A securely guarded convey arrived last Wednesday at the office of the Palestinian Authority prime minister in Ramallah. Finance Minister Moshe Kahlon emerged from one of the vehicles, along with the coordinator of government activities in the territories, Maj. Gen. Yoav Mordechai, and a number of senior Israeli treasury officials. A few minutes later, they were sitting around a table with PA Prime Minister Rami Hamdallah and several senior PA officials for the iftar meal breaking the daily Ramadan fast.
Kahlon’s arrival in Ramallah was very unusual, and so was the fact that the visit was officially publicized. There has been no visit by a senior Israeli minister to the PA in more than a decade, and apparently not since the outbreak of the second intifada at the end of 2000. Wednesday’s meeting was also the highest level meeting between the two sides since Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas met in September, 2010, in Washington.
The declared purpose of last week’s meeting in Ramallah was to present directly to Hamdallah the decisions regarding economic measures in the West Bank made by Israel’s security cabinet a week-and-a-half earlier. Those measures include a decision to refrain from demolishing 20,000 Palestinian houses built without permits in Area C, the area of the West Bank under full Israeli civil and military control, as well as permission for more construction for Palestinians in that area.
Two senior Israeli officials knowledgeable about the talks, who asked to remain anonymous, said that in addition to the dinner and discussion of economic cooperation, conversation turned to the ongoing diplomatic freeze between Israel and the Palestinians.
According to the officials, Hamdallah said that the economic measures Israel had decided on were a step in the right direction, but he made clear that as important as “economic peace” was, if a diplomatic prospect did not emerge at the same time, the situation would continue to deteriorate.
“Some sort of process has to start,” Hamdallah reportedly told Kahlon. “We don’t have to run, but there has to be a horizon.” Hamdallah presented the example of talks on security coordination and economic cooperation, hinting that these kinds of contacts could also take place at the diplomatic level. “When there are talks, progress can be made,” he said.
Kahlon told Hamdallah what he had said a few days ago at a conference in Eilat: “Everyone, both on the left and the right, knows that at the end of the process there will be two states. We don’t have money for national insurance for everyone. I’m the finance minister and I know it.”
Kahlon said that he stood behind his statements. He added that this won’t happen tomorrow and there is a need to build trust over a long period, ultimately he saw no other solution.
Hamdallah is not the only one to whom Kahlon made these statements. The finance minister, who was a member of Likud until he split to form the Kulanu party, still has connections with quite a number of the members of the Likud Central Committee, and they too have heard this message.
In the diplomatic vacuum, Kahlon is the only minister who is personally maintaining contacts with the Palestinians. Since the establishment of the current government he has met with his Palestinian counterpart, Shukri Bishara and with the PA’s minister of civilian affairs, Hussein al-Sheikh, and now, contacts have gone up a level with Kahlon’s meeting Wednesday with the Palestinian prime minister.
Immediately after the meeting, reports on it were conveyed to Netanyahu and Abbas. A senior Israeli official who has taken part in a number of meetings between Kahlon and senior Palestinian officials said that Kahlon had managed to create chemistry and trust with the Palestinians, and especially a feeling that he is not patronizing them.
A senior Israeli official said that in light of the atmosphere in the right-wing public and even more so among most cabinet members, Kahlon needs quite a bit of courage to push for gestures to the Palestinians. But the official said that it was in fact Kahlon’s political background that allowed him to do so without drawing direct criticism from more right-wing ministers. For example, when Culture and Sports Minister Miri Regev spoke enthusiastically about the disengagement from Gaza – which she now calls “expulsion” – Kahlon was one of the main rebels in Likud who led opposition to the move.
The reason Kahlon is pushing for cooperation with the Palestinians is first of all to improve the economy, but the byproduct is an improvement in security. A senior Israeli official said that Kahlon believes that any downturn in the economy of the West Bank creates more frustration, which generates more terror attacks, while improvement, Kahlon believes, will prevent the next stabbing.
In the meeting with Hamdallah, Israel presented a number of measures that could improve the economy in the PA. For example the parties discussed installing a joint computerized system for accounting that would prevent the tax evasion now taking place in business dealings between Israelis and Palestinians. This simple technical solution could bring in some 200 million shekels ($56.3 million) to the PA treasury, a considerable sum for the Palestinians.