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Palestinians and Middle East peace: issues for the United States.

SUMMARY

The United States began contacts with the Palestine Liberation Organization (PLO) in December 1988, after the PLO accepted Israel's right to exist, accepted U.N. Resolutions 242 and 338 that call for an exchange of land for peace, and renounced terrorism. The United States continues its contacts with the PLO and the Palestinian Authority elected in January 1996, and is an active broker in the continuing Middle East peace process.

Congress gave the President the authority to waive previously passed legislation prohibiting U.S. contributions to the United Nations from funding any PLO activities, threatening to withdraw U.S. membership from international organizations that recognize the PLO, prohibiting U.S. government employees from negotiating with the PLO, and labeling the PLO a terrorist organization. The waiver authority was extended in P.L. 104-107 (February 12, 1996), but expired August 12, 1997. Congress also ordered closed PLO offices in Washington and New York, although the New York office serving the U.N. remains open under a U.S. court decision.

In opening remarks to the Madrid conference on October 30, 1991, the Palestinian delegation accepted transitional phases for the peace process and accepted confederation of a Palestinian state with Jordan. Despite accepting confederation, most Palestinians want an independent Palestinian state.

The Israeli and Palestinian delegations did not appear to be making any progress in resolving any of the issues: elections for an interim Palestinian administration, the future national status of the West Bank and Gaza Strip, borders, peacekeeping forces, demilitarized zones, water and natural resource sharing, population exchanges, economic cooperation, diplomatic relations, and the status of Jerusalem. Then on August 19, 1993, Israeli and PLO representatives initialed a secretly arranged Declaration of Principles to guide future negotiations. On September 10, the PLO and Israel exchanged letters of mutual recognition, and on September 13, the two signed the Declaration of Principles, that called for Israeli withdrawal from Gaza and Jericho, the election of a Palestinian Council, and negotiations for future withdrawals and a permanent settlement in 5 years.

On May 4, 1994, Israel and the PLO signed an agreement providing for the Israeli withdrawal from Gaza and Jericho (withdrawal completed May 11, 1994). The Interim Agreement signed on September 28, 1995 (also called Oslo II or the Taba Agreement), provided for elections for the 88-seat Palestinian Assembly, the release of Israeli-held prisoners, Israeli withdrawal from six West Bank cities, and other issues. The Israelis withdrew from the West Bank cities by the end of 1995, and the Palestinian Assembly was elected on January 20, 1996, and sworn in on March 7, 1996.

Israel and the Palestinians agreed to an Israeli withdrawal from Hebron in January 1997, and on October 23, 1998 signed the Wye agreement to meet previous commitments. The peace talks stalled at Camp David in July 2000, and remain suspended since the Palestinian uprising began in September. Some 1,493 Palestinians and 585 Israelis have died in the continuing confrontation. Also see CRS Issue Brief IB91137, The Middle East Peace Talks.

MOST RECENT DEVELOPMENTS

On November 10, 2002, Binyamin Netanyahu, Israel's new foreign minister and prime minister candidate, told a Likud party audience that his first task after becoming prime minister would be to expel Yasir Arafat from the occupied territories. Israeli elections for the 120-seat Knesset are scheduled for January 28, 2003.

Palestinian gunmen killed five Israelis in a West Bank settlement on November 12. The next day, Israeli tanks invaded Nablus in search of terrorists.

As of November 6, 2002, 1,646 Palestinians and 625 Israelis have died in the fighting since September 2000.

BACKGROUND AND ANALYSIS

The United States and the Palestinians

U.S. Policy Toward the Palestinians

Between World War II and the 1991 collapse of the Soviet Union, U.S. policy toward the Middle East was based on several broad goals, the most noteworthy of which were (1) stop Soviet expansion into the region; (2) keep open the Middle Eastern lines of communication and trade; (3) maintain Western access to Middle Eastern oil; (4) foster democracy and free market economies; and (5) protect Israel's security.

There appear to be many reasons why U.S. citizens have favored Israel: Israel and the United States espouse shared Judeo-Christian principles; both countries were "pioneering" in their early years; both countries are democracies; the United States has empathy for Israel's position as an embattled "underdog"; Israel and the United States opposed Soviet expansion during the cold war years; the United States has sympathy for the experience of European Jews in World War II; Jewish-Americans have a very effective pro-Israel political support organization; and the United States is more aware of Israel's point of view. In short, Israelis "are like us." Conversely, there is less empathy among Americans for Arab viewpoints because Arabs are "not like us." Eastern Arab culture (dress, food, music, art, written and spoken language, religion) appears to have little in common with Western American culture, and Arab-Americans in the past have tended to assimilate more than some other ethnic groups and to avoid the public stage of advocacy for Arab causes.

Refugees and Terrorists. The United States, until recently, treated the Palestinians as one of the problems to be solved in ending the Arab-Israeli dispute rather than as participants in the peace process. From 1948 until the 1967 war, the United States, like many other countries, considered the Palestinian people in the context of the refugee problem and not as an independent national movement. Beginning with a series of terrorist incidents starting in 1968, most added "terrorist" to the "refugee" image of Palestinians. President Carter shifted the terrorist-refugee perception on March 16, 1977, when he said the Palestinians deserved a homeland, and on January 4, 1978, when he said that the Palestinians had legitimate rights and should participate in any deliberations about their future. The Camp David agreements of September 1978 mentioned "the legitimate rights of the Palestinian people." Early in the Reagan Administration, officials returned to referring to Palestinians as "refugees" and "terrorists" and did not mention Palestinian rights or self-determination. But in his September 1, 1982, Middle East address, President Reagan said that the Palestinian problem was more than refugees.

