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US banks on peace in the Middle East

Patrick Cockburn Jerusalem
Tuesday 31 October 1995 19:02 EST
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Jerusalem

In the face of opposition from Europe and Arab oil states, the US has forced through the establishment of a Middle East development bank as an economic symbol of the peace agreements that Israel has signed with the Palestinians, Jordan and Egypt.

The Middle East and North Africa development bank, agreed yesterday at the economic summit in Amman and with capital of $5bn (pounds 3.2bn), is regarded with suspicion by Saudi Arabia and other oil states, which think they may be called on to fund it.

West European states believe enough financial institutions funding development exist already in the Middle East.

Israel and the US want to institutionalise the peace accords agreed with the PLO in 1993 and Jordan in 1994.

Warren Christopher, the US Secretary of State, told the summit, attended by more than 1,000 officials and businessmen, that "the bank's establishment is a major milestone, not least because it is the first such initiative put forward by the parties to the peace process themselves".

Another sign that Israel is establishing economic links with the Arab world is its agreement with Qatar to buy $3bn of liquefied natural gas, signed yesterday. Israel will also belong to a regional tourist board being established in the region.

Israel's Foreign Minister, Shimon Peres, denied Israel seeks to control the Middle East economy but there is no doubt it is breaking out of economic isolation. The new development bank will be based in Cairo to satisfy Egypt, which fears it is being marginalised as other Arab leaders establish relations with Israel.

Jordan has good reason to be satisfied with the summit, which enabled it to improve ties with Washington and the Gulf Arabs, which have been frosty owing to its neutrality in the Gulf war. Yasser Arafat, the PLO chairman, has similar motives and needs aid to underpin his rule in Gaza and the West Bank.

Despite the agreements in Amman on the bank, tourism and Qatari gas, relations between the participants remain prickly. The Egyptian Foreign Minister, Amr Moussa, criticised Jordan for hurrying to normalise relations with Israel. King Hussein replied: "Egypt preceded us by 17 years." Mr Peres also clashed with Arab journalists, asking if they wanted Israel "to commit suicide".

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