, the government went ahead with the erection of the "security fence" in West Bank occupied territory.
21. In the meantime, the PNA had started work on its internal reform as required by Phase I of the road map. In accordance with its 100-day plan, many changes were made. Mahmoud Abbas' Finance Minister, Salam Fayyad, moved swiftly to consolidate the finances and accounts of the Palestinian National Authority and extricate them from the influence of the President.
22. Unfortunately, Prime Minister Abbas ran up against serious difficulties in his efforts to reform the Palestinian security forces. President Arafat refused to transfer his control over the Palestinian uniformed police to the Prime Minister. As a consequence, Prime Minister Abbas was powerless to reorganise and rebuild the PNA security apparatus in order to combat terrorism and violence against Israel effectively, this being an essential requirement of Phase I of the road map.
23. At the end of August 2003, President Arafat took deliberate steps to further weaken Prime Minister Abbas's position by appointing Nasser Yousef to the post of Interior Minister, a position which the Prime Minister had held since April, and by naming Jibril Rajoub National Security Adviser, thus apparently creating a post which competed with that of Mr Abbas's Minister for Security, Mohammed Dahlan.

5. A new beginning after an untimely halt

24. The period after 29 June showed that the two parties were willing to work together to take the first steps necessary to achieve long-term stability in the Middle East. Even when violent incidents occurred, both sides showed tolerance and patience in order to give the road map the space it needed to develop. But despite a number of positive developments, the implementation process remained very fragile. This became clear with the outbreak of a fresh round of terror and violence at a very critical moment, with Israel preparing to withdraw its troops from the Palestinian cities of Jericho and Qalqilya, and Abbas negotiating with leaders of the Palestinian militant groups to extend the existing ceasefire. Bloody terrorist attacks and counter attacks (20 and 22 August 2003) marked the end of seven weeks work to ensure that the road map succeeded. On 22 August, Hamas and Islamic Jihad formally declared the end of the ceasefire.
25. Clearly, both sides failed to meet their obligations as defined in the first phase of the road map. In regard to the Palestinian National Authority (PNA), it was President Arafat, and not Prime Minister Abbas, who had control of the complicated Palestinian security apparatus. The PNA did not seriously confront the Palestinian radical movements engaged in terror or even start to dismantle terrorist capabilities and infrastructure. Even if Prime Minister Abbas had wanted to tackle the security issue, he could not do so since he lacked the power and authority needed to address it. Moreover, most analysts are agreed that any effective action in that direction might easily have led to civil war in the Palestinian territories.
26. However, Israel's obsession with security, while understandable, has prevented it from showing any sign of flexibility. The Israeli Government pays little heed to the humanitarian situation in the Palestinian territories. Its continued settlement activities, the building of the security fence, curfews, restrictions on the movement of people and goods, are all in contradiction with the road map. This attitude has been counterproductive and has only incited the already desperate Palestinians to further violence. No positive action was taken to support Prime Minister Abbas's authority, a factor recently strongly criticised by Israeli Chief of Staff, Lieutenant General Moshe Ya'alon, who accused the Israeli Government of being "tight-fisted in gestures" to the Palestinian Government, thus contributing to its collapse. He stated that "The tight closure being enforced on the Palestinians only generates hatred that will explode in our face" and warned finally that Israel, in managing the conflict by military means alone, without offering the Palestinians any prospect of a political settlement, was likely to bring down Prime Minister Ahmed Qurei's new government and lead to chaos².
27. Israel, supported by the United States, demanded more security but offered nothing in return. It had stood quietly by until Prime Minister Abbas's Government collapsed. Precious time was lost because of an almost total lack of mutual confidence. Moreover, the general impression is that both the present leaders, Yasser Arafat and Ariel Sharon, each for different reasons, lack the will to take decisive steps towards a lasting peace.
28. Implementation of the road map has come to a standstill. but the road map itself is not necessarily dead. It is worth noting, from a wider perspective, that by adhering to the road map an Israeli Government, for the first time in history, gave its support to the creation of a democratic Palestinian State. Even during the hammering out of the Oslo Accords, the left-wing Israeli Government (including the late Prime Minister Rabin) did not explicitly refer to a Palestinian state as an option for the future. The road map also succeeded in helping bring about important reforms in the PNA's finances, introducing more transparency in governance and putting judicial reforms on track. Now that the new Palestinian Government of Prime Minister Ahmed Qurei is in place, the implementation of Phase I could soon get back on track, if both sides are prepared to take the necessary steps.

1. General situation

29. Since the beginning of the second Intifada, the situation in Israel has undergone a dramatic deterioration. The government, under Prime Minister Ariel Sharon, has chosen to concentrate on ensuring security in Israel by force. There have been repeated military incursions into the villages and cities of the West Bank and the Gaza Strip and it has started to build a security fence which is supposed to protect not only the territory of Israel but also a number of settlements in the West Bank against terrorist attacks. It has continued with its settlement policy and its targeted attacks on Palestinian radical activists. Prime Minister Sharon is said to take the view that the West Bank and the Gaza Strip should remain under Israeli control for strategic reasons.
30. Your Rapporteur was able to ascertain that while many Israelis, even among the most moderate, are in favour of a policy of providing security for the population, including the building of a security fence, the number of people who want peace is increasing all the time and there have been widely publicised actions recently, criticising government policy. Some Israeli defence force (IDF) pilots refused to bomb targets in the West Bank and Gaza. IDF Chief-of-Staff Yaalon has said that Israeli military operations in the West Bank and Gaza which aim to root out terrorism are counterproductive, a claim subsequently given strong support by four former directors of Shin-Bet, the Israeli security service. Finally, the commemoration of the assassination of former Prime Minister Rabin culminated in a massive demonstration in favour of peace.
31. At the same time, a number of leading figures in Israel have proposed peace plans together with their Palestinian counterparts and particular reference has been made in this connection to the Geneva Accord and the Ayalon/Nusseibeh Initiative. According to opinion polls, most Israelis would prefer a final agreement based on a two-state solution, withdrawal of the IDF from most of the occupied territories and a partition of Jerusalem, but they are afraid to act now because of the action the Palestinians, whom they do not trust, might take as a result of such a solution. The pattern of reaction on the Palestinian side is similar -including a lack of confidence in the Israelis.
32. The Geneva Accord has an important role to play in influencing public opinion. The peace camp in Israel considers it to be a historical document because it demonstrates that there are well respected Israelis and Palestinians who have proved they are able to conclude a detailed agreement without leaving any of the important issues out. Both sides have made painful concessions to make an overall agreement possible.
33. According to some Israeli analysts, the people are in favour of peace but the politicians do not appear to be ready to translate that desire into reality. In fact, the Israeli political class is in the throes of a deep crisis. The two traditional main parties, Labour and Likud, are in disarray and, taken together, did not even obtain 50% of the vote in the last legislative elections. Political leaders are afraid to take bold initiatives and both parties have lost their ideology. The situation has worsened recently because of the fact that so far the Palestinian National Authority (PNA) has not been able to end violence in the territories or control the radical movements.
34. Politicians welcome the recent peace initiatives, which appear to have been well received by the public (40%). But many tend to think that peace cannot be established without very strong outside pressure. They believe that the only road to peace based on a two-state solution is via a UN mandate which includes the intervention of a multinational force, accompanied by a civilian force. This should help the Palestinians to set up an effective government and administration for the Palestinian territories. However, they see little chance of such a solution being considered until the situation in Iraq improves and the American presidential elections have been held. Others argue that no peace agreement will work without supervision by the international community.
35. However, they also take the view that the present Sharon government will be against international intervention as this would thwart its policy towards the Palestinians.
36. But time is running out for a two-state solution because demographic developments are going to produce a situation in which, in ten years' time, there will be more Arabs than Jews in the region lying between the Jordan River and the Mediterranean. The solution of a bi-national state is seen as a catastrophe which would be disadvantageous to both Arabs and Jews. Europeans are being pressed to intervene in order to finalise once and for all a global peace settlement for the Middle East.
37. Repeatedly, analysts make it clear that there are several obstacles to a two-state solution: the continuation of Israel's settlement policy, the natural growth of the Palestinian population, the lack of confidence of the Israeli population in their Palestinian neighbours and the fact that President Arafat does not seem to have renounced force as a means of influencing the process.
38. There is also the fact that the Palestinian National Authority has to confront the Palestinian radical movements, which the same analysts think can be done without triggering a civil war because of the Palestinians' fear that their society would break up.
39. Any peace agreement can be reached only if strong outside pressure is exerted by both the United States and Europe on each of the parties. The United States will have to convince the Israeli Government that its policy, particularly as regards the settlements, the present route of the security fence and many of the military activities in the occupied territories does not facilitate the peace process. On the other hand, Europeans could use their contacts with the Palestinian National Authority to convince it that the terrorist activities of the radical Palestinian movements must stop.
40. Most Israelis are in favour of the security fence as a means of protection against terrorist attacks and point out that the fence around the Gaza Strip has proved effective. Initially, the present government did not seem to be in favour of building the fence but finally caved in to public pressure to do so while at the same time changing its route in order to surround major settlements. In practice, the security fence, combined with the settlements and the by-pass roads, is already leading to a bantustanisation of the population in the occupied territories.
41. Many moderate Israelis argue that the security fence should not be condemned outright but that its present route should be subject to discussion. They are in favour of giving up the occupation and building a security fence that more or less follows the "green line" between Israel and the occupied territories, which would separate the Israelis from the Palestinians.

2. Social and economic situation

42. The present state of affairs in the peace process and the efforts to break the deadlock cannot be considered without taking account of the grim social and economic situation in Israel. The continuing adverse effects of the domestic security situation and the worldwide economic crisis have resulted in a slowdown in economic activity, which started at the end of 2000.
43. In October 2003, a nine-day port strike by 50 000 government ministry employees and the announcement by the Histadrut Labour Federation of possible new labour sanctions, created an atmosphere of crisis and social unrest³.
44. The struggle between the Israeli Government and labour federations is taking place against the background of a severe, prolonged recession in which the private sector is under pressure, unemployment is running at around 11%, most people's wages have been eroded⁴ and demand is in decline. Both domestic and foreign investments have been severely hit⁵. Many criticise the Israeli Government's handling of the present economic problems. Its decisions have been characterised as improvisation and are not the result of the careful consideration and long-range planning that most of the problems require⁶. It has used the expansion of public sector jobs as a means of solving the problem of unemployment in the private sector in the short term, preferring to ignore the fact that this may push government spending up for a long time to come and in the end may well restrict growth in the business sector.
45. In 2002, the government had to introduce austerity measures which, among other things, resulted in a 5% reduction in social benefits. The average wage in Israel has dropped substantially in recent years, with Israelis losing 10% of their purchase power.
46. While Israel needs long-term, stable, social programmes designed to raise the level of education and income of the majority of its citizens, every government in recent times, whether left or right, seems to have forgotten about its social responsibilities. Government policy has consisted of tax cuts for the business sector and has resulted in ordinary Israelis having to bear an additional burden in the areas of education, health and social welfare.
47. Today, a total of 21% of Israeli citizens are living below the poverty line (540 euros per month for a couple without children). The Intifada has had dramatic effects on the tourism sector⁷. At present, tourism stands at half the level it reached in 2000. Other sectors of the Israeli economy, especially the agricultural and construction sectors which rely heavily on Palestinian labour, have been severely hit by the Palestinian uprising and the ensuing security measures and closures of Palestinian territory. This supply-side labour shortage has resulted in wages in these sectors shooting up.
48. In the past, various prominent Israeli academics, politicians and senior army commanders have warned that the ailing Israeli economy will not be able to support the military campaign against the Palestinians for much longer. Many say that only a return to the peace process can prevent the economy from collapsing in the long term⁸.
49. Despite the fact that in budgetary terms the cost of the Intifada comes nowhere near that of a full-scale war against another country and is relatively inexpensive, it has already reversed Israeli budgetary trends because of the need to increase public expenditure on social security, unemployment, poverty and military activities.

3. The settlement policy

50. Israeli policy toward the settlements in the West Bank has undergone various changes over the years, reflecting the divergent political views of decision makers and developments in the international arena.
51. The Israeli settlement policy was first introduced after the end of the six-day war in June 1967. The government immediately began building settlements in areas to the north, east and south of West Jerusalem. These areas were annexed to Jerusalem and Israel regarded settlement-building as a way of preventing any challenge to its sovereignty over them. At the same time, as a result of pressure from various groups of citizens and initiatives from within government, the first settlement was established on the West Bank. The government intended to hold that territory as a bargaining chip for future negotiations.
52. At the end of 1967, preparation began on a strategic plan which, although never formally approved, provided the basis for the layout of the West Bank settlements in the following years. In its final draft (1970) the plan proposed Israeli annexation by means of settlement of almost half the West Bank. The remaining half, two unconnected areas to the north and south, was supposed to become part of a Jordanian-Palestinian state.
53. In certain religious right-wing circles, Israeli's victory in the 1967 war, was interpreted as a historic opportunity to turn the vision of the biblical "Whole land of Israel" into a reality. In 1974 these factions formed the movement of Gush Emunim (Bloc of the Faithful), with the intention of forcing the Israeli Government to establish as many settlements as possible across as wide an area as possible. In some cases the Gush Emunim group attempted to establish settlements without government authorisation, in others it received permission and support from the authorities.
54. After Likud came to power in 1977, Israel's settlement policy assimilated more of the ideas of the Gush Eminum group. Plans prepared by Drobless⁹ and Sharon¹⁰, although not officially adopted, constituted guideline documents for the government. Both plans recommended the establishment of settlements in areas of the West Bank as a way of furthering annexation and promoting security, and led the government to authorise dozens of settlements near Palestinian population centres in the occupied territories.
55. Despite a small decrease in settlement activity during the 1984 Government of National Unity, the Likud Government (1988-1992) continued the policy apace. The main goal was the expansion of existing settlements, illustrated by a 60% increase in the settler population over four years. It should be noted that over the same period only a small number of new settlements were established, owing to open confrontation between the United States and Israeli Governments.
56. In 1992, the Rabin Government came to power, offering the possibility of a real change in Israel's settlement policy. The Israeli Government promised the United States that it would not establish new settlements and would halt the expansion of the existing ones by any method other than the growth of the population. This commitment was also included in the basic government guidelines, with exceptions made for settlements situated in the Greater Jerusalem area and the Jordan Valley. Moreover, in the 1995 Israeli-Palestinian interim agreement (Oslo II), it was stated by both parties that: "neither side shall initiate or take any step that will change the status of the West Bank and the Gaza Strip pending the outcome of permanent status negotiations"¹¹.
57. Despite these undertakings on the part of the Israeli Government the number of settlements, and their population, increased. During the period of office of the Rabin government, almost 10 000 new housing units were completed throughout the West Bank, construction of which had begun under the previous government.
58. The increase is also the result of the absence of a detailed definition of the term "natural growth". All Israeli governments have interpreted this term as including not only natural growth of the existing population but also the growth of the population by migration. In addition, Israel used the expression "natural growth" to establish new settlements under the guise of new districts of existing settlements
59. In recent years, settlers have found a new way of operating. By parking a number of caravans on a possible new location, they try, without the approval of the authorities, to establish a new settlement. These locations are better known by the term "outpost". Outposts start as unauthorised settlements, but sometimes end up by being approved.
60. Since the Oslo process, all Israeli governments have implemented a policy of settlement growth by simply "meeting" so-called natural-growth requirements for settlements. As a result, the settler population has grown dramatically. Whereas in 1993, there were some 100 500 settlers living on the West Bank, by 2000 their number had increased to 191 600, a growth rate of some 90%. The steepest increase, it should be noted, took place under the administration of Ehud Barak.
61. The trend has continued under both Sharon governments. Although basic government guidelines include the statements: "... During its term of office, the Government will not establish new settlements. The Government will provide for ongoing needs in the development of existing settlements..."¹², the total number of settlers (on the West Bank and in the Gaza Strip) has increased by a further 30 000. In January 2001, 203 000 settlers were living in settlements in the occupied territories. Today, that number has increased to 231 443 ¹³. Given the Sharon Government's current settlement policy it seems likely that their numbers will continue to rise steeply.