Recognition. The United States changed its policy toward the PLO in 1988. In 1975, one year after the Arab League stated that the Palestine Liberation Organization (PLO) was the sole representative of the Palestinian people, Secretary of State Henry Kissinger informed Israel that the United States would not recognize or negotiate with the PLO unless and until the PLO recognized Israel and accepted U.N. Resolutions 242 and 338. Congress codified the pledge into law (Section 535, P.L. 98-473, October 12, 1984), and added that the PLO also must renounce terrorism. PLO chairman Yasir Arafat told the U.N. General Assembly meeting in Geneva (because the United States would not grant Arafat a visa to attend the U.N. session in New York) that the PLO recognized Israel, accepted U.N. Resolutions 242 and 338, and renounced terrorism. Secretary of State George Shultz stated on December 14, 1988, that the PLO had met the conditions stipulated by the United States, and that the United States would open a dialogue with the PLO in Tunis, Tunisia, on December 16, 1988. It was not made public why the Reagan Administration, considered by most to be pro-Israeli, chose to open the dialogue with the PLO at that time. Some speculate that President-elect George Bush asked President Reagan for the gesture as part of a Bush plan to address the Arab-Israeli issue.

The United States maintained the dialogue with the PLO in Tunis until June 20, 1990, when President Bush ended the talks because the PLO did not denounce an attempted terrorist attack near Tel Aviv on May 30, 1990. President Bush announced on March 6, 1991 (in the wake of the Gulf war), that he would pursue Arab-Israeli peace negotiations; he dispatched Secretary of State Baker to the Middle East where he met with Palestinian leaders from the occupied territories. Baker's 8 trips to the region and his contacts with the Palestinians, Jordanians, Israelis, Syrians, Egyptians, and others led to peace talks in Madrid on October 30, 1991. But at Madrid and the subsequent meetings, the United States (and Israel) treated the Palestinians as part of the Jordanian delegation, not as a separate entity.

On September 10, 1993, following the Israeli-PLO mutual recognition, President Clinton announced that the United States would resume the dialogue with the PLO. PLO leader Arafat, representing the national aspirations of the Palestinian people, shared the spotlight with Israeli Prime Minister Rabin and President Clinton at the signing of the Declaration of Principles on the White House lawn on September 13, 1993. U.S. official attitudes toward the Palestinians had evolved from seeing them only as refugees to according them a form of recognition that approached, but did not reach, nationhood. Following a pledge made at the Wye River conference, President Clinton visited Gaza to attend the December 14, 1998 meeting of the PLO National Council, at which the Council voted by show of hands to reaffirm that the PLO Covenant had been amended to remove anti-Israeli references.

Current Relations. The White House refuses to meet with Palestinian President Yasir Arafat because, in the Administration's view, Arafat is not doing enough to stop terrorism. Assistant Secretary of State William Burns met with Palestinian officials during his late October 2002 tour of the region when he presented the "quartet" (Europe, Russia, U.N., U.S.) three-phase peace plan (see below, Current Negotiations).

U.S. Aid for the Palestinians (See Table 4, U.S. Assistance to the West Bank and Gaza, at the end of this report)

At an October 1, 1993, Washington meeting, 46 donor nations pledged $2.4 billion for the Palestinian entity. The U.S. Administration offered $500 million ($125 million in loans or loan guarantees and $375 million in grants) over 5 years for economic development of the Palestinian entity. Of the $125 million available in loan guarantees, only $3 million had been drawn through April 2001. The United States provided only $36 million funding for the Palestinian Authority through the Holst Fund of the World Bank. The remaining $339 million was delivered through private voluntary organizations (PVOs), and through USAID contracts. No U.S. aid went directly to the PLO.

Wye Agreement Funding. On November 30, 1998, President Clinton told the donors conference in Washington that the United States would provide $400 million in grants for the Palestinians, $200 million of which would be provided in FY1999, $100 million in FY2000, and $100 million in FY2001. (The President also requested $1.2 billion for Israel and $300 million for Jordan to implement the Wye Agreement.) Congress did not include funding for the Wye Agreement in the Foreign Operations Appropriations bills for FY2000 (H.R. 2606, S. 1234). The President vetoed H.R. 2606 in part because it did not contain funding for the Wye Agreement. After negotiations with the White House, the House of Representatives passed H.R. 3196 on November 5, 1999, that included the Wye Agreement funding; $1.2 billion for Israel, $200 million for Jordan, $25 million for Egypt, and $400 million for the Palestinians. H.R. 3196 was set aside and replaced with H.R. 3422, which was included by reference in H.R. 3194, the consolidated appropriations bill passed by the House on November 18, by the Senate on November 19, and presented to the President on November 22, 1999. The $400 million Wye supplemental was in addition to annual aid levels of about $75 million.

According to a State Department report presented to Congress in late October 1999, the Wye funding for the Palestinians would be spent as follows:

Palestinians: $400 million

$100 million--Community Development (health, education, water, infrastructure, services)

$30 million--Rule of Law (law enforcement, human rights, train judges, prosecutors, lawyers, etc.)

