ISR"L'S SETTLEMENT POLICIES THREATEN LASTING PEACE IN MIDDLE EAST, SPEAKERS TELL ECONOMIC AND SOCIAL COUNCIL

15 July 1996

Press Release
ECOSOC/5668

ISRAEL'S SETTLEMENT POLICIES THREATEN LASTING PEACE IN MIDDLE EAST, SPEAKERS TELL ECONOMIC AND SOCIAL COUNCIL

19960715 Business and Development; International Cooperation in Tax Matters Also Discussed

Israel's settlement policies continued to threaten lasting peace in the Middle East, speakers told the Economic and Social Council this afternoon as it continued its consideration of a number of economic and environmental questions as part of its general segment.

"It is clear that the continuing policy of settlements and the expansion of that policy has now become a strategic and vital part of the Israeli Government's policy", said Algeria's representative, who was speaking on behalf of the Arab Group. He called on the international community to work harder than ever before in order to preserve the window of opportunity for peace which had been opened in recent years.

The observer for Palestine told the Council that the newly elected Government of Israel had stated clearly that it was committed to expanding settlements, ignoring the international community, and undermining the achievements of the peace process. Still, the Palestinian Authority was committed to the peace process and ready to negotiate with the new Israeli Government on the basis of the implementation of the agreements reached, he added.

The representative of Syria said that the Government of Israel seemed set on expanding territories in the occupied Golan at the expense of the Syrian Arab peoples. Financial and tax incentives were being still used to expand the 40 Israeli settlements in the Golan.

Statements on Israeli settlements were also made by the representatives of Lebanon, Egypt, Tunisia and Pakistan. The report of the Secretary-General on economic and social repercussions of the Israeli settlements on the Palestinian people in the Palestinian territory was introduced by the Executive Secretary of the Economic and Social Commission for Western Asia.

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Regarding business and development, the representative of the United States said his country would introduce a draft text later in the Council's substantive session concerning a United Nations declaration on corruption and bribery in transnational commercial activities. Preventing corrupt practices was critical to improving a nation's business environment. The draft "will provide impetus to each of our national efforts to end the pernicious effects of corruption", he said.

Also this afternoon, the Council took note of the report of the Secretary-General on the work of the Ad Hoc Group of Experts on International Cooperation in Tax Matters. The report was introduced by the Director, Division of Public Administration and Development Management of the Department for Development Support and Management Services. Statements on tax matters were made by the representatives of Lebanon, United States, Belarus and the Russian Federation.

The Council will meet again at 10 a.m. tomorrow, 16 July, to continue its general segment.

Council Work Programme

The Economic and Social Council met this afternoon to continue its general segment, focusing on economic and environmental questions. It is scheduled to consider international cooperation in tax matters; business and development; and permanent sovereignty over natural resources in the occupied Palestinian and other Arab territories.

International Cooperation in Tax Matters

The Council has before it the report of the Secretary-General on the seventh meeting of the ad hoc group of experts on international cooperation in tax matters (document E/1996/62). The report stresses the importance of tax issues in view of the globalization of the world economy and emphasizes that any discussion of international tax matters must take account of the varying levels of economic development among countries.

According to the report, the work of the group of experts is part of the continuing efforts of the United Nations and other international organizations to eliminate double taxation, prevent international tax evasion and improve national tax collection in order to improve international income allocation and enhance financial resource mobilization for sustainable development. Some 21 experts and 23 observers participated in the seventh meeting.

In their considerations, says the report, experts noted the need to study connections between customs valuation and transfer pricing for income tax purposes. It was proposed that the group of experts work closely with the Organisation for Economic Cooperation and Development (OECD) on transfer pricing. The nomination of an international body to deal with transfer pricing was also discussed. Identifying the limitations to the proposal, it was recognized that the willingness of countries to accede to a common set of transfer pricing principles could be constrained by any derogation from their sovereignty. Moreover, acceptance of the idea might not be politically feasible at any time in the foreseeable future because it represented a new paradigm.

