A U.S. government agency on Thursday presented a political risk insurance program to help guarantee investments in the West Bank, part of an international effort to help develop the local economy and pave the way for an independent Palestinian state.
The measure, announced at an international investors' conference in this biblical town, is meant to allay concerns by investors about risking their money in the turbulent Palestinian territories, especially at a time when the fate of Israeli-Palestinian peace talks is uncertain.
The conference has drawn hundreds of business people, many from the Arab world, and 109 investment projects valued at nearly $2 billion are being presented.
On Wednesday, a Qatari and a Saudi company signed two separate construction deals with Palestinian partners for a total of $550 million.
Palestinian Prime Minister Salam Fayyad told investors Thursday that his government would try to create a comfortable business environment. In the past, the Palestinian Authority was plagued by allegations of widespread official mismanagement and nepotism. Fayyad, a respected economist, has been credited with cleaning up public spending.
Fayyad said Palestinian President Mahmoud Abbas has signed a new law regulating companies. "This is just part of several laws aimed at reducing the tax burden and encouraging investment," he said.
U.S. Treasury Deputy Secretary Robert Kimmitt, who led a six-member presidential delegation to the conference, said he would urge U.S. companies to consider investment opportunities in the Palestinian territories.
"I think for some companies, there will be very good mid- to long-term business opportunities, and for others it might not be the time to invest," Kimmitt told reporters. "That's true in any location. We're going to have more companies taking a closer look at investment in the Palestinian territories as a result of this conference and if the investment climate is established by the Palestinian Authority."
On the sidelines of the conference, the political risk insurance program was signed by the Overseas Private Investment Corporation, an arm of the U.S. government, and the National Insurance Co., based in the Palestinian areas. The third partner is the Middle East Investment Initiative, a U.S.-based nonprofit group formed to help revitalize the region.
The Palestinian economy has been severely hampered by Israeli restrictions on Palestinian trade, imposed after the outbreak of a Palestinian uprising against Israeli occupation in 2000. Delays at Israeli checkpoints often make it difficult for Palestinian exports to deliver their goods on time.
The risk insurance program offers exporters up to $75,000 per claim. The Palestinian insurance company pays the first $10,000 (6,300) of a claim, and OPIC and MEII cover the rest, said the head of MEII, Berl Bernhard.
OPIC President Robert Mosbacher Jr. said the insurance fund would start with $5 million and is to grow to $20 million. Mosbacher said the program could eventually facilitate $400 million in exports.
Some Palestinian critics say the U.S. would be better served to use its political clout to speed up a lifting of Israeli checkpoints. Israel says it is trying to ease the travel and trade restrictions, but argues that the continued threat of Palestinian militants makes it impossible for broader measures.
The political risk insurance is one of the elements of a U.S.-backed economic program. OPIC and MEII also operate a $228 million loan guarantee program for small and midsize businesses.
Also Thursday, the U.S. Trade and Development Agency provided a $480,000 grant to a West Bank company, BCI Communications & Advanced Technologies Ltd. to help promote wireless Internet connectivity in the West Bank. A wireless network would connect the 10 largest towns in the West Bank, and would provide wireless service to about 45,000 users by the fourth year of operation, the U.S. agency said.
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