$10 million--Industrial Estate--West Bank

$100 million--Gaza Port, Gaza-West Bank passageway

$30 million--Scholarship Fund

$100 million--Janin-Nablus Road

$30 million--Contingency Fund

Other Assistance. On November 14, 2000, President Clinton requested an emergency appropriation that included an unspecified amount for FY2002 for the Palestinians to be drawn from $150 million to be shared among Egypt, Jordan, and the Palestinians. The request submitted to Congress also included $450 million for Israel, $225 million for Egypt, and $75 million for Jordan for FY2001, and an additional $350 million for Israel for FY2002. The 106th Congress adjourned without acting on the request.

The supplemental appropriation for FY2002 (H.R. 4775, P.L. 107-206, signed on August 2, 2002) includes $50 million in disaster relief assistance for the Palestinians, primarily in response to damages inflicted during the April-May 2002 Israeli military operations in Palestinian areas, particularly the city of Jenin. The section specifically allocates the funds for the West Bank and Gaza and prohibits funding for the Palestinian Authority.

(See CRS Report RS20895, Palestinians: U.S. Assistance, April 17, 2001, 6 p.)

Congress and the PLO

Congress stated its opposition to the U.N. special committee on Palestinian rights (Section 614, P.L. 95-426, October 7, 1978), opposed U.S. participation in the International Monetary Fund if the IMF granted membership to the PLO (Section 7, P.L. 96-389, October 7, 1980), and stated that U.S. funds contributed to the U.N. could not be used to support the PLO (Section 154, P.L. 97-377, December 21, 1982). In 1984, Congress prohibited U.S. government employees from negotiating with or recognizing the PLO unless and until the PLO recognized Israel's right to exist, accepted U.N. Resolutions 242 and 338, and renounced terrorism (Section 535, P.L. 98- 473, October 12, 1984).

In 1987, Congress declared the PLO to be a terrorist organization and a threat to U.S. interests, and ordered the PLO information office in Washington and the office of the PLO U.N. mission in New York to be closed (Title X of P.L. 100-204, December 22, 1987). The Department of State closed the Washington office, but the New York office remained open after a judge ruled that the office was legal under the U.N. treaty signed by the United States. The Washington office reopened in September 1993, after the PLO and Israel signed the Declaration of Principles under waiver provisions in the Middle East Peace Facilitation Act. The PLO office closed on August 12, 1997, when the Middle East Peace Facilitation Act expired because the presidential waiver expired with the act. The PLO office reopened on December 6, 1997, when the President exercised the waiver in Section 539(d) of P.L. 105-118, the foreign operations appropriations law. The office remained open under subsequent presidential waivers provided in the foreign operations appropriations bills. The Foreign Operations Appropriations bill (H.R. 5410/S. 2779) currently in conference provides for a 6-month waiver in Section 534(d).) According to April 2002 press reports, the PLO was evicted from its Washington office because it could not pay the rent.

In 1989, Congress added Title VIII, the PLO Commitments Compliance Act (PLOCCA), to P.L. 101-246, signed into law on February 16, 1990, which repeated the prohibition against negotiating with the PLO, stated the sense of Congress that the United States should seek to prevent PLO involvement in terrorism, said the United States should obtain an accounting from the PLO of several listed incursions into Israel, required the Secretary of State to report to the Congress on the PLO explanation of the incursions, and required the President to file quarterly reports on several listed PLO activities and positions. The Secretary of State sent the first PLO Compliance Act report to Congress on January 11, 1994, stating that the PLO remained opposed to terrorism and that the United States would continue the dialogue resumed on September 10, 1993.

Following the signing of the Declaration of Principles on September 13, 1993, Congress passed the Middle East Peace Facilitation Act (MEPFA) granting the President the authority to waive sections of existing law that forbid contacts with the PLO, that prohibit the PLO from opening an office in the United States, or that constrict providing aid to the PLO through the United Nations. (The Middle East Peace Facilitation Act of 1993, P.L. 103-125, October 28, 1993; amended and renewed several times, most recently in P.L. 104-107, February 12, 1996). The current MEPFA and the President's waiver authority expired on August 12, 1997. The most recent combined MEPFA-PLOCCA report to Congress appeared on January 12, 1997, covered both the PLO Commitment Compliance Act and the Middle East Peace Facilitation Act, and found that the PLO was complying with its commitments. The May 7, 2002 PLOCCA report does not include a determination that the PLO is complying with its commitments.

In May 1997, Members of Congress threatened to cut U.S. aid to the Palestinians because Palestinian leaders advocated applying a 1973 Jordanian law that called for the death penalty for Palestinians who sold land to Israelis or Jews. On June 10, 1997, the House passed by voice vote an amendment to H.R. 1757, the Foreign Relations Authorization bill, that called upon Palestinian leaders to renounce the death penalty, and stated that the President and Congress will consider Palestinian actions when considering renewal of the Middle East Peace Facilitation Act that expired on August 12, 1997. Other Members of Congress suggested cutting aid to the Palestinians because they believed that the PLO or the Palestinian Authority incited recent terror attacks against Israel. News reports that an internal PA audit released on May 25, 1997, disclosed corruption and waste prompted other Members of Congress to question U.S. aid to the Palestinians. After allowing the Middle East Peace Facilitation Act to expire on August 12, 1997, Congress added sections to the Foreign Operations Appropriations bill, H.R. 2159, that gave the President waiver authority similar to the MEPFA waivers. (See, for example, Sections 539(d), 552, and 566 of P.L. 105-118, November 26, 1997, and Sections 553, 556, and 566 of P.L. 105-277 of October 21, 1998, or Section 538(d) of H.R. 3194 of November 19, 1999.)