The inclusion of arbitration clauses in bilateral treaties for the resolution of transfer pricing disputes between countries was also considered by the experts, the report continues. They discussed monitoring of the United Nations Model Convention on the matter adopted in 1979. They paid special attention to the tax treatment of teachers and students, the tax treatment of financial instruments and derivatives and the updating of the Model Convention and the Manual for the Negotiations of Bilateral Tax Treaties between Developed and Developing Countries.

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Business and Development

By its resolution 50/106, on business and development, the General Assembly called for follow-up action by the Council on a draft international agreement on illicit payments. The resolution, among other provisions, recommended that the Council consider the appropriate time-frame and procedure for the continuation of work on illicit payments with a view to completing the draft international agreement on illicit payments. The resolution also recommended that the Council report on the matter to the Assembly's next session.

Israeli Settlements in Palestinian Territory

The Council also has before it a note by the Secretary-General on the economic and social repercussions of the Israeli settlements on the Palestinian people in the Palestinian territory (document E/1996/51), annexed to which is a report prepared by the Economic and Social Commission for Western Asia (ESCWA) which covers the period April 1995 to March 1996.

The report states that according to the Palestinian Land and Water Agency, Israeli authorities had confiscated 230,000 dunums of land between the signing of the Declaration of Principles in September 1993 and the end of 1995. (One dunum equals 1,000 square metres.) Those confiscations took place under various pretexts relating to the establishment of natural reserves, the construction of Israeli bypass roads, the expansion of settlements and the construction of a "security wall" surrounding an area 360 kilometres long by 2 kilometres wide.

Those expropriations had led to thousands of Palestinian families being deprived of their only livelihood since most of the lands involved had been planted with crops and olive and fruit trees, the report states. Archaeological and religious sites and Palestinian homes had also been destroyed. The Palestinian Authority had protested those expropriations, stating that confiscations were going beyond their supposed security objectives and now were aimed at destroying cultivations, dissolving the geographic uniformity of Palestinian villages, towns and cities and at halting urban and demographic expansion. The construction of the bypass roads tended to indicate that Israeli settlements would remain in the occupied territories indefinitely, with Israeli authorities in permanent control, according to the Palestinian Authority.

The report of ESCWA states that most Israeli settlement activity in 1995 and in early 1996 had been concentrated in Jerusalem. Israeli measures targeting Arabs in the city had included harassment and closure of Palestinian institutions; withdrawal of Israeli identification cards from Palestinians registered in Jerusalem and living outside the city; interference in the election of the Palestinian Legislative Council through harassment of

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candidates and the obstruction of voter access to the polls; intensification of Israeli settlement activity in the city; and additional expropriation of Palestinian land. In response to the expropriations, non-aligned countries had submitted a draft resolution to the Security Council requesting the cancellation of expropriation decrees. That draft was vetoed by the United States.

Citing Israeli press sources, the report states that 11,000 Jewish housing units were being constructed in Jerusalem as at the beginning of 1996. The Planning Department of the Municipality of Jerusalem had indicated that plans were being drawn up for 33,458 housing units for Jews, and 15,120 for Arabs, with the objective of increasing the Jewish population of Jerusalem by 123,000.

Water utilization in the occupied territories also adversely affected the lives of Palestinians and their economic and social conditions, according to the ESCWA report. In July 1995, Israel and the Palestinian Authority had agreed that water rights in the West Bank would be determined in the final- stage negotiations. Israeli press sources had indicated that aquifers under the hills of the West Bank which supplied 30 per cent of Israeli water consumption, produced 600 million cubic metres of water per year, from which Israel drew 490 million, and the Palestinians 110 million. Palestinians' quota of water had been fixed since 1967, despite a growing population.

Discussion on Tax Matters

GUIDO BERTUCCI, Director, Division of Public Administration and Development Management, Department of Development Support and Management Services, introduced the report on the work of the Ad Hoc Group of Experts on International Cooperation in Tax Matters. He said the Group, which had been established in 1967, had been drawn from tax departments of both the developed and developing countries. He added that an ever increasing number of tax treaties had been completed between the developed and developing countries since 1980.

