Opening Address at the AHLC-meeting in New York

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Excellencies, ladies and gentlemen,

It is a privilege to welcome you all to this AHLC meeting in New York. Let me first thank Secretary-General Ban Ki-moon for kindly hosting us here at the UN. I would like to extend a special welcome to Prime Minister Hamdallah and Deputy Minister Hanegbi, and to our two co-sponsors, Secretary Kerry and High Representative Ashton.

One year ago, the return of Israelis and Palestinians to final-status negotiations gave the two-state solution a new lease on life. Today – I regret to say – we have come together in a less promising political context. Just in the last few months, we have again witnessed the breakdown of peace talks and the outbreak of war in Gaza – the third in less than six years, leaving death and destruction in its wake.

Against the backdrop of this challenging political horizon, I feel compelled to make three main observations.

First,

Now is the time to reaffirm in word and deed our commitment to the vision of an independent and sovereign Palestinian state living side by side with Israel in peace and security.

The burden of proof lies first and foremost on those who have failed to do their part. From the outset, the three-party cooperation between the Palestinian Authority, Israel and the international donor community has rested on an unwritten contract: As long as the Israelis and Palestinians move forward on the political track, the donors will be ready to support them on the economic track. In view of yet another derailed process, the donors need to be convinced that the parties are not in material breach. Only an urgent return to credible negotiations will do.

Second,

In the meantime, it should be no surprise to anyone that donor contributions are lagging behind the Palestinian Authority’s undiminished needs for external support. The IMF projects that the Palestinian budget deficit will reach USD 1.5 billion in 2014. By the end of the third quarter, the PA has received less than half of that amount in disbursed budget support. It is hard to see any constellation of donors that is willing and able to make up the resulting shortfall. That is, unless policies on the ground undergo fundamental and rapid change.

Yet I urge those who have outstanding pledged contributions to honour their commitments.

In principle, the PA must gradually learn to live within its means. It is disconcerting for donors to once again see projections of growing budget deficits in the latest three-year Palestinian National Development Plan. Granted, the Hamdallah Government deserves praise for implementing measures to keep public-sector salary growth in check, while seeking ways and means of increasing revenue. Still the Palestinian Authority cannot break out of its structural donor dependence through fiscal discipline and institutional reforms alone.

The viability of a future Palestinian state will be determined not only by the strength of its institutions, but also by its ability to sustain economic growth. The potential of the private sector must be tapped in order to fuel the drive towards independence, which in turn requires access to resources and markets in Area C and East Jerusalem, and foreign markets. Sooner rather than later, the Israeli closure regime must be reversed in the light of its strategic failings.

Ultimately, security in Israel cannot be achieved by the steady erosion of the future Palestinian state’s viability, and of the very ground on which it is to be built. Israel’s unceasing settlement project is bound to trigger more resistance and radicalisation, and not only in the West Bank.

Which brings me to my third and final point.

Gaza cannot be pacified or dealt with in isolation from the other constituent part of the prospective Palestinian state. The state-building project will never become a reality without the reintegration of Gaza and the West Bank – politically, economically, and ultimately in terms of security. The latest round of war in and around Gaza made it clear for all to see that the cycle of recurring violence and destruction must be broken. Returning to the status quo ante is simply not an acceptable option.

That is why I already in July called for an international conference to address the major challenges in Gaza within its broader Palestinian context. And that is why I ask Israeli and Palestinian leaders to make good use of the window of opportunity which will open from now until the Cairo conference on Palestine and Gaza reconstruction, to be co-hosted by Egypt and Norway together with President Abbas on 12 October.

It is an opportunity for both sides to lay the basis for a fundamental change in how the whole Gaza equation is dealt with, and to provide the clarity and predictability needed for large-scale donor mobilisation.

It is an opportunity none of us can afford to miss.

Thank you.