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                    Office of the Press Secretary
                         (Wadi Araba Passage
                      Jordanian-Israeli Border) 

                         BACKGROUND BRIEFING

October 26, 1994

                        Aboard Air Force One 
                      En Route Al-Aqaba, Jordan

11:09 A.M. (L)

SENIOR ADMINISTRATION OFFICIAL: I was in the Mubarek meeting, my colleague was in the Arafat meeting, so I'll talk about Mubarek first very quickly.

The focus of the meeting was to talk about the President and Mubarek working together on the next steps in the peace process; in particular, implementation of the Israeli-Palestinian agreement and their upcoming meeting with Arafat, and discussion about IsraelSyria negotiations and how to accelerate the negotiations on that track.

They exchanged views on that and President Mubarek agreed that he would do his best to facilitate the President's efforts in that regard.

Q Did he say anything specific he could do with Arafat?

SENIOR ADMINISTRATION OFFICIAL: Arafat, well you can get him from --

Q I mean, I'm sorry, Assad.

SENIOR ADMINISTRATION OFFICIAL: Assad, well they discussed different ideas on that track, but I don't want to get into specifics. Sorry.

Q Did Golan come -- I mean, did they specifically talk about the Golan, or some of the obstacles?

SENIOR ADMINISTRATION OFFICIAL: They did not specifically talk about the Golan. They talked about the nature of where the negotiations were and how they could move them forward.

Q You can't tell us how they agreed to move them forward?


Q Okay, let's go on to Arafat then.

Q Mubarek's a great guy; let's go on to Arafat. (Laughter.)

SENIOR ADMINISTRATION OFFICIAL: Here we have -- I'll be a little bit more specific -- two areas the President focused on. One was security and the whole question of Hamas and other extremist groups who represent a fundamental challenge to the process and the ability to move forward. And the other issue was economics.

Now, in the security area, what happened -- very quickly -- was that Arafat responded almost immediately saying, I'm their main target, and of course I'm doing everything; why wouldn't I do everything if I'm their main target? And the President made it very clear that obviously, from our perspective in terms of our ability to try to be helpful to the Palestinians, and from the Israeli perspective in terms of if the basic preoccupation with security, that everything that had to be done indeed had to be done. And what he said publicly, he also privately said, he said, we don't expect 100 percent success; we do require 100 percent effort. And Arafat said, I am doing that; I will do it; nobody has more of an interest in it than I have.

On the economic side, we have for some time been working on an understanding that would have the Palestinians assume a set of obligations to generate their own revenues so that we could go to other donors and say this is not going to be an open-ended enterprise. During the course of that meeting, we actually -- even though it's not an agreement directly with us -- we actually concluded the agreement. We have been working with the Palestinians and they will now send a letter --

Q What will they do?

SENIOR ADMINISTRATION OFFICIAL: Well, there's a whole textual understanding that lays out how they will set up a taxing mechanism, especially in the West Bank; how they will cooperate with the Israelis in terms of setting that up, because in the West Bank, the Israelis will still be there; other steps that they will take to put a taxing mechanism in place in Gaza and Jericho so that we can work with the donors to close the gaps not only in the pledges that have been made, but also that we can work with the donors to close the gaps between what their needs are and what remains to be provided for those needs.

There are three basic areas where there are needs and where there is a gap. One is in the start-up costs for Gaza and Jericho meeting the basic administrative costs; two is in the startup costs of early empowerment. The Israelis transfer six areas in and August 29th agreement with the Palestinians -- six areas in the West Bank to Palestinian control. Only one has already been transferred, and that's education. The others will not be transferred until there's a financing mechanism. This particular agreement, this understanding, is the key to producing that.

Q When you say we concluded an agreement, do you mean, we the U.S., we the --

SENIOR ADMINISTRATION OFFICIAL: We've had a number of meetings of the course, really since September. We have been developing, through a number of meetings, a set of understandings that would lay out, in a timed sequence way, how the Palestinians would begin to generate their revenues that would begin to go on an incline, and how the donors would be providing funds. But that would gradually decline until they met.

Q How are they going to start generating revenues?

SENIOR ADMINISTRATION OFFICIAL: Well, they do have a -- there is a taxing mechanism that they can set up. And it's largely drawn from what in the West Bank largely existed from the Israelis. The Israelis will cooperate with them to make certain that it happens.

Q What was your third point, before you lose -- you had a third thing, before you lose it. You said there were three things.


Q Right.