4. The security fence

62. After the failure of the Oslo peace process some leading Labour politicians like Barak and Ben Eliezer, concluded that to protect the state of Israel a barrier should be erected separating Israelis and Palestinians. This idea was never implemented under the Labour Government. When Prime Minister Ariel Sharon came to power, he was initially opposed to the idea, not least because it might have consequences detrimental to Israel's settlement policy. However, under massive public pressure to stop the suicide attacks that were escalating both in violence and in number, he revised his position. On 14 August 2002, the Israeli security cabinet approved the first 115-kilometre stage of the security fence and construction began.
63. The security fence is a system serving a dual purpose: to warn against and prevent attempts to infiltrate. It consists firstly of a fence fitted with electronic detection equipment to the east of which is a service road, another fence and a canal, in order to prevent a breakthrough using a vehicle. The average width of the barrier is 60 metres but this varies with the topography. It consists of chain-link fencing over 90% of its length but at certain points, especially in areas where it might be possible for Palestinian terrorists to shoot at Israeli passers-by or people in nearby towns, it becomes a solid wall with watchtowers.
64. The fence loosely follows the 1967 "green line" between Israel and the West Bank but at several points cuts deep into the occupied territories, with the stated objective of protecting settlements. The route of the fence has been devised so as to enclose about 80% of settlers living on the West Bank and is also intended to improve control over the entry of people and goods from there into Israeli territory. The fence has largely been built within the Palestinian territories - not along the "green line" or in Israeli territory, but in occupied territory.
65. The fence will cut many Palestinian villages off from the rest of the West Bank. The physical division of the West Bank into tiny enclaves will place heavy restrictions on Palestinian freedom of movement. Palestinians need to hold a special pass to be allowed to travel from one "mini-Bantustan" to another and road blocks, often open only at restricted times, further hinder their movement.
66. Israel has now completed construction of the first phase of the fence. More than 150 kilometres have been built in the northern West Bank and the Jerusalem area, with the result that towns and villages such as Tulkarem, Qalqilya and Jenin are surrounded. The route in the Jerusalem area, known as the "Jerusalem envelope", creates a separation between the Ramallah and Bethlehem districts and also separates the Arab parts of East Jerusalem from the other parts of the West Bank.
67. The main reason the Israeli Government, with the support of an overwhelming majority of the Israeli population, decided to build the separation fence was to prevent terrorism on Israeli soil. Most Israelis complain that the Palestinians to date have taken no concerted, effective action to confront radical Palestinian movements, and to disarm and disband them so as to root out terrorism originating in the Palestinian Territory.
68. Israel's representative to the United Nations has stated that the members of the current Palestinian leadership, by deciding to remain passive and even to support terrorism, have built the fence with their own hands.¹⁴
69. According to the Israelis, no other option was open to them but to build a fence. Terrorists operate from the heart of civilian centres and Israel is aware that there is no foolproof way of preventing that kind of activity without serious impact on the lives of the Palestinians amongst whom the terrorists are hiding. Israel regards the construction of a security fence as the most effective non-violent means of preventing terrorists getting through and quotes its experience in the Gaza Strip where, since the construction of a similar fence, not a single terrorist has succeeded in penetrating into Israel from Gaza and carrying out an attack. At the same time, however, most Israelis are turning a blind eye to Palestinians' right to live and move freely.
70. Israel hopes that the fence will allow it significantly to reduce the presence of its forces and military operations in the occupied territories. Moreover, it thinks that the fence will also lead to the removal of many roadblocks and checkpoints and consequently to greater freedom of movement for Palestinians within the West Bank, without Israeli's vulnerability to terrorism being thereby increased.
71. Palestinian reactions to the building of the security fence have without exception been negative. Some have called the fence a "Berlin wall", others an Israeli attempt to create a new form of apartheid. The Palestinian National Authority has accused the Israeli Government of using the fence as a way of determining unilaterally the borders of a future Palestinian state, and of a deliberate annexation of vital parts of the West Bank.
72. In addition to the political damage the fence causes, even greater damage is being wrought both in material and economic terms. As a direct consequence of its presence, valuable agricultural, irrigated land is being destroyed or put out of Palestinian reach, with major consequences for a Palestinian economy currently heavily reliant on agricultural production. Palestinians will also lose 18% of their share of the available water supply¹⁵ in the West Bank.
73. Moreover, the fence will also disrupt the daily lives of Palestinians by denying them access to schools, work and public services. A study prepared by the World Bank revealed that, after completion of the fence, over 100 000 Palestinians would find themselves cut off from the main area of the Palestinian territory.
74. According to Javier Solana, Secretary-General and High Representative for the CFSP, the Israeli Government not only has the right but also the duty to take measures to protect its citizens from terrorism. However, in doing so it must act in accordance with the rules of international law. In his words, "in a geographical area as volatile as the Middle East, it is crucial that actions by all parties be aimed at reducing tension, not increasing it"¹⁶.
75. Furthermore he expressed Europe's concern about the Israeli Government's decision to continue with the building of the security fence in the West Bank. In Europe's view, the fence forces decisions on the ground about land, the division of which has still to be agreed. The security fence is creating a fait accompli when it comes to the future border between Israel and the Palestinian lands, still subject to negotiation in any future peace agreement.
76. American reaction might be described as critical. Both the US President and the Secretary of State, Colin Powell, have repeatedly said that the fence is "a problem". According to the Secretary of State, a nation has the right to put up a fence if it sees the need for it, but when Israel's fence does not follow the "green line" the United States considers it a problem. Any fence ought to be built on Israel's own territory. The more Israel intrudes into Palestinian territory, the more trouble it will cause in future negotiations over the borders between Israel and any Palestinian state.
77. Notwithstanding, the US Government has not condemned the Israeli fence. Rather, it has preferred to start a quiet dialogue with the Israeli Government to discuss changes in the route.
78. On 21 October 2003, the United Nations General Assembly approved a Resolution demanding that Israel stop and reverse construction of the fence in the West Bank. The text of the Resolution expressed the "Assembly's particular concern that the route marked out for the wall under construction by Israel in the occupied Palestinian territory, including in and around East Jerusalem, could prejudice future negotiations and make the two-State solution physically impossible to implement and would cause further hardship to the Palestinians"¹⁷.
79. This Resolution, the outcome of hard bargaining between Europe and the Arab states, was adopted by 144 votes to 4 (including Israel and the United States) with 12 abstentions. A week earlier the United States had vetoed a UN Security Council Resolution condemning Israel's security fence as illegal and demanding it be taken down, on the grounds that such a Resolution would not contribute to the goals of peace and security in the region.

80. The situation in the Palestinian territories is desperate. The Palestinian National Authority (PNA) has so far been unable to assert itself as an effective governing body or establish the rule of law. Different radical Palestinian movements are acting more or less autonomously in the territories while the PNA's numerous security services have never managed to establish law and order.
81. As a result of Israeli military operations in the Palestinian territories, particularly since the beginning of the second Intifida, unprecedented damage has been inflicted on infrastructure, housing and agricultural lands. Closures and other restrictions have severely hampered those Palestinian administrative services that exist and brought any significant economic activity to a standstill. Israel is continuing to build its security fence in the face of fierce international opposition. In addition to Israel's settlement activities and the building of by-pass roads, this fence has resulted in the Palestinian territories becoming a patchwork of small pieces of land, making the development of a viable state and a healthy economy well nigh impossible.
82. As part of the road map the PNA had established a government under Prime Minister Abu Abbas but an internal power struggle over how the Palestinian security services should be organised and who should take responsibility for them, combined with a lack of outside support, finally brought his government down at the end of summer 2003. After protracted negotiations, a new government under Prime Minister Ahmed Qurei secured a vote of confidence from the PNA Parliament on 12 November 2003.
83. President Arafat and Prime Minister Qurei have agreed to put the Palestinian security forces under the control of the National Security Council (NSC). The NSC was set up in 2003 to oversee the work of all the PNA security services. Chaired by President Arafat, it consists of the Prime Minister and three other ministers, a member of the PLO Executive Committee, the President's National Security Advisor, Jibril Ragoub, a long-time associate of President Arafat, and the chiefs of the police and security forces. The Interior Minister, Hakam Balawi, is responsible for administrative and civilian affairs, while security issues will be dealt with by the NSC. Israel, though dissatisfied with these arrangements, has said it is prepared to work with the new government, which it will judge on its results.
84. In the present deadlock, the PNA has pinned its hopes on Europe for effective initiatives to broker a peace agreement and help it achieve its objective of a Palestinian state. It wants Israel to end its occupation of the West Bank and lift the closures and restrictions in the Palestinian territories. The PNA cannot accept the present bantustanisation of its territory and population.
85. The new PNA government now aims at establishing a truce including a ceasefire for the entire Palestinian territory, which should involve both Palestinians and Israelis. Europe, the United States and the Quartet as a whole will have to convince Israel to implement its obligations as specified in the road map. This would pave the way for negotiations taking into account earlier agreements, the Geneva Accord and the Arab Peace Initiative. There is also an urgent need to start preparing an international conference as foreseen in Phase II of the road map.
86. PNA officials cannot understand why the international community, having sent troops to intervene in many conflicts in the world, has not sent a multinational intervention force to the occupied Palestinian territories, given that this could help bring security and stability to the region.
87. The new PNA Government intends to continue with a programme designed to reform finances, administration, the social services and the security forces in dialogue with all the organisations concerned. The holding of elections is an important priority and should ideally be done in mid-2004. The other main priority is to engage in talks with Israel following intra-Palestinian dialogue on a ceasefire. Prime Minister Qurei is preparing to meet Prime Minister Sharon but this can only be done if there is a good chance of such a meeting producing constructive results.
88. Since 1967 the Palestinian economy has been closely bound up with the Israeli economy. Although a process of political separation between Israel and the territories under Palestinian control has been developed since 1994, the Palestinian economy continues to be greatly influenced by Israeli policies and market forces, and there is little the PNA can do to change the situation which can be explained mainly by the limited scope of the Palestinian economy, the physical separation of the West Bank and the Gaza Strip and the lack of access to markets outside Israel, which controls all points of entry to and exit from the Palestinian territories.
89. Compared with the more stable conditions that prevailed in the pre-Intifada period, the Palestinian economy has been is in deep crisis since the beginning of the current Intifada, mainly as a result of the restrictions Israel has imposed on the movement of Palestinian goods and people within the West Bank and Gaza Strip and across their borders. These restrictions have resulted in increased transaction costs, lower productivity and less competitiveness.
90. At present, the PNA employs 125 000 people in the West Bank and the Gaza Strip. A total of 100 000 Palestinians, some 18% of the working population, have lost their jobs in Israel since the beginning of the second Intifada. About 60% of Palestinians are now living below the poverty line of US$2 a day and up to 55% are unemployed. In the meantime, the population is growing by about 4.3% a year. According to the World Bank imports over the last five years have accounted for approximately 70% of GDP, and exports less than 20%.
91. Trade with Israel represents the bulk of total Palestinian trade. Palestinian imports from and exports to Israel have diminished by almost half, respectively from US$ 478 million and US$ 77 million in the third quarter of 2000 to US$ 209 million and US$ 39 million in the first quarter of 2003.
92. The current crisis has forced the PNA to rely heavily on deficit financing. Public spending increased from 30% of GDP in 1999 to 52% in 2002¹⁸ while revenues diminished, not least because Israel withheld the US$ 700 million tax revenue collected on behalf of the PNA. As a result of pressure from PNA donor countries, Israel began to transfer this revenue back to the PNA at the end of 2002. The PNA's monthly revenues fell from US$ 91 million in late 2000 to just US$ 18 million by the end of 2002. A total collapse of the PNA has been averted by emergency budget support from the donor countries.
93. The deficit was partly financed by the donor community. The largest contribution of US$ 825 million was made by the Al Aqsa Fund of the League of Arab States. This represents 40% of all the international support the Palestinian people have received during the second Intifada. However, in 2003 aid from Arab countries has dropped to about half its 2002 peak. The European Union has increased its contribution to US$ 333 million (14.5% of total support) as compared with the US$ 69 million it donated over the period 1999-2000.
94. In 2003 external budget support has fallen short of the PNA's request. In December, PNA Finance Minister Salam Fayyad will urge donors to commit US$ 1.2 billion for 2004, with the warning that he faces a budget deficit of US$ 700 million.
95. The World Bank has stated that a doubling of donor support in 2003 and 2004 -not that there is any reason to believe this will actually happen - would reduce the rate of poverty by no more than 7% by the end of 2004. Removal of closures in the Palestinian Territories, however, would result in a 19% improvement in the situation by the end of that year. There is a serious risk, however, that less aid will be forthcoming in the future as a result of donor fatigue and allegations that the money is being diverted to radical movements involved in terrorist activities, or is being used to fund the requirements of other conflicts or is disappearing into the pockets of officials
96. Donors have also complained that the aid effort is merely serving to fund the Israeli occupation of the West Bank and the Gaza Strip whereas, under the fourth Geneva Convention, Israel should, as an occupying power, take responsibility for most of the expenses incurred as a result of its policy in the occupied territories. There are also complaints from aid agencies that the Israeli authorities are making it difficult for aid workers to access the occupied territories and are destroying the Palestinian infrastructure which has been funded by the international community.
97. As a result of the allegations that money is being misappropriated, and even used to fund terrorism, many donors - including the EU - have felt obliged to stop providing a substantial proportion of aid money as such and turn towards other means of support such as paying the PNA's creditors.
98. There can be no doubt that only a return to the political process of peace negotiations can lead to the resumption of economic and social development not only in the West Bank and Gaza but also in Israel.
99. The PNA's development strategy of relying heavily on labour exports to Israel has proved disastrous. Less economic dependence, diversification of the Palestinian economy and its integration in global markets would result in major gains in terms of investment and productivity, leading to export-driven GDP growth¹⁹. Even after such diversification Israel would probably continue to be the Palestinians' main trading partner. While restoring access to the Israeli labour market would be the quickest way of improving the financial plight of ordinary Palestinians, this does not offer any real solution for the longer term.
100. The PNA has adopted a serious reform programme, known as the "100-Day Plan of the Palestinian Government", which aims to weed out corruption by enforcing full fiscal accountability, creating a proper and transparent legal environment and establishing a modern, merit-based civil service.
101. A number of important reforms have been carried out with a view to restoring the PNA's credibility in the eyes of the international community, particularly as regards the management of its finances. PNA Finance Minister Salam Fayyad recently declared that money for legitimate PNA investments is now being managed by a newly created Palestinian Investment Fund under his control. He has introduced a series of reforms to improve financial management and transparency, a move which the donor countries have welcomed. However, although the PNA reform programme dates from 12 June 2002, many of the necessary changes still have to be implemented.
102. What is Europe doing to improve the situation? Through the European Commission Technical Assistance Office to the West Bank and Gaza and through its influence as a major aid donor, the EC aims to achieve four main objectives:

103. It is well known that action by Israel to ease closures and other restrictions are a precondition for any successful plan to help the Palestinian economy recover. The EU should therefore help Israel find ways of maintaining its security without stifling the Palestinian economy and taking away the livelihood of ordinary Palestinians; it should also persuade it to continue with the transfer of PNA monthly revenues. Naturally, such efforts can be successful only if the PNA enters into a real commitment to put a stop to acts of terrorism and violence against Israeli targets.
104. To sum up, your Rapporteur can but conclude that a revival of the peace process is vital for the development of a healthy economy in the Palestinian territories, this being the only basis on which a viable Palestinian state can be built in the future.

105. Jordanian authorities consider that there has been a serious deterioration in the Israeli-Palestinian conflict. The failure to implement the road map has created an explosive and dangerous situation. The Jordanians have a great many reservations about the intentions of Prime Minister Sharon, who does not seem to want a negotiated peace. In direct contravention to the road map, Israel is building a security fence along a route that does not follow the 1967 "green line", thus offering little hope for the creation of a viable Palestinian state. For the security fence, combined with the settlements and their infrastructure, if maintained, allows only for a Palestinian state divided into three separate territories, occupying a mere 42% of the pre-1967 Palestinian lands. Jordanian authorities are appalled to think that Prime Minister Sharon is now implementing his earlier concept of a Palestinian entity by means of a fait accompli.
106. The Israeli Government has made no serious effort as yet to tackle the basic problems involved with its relationship with the Palestinians or to provide support for those elements of the Palestinian authorities that are now showing willing to move towards a solution, or which have done so in the past.
107. Recent events, such as the declaration by 27 Israeli Defence Force pilots who consider it futile to bomb Palestinian targets, the statement by the commander of the armed forces that military operations in the occupied territories are counterproductive and the mass demonstration by Israeli citizens to commemorate the death of the assassinated Prime Minister, Yitzhak Rabin, show that many Israelis no longer have faith in government policy.
108. However, Jordan feels that until now, the Palestinian National Authority has failed to accept its responsibilities. The leadership, under President Arafat, has not made a big enough effort to tackle the security problems that have to be resolved. This does not simply involve putting an end to suicide attacks but also to arms production and the arms trafficking tunnels between the Gaza Strip and Egypt.
109. A main problem on the Palestinian side is the absence of credible and effective institutions. The impasse in the Palestinian leadership and the vacuum in its authority has created a stalemate and hope for a rapid solution to the conflict is waning. At present, there is no consolidated Palestinian position and the earlier standoff between President and Prime Minister over security matters has created a feeling that no one can deliver peace.
110. The President of the PNA should now allow Prime Minister Qurei to become involved in the peace process without having his hands tied. The new Prime Minister should have overall control of security inside the Palestinian territories as well as the power to deliver security to their neighbours. Jordan notes that not enough politicians, either in Israel or in the Palestinian lands, take the will of their citizens into account.
111. At present, there would appear to be three alternatives, all of them unacceptable to Jordan:

112. This prospect is one of the main reasons why Jordan supports the "Geneva Accord", which showed that productive negotiations over all-important issues were possible and that interlocutors were available on either side. Jordan is also strongly in favour of a two-state solution.
113. Jordan agrees with the contents and thinks that strong international support can help get it moving. It would be possible for Jordan to convince other Arab states, in particular Egypt, Saudi Arabia, the Gulf States and Morocco, to support the Accord but it feels it can only do so if there is consensus among the Palestinians that they should give it their full and unambiguous public support.
114. There is no contradiction between the road map, which is a mechanism for moving forward, and the Geneva Accord which is a model for a solution - in fact the conclusion of the interrupted Taba negotiations.
115. Europe should help establish a six-month truce between the parties, including a cease-fire, and then give its full support to a peace process combining implementation of the road map, the Geneva Accord and the Arab League's Beirut Declaration of March 2002. Finding a solution to the Israeli-Palestinian conflict is the key issue that will have the greatest impact on the whole region - including Iraq.
116. A Jordanian-Palestinian confederation is not a realistic option, as it would create a demographic imbalance and threaten the country's present internal stability. Jordan has already taken in more than 1.7 million Palestinian refugees down the years, no less than 300 000 of whom are living in camps. Jordan points out that the Lebanese Government's reluctance to agree to absorb the Palestinian refugees currently living in its territory, on the grounds that this would disturb the country's fragile balance is unacceptable. It would be best to resolve the refugee problem by codification of the right of return, and its specific implementation along the lines suggested in the Geneva Accord - including granting compensation.
117. Jordan is not in favour of the decision taken by the US Congress to target Syria (Syria Accountability Act) and hopes that Damascus and Washington will find a more appropriate way to remove the impediments marring their relations.
118. As far as Iraq is concerned, efforts must be made to organise free elections there. A multinational force is needed to maintain stability, but there is an urgent need for a fully-fledged Iraqi army and police forces. The creation of an Iraqi federal state based on ethnic divisions would, in the not too distant future, lead to the decomposition of Iraq as it now is and present an additional threat to peace and stability in the region. Iraq should move towards representative government as soon as possible in order to prevent a radicalisation of national politics. At present, there seems to be a genuine willingness among the Iraqi population to see progress and real change in Iraq. If that is taken into account by the leadership, the country could become an example of what plurality, transparency and representative government can really do and mean for the whole region.
119. Radical Islam is a complex issue. Osama bin Laden has tried to link the Israeli-Palestinian conflict to his own cause, without success. That conflict has, however, been exploited by others to export extremism and terrorism. At the heart of the issue is a sense of injustice stemming from different standards in West and East. Unfortunately, the war in Iraq and its aftermath have served the causes of both Islamic radicalism and terrorism.
120. Saudi Arabia has now woken up to the fact that it is not immune to radical Islamic terrorism and has started to address the issue seriously, in the knowledge there is still some way to go. The realisation that Arab citizens can also fall victim to such terrorism has created outrage in the Islamic world and caused many potential supporters of such terrorism to recoil from it.
121. The Jordanian Government does not consider radical Islam a serious threat within the country itself, given its long-standing democratic traditions. A process of political renewal has just started and the existing, recognised fundamentalist party is functioning in complete openness and transparency.
122. The priorities for the new Jordanian Government are economic, political and social reform, including reforms to improve the position of women and families. It also wants to step up the fight against corruption and nepotism and improve transparency at all levels of governance. The Jordanian leadership is aware that the weakness of existing political parties does not make for stable government. It is therefore encouraging the establishment of political parties with national socio-economic platforms.
123. Both the late and the present King of Jordan have always looked for openings, and sought to take up such opportunities as presented themselves and not to despair.

124. Syrian Government authorities take the view that Europe should play a more active role in the efforts to establish peace in the Israeli-Arab conflict. The road map is a matter for Palestinians and Israelis. Syrians will accept what the Palestinians accept, even if it is not a global peace settlement. But the road map concentrates only on one aspect of the conflict and ignores the fact that a peace settlement needs a global approach, which is the only way to establish peace in the region. Although it approved the road map in May 2003, Syria is not really interested in that process because it makes no reference to the occupation of the Golan Heights. Syria wants to recover the Golan Heights which were occupied by Israel in 1967 in accordance with the UN Security Council Resolution 242 formula of "land for peace".
125. Following the 1991 Madrid conference, Syria and Israel conducted negotiations over the period 1992-1996, with Syria refusing to enter into substantive negotiations with Israel before the Israelis committed themselves to a full withdrawal to the 4 June 1967 lines. Negotiations resumed after the election of Ehud Barak in 1999 but after initially accepting full withdrawal in exchange for joint demarcation of the 4 June 1967 borders, the Israelis rejected the idea and asked Syria for concessions on other issues. Syria then decided to break off the negotiations. Should the occasion arise, Syria could resume negotiations at that point and it might not take long to reach a conclusion.
126. In principle, however, Syria can only agree with a peace process based on the global, all inclusive approach of the 1991 Madrid Peace Conference.
127. Your Rapporteur notes that although a peace agreement with Israel might lead to improvement of Syria's position in the region, recovery of the Golan Heights is not essential to life in Syria. This may therefore be one reason why Syria is not in a hurry to conclude an agreement and feels it can afford to wait for the best possible deal.
128. Syria takes the view that peace in the Middle East could easily be established if a number of essential UN Security Council resolutions were implemented. Syria supports Palestinian radical movements in an act of Arab solidarity with the Palestinian people in its struggle for independence. The Damascus offices of those movements are still open but they have restricted their activities in order not to embarrass Syria in its present difficult position.
129. Syria does not share the opinion of those who describe such movements as "radical". That, it argues, is an ideological interpretation which does not apply to Palestinians who are actively resisting an occupying power in their land. Syria prefers to call them "good citizens", deserving of the support of others like them.
130. One Syrian official called the Geneva Accord a light at the end of the tunnel. It could play an important part in waking up public opinion. If the two parties involved and the Arab world agree to it, Syria will play the Arab solidarity card. The Accord also demonstrates that, contrary to what some have suggested, there are valuable Palestinian conduits for negotiations and even difficult issues can be resolved.
131. The question remains as to whether the Israeli Government can be relied on to comply with an unofficial agreement when it does not even respect official undertakings.
132. The collapse of the Soviet Union in the early 1990s deprived Syria of its most important protector. Since then, it has started to put effort into improving its relations with the United States and the European Union. At present, both the United States and Israel are accusing Syria of being a troublemaker in the region, in particular because, allegedly, it is:

133. Before the war in Iraq, to which Syria was opposed, US Defense Secretary Donald Rumsfeld warned Syria that if it supplied Iraq with military equipment, it would be held "accountable" by the United States for such "hostile acts".
134. Immediately following the war, in meetings Secretary of State Colin Powell held with the Syrian leadership in Damascus, the regime showed itself pragmatic and conciliatory. It was agreed "to maintain contacts and coordination of efforts in a manner that serves the interests of both countries and achieves security and stability in the region". After Mr Powell's visit, Syria closed some of the Damascus offices of Palestinian militant movements, in particular those of the PLFP (Popular Front for the Liberation of Palestine) and of the Democratic Front for the Liberation of Palestine.
135. In late October 2003, the US Congress passed the Syria Accountability Act (SAA). This would give the President the option of imposing economic sanctions if Damascus fails to comply with US demands for it to stop acquiring weapons of mass destruction and supporting Palestinian radical movements and to withdraw its troops from Lebanon.
136. The SAA would empower the US Government to cut off all sales of goods with both commercial and military uses (dual use technology) and choose two from a menu of other sanctions, including bans on trade and investment in Syria and restrictions on diplomatic contacts. It should be noted that, at present, there is very little trade between Syria and the United States.
137. Syria now takes the view that there is no need to make substantive concessions to Washington, in particular because it is aware that the United States has enough problems on its hands managing the situation in Iraq. Rather, it thinks it could become an important interlocutor for the United States if terrorism and guerrilla fighting in Iraq escalate further.
138. Syria seems not to be very bothered by the SAA, as it thinks its implementation would not have much impact on the country's economy. Officials note that Syria has for some time now featured on the US list of countries that support terrorism, a position which brings with it a number of specific sanctions. Economic relations with the United States had already reached an all-time low. The US's only investments in Syria are related to oil and gas and an American withdrawal would therefore create new opportunities for European oil companies.
139. Syria was opposed to the war against Iraq. The major challenge facing the Coalition forces now is to win the peace. The United States wanted to bring democracy to Iraq but Iraqi state institutions collapsed as a result of the war and the armed and security forces were dissolved, leaving at large a force of no less than 500 000 impoverished and frustrated armed men and their families who now pose a threat to the country's stability. Many Iraqis will resist the foreign occupying forces as long as they remain in the country. Syria does not provide any support to the resistance in Iraq which patently does not need it, having already enough combatants and weapons.
140. As regards its own regional position, Syria maintains that its "region" is not just the Middle East, but the entire Arab world from Morocco to Iran.
141. Syria's relations with Turkey have been dominated by a number of disputes: over the sharing of waters from the Euphrates, over Syrian support for the Kurdish Workers Party (PKK), said to be factor in the water dispute, and over Turkey's military ties with Israel. Relations with Jordan, which signed a peace agreement with Israel in 1994, have improved since the death of King Hussein.
142. Relations with Turkey are improving since the problems over the PKK have been solved. Both countries have now established a joint security commission which meets regularly. President Assad will visit Ankara in January 2004.
143. Syria has a strategic relationship with Iran since the latter's war with Iraq and, in that framework, the two countries hold periodic meetings. Recently, a number of meetings have taken place between countries in the region with a common border with Iraq.
144. The Syrian presence in Lebanon is based on an agreement between the two governments and plays an important role in maintaining the balance between different factions in the population, and the country's stability. Syria's presence in Lebanon consists of some 15 000 troops and 6 000 intelligence officers, but it has also an important political influence and preferential economic ties. Syrian armed forces have been redeployed several times in recent years (June 2001, April 2002 and February and July 2003).
145. Traditionally, Syria made a comprehensive Middle East peace a precondition for its military withdrawal from Lebanon and suggested that its pulling out prematurely could lead to unforeseen developments.
146. More recently, however, President Bashar al-Assad has made no mention of the precondition and has acknowledged that Lebanon could handle its own domestic security. Syria's withdrawal from Lebanon would remove any US or Israeli pretext for refusing to negotiate. In February 2003, Syria withdrew around 4 000 troops from its 20 000-strong force in Lebanon.
147. Syria claims that its support to Lebanon also enables it exert a moderating influence over Hizbullah and other Palestinian radical movements and suggests that were they to move into south Lebanon as a result of Syria's pulling out, the situation at the border between Israel and Lebanon would no longer be under anyone's control. Nevertheless, Syria regards Hizbullah as a useful instrument for keeping up pressure on Israel for the return of the Golan Heights which the latter captured from Syria in the 1967 war.
148. Syria is worried about radical Islamist movements. In the last century, such movements were often supported by Western countries to combat Arab nationalism. Those same movements are now often engaged in fighting their former benefactors and recently, their strategy has also included targeting Arabs.
149. The European Union has strenuously criticised US efforts to impose diplomatic and economic sanctions on Syria, fearing that to isolate it may be counterproductive. The EU continues to seek to increase cooperation with Syria, which has responded positively to European proposals for closer ties. Syria regards the EU both as a source of aid and assistance and as a potential mediator in the conflict with Israel.
150. The country is also participating in the EU's Barcelona process which, inter alia, aims to establish a Euro-Mediterranean Free Trade Area by 2010. In this framework, both partners expect to sign a trade association agreement by the end of 2003. The agreement also includes human rights issues which the EU regards as non-negotiable, reflecting its conviction that there is a direct link between a market economy and a fully developed democracy. Currently, EU trade with Syria amounts to less than 0.5% of total EU trade but 32% of Syrian imports are from the EU, which also absorbs 60% of that country's exports.
151. Because of its reluctance to undertake the necessary economic and political reforms, Syria is the only Mediterranean country in the Barcelona process not yet to have signed an association agreement with the EU.
152. President Bachar al Assad, who came to power in 2000, succeeding his father, Hafez El Assad, has said he wants more political and economic openness so as be able to modernise his country. Three years on, it has become clear that he will have to introduce these reforms slowly, in view of the fact that the "old guard" still occupying many influential positions in the country is not prepared to concede its power.
153. In late 2001, a cabinet reshuffle took place, impacting in particular on the economic and financial sectors. This might be interpreted as an expression of the determination to introduce structural reforms to help modernise and improve the economy and the administration.
154. Despite some early signs of liberalisation early in 2001, the government quickly reigned in political freedom, arresting a number of political activists and parliamentarians and closing the "Muntadas" or private meeting clubs, where political discussion was tolerated. In 2002, a number of political opponents, both Islamic fundamentalists and others, are still being arrested, but it is worth noting that some of those tried or arrested have been given amnestied or released.
155. Your Rapporteur has noticed that Syria, although long involved in the Israeli-Arab conflict in various ways, makes no efforts to promote a solution. Its policy is to stand aside and wait and see - and it apparently finds this to its advantage. It is biding its time and sees no reason for haste, which it feels is not in its interest. On the other hand, it supports openly radical Palestinian and Lebanese resistance movements of a kind would not tolerate if they active on Syrian territory.
156. Unfortunately, one gets the impression that the present attitude of the government is resulting in an increased isolation which can only be detrimental to the country's position in the region and its political and economic development.
157. It seems that, with the new situation in Iraq, Syria may have to reconsider its position in the region, based a fragile balance of power that now no longer exists

1. General situation

158. The Lebanese Government regrets that the Arab Peace Initiative of March 2002 did not receive the attention it deserved. The initiative concerns all the issues which are important for peace and security throughout the region. Lebanon does not want to be accused of a wait-and-see policy. It made great efforts to secure unanimity at the March 2002 Beirut Summit. This Arab initiative could still have a role to play if there was a real resolve to put an end to the Israeli-Arab conflict.
159. Lebanon would welcome the successful implementation of the road map, but wants to know what happens next. It also has reservations about the road map because it ignores crucially important issues such as the refugees in Lebanon and the Golan Heights. It would have preferred an international conference on peace for the region as a whole and does not expect much from the recently concluded Geneva Accord, which has only a limited scope. Lebanon takes the view that it would be sufficient for everybody concerned to go back to the UN and insist on full implementation of the existing UN Security Council Resolutions regarding the Israeli-Palestinian conflict. Lebanon attaches particular importance to the implementation of UN Security Resolution 425. Israel's allies should now impress upon it the need to give effect to the Resolution.
160. Lebanon considers that the present Israeli Government has not taken any steps which could lead to peace with the Palestinians. The continuation of settlement activities, and the building of the security fence will make it virtually impossible to create a viable Palestinian state. Lebanon has therefore concluded that Israel wishes to retain control over the occupied territories by whatever means it can.
161. Israel should accept that security is less of a material than a psychological and moral issue and that it is illusory to pretend that a wall is going to protect it against suicide attacks. In the opinion of the Lebanese authorities, Israel is preoccupied with its rights, but pays no attention to its obligations. At present, it seems that neither the Prime Minister of Israel, nor the US President is prepared to listen to advice from friends and allies on the Israeli-Palestinian conflict.
162. Lebanon argues that Prime Minister Sharon should be supporting Prime Minister Qurei's negotiations with Palestinian radical movements on establishing a truce by putting an end to Israeli military operations in the occupied territories. In order to stimulate the peace process, Europe should now exert its influence to ensure that the Quartet re-activates the peace process.
163. Palestinian refugees in Lebanon could well be considered to be the prime victims of the Israeli-Palestinian conflict. They are living in unacceptable legal, humanitarian, social and economic conditions. There is a general consensus in Lebanon about rejecting the permanent settlement of Palestinian refugees in the country and favouring the right of return. According to the UNRWA (United Nations Relief and Works Agency for Palestine Refugees in the Near East), there are 390 498 Palestinian refugees registered in Lebanon, of whom 220 052 are living in camps and 170 446 elsewhere.
164. Lebanon argues that the permanent settlement of substantial numbers of Palestinian refugees in Lebanon would have a negative influence on the existing demographic and religious balance in the country, which is closely related to the delicate nature of political stability, pluralism and democracy in Lebanon. In particular Christians, currently representing 25% of the population, would suffer if their strength were reduced to 10 or 15%.
165. It should be noted that the international community has usually considered the Palestinian presence in Lebanon in humanitarian terms, and has not paid much attention to the political, security and stability issues which are closely linked with the presence of the refugees and their possible permanent settlement. Lebanon hopes that Europe can help to find a solution to the refugee issue which also takes account of the importance of Lebanon's continuing internal stability.
166. In 2002, the EU and Lebanon signed an Association Agreement. During his visit to Lebanon in February 2003, the European Commissioner for External Relations, Chris Patten, raised the subject of discrimination against the Palestinian refugees in the country. He expressed the EU's understanding for the fact that hosting Palestinian refugees in Lebanon was a burden, but also voiced concern about living conditions in the refugee camps, arguing that despair among the refugees could pose a threat to regional stability.
167. In response to EU insistence, a small part of the Lebanese budget, which is provided by the European Union, is now being used for refugee support projects. The European Commission works closely with non-governmental organisations and UNRWA to improve the economic, social and humanitarian conditions of Palestinian refugees in the camps in Lebanon. Most of the projects concentrate on educational and health services.
168. Your Rapporteur has the feeling that any future peace agreement between Lebanon and Israel will depend on the outcome of negotiations between Syria and Israel, even if the terms of reference of an agreement may be different from those for Lebanon and Syria. She thinks that Lebanon should be present at multilateral peace talks, in particular so that it can participate in negotiations on the refugee issue and avoid being confronted with a fait accompli in terms of a solution to the problem.
169. Regarding the internal situation in Lebanon and its close relationship with Syria, the country's recent history has to be borne in mind. More than fifteen years of civil war in Lebanon ended with the TAEF agreement of October 1989 which made it possible to reconstruct the state's institutions and administration, reunify the army and start rebuilding the economy. These institutions continue to be based on the earlier division of responsibilities between the different religions. Your Rapporteur notes, however, that politics in Lebanon today still appear to be strongly polarised along sectarian lines.
170. The Syrian presence was not imposed by anybody. It has been accepted and legitimised by the Lebanese Parliament and by the UN Security Council. That presence will continue as long as both partners consider it to be beneficial for peace and security in Lebanon.
171. In general, it is assumed that Syria's close links with and presence in Lebanon has guaranteed that country's security and stability. Lebanon has preserved its sovereignty, but that can only be exercised within the terms of the Treaty of Brotherhood, Cooperation and Coordination between Lebanon and Syria and the country has little or no autonomous influence over its foreign and defence policy.
172. Lebanon is still in favour of close cooperation, if not synchronisation, with Syria in both the political and security fields, enabling both partners to control extremist movements that might try to upset the regional balance of power and stability.

2. Lebanon's border with Israel

173. Israel withdrew its armed forces from south Lebanon in May 2000 and UNIFIL²⁰ now focuses on the remaining part of its mandate. Pending a comprehensive peace settlement UNIFIL now seeks to maintain the ceasefire along the line of withdrawal - the so-called "Blue Line" - by patrols and observation from fixed positions, and close contact with the parties, with a view to limiting violations and preventing the escalation of incidents. It is thought that the need for the United Nations to perform such functions will continue to exist in the foreseeable future.
174. Israel and some western countries have repeatedly insisted that the Lebanese Government deploy its troops in the area along the Blue Line. Lebanon, however, continues to rebuff such demands, arguing that it is not prepared to act as a border guard for Israel.
175. Lebanon has deployed two battalions of its Joint Security Forces in the area some 30 kilometres north of the Blue Line. These forces are carrying out road patrols and occupying checkpoints at main connecting roads. Their main aim is to control the movements of Palestinians.
176. At the instigation of Syria, Lebanon has left the border area with Israel virtually under the total control of the armed Hizbullah militia and the Lebanese armed forces will not do anything to impede Hizbullah's freedom of movement in that area.
177. Hizbullah occupies observation posts along the Blue Line and has weapon stores and training grounds in the area which are in practice no-go zones for others.

3. Hizbullah

178. Hizbullah, which was established in 1984, has been active especially as a militant resistance movement against the Israeli military occupation of southern Lebanon. Its most important raison d'être appears to have disappeared with the withdrawal of the Israeli armed forces from that area in May 2000 but it is still a powerful presence on the ground.
179. It is common knowledge that Hizbullah draws political and material support from Syria but it is also under the political and ideological influence of Iran. The importance of external influence whether from Syria or Iran, however, remains difficult to assess. Syria views Hizbullah as a useful tool to maintain pressure on Israel for the return of the Golan Heights, captured by Israel in 1967.
180. Occasionally, Hizbullah has also caused skirmishes over the Sheba'a Farms, an uninhabited strip of land between Lebanon's southern border and the Golan Heights where the Israeli Defence Forces are manning outposts. The notion of liberating the Sheba'a Farms is, however, losing its currency for Hizbullah, given that Lebanese and Syrian claims that it belongs to Lebanon are being met with increased scepticism, both in Lebanon and abroad.
181. During the Iraq crisis, Hizbullah was estimated to have deployed around 10 000 rockets and missiles of varying types in southern Lebanon, including Katyusha rockets and Zelzal-2 short range ballistic missiles. Reportedly, this arsenal was further augmented in May 2003²¹.
182. Since December 2002, there have been a number of armed attacks on Israeli positions by Hizbullah, which repeatedly fired on Israeli aircraft violating Lebanese airspace.
183. Most of the inhabitants of southern Lebanon have had enough of the past decades of armed conflict which have thwarted economic development in a region of chronic unemployment. They want Hizbullah to move its military positions away from inhabited and built-up areas. However, official Lebanese criticism of Syria's military presence and Hizbullah has been unanimous since Damascus became an overt US target.
184. In fact, Hizbullah has no desire to escalate the situation into a border conflict it could not afford to sustain and Israel has indicated that it favours diplomacy, rather than military action to defuse tension along the border with Lebanon.
185. In future will Hizbullah, an Islamic military and religious movement, remain an armed militia, with a political branch or will it become a local political and religious movement with international links? Or will it become one among many Lebanese political parties? The more unrest and instability there is in the region, the less pressure there will be on Hizbullah to normalise and disarm.
186. For the time being, Hizbullah has joined the Lebanese political mainstream in that it has members of parliament in the National Assembly. But it denounces the system as inherently oppressive, corrupt, authoritarian and lacking in democratic transparency. It considers the other party representing Shiite interests within the Lebanese system - Nabi Berri's Amal - as corrupt and elitist.

