FOREIGN MINISTRY OF ISRAEL press release via IMRA 1/5/99: "The Wye River Memorandum, signed in Washington on October 23, 1998, sets out a series of specific obligations of the Israeli and Palestinian sides to be implemented in a phased approach in accordance with a detailed Time Line.

The third phase of this Time Line (weeks 2 - 6 after entry into force) was due to have been completed on 18 December 1998, but, as outlined below, most of the obligations of this phase are still awaiting implementation.

Despite recent internal political developments in Israel, the Government of Israel has reiterated its commitment to the Wye Memorandum in all its aspects, together with all the other Israel- Palestinian agreements.

Israel will continue to negotiate all outstanding issues and implement its obligations on the basis of reciprocity.

Security Obligations

Significant Palestinian security obligations are still outstanding from the earlier phases of the Wye Time Line. In particular, the Palestinian side has not taken the necessary measures to "outlaw all organizations (or wings of organizations, as appropriate) of a military, terrorist or violent character and their support structure".

Other areas of serious concern in the field of security are the failure of the Palestinian side to comply with its security work plan and to engage in "full bilateral security cooperation" as required by the Memorandum, and the continuation of the "revolving door" policy whereby security offenders are subjected to token arrests and almost immediately released.

Illegal Weapons

Under the Wye Memorandum, the Palestinian side undertook to establish a legal framework for the collection of illegal weapons, and also to take significant steps to collect and dispose of illegal weapons during the current phase.

The collection of these weapons is to be completed by 12th week of the Time Line.

Notwithstanding these commitments, and despite the decree issued by the Palestinian side, there are literally thousands of illegal weapons freely held in the areas under Palestinian jurisdiction, not only in the hands of civilians but also in the hands of the Palestinian Police.

These weapons considerably exceed the numbers permitted by the Interim Agreement and many of them, including mortars, mines and grenade launchers, are totally prohibited by the Agreement...

At the Wye talks it was also agreed that the modalities for granting weapons licenses, and the categories of persons to be granted such licenses, would be agreed between the two sides in the Joint Security Committee, as required by the Security Annex of the Interim Agreement. This commitment was restated in a letter from Saeb Erakat to the Israeli Cabinet Secretary, dated November 18, 1998. However, despite Israeli requests to raise this issue in the Joint Security Committee, the Palestinian side has refused to discuss it...

Palestinian Police

Under the Wye Time Line, the Palestinian side is obliged to fulfil its outstanding commitment under the Interim Agreement and transfer a list of Palestinian policemen to the Israeli side for its approval.

In doing so, it should ensure that the number of policemen does not exceed 30,000, as prescribed by the Interim Agreement. The size of the Palestinian police is currently considerably in excess of this number.

Notwithstanding repeated statements by the Palestinian side that the list will "shortly be transferred to Israel", it has still not been received by the Israeli side. It should be recalled that the Wye Time Line requires not only that the list be transferred but also that the Monitoring and Steering Committee commence its review of this list before the conclusion of the current phase.

Preventing Incitement

In the Wye Memorandum, the Palestinian side undertook to issue a decree prohibiting "all forms of incitement to violence and terror" and to establish a mechanism which would "act systematically against all expressions or threats of violence or terror".

A decree was published by the Palestinian side on 19 November 1998, and although it makes no reference to terrorism as required by the Memorandum, and contains a number of legal inconsistencies, it was welcomed as a positive step by the Israeli side.

However, despite the continuing incitement to violence and official statements that encourage or condone such acts, Israel has yet to see any implementation whatsoever of the anti-incitement decree published by the Palestinian side.

PLO Charter

Israel was pleased to note that at a meeting in Gaza on 14 December 1998, the PNC adopted a resolution amending the PLO charter, as required by its outstanding obligations from: the exchange of letters between Chairman Arafat and Prime Minister Rabin dated September 1993, the exchange of letters attached to the Gaza-Jericho Agreement of May 1994, the Interim Agreement of September 1995 and the Note for the Record attached to the Hebron Protocol of January 1997.

Unilateral Actions

The Wye Memorandum restates the prohibition established in the previous Israeli-Palestinian agreements against initiating or taking any step which will change the status of Judea and Samaria (the West Bank) and the Gaza Strip.

However, notwithstanding the obligation to resolve this issue through negotiations, the Palestinian side has repeatedly stated its intention to unilaterally declare an independent state with Jerusalem as its capital in May 1999.

Such statements are inconsistent with the provisions of the Wye Memorandum, with the Interim Agreement, and with the undertaking in Chairman Arafat's letter of September 9, 1993, that "all outstanding issues relating to permanent status will be resolved through negotiations".

