Israeli billionaire's investment plan raises fears of a hidden agenda

The man thought to be Israel's richest businessman has secretly proposed funding a multi-million dollar investment plan aimed at regenerating refugee camps in Gaza and the West Bank.

But the plan devised by Steph Wertheimer, who recently sold most of Iscar, his engineering business to the US investor Warren Buffet for $4bn, is likely to face huge political and practical obstacles in a climate in which Israel has been withholding $60m per month in duties from the Hamas-led Palestinian Authority.

The Israeli daily Maariv said that in the absence of a political process between the two sides in the conflict, the entrepreneur is promoting the plan to "dry out the terror quagmire" and help lay the foundations of a future political negotiation.

An Israeli official confirmed yesterday that Mr Wertheimer has "shared" the plan with Tzipi Livni, the Foreign Minister, and that she had been sympathetic in principle. "We can hardly be opposed to something which would ease the suffering of Palestinians," the official said.

But Ghassan Khatib, the former PA planning minister, said it was one of a series of such proposals that had been made from time to time and that while Palestinians were in dire need of emergency help it would not solve the political conflict. Adding that the economy had been crippled by illegal measures including restrictions on movement and goods he declared:

"Israel cannot pretend to be solving a problem by humanitarian means when it is responsible for it in the first place."

By limiting the focus to families of the refugees who fled their homes in what is now Israel during the 1948 war the plan will also fuel Palestinian suspicions that its hidden agenda is to reduce the demand for a "right of return" to their family homes in what is now Israel in any future peace negotiations. Some 660,000 of the 1.6m refugees registered by the UN in Gaza and the West Bank live in the camps while a further 2.4m are in Lebanon, Syria and Jordan.

Mahmoud Abbas, the Palestinian President, has long hinted that a future compromise is possible in which an overwhelming majority of refuges would be allowed to settle in the future Palestinian state rather than Israel.

But the idea of acknowledging even a theoretical right of return remains anathema to Israel.

Dr Khatib said yesterday that the refugee issue would need to be solved in accordance with international law and as part of a comprehensive political solution. Yasser Abed Rabbo, a close ally of Mr Abbas, described Mr Wertheimer's plan as "idiotic".