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International Business : Palestinians Plod Long Road to Stability : Middle East: Nonprofit group Builders for Peace has announced nine business ventures in Gaza and the West Bank. But skeptics say poor infrastructure may thwart its efforts.

November 17, 1994|RAY DELGADO | TIMES STAFF WRITER

Like the signers of the historic peace agreement that spawned its creation, the nonprofit group working to bring economic development to the Palestinian territories of Gaza and the West Bank has seen the euphoria of a year ago dissipate under the harsh realities of the politics of the Middle East.

But Builders for Peace plods along in its efforts to broker business deals in the economically depressed territories and in Jordan.

The organization was created last year by Vice President Al Gore after Israeli Prime Minister Yitzhak Rabin and Palestine Liberation Organization Chairman Yasser Arafat signed the accord giving limited autonomy to Palestinians in the territories. The mission of Builders for Peace was to buttress the peace process with economic ventures that would help improve the miserable living conditions in the territories.

Co-chaired by former U.S. Rep. Mel Levine and James Zogby of the Arab American Institute, the group of Arab American and Jewish business people was partly successful in meeting its goals. It has announced nine projects, including a hotel, a housing development, and manufacturing plants to produce olive oil, bottled water, furniture and other goods.

In all, the ventures represent about $100 million in investment and should produce about 5,000 jobs in a region with an unemployment rate of 50% to 60%, said Levine, a Democrat who represented the Santa Monica area for 10 years.

"This is the tip of the iceberg," he said in explaining plans for a tuna cannery, a plastics manufacturer and a Pepsi bottling plant, among other projects in early development. "Frankly, I believe that the interest and success of (potential investors) will depend on the success of these nine projects."

But the group has also encountered skepticism about its prospects for success, partly because Gaza and the West Bank have poor infrastructure, including financial and legal systems, to support such businesses.

It was hoped that the World Bank and other international lending agencies would fund the water treatment plants, roads and other such infrastructure projects needed in the territories, but the process has been delayed by dissatisfaction with Arafat's administrative procedures.

Levine acknowledged that the large projects to be funded by donor nations are "going more slowly than anyone wanted." But he added: "Our mission never was infrastructure. It was always the individual business projects. Clearly, infrastructure is needed, but that's beyond our scope."

Some critics have also complained that some of the projects brokered by Builders for Peace, such as a flashy hotel, are not appropriate for the area. Said Levine: "We are in no place to decide which companies need to go there. They bring jobs and improvements to the economy. Whether large or small, they contribute to the same goal."

Shadowing Builders for Peace's efforts are the terrorist attacks on Israel by Palestinian militants and Israel's retaliatory actions in the territories.

Indeed, Palestinian militants were holding an Israeli soldier (later killed in a rescue attempt) hostage last month when Builders for Peace brought together American investors and Palestinian businessmen at a Beverly Hills dinner.

That environment may worry potential investors, but none of the applicants for loans and other financial support from the Overseas Private Investment Corp. for projects in the territories has withdrawn because of the continuing violence, said OPIC representative Walter Jones.

Despite recent troubles, Israelis and Palestinians are moving toward coexistence, said Khaled Quotob, a manager of the Palestinian Agricultural Marketing Assn., who attended the Beverly Hills dinner. "I'm looking for aggressive American companies who are willing to come over and do business."

Sabri Farra, an Arab American who heads a construction and trade company in Gaza, said the company's projects have not been hampered by the violence.

"We're not threatened in any way at all," Farra said. "We're not just going there to make money and quit. We're there for the long term." However, he said the firm is concerned about the slow pace of infrastructure improvements.

"We're very much interested in seeing things developed. The U.S. government needs to speed its assistance to the area," he said.

* International Business: For additional Times analysis and coverage of commerce and opportunities overseas, sign on to the new TimesLink on-line service and "jump" to keyword "business."

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