Further Redeployment (FRD)

The Wye Memorandum provides for three stages of further redeployment in the course of the Time Line. Each of these is listed at the end of the relevant phase and is contingent upon the implementation of the prior Palestinian commitments within that phase.

Upon completion of these commitments Israel is obliged to implement the FRD obligation. Thus, at the conclusion of the second phase, ending week 2 of the Time Line, Israel implemented the first stage of the FRD, transferring 2% of Area C to the status of Area B and 7.1 % of Area B to Area A.

By the conclusion of the phase ending week 6, Israel was to have implemented the second FRD stage. However, as noted above, significant Palestinian obligations required to be implemented prior to this stage are still outstanding.

Israel awaits implementation of these commitments so that it can implement its FRD undertaking on the basis of reciprocity.

While the Wye Memorandum recognizes that the third FRD is to be the subject of a unilateral Israeli decision, it provides for the establishment of an Israeli-Palestinian committee to discuss matters relating to this issue. Israel has notified the Palestinian side of its representatives to this committee, but the committee has not yet been convened.

Release of Prisoners

The release of prisoners by Israel was not specifically included in the Wye Memorandum, but it was agreed that 750 prisoners would be released in three phases.

Israel has released prisoners in full compliance with both the Wye understanding and the Interim Agreement, and with Israel's clear statement at the Wye talks that it would not release prisoners that were members of the Hamas or Islamic Jihad organizations or who have blood on the hands.

Although the provisions of the Interim Agreement and the Wye understanding on this issue are perfectly clear, the Palestinian side has raised new demands, insisting on the release of terrorists with blood on their hands, which have no basis in any of the agreements between the two sides.

Moreover, rather than condemn or seek to calm the violent demonstrations that have been fomented over this issue, Palestinian leaders have condoned and even encouraged such violence.

Interim Committees and Economic Issues

The Wye Memorandum provided that the parties would reactivate all standing committees established by the Interim Agreement, and specified in particular the Monitoring and Steering Committee, the Joint Economic Committee, the Civil Affairs Committee, the Legal Committee and the Standing Cooperation Committee.

All of these have met on a regular basis since the entry of the Memorandum into force, except for the Legal Committee and the Standing Cooperation Committee, both of which, despite repeated Israeli calls, the Palestinian side has refused to convene..."

11. Shovall writes

ARUTZ7 1/7/99: "Israel's Ambassador to the U.S. Zalman Shoval wrote a commentary in The Washington Times yesterday, explaining that the Palestinians had gone back to what he called "business as usual," and were not living up to their obligations.

State Department spokesman James Rubin, reacting to the article, said yesterday, "We do not share Ambassador Shoval's assessment at all.

The Palestinians have, in fact, worked hard to implement many of their commitments under the Wye agreement, including annulling clauses in the Palestinian National Council Charter, and stepping up the fight against terror.

There are some commitments that still have to be fulfilled; but in our view, overall, they are making progress here.

Let me point out that it is the Israelis that have not fulfilled any of their Phase 2 obligations by failing to pull back further re-deployment, as required by Phase 2."

ARUTZ7 1/6/99: "The U.S. State Department rejects Israel's demand that the PA refrain from unilaterally declaring a state. State Department spokesman James Rubin said on Monday that this is a "new condition" not included in the Wye agreement and not supported by the U.S.

David Bar-Illan, Director of Policy Planning and Communications in the Prime Minister's Office, said, "There are definite provisions in both the Oslo and Wye agreements against any change of status in the territories. A declaration of a Palestinian state would clearly be in violation of these clauses.

The U.S. may claim that the Palestinians are only expressing their aspirations, but in fact this is a clear threat [to the status quo

Although Rubin said that the U.S. wants Israel to continue its withdrawals, Israel is of the position that it can only do so if the Palestinians comply with their obligations..."

13. PA monopolies

MIDDLE EAST MEDIA AND RESEARCH INSTITUTE 1/7/99: " [MEMRI holds copyrights on all translations. Materials may only be cited with proper attribution.]

The PA Economy - Free Market or Kleptocracy? Part I: Economic Policy By Stacey Lakind and Yigal Carmon

Two of the primary assumptions underpinning the Western approach toward the Middle East peace process are that economic well-being leads to peace, democracy, and stability and that the Palestinian Authority (PA) - if granted Western financial aid - would create a free market economy. Thus, foreign aid to the PA has become a vital component of the peace process.