Section 584 of P.L. 105-277 of November 21, 1998, and Section 578 of H.R. 3194 of November 19, 1999, and Section 574 of P.L. 106-429 of November 6, 2000, prohibit any aid funds for the Palestine Broadcasting Corporation (PBC). The United States provided about $250,000 for training and equipment for the PBC in 1995 but withdrew the aid when it was feared that Arafat would use the public station for political purposes. The United States continues to help Palestinian journalists, but does not provide direct support to the PBC. The ban on aid to the PBC is continued in Section 561 of H.R. 5410, the Foreign Operations Appropriations bill for FY 2003 in conference.

The House of Representatives passed H.Con.Res. 426 by a vote of 365 to 30 on October 25, 2000; the resolution expressed solidarity with Israel and condemned Palestinian Arab leaders for encouraging violence in the continuing confrontations that began following Likud Party leader Sharon's visit to the Haram al-Sharif/Temple Mount area of Jerusalem on September 28.

Eighty-seven U.S. Senators and 209 Representatives signed similar letters to President Bush on April 5, 2001, advising that Palestine President Arafat not be invited to the White House until the Intifadah ended, that the Palestinian leadership was responsible for orchestrating the Intifadah, and that the United States should stop aid to the Palestinians.

P.L. 107-115 (H.R. 2506), the foreign operations appropriations bill for FY2002 signed into law on January 10, 2002, requires the President to report to Congress on PLO compliance with past commitments. If not in compliance, the President may close the PLO office in Washington, designate the PLO constituents as terrorist groups, and/or limit humanitarian assistance to the Palestinians.

The House passed H.Res. 392 by a vote of 352-21 with 29 "present" on May 2, 2002. The bill states that the Palestinian leadership incites and supports terrorism against Israel. The Administration opposed the bill because it could hamper U.S. efforts to mediate an Israeli-Palestinian cease-fire. The bill vows U.S. solidarity with Israel and justifies Israel's use of force against the Palestinians. The Senate passed S.Amdt. 3389 to H.R. 3009, the Andean Trade bill, the same day, also justifying Israel's actions against the Palestinians.

H.R. 4693, introduced on May 9, 2002, finds that Arafat and the PLO are responsible for terrorism against Israelis, states that it is the sense of Congress that Arafat and the PLO should end support for terrorism, and imposes sanctions on the PLO and the PA.

Title VI of the Foreign Relations Authorization Act of 2002 (P.L. 107-228, H.R. 1646), entitled the Middle East Peace Commitments Act of 2002, repeats many aspects of PLOCCA, MEPFA, and the reporting requirements in the appropriations bills mentioned above. Section 604(c) provides for a presidential waiver of the Act's sanctions applicable to the Palestinians.

Palestinian Statehood. On November 15, 1988, the Palestine Liberation Organization National Council declared a Palestinian state with its capital in Jerusalem. Some 100 nations recognized the new state even though it did not have a government or any territory under its sovereignty. Despite the 1988 declaration, in February 1998, Palestinian leader Arafat said he would declare a state unilaterally on May 4, 1999, the date set in the 1994 Gaza-Jericho Agreement for completing the permanent status talks. Later Arafat delayed the declaration while Israel held its elections and during the negotiations that led up to the Wye and Sharm al-Shaykh agreements, but he later renewed his intention to declare the state, selecting September 13, 2000, the new date the two sides set for completing the permanent status negotiations. The PLO Central Council announced on September 10, 2000, that the declaration of statehood would be delayed pending the outcome of the current peace negotiations, but the declaration is further delayed by the Intifadah. Israeli leaders oppose the Palestinian declaration of statehood because they feel that the future status of the Palestinian entity should be a subject in the talks.

Several U.S. Administrations have decried unilateral actions that could interrupt the peace talks, and the Clinton Administration had cautioned Arafat not to declare a state unilaterally. H.Con.Res. 24, passed by the House on March 16, 1999, and the Senate on April 12, 1999, states that a unilateral declaration of Palestinian statehood would draw strong congressional opposition and that the President should assert that a statehood declaration would violate the Oslo accords. (Palestinian statehood is not mentioned in the Oslo agreements.) The House voted 385 to 27 (with four present) on September 27, 2000, to pass H.R. 5272, which would have cut off U.S. foreign assistance to the Palestinians if the Palestinians declared a state without Israeli agreement.

On September 24, 2001, President Bush said that a state of Palestine was part of the vision for a future resolution of the Arab-Israel problem. The statement was reinforced by other Administration spokesmen in the following months. U.N. Security Council Resolution 1397, passed by a vote of 14-0-1 (Syria) on March 12, 2002, included the phrase "two states, Israel; and Palestine," the first UNSC resolution to mention a Palestinian state. Observers noted that the United States sponsored the resolution and voted in favor.

Current Negotiations Between Israel and the Palestinians

Saeb Erikat and Israeli ministers Shimon Peres and Benyamin Ben Eliezar met with U.S. Assistant Secretary of State William Burns on October 24, 2002, to discuss the "quartet" peace plan (Europe, Russia, U.N., U.S.A.). During stage one of phase one, the Israelis will end attacks on Palestinian cities, end house demolitions, end deportations, and dismantle settlements established since February 2001, and the Palestinians will name a new cabinet (done on October 29, 2002), name a Prime Minister, end violence against Israelis, and consolidate the Palestinian police forces. During stage two of phase one, beginning in 2003, the IDF will withdraw to the September 28, 2000 lines and freeze all settlement activity. The Palestinians and the Israelis will sign a new security agreement. The Palestinians will hold elections for the Palestinian Legislative Council. (Elections for the PLC and president are scheduled tentatively for January 20, 2003.)

