Explainer: Money talks in Trump's Mideast plan. But can it pave way for peace?

JERUSALEM (Reuters) - More than two years after U.S. President Donald Trump first proposed a plan to revive the Israeli-Palestinian peace process, its first phase will be formally unveiled on Tuesday at an economic workshop in Bahrain.

FILE PHOTO: White House senior advisor Jared Kushner smiles while listening to U.S. President Donald Trump talk as the president meets with Israel's Prime Minister Benjamin Netanyahu at the White House in Washington, U.S., March 25, 2019. REUTERS/Carlos Barria

The ‘Peace to Prosperity’ economic summit to encourage investment in the Palestinian Territories was billed as the first part of the White House’s broader political plan to end the conflict.

Trump’s son-in-law Jared Kushner, the plan’s main architect, gave Reuters an exclusive preview of the economic proposals on Saturday.

But the White House’s economic prospectus makes no mention of Palestinian statehood. And little has so far been revealed about the later political stage of the plan, which will have to address this and other issues that have defied decades of efforts by previous peacemakers.

These issues include:

-The status of Jerusalem – which includes sites sacred to Judaism, Islam and Christianity

-Establishing mutually agreed borders.

-Finding security arrangements to satisfy Israel’s fears of attacks by Palestinians and hostile neighbors.

-Addressing Palestinians demands for statehood, and an end to Israel’s decades-old occupation of the Palestinian Territories.

-Finding a solution to the plight of millions of Palestinian refugees.

-Arrangements to share scarce natural resources, such as water.

-Palestinian demands that Israel remove settlements in which more than 400,000 Israelis now live among roughly 3 million Palestinians in the West Bank, with another 200,000 settlers in East Jerusalem.

What do we know about the plan?

The ‘Peace to Prosperity’ workshop in Manama will take an “economy first” approach to a political and religious conflict.

This reflects either a refreshingly pragmatic approach, or the business roots of its New York architects, depending on whether you talk to supporters or critics.

It calls for a $50 billion investment fund to boost the Palestinian and neighboring Arab state economies, according to documents reviewed by Reuters.

Among the 179 proposed infrastructure and business projects is a $5 billion transportation corridor to connect the West Bank and Gaza.

More than half of the $50 billion would be spent in the Palestinian territories over 10 years.

The rest would be divided between neighboring Lebanon, Egypt - whose Sinai peninsula adjoins Gaza - and Jordan, the country which has absorbed more Palestinians than any other, and fears anything that might lead to their permanent settlement there.

Who will pay?

The Trump administration hopes that others - principally wealthy Gulf states and private investors - will foot much of the bill.

What are its chances?

Expectations are low – there will be nobody from the Israeli or Palestinian governments at a workshop devoted to promoting peace between Israelis and Palestinians.

And the economic revival plan would be implemented only if a political solution to one of the world’s most intractable conflicts is reached.

The last peace talks collapsed in 2014, but hopes were low even then after two Palestinian uprisings in the last three decades, Israeli settlement expansion and the rise to power of Hamas – an armed Islamist movement that remains implacably opposed to Israel’s existence.

What’s new?

Kushner and Trump’s Middle East envoy Jason Greenblatt are seeking a deal that could unlock prosperity for the Palestinians and security for Israel.

But some of the economic proposals have been floated before – such as the transportation corridor linking Gaza and the West Bank – and stalled for lack of underlying political or security agreements.

The elephant in the room is whether the Trump administration’s talk of a new approach is code for an abandonment of the two-state solution - the long-standing international formula to bring about peace by creating an independent Palestinian state living side-by-side with Israel.

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The United Nations and most nations around the world back the two-state solution and it has underpinned every peace plan for decades. But the Trump team has consistently refused to commit to it.

What are the Israelis saying?

Israeli Prime Minister Benjamin Netanyahu said he would listen to the U.S. plan, but restated his long-held position that his country must retain a presence in the Jordan Valley, the strategic and fertile easternmost strip of the Israeli-occupied West Bank that borders Jordan.

