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On Tuesday afternoon, after being delayed at the Qalandiyah checkpoint on his way into Israel from Ramallah, Saeb Bamya arrived at the Defense Ministry's offices in Tel Aviv. The former deputy minister for economic affairs in the Palestinian Authority entered the office of Major General (res.) Amos Gilad with Prof. Arie Arnon. Bamya and Arnon presented Gilad, the defense minister's representative on the team formulating a statement for the Annapolis summit, with a thick document that sets forth possible political-economic solutions for two of the major "core" issues: the Palestinian refugees and Jerusalem. For Bamya, the assessment of the Aix Group, comprised of Israeli, Palestinian and international experts, that the cost of resolving the issue of the right of return will run between $55 billion and $85 billion, is an entirely personal matter.

Rational economic discourse

The Bamya family owns a large and valuable building in Jaffa's Ajami neighborhood, right by the coast. Saeb was less than a year old in 1948, when Bamya's father locked the doors to the house and shut the offices of his bus company. Since then, he has lived the life of a wandering Arab: Beirut, Yemen, Tunisia, Dubai, Jordan, Tunisia, Ramallah. He stood alongside Ahmed Qureia (Abu Ala) at the birth of Oslo I, and after the signing of Oslo II he was one of the group of PLO exiles in Tunis who returned to the West Bank in order to build Palestine. On one occasion, he took his children to Jaffa to see his grandfather's house. The Jewish tenants in only one of the building's seven apartments opened their doors to them.

Since then, he has been privy to an endless series of disappointments and crises, but also to the initiatives and efforts to salvage the peace process. From his point of view, Bamya says, the key to peace is the partition of the country into two states based on the lines of June 4, 1967, with agreed-on border modifications. For him, this would mean forgoing the building in Jaffa in exchange for appropriate compensation, the amount to be decided by neutral experts. He will choose to build his permanent home in East Jerusalem, the capital of Palestine. He will be Arnon's neighbor; Arnon was also born in 1947, to a family of Holocaust survivors who hid from the Nazis in a Christian village and immigrated to Palestine just before Israel's declaration of independence. The economics professor from Ben-Gurion University of the Negev in Be'er Sheva lives in Beit Hakerem, one of the last secular enclaves in West Jerusalem. He would not live in an abandoned Palestinian home even if it were offered for free.

The Aix Group document, the final draft of which is being made public here for the first time, is the first semi-official Israeli-Palestinian attempt to deconstruct the right-of-return barrier and present practical solutions to all parties involved and to the international community. The prime minister's economic adviser, Prof. Manuel Trachtenberg, who took part in the group's meeting in Paris, says he returned from the meeting, for the first time in his life, with the feeling that the refugee problem was not a monster, and that the document's importance lay in the sheer ability of the sides to translate militant language of injustice and historic rights into rational economic discourse.

The Aix Group document opens with a declaration of principles that an agreed and just long-term solution to the problem of the 1948 refugees must be based on the relevant United Nations resolutions, including General Assembly Resolution 194, which grants every refugee, under certain conditions, the right to choose between returning to his home and compensation, "while recognizing that a literal application of this Resolution is no longer possible given the substantial changes on the ground."

On the one hand, the Palestinian refugees will be able to choose a permanent place of residence, but on the other hand, implementation of the choice will be agreed by all sides and subject to the sovereignty of all the states concerned, including Palestine and Israel. As stated, "The parties would agree that the measures recommended in the paper implement Resolution 194."