Phase two will begin about May 2003. The quartet will establish a monitoring system to monitor compliance with the agreement and will hold an international conference on Palestinian economic recovery. The quartet also will sponsor negotiations for a Palestinian state within provisional borders. During phase three, scheduled to begin in 2004, Israel and the Palestinians will agree on a provisional Palestinian state and, by the beginning of 2005, will resume negotiations for permanent borders, Jerusalem, refugees, settlements, and other unresolved issues.

Unresolved Issues in the Palestine Problem

Jerusalem

Palestinians claim that Israel must withdraw from east Jerusalem, seized by Israel in the 1967 war along with the rest of the West Bank. Palestinians maintain that east Jerusalem will become the capital of the Palestinian state. Israel, which has claimed Jerusalem as its capitol since 1948, annexed east Jerusalem in 1967, and claims that Jerusalem's status is not negotiable. No other country recognizes Israel's annexation of east Jerusalem.

The July 25, 1994 Jordan-Israel non-belligerency agreement states that Israel "respects ... the special role" played by Jordan in Muslim religious shrines in Jerusalem. Arafat had stated in the past that the Palestinian entity would be responsible for non-Jewish religious shrines in the holy city. The Jordan-Israel agreement appears to set the stage for a future contest or cooperation between Jordan and Palestine over the religious sites.

The United States has maintained a policy since 1967 that the future of the city must be negotiated and cannot be decided unilaterally, and that the city should not be divided as it was between 1948 and 1967. In 1990, Congress opposed the Administration position and passed resolutions acknowledging that Jerusalem was the capital of Israel and should not be a divided city (H.Con.Res. 290, passed on April 24, 1990, and S.Con.Res. 106, passed on March 22, 1990). In 1995, Congress passed S. 1322 (P.L. 104-45, November 8, 1995) that stated that the U.S. embassy should be moved from Tel Aviv to Jerusalem. The law provides a presidential waiver if maintaining the embassy in Tel Aviv is in the U.S. national interest. (See CRS Report 94-755, Jerusalem, dated February 25, 1995.) On July 27, 2000, President Clinton told an Israeli interviewer that he favored moving the embassy to Jerusalem, but signed waivers to keep the embassy in Tel Aviv. During the 2000 campaign, George Bush said he favored moving the embassy to Jerusalem, but since becoming President has signed waivers delaying the move.

Section 214 of P.L. 107-228, the Foreign Relations Authorization Act for FY 2003, states that Congress maintains its commitment to moving the U.S. embassy from Tel Aviv to Jerusalem, bans funds appropriated in the Act from being used to support the Jerusalem consulate unless the U.S. ambassador to Israel has authority over the consulate, declares that publications financed under the Act must list Jerusalem as the capital of Israel, and states that any U.S. citizen born in Jerusalem may request that their birthplace be listed as Israel. President Bush issued a statement on September 30, 2002, that he considered the section to be advisory, not binding, and that the section interfered with his constitutional authority to conduct the nations' foreign relations. The statement also said that U.S. policy toward Jerusalem remained unchanged, which implied that the United States holds that the future of Jerusalem must be negotiated and not be decided unilaterally, as the Israelis have done.

Boundaries

The Palestinians would prefer a return to the boundaries recommended by the United Nations in Resolution 181 of 1947, but since 1974, have accepted the 1948-1967 boundaries between the West Bank/Gaza and Israel. The Shamir government (1988- 1992) claimed all of the West Bank as part of Israel, and would have made the boundary the Jordan River. It is not clear what compromise the Rabin-Peres government (1992- 1996) would have offered or accepted.

The Palestinian-Israeli Interim Agreement, September 1995, partitioned the 2,200 square mile West Bank into a patchwork quilt composed of three different jurisdictions: Area A, under full Palestinian control, about 1% of the total, was comprised of the seven largest cities (excluding Jerusalem), primarily populated by Palestinian Arabs; Area B, under shared Palestinian and Israeli control, about 27% of the West Bank, was comprised of Arab villages around the cities; and Area C, under full Israeli control, about 72% of the total, was comprised of Israeli settlements, so-called "state land," highways, public areas, and Israeli military bases.

Israel withdrew from the Area A cities in December 1995-January 1996 (and Hebron February 1997) and a few of the Area B villages, leaving the Palestinian Authority in control of about 3% of the West Bank. Israel also withdrew from 70% of the Gaza Strip, but retained four areas where there are Jewish settlements. The Netanyahu government ceded another 7% of the West Bank in November 1998, in keeping with the Wye agreement, but postponed further withdrawals until after the May 1999 election. The government of Ehud Barak, sworn in July 1999, agreed in September 1999 to further withdrawals in September and November 1999, and March 2000, that left about 18% of the West Bank in Palestinian hands, 22% under shared Israeli-Palestinian control, and 60% under full Israeli control.

