Chair's Summary of the Meeting of the Ad Hoc Liaison Committee (AHLC)

The members of the AHLC met today in Brussels, to review the Palestinian state building process and to discuss ways to improve and sustain the Palestinian economy in its effort to maintain the viability of the two-state solution.

The meeting was hosted by EU High Representative Ms. Federica Mogherini, and chaired by Norway’s Foreign Minister Mr. Børge Brende. The AHLC stressed the importance of resolving the outstanding issues of the conflict, and to achieve a negotiated two-state solution.

The AHLC regretted the lack of developments since the last meeting in New York, and raised concerns that the economic conditions for the Palestinians continue to deteriorate.

The AHLC welcomed the adoption by the Palestinian government of its National Policy Agenda for 2017-22 and its implementation through the revised local aid structures.

In its efforts to strengthen the Palestinian economy and to sustain the viability of a future Palestinian state, the AHLC agreed on the following set of action points:

1. Reaffirms its support to the two-state solution, and supports the resumption of substantive peace talks between the Israelis and the Palestinians aimed at achieving a negotiated solution that ensures peace and security. In this regard, the AHLC calls on the parties to refrain from actions that would jeopardize the two-state solution, and emphasizes that achieving Middle East peace remains a key priority and is instrumental to regional stability and security;

Fiscal sustainability

2. Emphasizes the need for a more comprehensive and coordinated approach to reduce the high fiscal financing gap, promote medium-term fiscal sustainability;

3. Stresses the need for both parties to revive discussions at the highest financial and economic level and, in particular, make a focused effort to reach closure on the fiscal files to boost revenues on a sustained basis;

4. Emphasizes the need for higher donor budget support to complement the Palestinian government’s fiscal consolidation efforts and create the conditions for it to gradually invest more in the productive sectors of the economy;

5. While acknowledging that the Palestinian government’s efforts alone will not be sufficient, encourages the PA to adopt a strategic approach to reducing the deficit based on fiscal reforms that can deliver lasting improvements such as reforming the civil service, putting in place a more progressive tax regime, and strengthening public financial management;

Economic development

6. Calls on Israel to open Area C for more Palestinian activity, including access and movement, in order to enable economic development;

7. Encourages the parties to urgently complete negotiation of the interim power purchase agreement in order to energize the Jenin power station. Encourages further the parties to complete the permanent power purchase agreement, in order for the Palestinian government to take over the responsibility of their own energy sector, and calls on the donors to mobilize resources for the implementation of the agreement;

8. Calls on all involved stakeholders to complete the “Red Dead water agreement” aiming to secure 30 MCM of water to the West Bank and Gaza;

9. Calls on Israel to do more to ease access to land, and to allow distribution companies and the Palestinian Electricity and Transmission Company (PETL) to operate efficiently, enhance transmission efficiency, and facilitate exploitation of efficient solar generation in Area C;

10. Welcomes the constructive discussions between the two parties on financial sector stability, especially the recent decision by the Israeli government to help maintaining banking relations, as well as continued progress towards bringing the Palestinian Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime in line with international standards, with support from international partners;

Gaza reconstruction and recovery

11. Expresses deep concern of the situation in Gaza, in particular with regard to the current energy crisis, the social, economic and political consequences of which should not be underestimated;

12. Expresses further concern for the unacceptable economic activity of the de facto authorities in Gaza, in particular the practice of excessively taxing the people and the supplies provided and paid for by the Palestinian government, as well as additional customs on all imported goods into Gaza;

13. Calls upon the United Nations to redouble its efforts to find practical solutions to the critical situation in Gaza, including through emergency measures to mitigate the impact on the most vulnerable who already bear the brunt of a deteriorating situation across the Gaza Strip;

14. Stresses the precarious water situation in Gaza and urges all relevant parties to address the outstanding questions regarding energy supplies for desalination and water treatment in Gaza, and clarify entry procedures for materials for construction, operations and maintenance;

15. In light of the precarious humanitarian situation, the AHLC calls upon donors to fulfill pledges made at the Cairo conference for the reconstruction of Gaza. In this regard, the AHLC underlines the progress made to import construction materials under the Gaza Reconstruction Mechanism, and calls upon Israel to expedite the approval and facilitate access for other essential 'dual-use' materials beyond cement.