Since its establishment in 1994, the PA has received $1.8 billion in foreign aid and enjoyed political as well as economic self-rule. After receiving foreign aid for several years, it is appropriate to assess the PA's economic policies and their consequences.

This study examines the economy emerging under PA rule. Part I focuses on the system of monopolies created by the PA and on the role assumed by Arafat's economic advisor, Muhammad Rashid, as Czar of the PA economy. Part II investigates the PA's deficit and corrupt financial management practices.

The PA's failure to establish a free market economy in the territories under its rule reflects the emergence of a non-democratic rule. This development bears implications beyond the issue of US foreign aid. It concerns the American attitude towards the peace process as well as the foreign policy and values of the United States.

The System of Monopolies

Ownership of the industrial enterprises in the pre-Oslo Palestinian economy was to some extent, decentralized. The post-Oslo Palestinian economy, on the other hand, is characterized by an opposite trend.

Control of the Palestinian economy is now being centralized under a few large corporations connected to the PA administration. Since the establishment of the PA, scores of monopolies have been created by Arafat and are being operated by individuals and organizations close to Arafat. These monopolies control and subvert almost every potentially profitable aspect of daily Palestinian life.

Monopolies are sometimes granted to people who are not as close to Arafat, but these are generally less profitable enterprises.

For example, 40% of the monopoly for sand was granted to the 'Veteran Warriors Association', an organization comprised of Arafat loyalists.

The PA itself is directly involved with several economic sectors in which it does not allow private enterprises to operate. This centralization and control of major sectors of the economy has caused foreign and Palestinian Diaspora investors to avoid the territories under PA control.

The main players in the PA's system of monopolies are PADICO and Arafat's economic advisor, Muhammad Rashid...

In the U.S., Hani Al- Masri, is Arafat's confidant in Washington, D.C. The Al-Masri family owns many other economic projects in the PA, outside of PADICO, such as the Palestinian newspaper, Al-Ayyam, which is scheduled to receive a $1.8 million loan from the World Bank...

Muhammad Rashid (aka Khalid Salam), guides the PA's economic policies. In his capacity as Arafat's top economic executive and advisor, he takes part in all international economic negotiations, and concurrently retains sole control of The Palestinian Commercial Services Company (PCSC), which is claimed to be government owned, but has been operating for years without a board of directors and without ever having been registered.

Through this company, Rashid operates monopolies on the import of at least four primary commodities: cement, flour, oil and cigarettes. Rashid is said to own 30% of the newly established casino in the PA controlled area in Jericho.

The Authority is to receive 25% or more of the casino profits in tax revenue after it returns on its initial investment. Rashid has refused to comment on his role in the venture...

The practical implications of these monopolistic practices, coupled with the familial connections of PADICO, are a deterrent for anyone who wishes to invest in the PA. If, despite these obstacles, one obtains a license to operate in the PA:

…one must still go to PADICO for space in the industrial zone; pay rent to PIIC/PADICO; pay telephone charges to PALTEL/PADICO; pay electric charges to Palestine Electric Co./PADICO; pay development taxes to AquariA/PADICO; and eventually operate via the stock market owned by PSEM/PADICO etc."

14. More housing

ARUTZ7 1/7/99: "Four independent contractors and two residents' associations will be building a total of 679 units in the newest Jerusalem neighborhood, Har Homa. The two associations include Halutzei Har Homa, run by Rabbi Yaakov Shimon, head of the Nachalat Tzvi institutions in Jerusalem, which will build 103 units in two neighborhoods.

The other association is Ganei Har Homa, which will build 72 units. Actual construction is scheduled to begin in three months. Avi Wechsler, Director-General of the Israel Lands Authority, said that in light of the success and the high demand in the current tender, a tender for another 346 units was issued this week."

15. More terrorism

THE JERUSALEM POST 1/8/99: "The Palestinian Authority's failure to clearly condemn terrorist attacks against Jewish residents of Hebron is seen by terrorists as a "yellow light" for more violence, a senior military source said yesterday.

The source also accused the Palestinian security forces in Hebron of refraining from preventing attacks on Israelis and of keeping the fire of discontent smoldering in the city. The comments came after a Wednesday night meeting between OC Central Command Maj.-Gen. Moshe Ya'alon, Haj Ismail Jaber, the commander of Palestinian forces in the West Bank, and Col. Jabril Rajoub, head of Palestinian Preventive Security.

It was conveyed to the Palestinians that Israel was not satisfied with the lackadaisical attitude taken toward rioters and terrorists. There have been at least 13 shooting attacks in the past five weeks at the Jewish quarter in Hebron, including the one on Monday which wounded two Israeli women.