According to press reports in early May 2000, Israel offered to withdraw from a total of 80% of the West Bank, withdrawing from 66% now and the remaining 14% after a couple of years. Israel would annex the remaining 20%. The Palestinians rejected the offer. The press reported on May 20 that Israel raised the offer to 90% of the West Bank, and an unconfirmed rumor circulating in August 2000 said that the United States proposed that Israel retain only 5% of the West Bank. Reports from the July 2000 Camp David talks said the figures under discussion ranged from 90% to 97%. The Palestinians rejected the Israeli Camp David offer because Israel retained sovereignty over all of Jerusalem--the Palestinians sought sovereignty over Arab east Jerusalem--and because the Israeli proposal divided the West Bank into three non-contiguous zones that would have impaired Palestinian nationalism and stymied economic growth.

France and Saudi Arabia suggested in February 2002 that Israel exchange withdrawal from the occupied territories for Arab recognition of Israel. It is not clear if the Saudi and French proposals are for full withdrawal or if the extent of the Israeli withdrawal is negotiable.

Palestinians consider the Golan Heights part of Syria, not Palestine, but the Syrian-Israeli negotiations over the Golan may affect Palestinian-Israeli negotiations over the West Bank and Gaza. Persistent rumors from Israel and unconfirmed reports from Syria claim that the Rabin-Peres government agreed to withdraw from most of the Golan Heights. The Netanyahu government elected in May 1996, appeared less inclined to withdraw from Golan and not inclined to meet a commitment made by its predecessor government. Periodic unconfirmed rumors circulating in Israel suggest that Israeli-Syrian talks continue in secret.

The United States has stated that boundaries should be negotiated and mutually recognized, "should not reflect the weight of conquest," and that adjustments in the pre-1967 boundaries should be "insubstantial." The U.S. position acknowledges the Israeli need for defensible borders (erase some of the anomalies along the 1948-1967 armistice lines) and also acknowledges the Palestinian desire for a territorial entity separate from Israeli rule.

Israeli Settlements in the Occupied Territories

The Arab nations maintain that Israeli settlements in the occupied territories are illegal under international law, specifically paragraph 6 of Article 49 of the Fourth Geneva Convention on the Protection of Civilian Persons in Time of War, which states: "The occupying power shall not deport or transfer parts of its own civilian population into territories it occupies." Israel maintains that Jordan's 1950 annexation of the West Bank was not recognized by the international community, and therefore is illegal. Egypt never claimed the Gaza Strip. Israel maintains that the two regions are not "occupied territories," and are not subject to the Geneva Convention and rightfully belong to Israel. Many nations, as reflected in the votes on several U.N. General Assembly and Security Council resolutions, believe that Israel is the occupying power, that the Geneva Convention applies, and that the Israeli settlements are illegal. United States' spokesmen, such as Ambassador George Bush on September 25, 1971, Ambassador William Scranton on May 26, 1976, and Secretary of State Cyrus Vance on March 21, 1980, have stated that the settlements are illegal. During a December 16, 1996 news conference, President Bill Clinton agreed with the statement that the settlements were obstacles to peace. President George Bush said on April 4, 2002, that Israeli settlement activity in the occupied territories must stop.

Compensation/Repatriation for Palestinian Refugees

Palestinians argue that paragraph 11 of U.N.G.A. Resolution 194 of December 11, 1948, states that the Arab refugees have a choice between returning to the homes now in Israel that they left during the 1947-1948 war, or receiving compensation for the lost property. Israel argues that the Arabs abandoned their property voluntarily, and that the international community should provide funding for resettling the Palestinian refugees in Arab countries. Arabs claim the Jews drove them from their homes in 1948-1949. Some Israelis counter with a claim for compensation for property abandoned by Jews who left or were driven from Arab countries in the aftermath of the 1948-1949 war.

Israel claims that allowing Palestinian refugees to return to homes left in 1948-1949 or 1967 will destroy the Jewish nature of Israel. Palestinians claim the right of return is a matter of justice encased in international law. The argument may be one of perception rather than physically moving a number of Palestinians into Israel: by accepting the right of return, Israel may be accepting blame for forcing the refugees out of their homes in the first place, and the Palestinians may be more interested in such a confession of guilt than in the actual return to abandoned properties. (See CRS Report RS20616, Middle East Peace: The Refugee Issue, June 29, 2000, 6 p.)

Demilitarized Zones and Peacekeeping Forces

In the past, both Arabs and Israelis have accepted demilitarized zones and peacekeeping forces stationed in the zones or along the borders, although Israel will not accept peacekeeping forces in its territory. Many believe the Palestinians will accept demilitarizing the West Bank/Gaza state they hope to form. Israel rejected a Palestinian suggestion that the Israeli Defense Forces withdraw from the occupied territories to be replaced by an international peacekeeping force to maintain order during the 5-year interim period, but Israel did accept Temporary International Presence in Hebron (TIPH) in 1994 (primarily composed of Danish, Norwegian, Swedish, Swiss, Italian, and Turkish police officers) to monitor the boundaries between the 120,000 Palestinians and 450 Israeli settlers living in Hebron. Arafat suggested, in September 1996, that the United States send a peacekeeping force to police Hebron, but the suggestion was dismissed immediately by Israel and the United States. TIPH announced it would pull out of Hebron on August 23, 2001, because of continuing harassment by the Israeli settlers. The United States vetoed a U.N. Security Council resolution on March 27, 2001, that would have created a U.N. observer force to monitor Israeli actions against Palestinians in the occupied territories but signed the G8 foreign ministers declaration on July 19 that endorsed monitors.