“We’ll hear the American proposition, hear it fairly and with openness. And I cannot understand how the Palestinians, before they even heard the plan, reject it outright,” Netanyahu said on Sunday.

“Under any peace agreement our position will be that Israel’s presence should continue here, for Israel’s security and for the security of all,” he said.

Palestinians say that the Jordan Valley, nearly 30 per cent of the West Bank, would be a vital part of their future state, as the breadbasket of the West Bank and its external border with Jordan.

What are the Palestinians saying?

President Mahmoud Abbas’s Palestinian Authority and Palestine Liberation Organization have refused to deal with the Trump administration for 18 months, accusing it of bias toward Israel. They are boycotting Bahrain and on Sunday, Abbas said that solely economic solutions were a non-starter.

“Money is important. The economy is important. But politics are more important. The political solution is more important,” he said.

“We welcome all those who wish to help us, whether it be in Manama or anywhere else. But for now, we reject the deal of the century.”

“What have the Americans proposed that is original? 50 or 60 billion dollars? We are used to this kind of nonsense. Let’s not lie to each other. We’ll see if anyone lives long enough to see that $50 billion or $60 billion come.”

Ismail Rudwan, a spokesman for Hamas, said: “Palestine isn’t for sale”.

What are others saying?

Nathan Thrall, Director of the Israel/Palestine Project, International Crisis Group:

“It doesn’t stand a chance because the Palestinians won’t even attend, and the Arab states have very limited room for maneuver in terms of how much they can betray the Palestinians on the core issues.

“They are betraying the Palestinians just in the very fact of their growing closeness to Israel, but to betray the Palestinians on something like the Arab position on Jerusalem or on refugees, that is something that, at least in 2019, is still unthinkable.”

Abdulrahman al-Rashed, former general manager of Al Arabiya TV:

“Many will say “It’s NOT the economy, stupid”, those against will demand a political solution based on establishing a Palestinian state. However, I believe economy is important and we were never short of political solutions. Building roads and bridges will bridge political differences.”

Aaron David Miller, former Middle East negotiator for U.S. Republican and Democratic administrations:

“I can’t tell you how many times while working on the Arab-Israeli negotiations over the course of a 20-year period, I’ve had Middle East proposals for Middle East “Marshall plans” cross my desk. The reality is that both in sequence and in scope it’s very problematic to use economic incentives - development, trade, assistance, even institution-building, without first obviously addressing the core political needs and requirements of peoples in conflict.”

Lebanon’s parliament speaker Nabih Berri:

“The only investment that will not find fertile ground in Lebanon is any investment that comes at the expense of the Palestinian cause and the right of return... Mr. Kushner, the Lebanese will not be partners in selling Palestine.”

Jared Kushner, White House senior adviser:

“There’ll be praise from some places, there’ll be criticism from some places, hopefully it will be constructive. I always prefer having people share what they’re for as opposed to what they’re against and if people have constructive criticism, we’ll welcome it and we’ll try and make modifications but the hope is that we can bring all of the different people together from Europe, from Asia, from the Middle East, and agree this would be a good path forward if we’re able to resolve the political issues.”

Is now a good time?

The timing is certainly complicated.

Official U.S.- Israeli relations are at a zenith, with Trump and Netanyahu the closest of allies.

But U.S.-Palestinian relations are close to an all-time nadir after Trump’s 2017 decisions to recognize Jerusalem as the capital of Israel and move the U.S. Embassy from Tel Aviv to Jerusalem.

Abbas has said Washington could no longer be regarded as an honest broker in any peace talks with Israel.

The Middle East is preoccupied by events in the Gulf, amid fears that tensions between the U.S. and its Sunni Arab allies on one side and Shi’ite Iran on the other could escalate into hostilities likely to threaten oil revenues and regional stability.

And both Trump and Netanyahu face election campaigns – Trump for re-election, and Netanyahu because he failed to put together a governing coalition in an election in April.