187. Palestinian refugees do not enjoy the same status in the different host countries surrounding the Palestinian territory. In Jordan, they are allowed to integrate completely while Syria lets them take part in civil society to a certain degree. This enables them to improve their living conditions as best they can. Surveys show that Palestinian refugees have tended to build a new life in a host state, rather then on insisting on their "right of return".
188. The Lebanese Government is blocking the permanent integration of Palestinian refugees in the country. They have no basic civil rights and are ineligible for most public services. They do not have the right to work in skilled professions or to buy property.
189. The status of Palestinian refugees in Lebanon and elsewhere is primarily determined by UNRWA, which provides humanitarian assistance. Article 1.D of the 1951 Geneva Convention on the status of the refugees states that:

190. As a consequence, Palestinian refugees assisted by UNRWA ((United Nations Relief and Works Agency for Palestine Refugees in the Near East) cannot benefit from the legal protection of the 1951 Geneva Convention. Their status depends on the goodwill of the host state. Lebanon has not yet ratified the 1951 Geneva Convention.
191. On 8 December 1949 the United Nations Security Council adopted Resolution 302, establishing UNRWA. It was tasked with carrying out direct relief and works programmes for Palestinian refugees in the wake of the 1948 Arab-Israeli conflict. In the absence of a lasting solution to the Palestinian refugee problem, UNRWA's mandate has been renewed continually ever since, with the last extension valid until 30 June 2005.
192. UNRWA continues to be the main provider of basic education, health, and relief and social services to the 4 055 758 registered Palestinian refugees living in Jordan, Lebanon, Syria, the West Bank and the Gaza Strip. Some 1.3 million refugees, around one third of the total, live in 59 recognised camps.
193. It has a Micro-finance and Micro-enterprise Programme whose aim is to create employment and income-generating opportunities for both Palestinian refugees and residents by promoting the development of small-scale and micro-enterprises through the provision of loans for working capital and investment at commercial interest rates. It also tries to support and encourage the local economy through direct and financial assistance including food aid for families living in hardship.
194. UNRWA employs 24 300 staff in the Palestinian territories, including teachers, health and social workers, 90% of whom are refugees.
195. Voluntary contributions from individual governments and the European Union account for 95% per cent of UNRWA's budget. In recent years the EU and its member states have been the major financial supporters of UNRWA. In 2001, EU support accounted for 52% of its total budget. In 2002 this decreased to 46%. For 2003, the EU contribution was raised from 120 million euros to 237 million euros, taking account of the current crisis in the peace process between Israel and the Palestinians.
196. UNRWA has repeatedly criticised Israel's policy in the occupied territories, in particular what it considers to be its excessive reliance on force to combat threats to Israeli citizens and territory, and the closures and other restrictions which are making the job of administering aid extremely difficult. In January 2002, as a result of the second Intifada, the escalating violence, closures and acts of destruction on Palestinian territory, which severely hampered the practical implementation of its programmes, UNRWA launched its fourth Emergency Appeal for an increase in its budget to meet the refugees' needs. In the 2002 budget the education programme accounted for 59.7% of total expenditure, the health programme was next (17.8%), followed by operational and common services (13%) and relief and social services (9.5%).
197. In view of the ongoing crisis in the Middle East, the European Union and its member states will no doubt have to continue to be major donors of UNRWA in the near future. The EU and UNRWA also cooperate very closely on the Food Security Programme in Palestine, which meets the basic requirements of the neediest section of the population. Over 350 000 families have benefited from emergency distributions (over 200 000 of them through UNRWA).
198. An important cooperation project is the European Gaza Hospital (EGH) conceived by UNRWA and funded by the European Commission. It is considered to be one of the biggest investments in the area, providing services to a population of almost 400 000. This advanced medical centre of excellence was completed in 1996 and handed over to the Palestinian National Authority's Ministry of Health in 1999.
199. In the past, and with increasing frequency during the second Intifada, UNRWA has been accused of turning a blind eye to the use of refugee camps as terrorist training centres where potential terrorists are subjected to anti-Israel indoctrination.
200. In 2003 a wave of accusations from US Congressmen that UNRWA "directly or indirectly is complicit in terrorism" led to a Congressional request for the US General Accounting Office (GAO) to audit UNRWA activities. While the report published by the GAO on 17 November broadly exonerated the Agency, it underlined the problems UNRWA faced in determining whether any of its staff or beneficiaries had connections with terrorists. The GAO also notes that while UNRWA "relies on host governments to review local job applications for UNRWA employment in Jordan, Syria and Lebanon, it does not have similar arrangements with authorities in the West Bank and Gaza, where UNRWA also lacks access to data on arrests of its local staff. Second, UNRWA uses international staff to inspect its facilities and requires non-UNRWA groups to obtain permission before using those facilities, but it has not been able to prevent armed incursions". The report also points out that UNRWA is constrained in determining whether its beneficiaries meet criteria stipulating that they must not be involved in the activities of guerrilla-type organisations engaged in acts of terrorism, "owing to concerns for its staff's safety and its inability to verify beneficiary responses".

1. The "Geneva Accord"

201. In October 2003, a group of Israelis and Palestinians published an agreement, the Geneva Accord, in order to show that it was possible to conclude a peace agreement between the two peoples and that solutions could be found even for the thorniest of issues, provided mutual confidence and a genuine will for peace existed.
202. The Geneva Accord combines all the previous understandings reached between Israel and the Palestinians at talks held in Oslo, Camp David and Taba. Indeed the signatories of the Geneva Accord were involved in the negotiations at Taba before these were suspended as a result of the political developments in Israel that led to the general election and subsequent accession to power of Prime Minister Ariel Sharon. Although they all act as individuals, the signatories believe that their approach represents the opinion of large segments of the public on both sides and opinion polls have indeed shown that up to 40% of the population support the Geneva Accord initiative. The Palestinian negotiators claim that President Yasser Arafat had been briefed on the talks that were ongoing and was aware of all the details of the final agreement. The Israeli negotiators claim that the office of Prime Minister Sharon was continually updated on the negotiations, but this has been denied by government sources.
203. The main points of the Geneva Accord are as follows:

2. The Arab Peace Initiative

204. At the summit meeting of the Arab League held on 27-28 March 2003 in Beirut, Saudi Arabian Crown Prince Abdullah Ibn Abdul Aziz introduced a "land-for-peace" proposal to end the Arab-Israeli conflict. This proposal was approved on 28 March as the Arab Peace Initiative, overcoming resistance in particular from Syria and Iraq (see Appendix IV).
205. The initiative called for:

206. In response, Arab states would consider the Arab-Israeli conflict over, sign a peace agreement with Israel and achieve peace for all states in the region. Moreover, all Arab countries would establish normal relations with Israel within the framework of this comprehensive peace.
207. The Arab League invited the international community and all countries and organisations to support this initiative but, although reactions were positive, there has been no overwhelming activity in the western world to promote it.
208. It should be noted that both American and European officials had encouraged Arab countries to limit their initiative to basic elements on which they stood together and could offer to the Israelis as a building block for peace and stability in the region.
209. After the adoption of the Arab Peace Initiative, Israel's Foreign Minister, Shimon Peres, said that Israel took a positive view of every initiative aimed at arriving at peace and normalisation. He considered the Arab initiative an important one but added that it was liable to founder if terrorism was not stopped. The details of any peace plan had to be discussed between Israel and the Palestinians and this could only be done if the PNA put an end to terror.
210. Israel refused to allow President Yasser Arafat to leave Ramallah in order to attend the summit. It had experienced a particularly violent month of March, dominated by a multitude of Palestinian suicide attacks on Israeli civilians and military targets to which it had responded with heavy military strikes on Palestinian targets, including a siege of Yasser Arafat's compound.

1. Iran

211. Over the past 10 years, the EU has crafted a policy of engagement with Iran which has gradually shifted from "critical" to "comprehensive" dialogue and negotiations for a Trade and Cooperation Agreement (TCA).
212. The EU's "critical dialogue" with Iran, as set out in outline at the Edinburgh European Council Meeting, was launched in 1992 and aimed in particular to address the following areas of concern to the Union: Iran's policies on the Middle East peace process, international terrorism, the production of weapons of mass destruction, respect for human rights, including minority rights and the situation of the author Salman Rushdie²².
213. However, the critical dialogue, although it succeeded in maintaining a level of contact between the EU and Iran, was not successful in influencing the regime. Over the period 1992-1997, it was essentially diplomatic and symbolic in character. At that time, the European Union was reluctant to use its economic leverage to obtain concessions from Iran on areas of concern, foremost among them human rights. A major reason for this was that there was no united front within the EU, where individual member states pursued their own agenda²³. Moreover, public opinion in Europe was opposed to a policy of offering political incentives to Iran, then perceived as a rogue state²⁴.
214. The dialogue was eventually suspended by the European Council Declaration of 29 April 1997²⁵, under pressure of public opinion, following the findings of a Berlin court that the Iranian leadership was behind the assassination of Iranian dissidents in Germany. However, the EU decided to resume talks with Iran the following year after the election of the reformist President Khatami. The EU's decision to step up the level of political contact by introducing a "comprehensive dialogue"²⁶, as yet of limited scope, was influenced mainly by the reformists' growing power. The intention was to seize the opportunity for cooperation and proffer support to Iran's reformist elements. Since then, the comprehensive dialogue has gathered momentum, with biannual Troika meetings, working groups on energy, trade and investment, and experts' meetings on drug trafficking, and on refugees²⁷.
215. Strengthening the Iran-EU relationship has been one of President Khatami's major foreign policy objectives. Since his election, bilateral relations with European states have improved and numerous visits and exchanges between European and Iranian political leaders have taken place. This has had the effect also of promoting a closer relationship between Iran and the EU. The EU has responded positively to Iran's overtures, in view of the latter's interest in closer bilateral ties, by supporting the Khatami Government's reforms and enhancing regional cooperation and stability. It identifies the following reasons for increased communication and cooperation with Iran:

216. Hence, in line with its strategy of involvement rather than containment, since 2001 the EU has actively promoted cooperation with Iran, and, on 12 June 2002, the European Council adopted directives on a Trade Cooperation Agreement³², to be linked to separate instruments on political dialogue and anti-terrorism. A human rights dialogue was also initiated in December 2002 and a human rights clause is to form part of the agreement. Negotiations on the TCA have been ongoing, however the EU has set a gradual pace, with the process being subject to continuous monitoring of Iran's progress towards economic, political and social reform. The EU has emphasised its global approach towards the TCA, which cannot be dissociated from progress in the areas of political dialogue and counter-terrorism, all of which measures are to enter into force as a package³³.
217. The objectives of the TCA are specifically to establish a contractual non-preferential agreement governing trade relations between Iran and the EU, support Iran's adaptation to WTO rules and promote closer cooperation on issues of mutual interest such as energy, transport, environment, refugees, and drugs control³⁴. Moreover, by linking progress on the TCA with progress on political dialogue, the EU is seeking to demonstrate its support for reform and to use the TCA negotiations as a form of leverage in promoting the globality of its interests vis à vis Iran.
218. The EU has brought pressure to bear on Iran mainly in the areas of human rights, the Middle East peace process, and weapons of mass destruction. While it would be somewhat premature to attempt an assessment of EU policy towards Iran in those areas, there have been signs justifying the EU stance as politically realistic and potentially successful. The efficacy of the EU's position is based on its efforts to establish a relationship of trust with Iran by treating it as an equal partner, while at the same time progressing their relationship gradually in response to any show of willingness on Iran's part.
219. The EU can indeed lay claim to having some leverage over Iran's policy-making since it is Iran's only bridge with the West. Given that Russia is aligning itself increasingly with the US, Iran would risk isolation were it to opt for an anti-European stance. Economic relations with Europe are also of fundamental importance to Iran which badly needs to attract investment in the face of soaring unemployment. The EU has also given the Khatami government greater legitimacy and enhanced Iran's position internationally. To lose EU support would therefore be detrimental, not only to the reformers, but to Iran in general.
220. There has been little progress on overall reform in the area of human rights. However, in a number of cases EU pressure and the latter's insistence on linking progress in economic relations with improvement in Iran's human rights record have born fruit. Stoning has been replaced with other forms of punishment, Jewish Iranian citizens accused of espionage have been released as has as Ayatollah Montazeri, Iran's most prominent dissident cleric. Iran has agreed to allow the UN Human Rights Commission Delegation to Iran into the country, for the first time for many years, and has agreed to go ahead with a human rights dialogue with the EU, without preconditions. At the same time, as a good will gesture with a view to the initiation of the human rights dialogue³⁵, the EU refrained from tabling a country resolution on the issue of Iran's human rights record at the United Nations General Assembly in autumn 2002.
221. The EU has acknowledged Iran's constructive efforts in promoting regional stability, and in particular in regard to the reconstruction of Afghanistan, the fight against drugs and accommodating refugees. It has therefore urged Iran to play a similar role in the Middle East, reciprocating that country's call for the EU to play a greater part in helping resolve the Israeli-Palestinian conflict. Indeed, the EU has lately been discussing the Israeli-Palestinian conflict in terms of a wider Middle East framework that would include Iran and Iraq³⁶ and the Middle East is increasingly becoming a focus for the evolving Common Foreign and Security Policy.
222. Thus the EU has repeatedly asked Iran to use its influence in the region to help reduce tension. In the Presidency Conclusions following the Thessaloniki European Council on 21 July 2003, Iran was encouraged to "exercise its influence in order to hamper and prevent any action that might jeopardise the chances of returning to a political process ...[and] join without reservation the international consensus on the necessary existence of two states, Palestine and Israel..."³⁷. In reality, what the EU is looking for from Iran in this instance is for it to abstain from supporting an anti-Israeli position³⁸. Iran's role in the Israeli-Palestinian conflict is, for the time being, unclear; however any shift in a more positive direction might be subject to internal developments that strengthen the hand of the reformers, economic rewards from the West or rapprochement with the United States.
223. The EU has raised with Iran its security concerns over non-proliferation issues, the country's long-range missile programme and, more recently, its nuclear (uranium enrichment) programme. Recent claims that Iran is secretly developing a site to test centrifuges for weapons-grade uranium production reinforce longstanding US claims of compelling evidence to suggest that Iran's nuclear programme is not intended solely for electricity generation, as that country maintains. The combination of a long-range missile capacity and uranium enrichment capability would render Iran dangerous even if it did not build a nuclear bomb.
224. The International Atomic Energy Agency (IAEA) therefore has worries about Iran's pilot gas centrifuge enrichment plant and the discovery of traces of highly-enriched uranium, used in nuclear weapons. Consequently it has asked Iran to sign the additional protocol to the Nuclear Non-Proliferation Treaty, which would allow IAEA inspectors to make snap inspections of Iran's nuclear sites and take air and soil samples. The EU stood firmly by the IAEA and has exerted pressure on Iran to sign the additional protocol and cooperate fully with IAEA demands³⁹.
225. In this instance, the harder line adopted by the EU seems to have been effective. It has threatened Iran with economic repercussions unless it moves swiftly towards adopting confidence-building measures as evidence of the peaceful nature of its nuclear programme⁴⁰. EU foreign ministers have expressed their "grave concern" over the Iranian nuclear programme, stating that "more intense economic relations can be achieved only if progress is reached in the four areas of concern"⁴¹. Teheran's angry reaction to the European message is indicative of the pressure felt by Iranian policy makers. On 18 September, a spokesman for the Iranian Foreign Minister stated that "Iran and the European Union began their political and commercial negotiations based on mutual respect, and just as Iran did not accept preconditions to start the talks, it will very certainly not accept preconditions to continue them"⁴².
226. Prior to that, in late August, EU foreign policy chief, Javier Solana had sent Teheran a clear message, "if you don't sign the protocol it will be bad news for you"⁴³. The EU policymakers continued with their carrot and stick approach towards Iran and, on 17 October 2003, following a two-day summit in Brussels, they issued a statement to the effect that the European Union remained "ready to explore ways to develop a wider cooperation with Iran (...). This can only be achieved through increased international confidence in the peaceful nature of Iran's nuclear programme and improvements in the areas of human rights, the fight against terrorism, and Iran's position on the Middle East"⁴⁴.
227. European diplomatic efforts appear to have met with success. Following a high profile visit to Teheran by UK Foreign Minister, Jack Straw, and his French and German counterparts, Dominique de Villepin and Joschka Fisher, on 21 October 2003, Iran agreed on temporary suspension of its uranium enrichment activities and to allow unannounced inspections of its nuclear sites. It has been suggested that the European ministers offered Iran technical assistance in exchange. In particular, as IAEA head Mohamed El Baradei noted in a recent interview, there were "discussions between Iran and some European countries to try to see whether in fact, to defuse the security concern, Iran might get assurance of supply, might get nuclear technology for electricity generation, without however having to do the fuel cycle itself"⁴⁵. The German Foreign Minister, on his return to Berlin, stated however that no concessions had been made towards Iran⁴⁶.
228. The latest developments show that Iran has in fact responded to the deadline of 31 October 2003 given it by the IAEA for providing evidence that it does not have a nuclear weapons programme. It has therefore provided relevant documentation intended to demonstrate the peaceful nature of its nuclear activities. On 23 October, it submitted a "comprehensive" statement on its past activities in the nuclear field⁴⁷. On 10 November 2003, Iran told the IAEA that it would temporarily suspend its uranium-enrichment programme with immediate effect and that it agreed to more stringent checks by IAEA inspectors⁴⁸. On 20 November, the IAEA will meet to examine Iran's declarations, on the basis of the results of inspections up to that date.
229. On 22 October, the US President described the deal struck in Teheran as a very positive development and thanked the European troika that undertook the initiative. At the same time, the White House spokesman underlined the importance of Iran translating words into deeds⁴⁹. Indeed, Teheran's announcement of its willingness to comply with the IAEA demands could be yet another attempt to buy time⁵⁰ since defusing the present heated climate serves any long-term strategy Iran may have for acquiring nuclear military capacity. The European initiative, however, should not be judged mainly on its outcome, but for its policy implications.
230. The European breakthrough, then, could be seen as a justification of Europe's policy of engagement with Iran. It would be prudent, however, to consider a number of case-specific factors that may also have been influential:

231. In any event, the recent European initiative demonstrates Europe's commitment to engagement with Iran and that this approach could be successful, if only by keeping the door ajar. The US, whose strategy of containment towards Iran has so far not paid off, should also recognise the potential effectiveness of the EU's policy. The European approach could prove useful to Washington in the event of the latter's wanting to take a softer line with Iran without resorting to a sudden policy shift.
232. Recent developments, however, indicate that the gap between the European and the US approach to Iran remains wide and could become a source of tension in the transatlantic relationship. Following the IAEA report of 10 November 2003, the Americans insisted on Iran being declared non-compliant with the Nuclear Non-Proliferation Treaty and on the matter being referred to the UN Security Council, which could consider imposing economic sanctions on Iran. The Americans have been critical of the IAEA report and especially of its conclusion that "no evidence has been found of an alleged Iranian programme to develop atomic weapons⁵².
233. The IAEA report, which was discussed on 20-21 November, also refers to Iran having concealed a centrifuge uranium enrichment programme for 18 years and having successfully produced small amounts of plutonium. However, it stresses that, so far, no evidence has been found to suggest that Iran has been trying to build a nuclear bomb⁵³. Furthermore, the report acknowledges Iran's newly cooperative approach and emphasises the importance of its maintaining its current commitment to continuing IAEA controls.
234. Intense negotiations led to agreement on an amended resolution, adopted on 26 November 2003 at a meeting of the IAEA Board of Governors. The compromise text reflects the position of the United Kingdom, Germany and France, and does not therefore include a reference to the UN Security Council. However, it does contain some strong wording to satisfy American demands. In particular the resolution notes "with the gravest concern that Iran enriched uranium and separated plutonium in undeclared facilities, in the absence of IAEA safeguards"⁵⁴. It also includes a "trigger" clause stating that "should any further serious Iranian failures come to light, the Board of Governors would meet immediately to consider, in light of the circumstances, ... all options at its disposal"⁵⁵.
235. Iran has reacted positively to the resolution given that any reference to the involvement of the UN Security Council has been avoided. The Iranian ambassador to the IAEA stated that the resolution is "...an achievement by all those who sought to resolve the issue, peacefully"⁵⁶. The insistence of the three European countries referred to above to adopt milder wording in the resolution in order to avoid alienating Iran seems therefore to have paid off.

236. For the past twenty years, since the Iranian revolution and the US embassy hostage crisis in 1979, United States policy towards Iran has been one of containment. In the 1980s, hostile Iranian-American relations were a catalyst in the expansion of the US military presence in the Gulf.
237. In the 1990s, the US adopted a "twin threat" approach towards Iran and Iraq which made a US security presence in the Gulf a top priority. The Clinton Administration considered introducing a policy of détente towards Iran, but in fact took a confrontational approach, by tightening sanctions and imposing a total trade ban in 1995.
238. The additional sanctions imposed in 1996 through the Iran-Libya Sanctions Act (ILSA) reflected the Congressional approach to Iran: namely, that since the US was unable to influence Iran's policymaking it had better influence (i.e. reduce) its capabilities. ILSA allows for secondary sanctions against foreign firms investing in the Iranian or Libyan oil industries beyond certain limits and has become a source of bitter disagreement between the US and the EU. The EU has adopted a Blocking Statute making it illegal for any European Union company to comply with ILSA⁵⁷.
239. The US has been very sceptical about Europe's policy of engagement with Iran, complaining that strengthening trade links and cooperation with Iran will only encourage it in its defiance of Western and US demands. On the other hand, Europeans point out that US policy towards Iran has been harming the cause of pro-Western reformist elements in Iran by providing hard-line conservatives with ammunition. This fundamental difference in the US and EU approaches has reduced the scope for a coordinated policy towards Iran and undermined the effectiveness of the US policy of containment.
240. Iran has been an issue of debate in the Bush Administration. Alongside the neo-conservatives, who are agreed on a containment and confrontational strategy towards Iran, there is a more moderate school of thought, concentrated mainly around Secretary of State Colin Powell, advocating a policy of gradual détente. The first group is convinced that President Khatami has failed to achieve reform and there is need of a regime change in the country. President Bush was responding to this line of policy thinking when, on 12 July 2002 he reacted to student demonstrations in Teheran with a statement urging the Iranian people to rise up against the regime⁵⁸.
241. However, the neo-conservative tendency has not had things all its own way. Policymakers belonging to the moderate wing have suggested that while the current policy of containment has failed to isolate Iran or persuade it to change its behaviour, it has, on the other hand, deprived US policymakers of tools for influencing the reform process in the country. They argue that a flexible policy of engagement, with conditions attached, should be adopted towards Iran, and should aim, not at regime change, but at the development of a security pact that would address some of Iran's own security concerns within a wider Middle East security arrangement⁵⁹.
242. Post 11 September 2001, and during the war on Afghanistan, contacts between the two countries intensified as the US sought Iran's support in ending the Taliban regime. However, with President Bush's declaration on an "axis of evil"⁶⁰ that included Iran, the American position toughened, and in recent months accusations against Iran for harbouring Al-Qa'ida terrorists, and the uproar about its alleged violations of the Nuclear Non-Proliferation Treaty have increased tensions between the two countries and seem to suggest that the hardliners within the Bush Administration were nearer the mark.
243. However, in the aftermath of the Iraq war, with American occupation forces facing an increasingly uphill task, Iran has assumed an even greater importance for the US. A more moderate approach towards Iran could therefore be forthcoming, as the testimony given by US Deputy Secretary of State, Richard Armitage, to the Senate Foreign Relations Committee on 28 October 2003 indicates. "We are prepared to engage in limited discussions with the Government of Iran about areas of mutual interest as appropriate"⁶¹. In addition, Mr Armitage stressed Washington's intention of refraining from any pursuit of regime change in Iran⁶².
244. Indeed, US policymakers have become increasingly aware of the limitations of a regime change approach, having realised that there were no overseas opposition groups likely to be successful in spearheading the overthrow of the regime. In addition, the way the internal political crisis in Iran has been managed demonstrates that there is currently no appetite for revolution and that political impetus is being channelled through a reformist movement that maintains the nationalistic character of the 1979 revolution.
245. The overwhelming majority of the Iranian public remain extremely conscious of their national identity and suspicious of US interventionism, still credited with orchestrating the 1953 coup that overthrew the elected leader, Dr Mossadegh, and restored royal autocracy⁶³. At the same time, most Iranians are eager for their country to have contacts with the US and young people in particular are very receptive to western culture. A poll conducted in 2002 by Iranian Government agencies showed that over 70% of Iranians were sympathetic towards a rapprochement with the US⁶⁴.
246. In this context, US policymaking now faces a major challenge and a great opportunity to develop a more constructive approach towards Iran. Security concerns in the Middle East add to the sense of urgency but at the same time point to the need for a culturally relativistic view of the Islamic world. The trend in Iranian society to look outwards towards the rest of the world - albeit mainly under pressure of economic considerations - means there is an opportunity for western policy to make an impact.
247. However, the tensions between the two countries are difficult to surmount. In particular, Iranian hostility towards Israel is a major obstacle to normalisation of US-Iranian relations and can only be overcome by Iran recognising Israel and accepting the road map for peace. Iran has been accused of providing proxy support to the pro-Palestinian groups that undermine efforts for a political settlement of the Israeli-Palestinian conflict. Specifically, it stands accused of giving political and financial backing to Lebanon's Hezbollah militia, the Palestinian Hamas, and Islamic Jihad. However, Iran's opposition to Israel is deep-rooted and is supported by political forces across the entire spectrum. Hence a shift of policy will be difficult to achieve within the current domestic setting.
248. In the meantime, the EU is continuing its efforts to achieve a political resolution of the Israeli-Palestinian conflict and its policy of engagement towards Iran could enable it to act as a facilitator between the US and Islamic countries in the context of peace-building and establishing new security arrangements in the wider Middle East region.