Palestinians and the Peace Process

The Palestine Liberation Organization and Palestinian Representation

The PLO was founded by the Arab League in 1964 (although some claim predecessor groups date back to the 1950s). The PLO is an umbrella organization composed of many constituent groups, the most prominent of which are the several military groups that have been involved in unconventional warfare against Israel. Other groups represented within the PLO are humanitarian agencies, welfare organizations, educational groups, medical institutions, professional organizations, women's groups, workers, and others. These groups are represented in the Palestine National Council (PNC), the 600+ member parliament, in the 90-member Central Council, which acts as a steering committee when the PNC is not in session, and the 18-member Executive Committee (four of whom resigned in opposition to the Declaration of Principles), which acts as a cabinet. The PLO is supported by taxes collected from Palestinian workers in Arab countries, from donations, from contributions from other Arab governments, and from profits of PLO business enterprises. Several Arab governments stopped their contributions to the PLO because of PLO support for Iraq's invasion of Kuwait in 1990.

In the past, Israeli leaders rejected the PLO as the Palestinian representative, claiming that the PLO is a terrorist organization committed to destroying Israel. On September 10, 1993, Prime Minister Rabin and Chairman Arafat exchanged letters granting mutual recognition.

Opposition

Not all Palestinians support the peace talks. A few Palestinians, primarily represented by groups headquartered in Damascus, prefer to maintain the state of war until Israel is defeated and the state of Israel is removed from the Middle East. Another group of Palestinians reject the September 1993 PLO-Israel agreement because it does not provide for an independent Palestinian state, does not call for an immediate and complete Israeli withdrawal from occupied territory, ties the Palestinian economy to Israel, and did not provide for immediate release of all Palestinian prisoners in Israeli jails. Among the groups opposing the peace process are the Popular Front for the Liberation of Palestine (PFLP), the Palestine Liberation Front (PLF), the PFLP-General Command (all in Damascus), and Hamas in the occupied territories. The Democratic Front for the Liberation of Palestine (DFLP) shifted to supporting the talks.

The Palestinian Entity

Government

On May 12, 1994, PLO Chairman Arafat named 15 members of a 24-person cabinet to govern the Gaza/Jericho enclaves. On May 24, 1994, Arafat canceled all Israeli laws and reinstated pre-1967 laws in Gaza and Jericho in an attempt to erase the Israeli occupation presence. Under terms of the September 13, 1993 Declaration of Principles, the Palestinian cabinet assumed responsibility for health, education and culture, social welfare, direct taxation, and tourism. The 88-seat Palestinian Authority (also called the Palestinian Legislative Council or the Palestinian National Authority), elected on January 20, 1996, and sworn in on March 7, 1996, and the 26-person cabinet named by President Yasir Arafat on May 9, 1996, assumed responsibility over other functions of government except for security and foreign relations, which Israel controlled through the 5-year interim and into the final negotiating period. Arafat named a new 34-person cabinet on August 5, 1998, to avoid a vote of confidence in the Palestinian Legislative Council, and on June 13, 2002, reduced the cabinet to 21 members as part of his reform program. The cabinet resigned on September 19, 2002. Arafat called for municipal, PLC, and presidential elections in December 2002 or January 2003. The United States and others have proposed that the Palestinians name a prime minister as a way to sidestep Arafat's authority, but Arafat opposes the suggestion.

The PLC passed a Basic Law in 1997, but Arafat did not sign the law until May 30, 2002. The Basic Law serves as a constitution, outlining the function of the PLC, the President, the cabinet, and the electoral process.

Police. According to negotiations following the May 4, 1994 agreement, the Palestinian enclaves were to be protected by a Palestinian police force drawn from the Palestine Liberation Army (PLA) units stationed in Egypt, Jordan, and Iraq, and Palestinians recruited from the occupied territories, Jordan, Egypt, Yemen, Tunisia, and other Palestinian concentrations. The Palestinian police began arriving in Gaza on May 11 and in Jericho on May 12, 1994, replacing the Israeli Defense Forces and Israeli border police. Other nations have provided training (Egypt, Jordan, Great Britain, Iraq), vehicles (the United States donated 200 light and heavy trucks, Russia donated armored vehicles, Greece donated 58 trucks), uniforms (Norway), communications equipment (Spain), anti-riot gear (Great Britain), housing and offices (Japan and Germany), and cash (the United States $5 million, European Union). The Palestinian police are supposed to cooperate with the Israeli police in patrolling the borders and the villages, manning crossing points, and maintaining order. Paragraph 3 of Article IV of Annex I of the Interim Agreement of September 28, 1995, states that the Palestinian police force shall number 12,000 in the West Bank and 18,000 in the Gaza Strip. According to Palestinian reports, there are about 30,000 uniformed Palestinian police and another 3 to 4,000 clerical and support personnel. Israel claims that there are between 36,000, and 40,000 Palestinian police in uniform; some Israelis claim there are 50,000 police. Israel destroyed most of the Palestinian police infrastructure during the Israeli invasions of West Bank cities in April-May 2002.

Economy

Israel's closure of the occupied territories has forced the near collapse of the Palestinian economy. Israel has closed Palestinian borders with Egypt, Israel, and Jordan, and has cordoned off Palestinian towns and villages to prevent traffic between Palestinian areas. About 100,000 Palestinian workers cannot cross into Israel to jobs; the unemployment is at 50%, and gross domestic product has fallen by 50%. In its search for terrorist infrastructure, the IDF has destroyed much of the water, electrical, telephone, and transportation systems in Ramallah, Nablus, Jenin, and other West Bank cities. The Palestinian Authority relies upon grants from the Arab states and the European Union to meet its payroll.