A curfew is being kept on Hebron in order to pressure the Palestinians to crack down on the perpetrators. A senior military source said that the Palestinians see the past year as an interim year, leading up to the declaration of a state in May.

The source also believes that the violence is under the directives of PA Chairman Yasser Arafat. He noted that the protests over the release of prisoners suddenly ended as US President Bill Clinton arrived, and have not resumed.

Hamas and other terror groups in the West Bank, despite suffering from the loss of its master bomb makers and ring leaders, are still intact and quite capable of recruiting activists.

Their intention is to carry out shooting attacks and kidnap an Israeli soldier, but there are no signs that they are planning suicide bombings in Israel. Still, the PA has not made a serious crackdown on terrorists, preferring to maintain a "carrot and stick" relationship with Hamas..."

16. Genetic heart attacks

THE JERUSALEM POST 1/8/99: "A team at Jerusalem's Hadassah-University Hospital in Ein Kerem have identified a hidden genetic mutation that can cause sudden death, especially in young people.

The mutation lurks undetected and affects the heart muscle. About a fifth of those carrying the gene will eventually suffer from serious heart problems.

It is believed to have been the cause of the deaths of young atheletes who died on the sports field.

It was the first mutation found in Israel linked to a disease called familial hypotrophic cardiomyopathy, and was found in a Jewish family in the North. People who have a history of sudden cardiac death in their family should first consult a cardiologist, who will decide whether to refer them for genetic testing.

Two years ago, the Israel Cardiology Society launched a program, headed by Prof. Eran Leitersdorf, director of Hadassah's center for prevention and treatment of atherosclerosis, and Prof. Andre Keren of Jerusalem's Bikur Holim Hospital, to register affected families, perform a genetic diagnosis, and ensure follow-up to prevent further deaths.

Leitersdorf said the discovery is crucial in deciding how to treat carriers of the gene and choosing between keeping them under regular medical supervision, implanting a NIS 20,000 defibrillator, and/or restricting physical activity..."

17. Israel & Lebanon

VOICE OF AMERICA 1/7/99: "Israeli troops and their militia allies in south Lebanon have demolished 16 houses in a village near where an Israeli soldier was wounded by a roadside bomb Tuesday. Correspondent David Gollust reports from Jerusalem that the action drew angry protests from Lebanese officials in Beirut.

Israeli bulldozers rolled into the village of Arnoun (early Thursday) and flattened the houses on a hillside just beyond Israel's self-declared south Lebanon security zone.

An Israeli soldier had been seriously wounded by a roadside bomb near Arnoun tuesday, and Israeli military officials said the houses had been used as hideouts by pro-Iranian Hezbollah guerrillas.

But Lebanese officials said they belonged to local residents and the demolitions were collective punishment, reminiscent of tactics israel has used against the families of fugitive Palestinians. Lebanese Prime Minister Salim Hoss called it a flagrant violation of a two-year old understanding in which civilians were to be spared from the conflict between Israel and Hezbollah -- which is trying to drive Israel out of the buffer zone it has occupied in south Lebanon since 1985.

One of the houses demolished (Thursday) was said to belong to a local commander of the Shiite-Muslim Amal militia that is allied with Hezbollah. Last week, Israeli troops tore down six other houses in Arnoun, which sits astride a road leading to the ruins of Beaufort castle, a mountaintop crusader fortress where Israel has an observation post.

Israel warned the Beirut government Last week it was prepared to hit infrastructure targets deep in Lebanon if Lebanese authorities did not act to restrain Hezbollah, which fired dozens of Katyusha artillery rockets into northern Israel December 23rd."

18. Real estate

HA'ARETZ 1/8/99: "The Housing Ministry is to market lots in the territories for building 3,729 residential units, according to a ministry document obtained by Ha'aretz.

Another 1,320 lots are to be made available at the politically controversial site of Har Homa in southern Jerusalem - on top of the 1,000 recently put on the market there after a year's freeze.

The entire building program includes 19,800 units in Israel and across the Green Line, 13.9 percent fewer than the 1998 program of about 23,000 units. The tenders to be issued for lots in West Bank settlements include 500 units in Ariel, 500 in Alfei Menashe and 400 in the ultra-Orthodox Emanuel.

In the Jerusalem District the program includes the construction of 811 homes in Givat Ze'ev, 636 in the ultra-Orthodox Betar, 600 in Ma'aleh Adumim, 182 in Adam and 100 at Efrat.