SENIOR ADMINISTRATION OFFICIAL: Gaza-Jericho start-up costs, early empowerment.

Q Okay, now what about police? What is the U.S. doing to help them with this? Where are they?

SENIOR ADMINISTRATION OFFICIAL: What we had agreed to, and this is part of this overall framework, is that it's not so much the equipment, it's the issue that there are three basic needs and the police are included in those three basic needs. When we go to the other donors, we will be targeting donors based on those who have made commitments but haven't yet fulfilled those commitments. And we'll be targeting those who have, if they haven't fulfilled them, they might also be able to reprogram monies that they have and direct them into one of these three areas.

Q Was this concluded today, this agreement? What you said, we concluded it, just now? At this meeting?

SENIOR ADMINISTRATION OFFICIAL: Yes, the fact is that what we got was we got a signature from Nabil Shaath to send to the Norwegians who are the chair of the ad hoc liaison committee. This is still something that has to be shared with the other donors. But what we wanted to do here was to get a clear set of Palestinian commitments on what they would do with regard to the generation of their own revenues and how they would --

Q Is this an extensive thing, or just a statement of principles?


Q It's a document?

SENIOR ADMINISTRATION OFFICIAL: Yes, it's a document, but it's not -- it's something that still has to be shared with all the donors. It basically goes back to something we had in mind beginning in early September -- that as a result of the early empowerment agreement, we were in a position where additional requirements were being sought from the Palestinians and Israelis. And that meant in the early empowerment area.

So if we were going to go to the donors, we said to the Palestinians, we have to be able to tell other donors that this is not open-ended; we have to be able to tell them that you're going to be undertaking a series of measures and adopting a series of obligations that will, in fact, begin to generate your own revenues over time.

Q Is there a time line?

SENIOR ADMINISTRATION OFFICIAL: Yes, there is a time line built into this. For the early empowerment, over the next six months, that they will generate increasing revenues over time. And the donors will be providing -- will try to make the effort to fill the gaps in these three areas of Gaza, Jericho, early empowerment.

Q Is this like income tax, sales tax, what kind of taxes?

SENIOR ADMINISTRATION OFFICIAL: Well, yes, that's largely what it is. But they haven't --

Q Did he complain about the border closing as hurting their economy?


Q Can you go into that a little bit?

SENIOR ADMINISTRATION OFFICIAL: Well, he said that with the border closing, it hurts the people who go and labor in Israel and who would gain income as a result of that.

Q Would he take that to Rabin?

SENIOR ADMINISTRATION OFFICIAL: Well, Nabil Shaath and Peres met on Sunday and the issue -- the closure was obviously an issue that was raised pretty extensively in that meeting. They raised it again with us. We'll obviously inform Rabin of what it is we heard, but I don't think it's anything he hasn't heard already.

Q Right, I got you. Okay.

SENIOR ADMINISTRATION OFFICIAL: I want to put perspective -- this is something -- the understanding -- the essence of the understanding is that it's pretty much been worked out already. But we hadn't gotten from them a final okay; we got the final okay today.

Q So it's like something that you can show to the international community to say, here's how they commit to being selfsustaining.

SENIOR ADMINISTRATION OFFICIAL: Yes. What we have from them is a very clear set of obligations that they have up until now not assumed.

SENIOR ADMINISTRATION OFFICIAL: The basic point is that the donors have to feel that this is not a bottomless pit; that the Palestinian administration is going to become self-sufficient over time, other wise, there will be a reluctance to give them money.

Q Can I ask you just one question before we land on a really important topic to all of us?

SENIOR ADMINISTRATION OFFICIAL: There are two elements here. One element is, we had to have a clear set of obligations on their part. But we also had to have a consistent set of budget numbers on their part. You can't -- we couldn't be in a position where we keep going to donors and saying, well, they told us this last week, but now the number is this. So now we have a very clear set of budget numbers and we also have a clear set of obligations. And that's what we wanted to do so that we could go to the donors to begin to generate closing the gaps.

Q Just before we land, could I just ask one question just before we land on the holy places and all of that? Was that -- how big a problem do you see that as right now? And what kind of trouble does that give the whole comprehensive peace?

SENIOR ADMINISTRATION OFFICIAL: Look, it did not get discussed in today's meeting.

Q At any level?

SENIOR ADMINISTRATION OFFICIAL: At any level. It did not get discussed.

Q Why?

SENIOR ADMINISTRATION OFFICIAL: I don't know. I mean, it's not our issue.

Q But how big a problem do you see it being at this point?