Other Aspects of the Palestinians

Terrorism

Individual Palestinians and Palestinian military groups, both PLO and non-PLO, have launched terror attacks against Israeli people and facilities. Palestinian terrorists also have attacked people or institutions that, in the Palestinians view, support Israel, including U.S. citizens, property, and installations. One of the conditions set by Congress in 1984 for beginning a U.S. dialogue with the PLO was that the PLO renounce terrorism, which it did in November and December 1988. But when the PLO refused to renounce the May 30, 1990, attempted military landing near Tel Aviv, the United States broke off the dialogue. Israel maintained that the PLO is a terrorist group. Until January 1993, any contact between an Israeli or anyone under Israeli occupation and the PLO was a crime in Israel. Many Palestinians view the attacks against Israel and its supporters as part of the legitimate Palestinian armed struggle to secure Palestinian rights, and view Israeli attacks against Arab civilians as terrorism. On October 8, 1999, the Democratic Front for the Liberation of Palestine was removed from the State Department's terrorism list after the DFLP had agreed to rejoin the PLO and accept a peaceful resolution of the dispute with Israel.

Intifadah, 1987

In December 1987, an incident in the Gaza Strip touched off a continuing anti-Israeli civil uprising throughout the occupied territories that left about 1,900 Palestinians and almost 400 Israelis dead through April 1996. Some claim the Intifadah succeeded because the uprising compelled Israel to join the Madrid peace talks in October 1991. Others disagree, claiming Israel joined the Madrid talks at the insistence of the United States.

Palestine Refugees and UNRWA

One-half of the world's almost 8 million Palestinians live in Israel or under Israeli occupation. About 1 million Palestinian Arabs live in Israel and are Israeli citizens, who may vote and are eligible to serve in the Knesset (11 Arabs were elected to the Knesset in May 1996). The 3 million Palestinians in the occupied territories are not Israeli citizens and do not vote in Israeli elections. Jordan granted citizenship to the Palestinians living in Jordan but other Arab states have not offered blanket citizenship.

Of the 8 million Palestinians, 3.7 million are registered with the United Nations Relief and Works Agency (UNRWA) as refugees from the 1947-1948 war. There is disagreement over why the Palestinians became refugees: Israeli sources claim the Palestinians left their homes voluntarily or because the Arab governments told them to leave; Arab sources claim the Israelis forced the Palestinians to leave. UNRWA provides shelter, food, medical and dental care, and education benefits for the 3.7 million Palestinian refugees from the 1947-1948 war. Not all the registered refugees receive all the benefits; only 1.2 million live in 59 refugee camps scattered across Lebanon, Syria, Jordan, the West Bank, and the Gaza Strip.

The United States contributes to UNRWA through the refugee and migration account, authorized in the State Department authorization bill and appropriated through the foreign operations appropriations bill. U.S. contributions to UNRWA have not been earmarked in past appropriations bills.
Table 1. Palestine Arab Refugees Registered with UNRWA

             1950 Total   2000 Total   No. of     No. in
Countries    Registered   Registered   Camps       Camps

 Lebanon       127,600       376,472     12       210,715
  Syria        82,194        383,199     10       111,712
  Jordan       506,200     1,570,192     10       280,191
West Bank           --       583,009     19       157,676
Gaza Strip     198,227       824,622      8       451,186
  Israel        45,800            --     --            --

Total          960,021     3,737,494     59     1,211,480

Source: Report of the Commissioner-General for UNRWA,
Supplement 13 (A/55/13) 2000.

Note: West Bank included in Jordan in 1950. UNRWA stopped operating
in Israel in 1952, when Israel resettled its Arab refugees.

Table 2. U.S. Contributions to UNRWA, 1950-2002
(millions of dollars)

        Year           Amount

Cumulative 1950-1991    1,618
        1992               69
        1993               68
        1994               78
        1995               74
        1996               77
        1997               79
        1998               78
        1999               81
        2000               89
        2001              101
        2002              100
Cumulative 1950-2002    2,514

Table 3. World Population of Palestinians, 1998

Jordan                            2,328,308
West Bank (Israeli occupation)    1,596,554
Israel                              953,497
Gaza Strip (Israeli occupation)   1,004,498
Lebanon                             430,183
Kuwait                               37,696
The Americas                        203,588
Syria                               465,662
Saudi Arabia                        274,762
Egypt                                48,784
Other Persian Gulf States           105,578
Iraq, Libya                          74,284
All Other                           264,792
Total                             7,788,186

Source: Miftah.

Table 4. USAID Assistance to West Bank & Gaza,
FY1975-FY2000
($ in thousands)

Fiscal Year   Actual/Est. Obligations

   1975               $1,000
   1976                1,572
   1977                3,416
   1978                2,687
   1979                6,801
   1980                3,000
   1981                2,500
   1982                6,000
   1983                6,500
   1984                8,500
   1985               12,141
   1986               13,950
   1987                8,400
   1988                6,911
   1989               20,903
   1990               12,618
   1991                7,663
   1992                7,074
   1993               29,557
   1994               56,769
   1995               80,263
   1996               64,306
   1997               68,679
   1998               60,685
   1999               79,592
2000 (est.)          118,642
2001 (est.)           84,707
   Total            $774,836


Clyde Mark

Foreign Affairs, Defense, and Trade Division
COPYRIGHT 2002 Congressional Research Service (CRS) Reports and Issue Briefs
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