The 25-member Ad Hoc Group met every two years in Geneva, he said. The Group had gained increased relevance and the issues it dealt with included tax matters between developed and developing countries, the reduction of tax incompatibilities, tax evasion and avoidance. At their most recent meeting, the experts had paid special attention to the tax treatment of teachers and students, the tax treatment of financial instruments and derivatives and the updating of the Model Convention and the Manual for the Negotiations of Bilateral Tax Treaties between Developed and Developing Countries.

HICHAM HAMDAN (Lebanon) asked if there was any relation between the Ad Hoc Group of experts and the Commission on International Trade Law.

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LESLIE LEBL (United States) said her delegation believed more progress could be made in the work of the Group by discussing issues that were problematic rather than by reopening the Model Convention.

SYARGEI SYARGEEU (Belarus) said his delegation had read the report and commended it. He stressed that the work done by the Group should be expanded so that double taxation could be avoided.

MIKHAIL SAVOSTIANOV (Russian Federation) said his delegation attached importance to international cooperation in taxation. It believed that the study and exchange of experience between countries was of value. Many of the questions being discussed by the Group of Experts were of particular importance in light of the economic transition occurring in many countries. He also expressed interest in discussions on transfer pricing.

Responding to question raised by Council members, Mr. BERTUCCI said there had not been not much exchange between the Group and the Commission on International Trade Law. However, if there was any item that required cooperation, such an exchange would be ensured. He stressed that the suggestion from the United States that the Model Convention not be reopened, reflected the discussion of the experts that it would not be appropriate to reopen the whole document. Referring to the comments by the representative of the Russian Federation, he said as the work of the Group developed and new situations emerged, new items should be added to its work.

The Council then took note of the report of the Secretary-General on the work of the Ad Hoc Group of Experts on International Cooperation in Tax Matters.

Statement on Business and Development

VICTOR MARRERO (United States) said his country would be introducing later in the session a draft containing a United Nations declaration on corruption and bribery in transnational commercial activities. The draft would be part of the United States' effort to call international attention to the need to combat international organized crime and corruption.

Bribery distorted markets and hindered economic development, he said. Bribes undermined democratic accountability. Weak governments were further weakened by corruption, and emergent democracies were threatened. "And bribery creates a sort of non-tariff barrier to trade that disadvantages companies which refuse to engage in the practice."

The draft to be introduced by the United States would encourage governments to take actions to combat bribery, he continued. Member States would be encouraged to enforce existing laws prohibiting the bribing of their public officials; criminalize the offering or soliciting of bribes by foreign

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public officials; and prohibit the tax deductibility of bribes paid to foreign public officials.

Governments would also be encouraged to adopt and adhere to accounting and auditing standards and practices which would improve the transparency of international business transactions, he continued. In addition, they would be encouraged to develop government procurement procedures aimed at improving transparency and to cooperate in connection with criminal investigations of bribery in transnational commercial activities.

He went on to say that the draft would reaffirm the link between good governance and economic growth. Preventing corrupt practices was critical to improving a nation's business environment. The draft "will provide impetus to each of our national efforts to end the pernicious effects of corruption".

Discussion on Israeli Settlements

HAZEM EL-BEBLAWI, Executive-Secretary of the Economic and Social Commission for Western Asia (ESCWA), introduced the report of the Secretary- General on economic and social repercussions of the Israeli settlements on the Palestinian territory. He said the information contained in the report had been drawn from a number of official and unofficial Israeli and Palestinian sources.

Speaking on behalf of the Arab States, KHEIREDDINE RAMOUL (Algeria) said that despite many resolutions passed by various United Nations bodies on the illegitimacy of Israeli settlements in the occupied territories, the issue had not progressed. On the contrary, the Secretary-General's report raised deep concern. Official and unofficial Israeli practices were moving to entrench and expand current settlements and to build new settlements, particularly in the Holy City of Jerusalem and in the occupied Syrian Golan.

He said that the international community had welcomed the recent peace negotiations which had enabled the creation of the Palestinian Authority, but optimism had quickly waned as the settlements problem worsened. The Arab Group was deeply concerned about the latest developments in the region. "It is clear that the continuing policy of settlements and the expansion of that policy has now become a strategic and vital part of the Israeli Government's policy."