2. Iraq

249. As a result of United Nations Security Council Resolution 1483 (22 May 2003) which ended sanctions against Iraq, control of the governance of Iraq was handed to American and British forces as "occupying powers" under the applicable international law, and a limited role defined for the UN.
250. UN SC Resolution 1500 (14 August 2003) approved the establishment of the interim Governing Council of Iraq and the creation of a UN Assistance Mission in Iraq (UNAMI).
251. On 16 October 2003, the UN Security Council unanimously approved Resolution 1511 authorising a multinational force under unified command to act in support of security and stability in Iraq and defining the role of the UN and a vision for a political transition to a sovereign Iraq.
252. The Resolution was put forward by the US, Britain, Spain and Cameroon at a time of steadily deteriorating security conditions on the ground and under mounting pressure from US public opinion for the international community to share in the burden of Iraq's reconstruction. Indeed, the main reasoning behind the American-led initiative at the UN was to gain more support, both in military and financial terms, and to appease American public opinion which was becoming critical of the Administration's decisions on Iraq.
253. The decision came after weeks of hard negotiation and was welcomed by UN Secretary-General, Kofi Annan, as "a clear demonstration of the will of all the members of the Security Council to place the interests of the Iraqi people above all other considerations"⁶⁵. Indeed, until the very last minute, five or six of the Security Council members, among them France, Germany, and Russia were considering abstaining from voting. However, faced with a deteriorating security situation on the ground they decided to avoid giving the impression of a divided international community.
254. France, Germany, and Russia, having for the most part coordinated their positions on the Iraq crisis, have argued for a rapid handover of power to the provisional Iraqi government. France in particular has been insistent on a clear timetable, aiming for a six-month deadline for the transfer of power. These three countries have also argued for the UN to have a political role, thereby wresting central control for Iraq's reconstruction from the United States-led Coalition Provisional Authority (CPA).
255. Some of their concerns have in fact been accommodated, albeit in more moderate terms. In particular the final text of the Resolution refers to "the temporary nature" of the authority exercised by the CPA and calls on it to "to return governing responsibilities and authorities to the people of Iran as soon as practicable"; it also sets a deadline for the "drafting of a new constitution for Iraq and for the holding of democratic elections under that constitution" no later than 15 December 2003⁶⁶. While it does not provide for a clear political role for the UN, it does refer to the UN's responsibility to assist the process of political transition by offering expertise on the convening of the constitutional conference, to contribute to "efforts to restore and establish national and local institutions for representative government" and to report to the Council on progress made on the transfer of authority to the Iraqi people⁶⁷.
256. However, the Americans have not ceded control over Iraq's immediate political future and no definite timetable for the political handover has been endorsed. In addition, the Resolution legitimises the presence of a multinational force under unified American command for the maintenance of security and stability in Iraq. This has been much sought after by the American Administration, as a statement by President Bush serves to illustrate: "Some countries have requested an explicit authorisation of the United Nations Security Council before committing troops to Iraq. I have directed Secretary of State Colin Powell to introduce a new Security Council Resolution, which would authorise the creation of a multinational force in Iraq, to be led by America"⁶⁸.
257. The significance of the unanimous adoption of the Resolution, while it boosted the American President's position at home, was nevertheless undermined by the subsequent common declaration by France, Germany and Russia. In a joint statement they stressed that their decision to vote for the Resolution was mainly informed by the need to demonstrate a "spirit of unity" in support of efforts for the reconstruction of Iraq with UN participation, and maintained their position that "the Resolution should have gone further [in regard to] the UN's role, especially in the political process (...) and the pace of the transfer of authorities to the Iraqi people"⁶⁹.
258. The significance of the adoption of the Resolution was further weakened by statements by France, Germany, Russia, and also Pakistan that they would not consider supplying military forces to the Coalition. Indeed, the adoption of the Resolution, while indicative of more give and take on both sides of the Atlantic, did not reflect agreement on how to pursue the reconstruction of Iraq. European countries, such as France and Germany, which had been against military action in Iraq are now unwilling to be drawn into "cleaning-up the mess". They also propounded the theory that security questions in Iraq would be better addressed by a sovereign Iraqi regime since the current American-led troop presence is seen by the Iraqi people as an occupation force, and therefore a target. Conversely, the US approach has been to label all attacks against its forces in Iraqi territory as terrorist attacks, thereby reinforcing its argument to retain control of authority in Iraq.
259. In reality, the situation on the ground will determine the course of the political transfer in Iraq as it is this that is most likely to influence the US attitude, as well as that of other countries. So far the increasing cost of the occupation to the US, both in casualties and in economic terms, has forced US policy to take account of some of the concerns of countries whose opinions differ from its own, such as Germany and France. This is demonstrated by the US efforts to seek a multilateral agreement on the Reconstruction of Iraq which led to the adoption of Resolution 1511.
260. However, as the security situation in Iraq is deteriorating, UN resolutions may well prove insufficient to promote stability and security on the ground and an active multilateral approach might be necessary. Viewed in this light, the current discussion on Iraq is but part of the wider discussion on international security, multilateralism, and international legitimacy, since for there to be any comprehensive multilateral effort in Iraq the United States, Europe and other big players would first have to reach agreement on those issues.
261. The EU has nevertheless contributed to the discussion from a common position, achieved by ironing out some of the differences between member countries that existed prior to and during the military campaign. The European Council has therefore welcomed the unanimous adoption of the UN SC Resolution 1511 on Iraq. It has also reconfirmed the European Union's willingness to contribute to the economic and political rebuilding of Iraq within the framework of UN resolutions and stressed the need to reinforce the UN's role and achieve an adequate level of security in Iraq⁷⁰. Indeed, the European Union has been vocal in its support of UN initiatives in Iraq and for the vital role the UN should play so as to give legitimacy to multilateral efforts for maintaining security and promoting the reconstruction of the country. The European Council has also endorsed the need for a realistic timetable (although not as rapid a one as the French suggested) for the transfer of authority to the Iraqi people, and has underlined the importance of restoring sovereignty to a democratically-elected Iraqi government as soon as possible⁷¹..
262. Some progress has indeed been made in this respect as the Iraqi interim authority has submitted in advance of the 15 December deadline set by the UN a timetable for restoring self-rule to Iraq. This timetable, drawn up in agreement with US and British officials, envisages the appointment by 31 May 2004 of a "provisional legislative body" that will elect a provisional government by the end of June thus dissolving the Coalition Provisional Authority and ending the occupation⁷². The timetable also foresees the drafting of a new constitution by 15 March 2005 which will be submitted to a referendum, and general elections to take place before 31 December 2005⁷³. The Iraqi Governing Council is therefore asking for a new UN resolution to endorse this timetable at a time when the US occupation forces are under constant strain and President Bush is facing a mounting death toll as the US electoral campaign period approaches. Indeed, the US Administration seems to have given in to the push for a more speedy transfer of power to the Iraqi people. However, when a new UN Security Council resolution is discussed, France, Germany and Russia are expected to continue to press for greater UN involvement in the transition process, a position the Americans have so far rejected.

263. After securing legitimation for the presence of its troops in Iraq with the adoption of UN SC Resolution 1511, the United States pursued the second part of its strategy - to obtain a multilateral commitment for the sharing of the financial burden of Iraq's reconstruction - at the International Donors' Conference on Reconstruction in Iraq.
264. At the conclusion of the Conference, US Secretary of State Colin Powell expressed his satisfaction at the total of 33 billion dollars raised for the purpose of reconstructing Iraq, praising the way in which the international community had come together to help the people of Iraq⁷⁴.
265. However, the outcome of the Conference has not been as successful as the United States has claimed, for two main reasons. Firstly, the 33 billion dollars comprises not only donations but loans, aid attached to business contracts, financial engagements already liquidated and short-term as well as medium-term commitments. Therefore the amount actually made available in the short term is not yet quantifiable and could be well below the stated sum.
266. Secondly, most European countries have been unwilling to make bilateral financial commitments. France, indeed, has been outspoken, with the French Foreign Trade Minister making clear that the political process in Iraq has not advanced sufficiently for his country to make additional financial commitments⁷⁵. Germany is following the French lead while many other European countries, including Italy and Spain, which have supported American action in Iraq, are reluctant to contribute large amounts of financial aid. The only exception has been the United Kingdom, which has pledged a total of 910 million dollars (352 million of which already committed). The European Union as a whole has committed 233 million dollars for 2003 and 2004 out of the EU budget.
267. The European response has been hesitant, largely because of inadequate levels of security in Iraq and the absence of a realistic programme for the transfer of power to the Iraqi people. The EU External Relations Commissioner, Chris Patten, explicitly stated in his speech at the Madrid's Donors Conference for Iraq that: "It will clearly be easiest for some of us to consider possible multi-annual pledges when the political and security situation is clearer"⁷⁶.
268. The EU stance is also outlined in a communication from the European Commission on the subject of the Madrid Conference on Reconstruction in Iraq. The text of the communication sets out three conditions that need to be fulfilled "if the European Union and its Members are to make an effective contribution to the reconstruction of Iraq"⁷⁷. The first condition refers to the need to improve the security environment in Iraq while stressing the responsibility of the Coalition Provisional Authority to provide the necessary conditions for international assistance to be delivered effectively.
269. The second condition emphasises the need for "tangible progress and a clear timetable for the transfer of power and sovereignty to the Iraqi people"⁷⁸. This is a view that reflects the preoccupations of many European countries, both in connection with the international legal status of Iraq's reconstruction effort and its practical effectiveness. In its role as a development agency, the EU is particularly concerned with the establishment of a participatory framework that will guarantee that Iraqis themselves are the agents of the rebuilding of their country.
270. The third condition put forward by the European Union relates to the need for "a transparent and operational multilateral framework for reconstruction". The text specifically refers to the wish of donors "to channel their contributions independently of the Coalition Provisional Authority"⁷⁹. The Community has therefore stated that the main part of its contribution will be channelled though the Multi-Donor Trust Fund for Iraq, currently being developed by the UN in cooperation with the World Bank.
271. Finally, the European Union is supportive of a more regional perspective and is therefore appealing to Iraq's neighbours to increase their support for rebuilding Iraq and to cooperate in bringing about regional stability.

272. The Israeli-Palestinian conflict, which has been going on for over 50 years, is causing instability in the region, fomenting terrorism and adversely affecting the economic development of the region as a whole. A global, negotiated political settlement must be found quickly.
273. The road map and the unofficial Geneva Accord initiative, which may be given new impetus at the 1 December 2003 ceremony, could provide an appropriate framework for restoring peace.
274. The negotiations should cover all the problems connected with two states existing side by side, their boundaries, withdrawal from the settlements, the security fence and the status of Jerusalem, but also other problems such as the Golan Heights, the right of return of the refugees and their entitlement to compensation.
275. The four million Palestinian refugees, 1.3 million of whom live in camps, should be entitled at least to basic human and social rights. It is paramount in any solution to the problem that their resettlement should be organised in a practical and humane way.
276. The Arab countries directly concerned by the conflict - Jordan, Syria and Lebanon in particular - should be involved in a global settlement and should firmly express their desire for stability and economic development within the region. In this way they would be contributing to the fight against terrorism.
277. A definite risk, in relation to both the conflict and its consequences, is the rise of radical Islam. Armed radical movements such as Hizbullah, Hamas and Islamic Jihad, supported as they are by various external powers, have to be brought under control.
278. Should the peace process fail because the incumbent authorities - Sharon in Israel and Arafat for the Palestinians - refuse to cooperate, the international community will have no choice but to intervene as it has done in other parts of the world.
279. A ceasefire, a UN mandate and a stabilisation force would then be the prelude to a peace agreement, the basis of which has already been mapped out.
280. Ending the conflict will restore stability in the region and help with the fight against terrorism. Economic revival will be necessary to ensure peace. As far as the peoples of the Arab countries and the citizens of Europe are concerned, opposing the policy of the Israeli Government is not anti-Semitism, although this could re-emerge. Peace can keep that risk at bay.
281. If the Israeli-Palestinian conflict persists and unless the situation in Iraq returns to normal, not only will security in Europe and the world as a whole be under a grave threat, but relations between the West and the Arab world will be seriously damaged.

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APPENDIX I

The following is a performance-based and goal-driven road map, with clear phases, timelines, target dates, and benchmarks aiming at progress through reciprocal steps by the two parties in the political, security, economic, humanitarian, and institution-building fields, under the auspices of the Quartet [the United States, European Union, United Nations, and Russia]. The destination is a final and comprehensive settlement of the Israel-Palestinian conflict by 2005, as presented in President Bush's speech of 24 June, and welcomed by the EU, Russia and the UN in the 16 July and 17 September Quartet Ministerial statements.

A two-state solution to the Israeli-Palestinian conflict will only be achieved through an end to violence and terrorism, when the Palestinian people have a leadership acting decisively against terror and willing and able to build a practicing democracy based on tolerance and liberty, and through Israel's readiness to do what is necessary for a democratic Palestinian state to be established, and a clear, unambiguous acceptance by both parties of the goal of a negotiated settlement as described below. The Quartet will assist and facilitate implementation of the plan, starting in Phase I, including direct discussions between the parties as required. The plan establishes a realistic timeline for implementation. However, as a performance-based plan, progress will require and depend upon the good faith efforts of the parties, and their compliance with each of the obligations outlined below. Should the parties perform their obligations rapidly, progress within and through the phases may come sooner than indicated in the plan. Non-compliance with obligations will impede progress.

A settlement, negotiated between the parties, will result in the emergence of an independent, democratic, and viable Palestinian state living side by side in peace and security with Israel and its other neighbours. The settlement will resolve the Israel-Palestinian conflict, and end the occupation that began in 1967, based on the foundations of the Madrid Conference, the principle of land for peace, UNSCRs 242, 338 and 1397, agreements previously reached by the parties, and the initiative of Saudi Crown Prince Abdullah - endorsed by the Beirut Arab League Summit - calling for acceptance of Israel as a neighbour living in peace and security, in the context of a comprehensive settlement. This initiative is a vital element of international efforts to promote a comprehensive peace on all tracks, including the Syrian-Israeli and Lebanese-Israeli tracks.

The Quartet will meet regularly at senior levels to evaluate the parties' performance on implementation of the plan. In each phase, the parties are expected to perform their obligations in parallel, unless otherwise indicated.

Phase I: Ending Terror And Violence, Normalizing Palestinian Life, and Building Palestinian Institutions -- Present to May 2003

In Phase I, the Palestinians immediately undertake an unconditional cessation of violence according to the steps outlined below; such action should be accompanied by supportive measures undertaken by Israel. Palestinians and Israelis resume security cooperation based on the Tenet work plan to end violence, terrorism, and incitement through restructured and effective Palestinian security services. Palestinians undertake comprehensive political reform in preparation for statehood, including drafting a Palestinian constitution, and free, fair and open elections upon the basis of those measures. Israel takes all necessary steps to help normalize Palestinian life. Israel withdraws from Palestinian areas occupied from September 28, 2000 and the two sides restore the status quo that existed at that time, as security performance and cooperation progress. Israel also freezes all settlement activity, consistent with the Mitchell report.

At the outset of Phase I:

Security

Palestinian Institution-Building

Immediate action on credible process to produce draft constitution for Palestinian statehood. As rapidly as possible, constitutional committee circulates draft Palestinian constitution, based on strong parliamentary democracy and cabinet with empowered prime minister, for public comment/debate. Constitutional committee proposes draft document for submission after elections for approval by appropriate Palestinian institutions.

Humanitarian Response

Civil Society

Settlements

Phase II: Transition - June 2003-December 2003

In the second phase, efforts are focused on the option of creating an independent Palestinian state with provisional borders and attributes of sovereignty, based on the new constitution, as a way station to a permanent status settlement. As has been noted, this goal can be achieved when the Palestinian people have a leadership acting decisively against terror, willing and able to build a practicing democracy based on tolerance and liberty. With such a leadership, reformed civil institutions and security structures, the Palestinians will have the active support of the Quartet and the broader international community in establishing an independent, viable, state.

Progress into Phase II will be based upon the consensus judgment of the Quartet of whether conditions are appropriate to proceed, taking into account performance of both parties. Furthering and sustaining efforts to normalize Palestinian lives and build Palestinian institutions, Phase II starts after Palestinian elections and ends with possible creation of an independent Palestinian state with provisional borders in 2003. Its primary goals are continued comprehensive security performance and effective security cooperation, continued normalization of Palestinian life and institution-building, further building on and sustaining of the goals outlined in Phase I, ratification of a democratic Palestinian constitution, formal establishment of office of prime minister, consolidation of political reform, and the creation of a Palestinian state with provisional borders.

Phase III: Permanent Status Agreement and End of the Israeli-Palestinian Conflict -- 2004 - 2005

Progress into Phase III, based on consensus judgment of Quartet, and taking into account actions of both parties and Quartet monitoring. Phase III objectives are consolidation of reform and stabilization of Palestinian institutions, sustained, effective Palestinian security performance, and Israeli-Palestinian negotiations aimed at a permanent status agreement in 2005.

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APPENDIX II

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APPENDIX III

"The Council of Arab States at the Summit Level at its 14th Ordinary Session, reaffirming the resolution taken in June 1996 at the Cairo Extra-Ordinary Arab Summit that a just and comprehensive peace in the Middle East is the strategic option of the Arab countries, to be achieved in accordance with international legality, and which would require a comparable commitment on the part of the Israeli government.