Why Bahrain?

With Israel, the West Bank and Gaza out of the question for political and security reasons, the Trump administration needed a safe space somewhere in the region.

Bahrain is a U.S. ally, can host a major event, and is home to the U.S. Navy’s Fifth Fleet.

The Four Seasons hotel, where the two-day event will be held lies on an island connected to the mainland by only one bridge. This allows the authorities to control security in an island state that has seen political unrest for years.

When will the political plan be revealed?

Nobody knows for sure, and the Trump team hasn’t committed to a date.

Greenblatt said it could be delayed until November because Israel is headed for an election in September – its second in six months.

Kushner told Reuters: “Our thought was that it was better to put the economic plan first. It’s less controversial. Let’s let people study it, give feedback.”

While its precise outlines have yet to be revealed, Palestinian and Arab sources who have been briefed on the draft political plan, fear that it seeks to bribe Palestinians into accepting Israeli occupation of the West Bank, a prelude to Israel annexing about half the territory and leaving them with scattered cantons.

Who is going to Bahrain?

U.S. Treasury Secretary Steven Mnuchin will be the highest-ranking member of the American delegation, which will also include Kushner and Greenblatt.

Israel is expected to send a business delegation but no government officials.

Jordan and Egypt both said they will attend, but not at a senior level. Each is sending a deputy finance minister. As the only Arab states to have reached peace agreements with Israel, it was important for the Americans to have them present.

A senior Trump administration official said that China had still not confirmed whether it would send a representative, but that Kirill Dmitriev, the head of Russia’s sovereign wealth fund was planning to attend.

However the Foreign Ministry in Moscow has been critical of the workshop, issuing a statement last month that it was “unacceptable to divert the Middle East peace process from the international legal framework.”

The International Monetary Fund, the European Bank for Reconstruction and Development and the World Bank said they planned to take part.

Most Gulf states have not confirmed who they are sending. The United Arab Emirates and Saudi Arabia plan to attend, but assured the Palestinians they would not endorse a plan that fails to meet their main demands.

The Saudi team will include economy minister Mohammed al-Tuwaijri and sovereign wealth fund Public Investment Fund (PIF) chairman Yasir al-Rumayyan. The PIF has not been asked to commit any money, according to a source familiar with the plan.

Kuwaiti media have said that Kuwait would be represented on a technical, and not political level, most likely a finance ministry official.

U.S. officials said Morocco will attend, but it has not confirmed. Foreign minister Nasser Bourita said Morocco remains attached to a two-state solution that guarantees the setting up of an independent Palestinian state with Jerusalem as its capital.

The United Nations is sending Jamie McGoldrick, the U.N. humanitarian coordinator in the Gaza Strip, West Bank and East Jerusalem. But on the same day that Bahrain opens, the U.N. agency UNRWA, which deals with Palestinian refugees, holds its annual pledging conference in New York. The U.S. has cut all funding to UNRWA.

Who isn’t going?

Palestinian political leaders have said they will stay away. Many Palestinian business leaders have also said they will boycott.

One exception is Ashraf Jabari, from Hebron, who has close ties to Israeli settler groups. A U.S. official told Reuters that at least 15 Palestinians were expected to attend.

Lebanon and Iraq are not attending.

Writing by Stephen Farrell. Additional reporting by Dan Williams, Maayan Lubell and Jeffrey Heller in Jerusalem, Nidal al-Mughrabi in Gaza, Rami Ayyub in Ramallah, Aziz El Yaakoubi, Lisa Barrington, Saeed Azhar and Sylvia Westall in Dubai, Stephen Kalin in Riyadh, Sami Aboudi in Cairo, Ahmed Eljechtimi in Rabat, Matt Spetalnick in Manama, Steve Holland in Washington, Suleiman al-Khalidi in Amman, Ahmed Hagagy in Kuwait, Maria Kiselyova in Moscow. Editing by Carmel Crimmins