Jay Solomon
The Wall Street Journal
October 13, 2008 - 8:00pm

Efforts to attract foreign investment into the West Bank are accelerating, despite fears that U.S.-brokered peace talks with Israel are foundering, Palestinian Prime Minister Salam Fayyad said in an interview.

Mr. Fayyad is spearheading his government's push to revive economic activity in the Palestinian territories and strengthen its institutions, as talks with Israel to formalize a Palestinian state continue.

In support of this economic drive, Mr. Fayyad will unveil Tuesday in Washington investments by Intel Corp., Cisco Systems Inc. and TouchStar in start-up businesses in the West Bank and Palestinian neighborhoods of East Jerusalem, which Israel annexed from Jordan in 1967.

Intel is building a minicomputer lab in Hebron, while TouchStar is committing $1.5 million for a Middle East-focused call center in East Jerusalem. Cisco is overseeing a $10 million, three-year investment plan to create jobs and economic projects in the Palestinian territories.

"What we're trying to do is move where we can, the most we can, as soon as we can do it," Mr. Fayyad said. These investments happen "to be something that's not sensitive to economic restrictions" such as Israeli roadblocks that limit access to the territories. "Of course, we hope we'll get to the point where there are no such restrictions," he added.

Mr. Fayyad said the Palestinian Authority has established a venture-capital fund to integrate American and Israeli technology and capital into the Palestinian territories. A Palestinian insurance company is working with the U.S. government's Overseas Private Investment Corp. to provide risk insurance to companies investing in the territories.

"People are beginning to see a difference on the ground," Mr. Fayyad said.

He was less optimistic about peace talks with Israel, saying their dispute is a "political conflict that requires a political solution."

U.S. Secretary of State Condoleezza Rice pledged in November 2007 at an international summit in Annapolis, Md., to conclude a peace agreement between the two sides by the end of the Bush administration.

Mr. Fayyad, in a speech Sunday, charged Israel with undercutting the negotiating process by accelerating, rather then freezing, the construction of Jewish settlements in the West Bank. He said Israel has increased the number of checkpoints in the West Bank to 630 over the past year from 563 before the Annapolis summit.

The Israeli government denied Mr. Fayyad's charges and said it has moved to reduce the numbers of settlers and checkpoints in the West Bank. A spokesman for the Israeli government said negotiations with the Palestinians continue and all disputes between the Israelis and Palestinians are on the bargaining table.

"Far more has been done for the Palestinians over the past year then has impinged upon them," said Jonathan Peled, a spokesman for the Israeli Embassy.

"We all hoped that we would be closer to peace by now," Mr. Fayyad said in his speech. In the interview, he said his government will continue strengthening institutions and services in the territories in anticipation of the creation of an independent state. He said the Palestinian Authority was working to unify control over the Gaza Strip, which is now run by Hamas, the militant group and political party.


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