Having listened to the statement made by his royal highness Prince Abdullah bin Abdul Aziz, crown prince of the Kingdom of Saudi Arabia, in which his highness presented his initiative calling for full Israeli withdrawal from all the Arab territories occupied since June 1967, in implementation of Security Council Resolutions 242 and 338, reaffirmed by the Madrid Conference of 1991 and the land-for-peace principle, and Israel's acceptance of an independent Palestinian state with East Jerusalem as its capital, in return for the establishment of normal relations in the context of a comprehensive peace with Israel.

Emanating from the conviction of the Arab countries that a military solution to the conflict will not achieve peace or provide security for the parties, the Council:

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APPENDIX IV

Israel's Separation Fence: completed and Projected Sections - July 2003

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APPENDIX V

(for more a detailed or recent map, please visit www.btselem.org or www.fmep.org )

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APPENDIX VI

1948	State of Israel declared
1964	The PLO (Palestine Liberation Organisation) was formed and in 1968 adopted its charter, calling for the elimination of Zionism in Palestine
1967	In the Six Days War, Israel gained control of the West Bank, Gaza Strip, East Jerusalem, the Golan Heights and the Sinai Desert. UN Security Council Resolution 242 called for the withdrawal of Israeli forces from "territories occupied in the recent conflict", for the termination of all claims, and for recognition of the sovereignty, territorial integrity and political independence of every State in the area
1973	Egypt and Syria attacked Israel in the Yom Kippur war. Early Arab territorial gains were reversed
1978	Camp David Accords
1979	Peace Agreement between Egypt and Israel, Sinai returned to Egypt
1982	Israel invades Lebanon to expel the PLO; massacres in the Sabra and Shatila refugee camps in Beirut
1987	Start of first Intifada
1988	The Palestinian National Council declared a Palestinian state; in December Yasser Arafat renounced all forms of terrorism and affirmed Israel's right to exist (UNSCR 242), opening the way to dialogue with the US
1991	Madrid Peace Conference in which all parties are for the first time in face to face negotiations. The structure of the current process remains almost unchanged: a "Palestinian track" (Israel PLO), now the Palestinian National Authority a "Syrian track" (Israel-Syria) a "Lebanese track"(Israel-Lebanon) a "multilateral track" with working groups on economic development, arms control and security, water, the environment, and refugees
1993	Following secret negotiations in Norway, Israel and the PLO signed a "Declaration of Principles" (often known as Oslo I). The two sides recognized each other's "legitimate and political rights", and agreed there should be negotiations leading to a Palestinian self-governing authority for a transitional period, not exceeding five years.
1994	Peace Treaty between Israel and Jordan
1995	Yasser Arafat and Yitzhak Rabin sign the Taba agreement (known as Oslo II) in Washington to expand Palestinian self-rule in the West Bank and Gaza and allow Palestinian elections (held on 20 January 1996). Assassination of Prime Minister Yitzhak Rabin by an orthodox Jewish student.
1995-1996	Peace negotiations between Israel and Syria, suspended after a series of suicide attacks.
1996	The Palestinian National Council no longer denies Israel's right to exist.
1998	Wye River Memorandum for a phased Israeli redeployment in parallel with Palestinian achievement of security objectives and progress on economic issues, including the Gaza Industrial Estate and Airport, and the re-launch of final status negotiations. The first phase of redeployments occurred; further redeployment went ahead delayed.
1999	In December, Prime Minister Barak met Syrian Foreign Minister Farouk al-Shara for peace talks, but these were broken off in March 2000.
2000	Talks between Abu Ala (Ahmed Qurei) and Shlomo Ben-Ami led to the Camp David summit, which ended without agreement. In September, start of the second Intifada.
2001	In January, start of marathon talks in Taba (Egypt). Taba achieved some further progress in narrowing the differences between the parties, and the parties issued a concluding statement making clear that they had never been so close to agreement. On 6 February, Ariel Sharon elected Prime Minister. Sharon rejected the negotiations at Camp David and Taba and the Clinton proposals as a basis for negotiations. He was in favour of a tough security policy until the Palestinian National Authority addressed effectively the violence against Israeli citizens, advocated and perpetrated by Palestinian radical movements. The Mitchell Committee, which was established by the Sharm el-Sheikh agreement, issued its report on 21 May 2001. The Committee recommended immediate and unconditional cessation of violence, a range of confidence-building measures focusing on security cooperation and a greater restraint on Israeli Defence Force behaviour, an end to closures and a freeze on all settlement activity including so-called "natural growth", and a return to negotiations. The report was accepted by the parties and widely endorsed, including by the EU and US. The need to implement the Mitchell package in full became the basis for diplomatic efforts. The recommendations of the Mitchell Committee were followed by the Temet security work-plan, committing both Israelis and Palestinians to implement steps towards a cease-fire. Both parties however continued their violence, each with its own justification for such acts and each placing the responsibility for the cycle of violence on the other.
2002	In December the Quartet (EU, Russia, UN and US) agreed on the text of the road maps, based on and consistent with all earlier international statements, the UN Security Council Resolutions, the Madrid terms of reference and the March 2002 Arab League initiative.
2003	In June 2003, both parties adopted the road map, implementation of which came to a standstill in September after renewed violence.

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¹ Adopted without amendment by the Assembly on 3 December 2003 (9^th sitting).

² Jane's Defence Weekly, 12 November 2003.

³ www.haaretz.com : Histadrut to decide Wednesday on strike plans, 15 October 2003.

⁴ Jerusalem Post Internet Edition : on the waterfront : Is Binyamin Netanyahu the next Margaret Thatcher - or another Jacques Chirac?, 9 October 2003.

⁵ The Israeli economy 2002: www.iet.ru/guest/lopez/Israel-2002.htm

⁶ Jerusalem report Magazine: Back page: "we put out fires, but there's no competent planning".

⁷ The price of the Intifada: www.themodernreligion.com/jihad/price.html

⁸ Israeli economy buckling from cost of war: http://www.guardian.co.uk

⁹ Matitiyahu Drobless, head of World Zionist Organization's Settlements Division.

¹⁰ Current Prime Minister Ariel Sharon, Minister of Agriculture in the first Likud Government 1977-1981.

¹¹ Israeli Palestinian Interim Agreement on the West Bank and the Gaza Strip, 28 September 1995, Chapter 5, Article 31(7).

¹² Basic Guidelines of the 30^th Government of Israel, http://www.mfa.gov.il/

¹³ www.haaretz.com and the Israeli Interior Ministry.

¹⁴ Statement by Ambassador, Dan Gillerman, Permanent Representative of Israel to the United Nations, to the UN Security Council, 14 October 2003.

¹⁵ According to figures submitted by the Palestinian Ministry of Agriculture.

¹⁶ Intervention of Javier Solana during the plenary session of the European Parliament on 9 October 2003.

¹⁷ United Nations General Assembly A/ES-10/L.15.

¹⁸ UNCTAD: Programme of Assistance to the Palestinian People, International Support to the Palestinian People 1999-2000 / 2001-2003

¹⁹ World Bank: Long-Term Policy Options for the Palestinian economy

²⁰ UNIFIL (United Nations Interim Force in Lebanon) was established in 1978 as a result of UN Security Council Resolution 425 after Israel's invasion of Lebanon on 15 March 1978 with a mandate to keep order and restore peace and stability in South Lebanon. Since then, the number of its troops has been reduced and as from 2002 the total number stands at about 2 000, including one Indian and one Ghanaian battalion, and support troops, mainly French, Italian, Polish and Ukrainian, and observers from a number of different countries.

²¹ The Military Balance 2003-2004, page 97, IISS, London 2003.

²² Edinburgh European Council meeting - Presidency Conclusions, Bulletin of the European Union, December 1992.

²³ Johannes Reissner, "Europe and Iran: Critical Dialogue", in eds. Richard N. Haass and Meghan L. O'Sullivan, "Honey and Vinegar: Incentives , Sanctions, and Foreign Policy", Brookings Institution Press, 2000.

²⁴ Ibid.

²⁵ European Union Declaration on Iran, No. 26/97, 29 April 1997.

²⁶ EU General Affairs Council, EU Declaration: Conclusions-Iran, Luxembourg, 8-9 June 1998.

²⁷ Commission of the European Communities, "Communication from the Commission to the European Parliament and the Council: EU relations with the Islamic Republic of Iran", Brussels, 7 February 2001.

²⁸ Ibid.

²⁹ Speech by the External Relations Commissioner , Rt. Hon. Chris Patten, "The Iranian choice - an opportunity to embrace the Family of Nations", Teheran, 5 February 2003.

³⁰ General Affairs and External Relations Council Conclusions on Iran, Brussels, 21 October 2002.

³¹ Press statement by the EU Presidency, EU-Iran Comprehensive Dialogue, Teheran, 10 September 2002; Speech by the External Relations Commissioner, the Rt. Hon. Chris Patten, "The Iranian choice - an opportunity to embrace the Family of Nations", Teheran, 5 February 2003.

³² General Affairs and External Relations Council Conclusions, Brussels, 17 June 2002.

³³ EU Presidency and Commission, joint press release on the opening of the negotiations with Iran, Brussels, 12 December 2002 (IP/02/1880); EU-Iran: launch of negotiations on new agreements with Iran, Brussels 11 December 2002 (IP/02/1862).

³⁴ EU-Iran: launch of negotiations on new agreements with Iran, Brussels 11 December 2002 (IP/02/1862).

³⁵ Speech by the External Relations Commissioner, the Rt. Hon. Chris Patten, "The Iranian choice - an opportunity to embrace the Family of Nations", Teheran, 5 February 2003.

³⁶ RFE/RL, "EU Foreign Ministers Grapple with `Wider' Middle East", 30 September 2003.

³⁷ General Affairs and External Relations Council Conclusions, Brussels, 21 July 2003.

³⁸ Commission of the European Communities, "Communication from the Commission to the European Parliament and the Council: EU relations with the Islamic Republic of Iran", Brussels, 7 February 2001.

³⁹ Statement of the deputy foreign minister of Italy H.E Roberto Antonione on behalf of the European Union, International Atomic Energy Agency, 47^th IAEA General Conference, Vienna 15-19 September 2003; Presidency Conclusions, EU Summit, Thessaloniki, June 19-20 2003; Council Conclusions, 29 September 2003.

⁴⁰ AFP, "EU warns Iran of economic fallout from nuclear drive", 29 September 2003.

⁴¹ BBC NEWS, "EU trade threat to Iran", 29 September 2003.

⁴² AFP news agency, 18 September 2003.

⁴³ EU Business, "Iran wants to allay nuclear suspicions but won't cede to pressure: Khatami", 30 August 2003.

⁴⁴ EU Business, "EU presses Iran on nuclear activities, uranium enrichment", 17 October 2003.

⁴⁵ BBC NEWS, "El Baradei interview", 16 October 10/2003.

⁴⁶ Euronews, 22 October 2003.

⁴⁷ BBC, "Iran hands over nuclear papers", 23 October 2003.

⁴⁸ The Times, `Iran vows to satisfy all UN concerns over nuclear programme', 10 November 2003

⁴⁹ AFP news agency, 22 October 2003.

⁵⁰ Benjamin Schreer and Asle Toje, "Europe's success in Iran has a hollow ring", Financial Times, 23 October 2003.

⁵¹ BBC News, "US and Russia warn Iran", 27 September 2003.

⁵² Reuters, "US Slams UN for Dismissing Iran Nuke Evidence", 21 November 2003.

⁵³ Le Monde, "Pour l'AIEA, il n'y a "pas de preuve" d' un programme nucléaire militaire iranien," 12 November 2003.

⁵⁴ IAEA, "Implementation of the NPT Safeguards Agreement in the Islamic Rrepublic of Iran", Resolution adopted by the Board of Governors, 26 November 2003, GOV/2003/81.

⁵⁵ Ibid.

⁵⁶ BBC, "UN powers agree on Iran warning", 25 November 2003.

⁵⁷ Statement by the EU Commissioner for External Relations, Chris Patten, "EU regrets extension of US sanctions law against Iran and Libya", Brussels, 31 July 2001.

⁵⁸ The Guardian Comment, "War on Iran is the new nightmare", 31 July 2002.

⁵⁹ Lee H. Hamilton, "A Critical Time for US policy on Iran: Statement on US policy towards Iran before the Ney/Snyder Panel", Woodrow Wilson International Center for Scholars, 24 June 2003.

⁶⁰ George W. Bush, "State of the Union Address", 29 January 2002.

⁶¹ Herald Tribune, "US contacts with Iran depend on al Qa'ida data", 29 October 2003.

⁶² Financial Times, "US denies pursuing policy of regime change in Teheran", 29 October 2003.

⁶³ Ibid.

⁶⁴ Ali M. Ansari, "Continuous Regime Change from Within", The Washington Quarterly,vol.26, No.4, Autumn 2003, page 64.

⁶⁵ UN News Service, "Security Council outlines roles in bringing peace, stability to Iraq", 16 October 2003.

⁶⁶ United Nations Security Council, Resolution 1511 (2003), 16 October 2003.

⁶⁷ Ibid.

⁶⁸ White House, Address of the President to the Nation, 7 September 2003, http://www.whitehouse.gov .

⁶⁹ Joint Statement by France, Germany, and the Russian Federation in Connection with the Adoption of UN Security Council Resolution 1511, 16 October 2003, http://www.acronym.org.uk .

⁷⁰ Bulletin Quotidien Europe 8566, 18 October 2003.

⁷¹ Bulletin Quotidien Europe 8552, 30 September 2003.

⁷² Reuters, "Iraqis Submit Timetable to End US Occupation", 24 November 2003.

⁷³ Ibid.

⁷⁴ Le Monde, "A Madrid, la communauté international affiche le chiffre de 33 milliards de dollars d'aide pour l'Irak", 27 October 2003.

⁷⁵ Ibid.

⁷⁶ External Relations Directorate General, Speech by the Rt. Hon. Christopher Patten, External Relations Commissioner, Madrid's Donors Conference for Iraq, 24 October 2003.

⁷⁷ Commission of the European Communities, Communication from the Commission to the Council and the European Parliament: The Madrid Conference on Reconstruction in Iraq 24 October 2003, Brussels, 1 October 2003 (COM (2003) 575).

⁷⁸ Ibid.

⁷⁹ Ibid.