Within reach

The group's assessment is that resolving the refugee problem will cost between $55 and $85 billion. Compared to the alternative, and spread out over 10 years and with extensive, generous international aid, this is not unattainable. According to the Bank of Israel, the first years of the second intifada caused Israel $4 billion in damage per year. A month of the war in Iraq costs the American taxpayer more than $20 billion. According to the Clinton parameters, as presented to the sides in December 2000, a substantial number of refugees will move to new places (at a cost of $8 billion to $19 billion, depending on how many refugees will choose to move from their current country of residence). Others will be rehabilitated in their current locations and will receive compensation "in kind or in money" (at a cost of $10 billion to $14 billion). The choice among alternative options will be made individually, under the supervision of the International Agency for the Palestinian Refugees (IAPR), to be established for this purpose. Each refugee will rank his priorities, and a time frame for completing the process will be agreed. The IAPR will implement a mechanism to ensure that the final decisions about place of residence are consistent with the overall agreements between the sides.

The Palestinians, as well as Israeli and international bodies, have in their possession a highly detailed database regarding "abandoned property." The problem, of course, will lie in evaluating its worth and in the method of capitalization. Accordingly, it was determined that an international committee of experts would settle the expected compensation on a "full and fair" basis. The group's economists estimate that the total cost will be between $15 billion and $30 billion. "Restitution will be considered only in those cases where 'full and fair compensation' has not been offered and where the properties exist in a form that can make restitution practical and equitable."

In addition, the group recommends the creation of a fourth fund, which will require about $22 billion, for compensation relating to "refugehood" not related to property claims or the other programs. All the registered refugees will receive a uniform amount of about $5,000 each. Currently, a refugee family of six-seven souls makes do on about $1,000 a year.

Prof. Arnon: "The economic dimension is not secondary. If the economic arrangements do not succeed in providing the conditions needed for true development, the political agreement will also fail. The proper solutions are difficult for both sides, but they are implementable." Bamya: "The time available for a two-state solution is running out. If ideas like ours are not adopted soon, both sides will have to consider an alternative political solution." The Aix Group is convinced that if bold steps are not taken in the right direction, the vision of one state for two peoples, based on joint citizenship and equality before the law, will be placed on the agenda.

The Aix-en-Provence Group

The idea to open a semi-official political-economic backchannel was conceived five years ago by Prof. Gilbert Benhayoun, a Moroccan-born Frenchman. He reached the conclusion that one of the mistakes made by both sides since 1993 was to base the peace process on "gradation," without agreement on - or even discussion of - the final result. The group decided to adopt the "reverse engineering" approach: The sides first agree on their destination, that is, on the blueprint of the final agreement, and then decide how to get there.

The patronage, financing and accommodations for the meetings were provided by Paul Cezanne Aix- Marseille University, the Peres Center for Peace, and DATA Studies and Consultation of Bethlehem. The group is administered by a steering committee led by Benhayoun, Arnon, Bamya, Dr. Ron Pundak (director of the Peres Center) and Dr. Samir Hazbun (from DATA Studies and Consultation). Other partners: the European Union, French donors, the World Bank, the French Foreign Ministry, the International Development Research Center in Canada, the General Council of the Bouches du Rhone and the Regional Council of Provence-Alpes-Cote d'Azur.

Among the Israeli institutions whose representatives took part in the discussions that preceded the document's preparation are the Foreign, Finance, and Trade and Industry ministries, the National Insurance Institute and the Bank of Israel. The Palestinians sent representatives from their ministries of Finance, Economic Affairs and Planning, and the support group of the negotiations unit. The observers did not take part in formulating the understandings. In addition to them, the group includes observers from the European Union and representatives of the World Bank and the IMF in the territories.

In the course of their work, the group met with policy makers from both sides, including Ehud Olmert in his capacity as minister of industry and trade, Meir Sheetrit, in his capacity as finance minister, the governor of the Bank of Israel and the senior officials of the National Security Council. Last week, the group met with the head of the Palestinian negotiating team, Abu Ala, and separately with Olmert's advisers Shalom Turgeman and Manuel Trachtenberg, as well as with a Foreign Ministry team headed by the director general, Aharon Abramovitch. Before that, a series of meetings were held in Washington with representatives of the State Department, the National Security Council, Congress, the Treasury, the World Bank and the International Monetary Fund.