SENIOR ADMINISTRATION OFFICIAL: Well, I think it's obviously a source of some tension between Arafat and Hussein. But in the end, you've got to look at the larger stakes that exist.

These guys have each committed themselves to peace. And they've each committed themselves to working towards it. And the fact of the matter is, every time we've seen problems crop up, we've also seen an ability and a willingness to figure out a way to get around them; and that's one of the signs of how much things have begun to change.

Q Is there something more specific that the President was referring to, regarding cracking down on Hamas? Was he talking about the domestic crackdown in the U.S.? Is he talking about a new initiative with Germany and France or others?

SENIOR ADMINISTRATION OFFICIAL: Well, there are several different questions embedded in what you're asking. One has to do with if we're going to be trying to mobilize others to do everything they can to cut off Hamas, we can't limit what we're doing only to words. So we have to intensify our own effort at home. And if, in fact, we find that the legislation that currently exists today is not sufficient to do everything that we might, then we might even look at that where necessary. But that's not something that's decided yet because we have to determine whether or not what we currently have in terms of authority permits us to be more effective in terms of cutting them off, or at least cutting off the monies that go to them.

Q How specific is this agreement?

Q And the second part of her question was the international efforts. He said we're going to ask all our friends.

SENIOR ADMINISTRATION OFFICIAL: Well, that's what I mean. When you're talking about wanting everybody to cut off the sources and monies for Hamas, then you don't want to simply leave yourself in a position where all you offer is words.

Q Is there some new initiative, not in terms of what we're doing at home. I know -- I think I know that. Is there some new international initiative?

SENIOR ADMINISTRATION OFFICIAL: We have been sending out high-level messages emphasizing the importance of this. We will continue to follow up on that.

Q Into Europe?

SENIOR ADMINISTRATION OFFICIAL: It's been principally focused on the Middle East, but I think it will be across the board because they get help in a lot of different places, including -- frankly, they get help from some of the Arab communities in South America.

Q Over all figures on the aid?

SENIOR ADMINISTRATION OFFICIAL: It's a -- there's a -- the question is sort of the nature of the budgetary gap between what they have budgeted and what they need. And we're looking -- I can't give you an exact figure right now -- but what we're looking to do is to deal with all of the donors, and especially the donors who have made pledges but haven't fulfilled the pledges, to close the gap.

I can tell you this: there has been vastly more pledged than has been delivered. And if we were to be able to get many of the countries who have made pledges to deliver, then there would not be a budgetary gap.

Q What are some of those countries that haven't delivered?

SENIOR ADMINISTRATION OFFICIAL: Well, there's some of the Gulf States haven't.

Q Saudi Arabia?

SENIOR ADMINISTRATION OFFICIAL: They've -- well, I'll give you an example. The Saudis have made a pledge for this calendar year of $100 million, and they've delivered $63 million. So obviously --

Q How much did they pledge for?

SENIOR ADMINISTRATION OFFICIAL: -- $100 million. So obviously they've done about two-thirds. We'd like to see the rest now.

Q And Kuwait?

SENIOR ADMINISTRATION OFFICIAL: Kuwait had pledged $25 million and has done $8 million.

Q So will these be a subject of discussions when the President goes there?

SENIOR ADMINISTRATION OFFICIAL: Yes, it will certainly be an issue that comes up. But it's across the board. The gap, as I said, between what was pledged at the donors conference on October 1, 1993, and what's been delivered is pretty significant. Now, part of that is that a lot of what was pledged was not in the form of cash, but in the form of projects. And in those cases where countries are prepared to move only on the basis of projects, what we're going to say to them is, fine, finance some near-term projects that can be oriented towards job creation.

Q Do you believe the agreement can be a lever to get the donors to cough up the rest of what they've pledged?

SENIOR ADMINISTRATION OFFICIAL: Well, I would say the agreement gives the donors a different kind of incentive than they've had. Many have been reluctant to do things either because they were uncertain about the nature of transparency, or because they didn't want to know that if we do this now, you're not going to come back in two or three weeks and ask for more. So this is a way to give them a degree of confidence.

Q Is there a bottom line on the agreement, that overall we need x amount of money or we're going to spend it on these seven things? Is it that specific?

SENIOR ADMINISTRATION OFFICIAL: Well, I said there are three basic areas where the needs have to be met. There's really a fourth if you talk about those countries who couldn't provide cash but could finance immediate projects.

I think that's it.

THE PRESS: Thank you.

END11:21 A.M. (L)