The repercussions of the settlements amounted to premeditated, planned impoverishment in a clear violation of international mandates, he said. The international community must work harder than ever before in order to preserve the window of opportunity for peace which had been opened in recent years.

He said the report contained much useful information, but it lacked methodology and was thus difficult to read. The report also failed to provide

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recommendations for the Council and United Nations bodies in the field to explore. It was hoped that future reports on the issue would follow the usual United Nations methodology and contain recommendations.

MUIN SHREIM, observer for Palestine, said that Israeli settlements violated the property rights of individual Palestinians as well as Palestinian national rights. Settlements in the occupied territories were a violation of international law, international humanitarian law and the will of the international community. Settlements also represented a flagrant violation of various conventions and resolutions, including the 1949 Fourth Geneva Convention relative to the Protection of Civilian Persons in Time of War, applicable to all territories occupied by Israel since 1967.

The establishment of new settlements and the expansion of existing ones was a clear violation of the spirit of the peace process and contradicted its basic principles, he said. The Declaration of Principles, signed on 13 September 1993 in Washington, D.C., had declared that negotiation on settlements was among the issues of the final stage of negotiations which had been due to commence in May.

The Israeli settlements policy constituted a campaign of colonization, he said. As with other acts of colonialism, it had severely impacted the Palestinian people, their land, natural resources and economy. The newly elected Government of Israel had stated clearly that it was committed to expanding settlements, ignoring the international community, and undermining the achievements of the peace process.

In recent years, Israel had intensified its settlement activities in and around Jerusalem by confiscating Palestinian land and encircling Arab East Jerusalem with Jewish settlements, aiming at changing the nature of occupied East Jerusalem and creating a new de facto situation.

The Palestinian side was committed to the peace process and ready to negotiate with the new Israeli Government on the basis of the implementation of the agreements reached, which had stipulated that the whole peace process and the negotiations on the permanent status would lead to the implementation of United Nations Security Council resolutions 242 (1967) and 338 (1973).

HICHAM HAMDAN (Lebanon) said the report clearly showed that the Israeli administration did not take account of international law, particularly the provisions of the 1949 Geneva Conventions as well as the numerous resolutions adopted by the United Nations over the years on the illegitimacy of settlements. Israel was using settlements to pressure Arab leaders in order to achieve its political, economic and regional gains. Many Palestinian families had lost their livelihoods as a result of land confiscation. Other Arab lands were being expropriated to build the so-called "security barrier" which would separate the occupied territories from Israel. In occupied

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Jerusalem, there was a continuing expropriation of Arab property and land in order to settle Jews there. Arabs owned or used a mere 4 per cent of the land in Jerusalem.

He said the report did not sufficiently address the problem of continuing settlements in the Syrian Golan, which Israel was continuing to encourage through a variety of incentives in clear violation of international law. The report should have contained a more detailed study of the economic and social repercussions of the appropriation of Arab land and the settlement policies. It should have addressed the impact of settlements on cultural identity, education, scientific research, patterns of consumption, economic dependency, productive capacity and individual income, all of which had clearly suffered under Israeli occupation. It was hoped that the Council would express clearly political will in support of a just, durable and comprehensive peace on the basis of land for peace.

ADEL M. ABDELLATIF (Egypt) said he wished the report of the Secretary- General had enumerated in greater detail the impact of Israeli settlements on the Arab and Palestinian peoples. All resolutions of the General Assembly had reiterated the applicability of the 1949 Geneva Conventions to the Arab territories occupied by Israel since 1967. Those Conventions specifically prohibited any attempts to change the demographic composition of occupied territories. Security Council resolutions, too, had recognized that Israeli settlement practices had no validity in law and were an impediment to peace in the Middle East.

His Government was concerned that Israel was still providing tax and fiscal incentives to settlers moving to the occupied territories. It seemed that Israel wished to occupy more territory, establishing access roads and other permanent infrastructures. The 1995 agreement between Israel and the Palestinian Authority obliged Israel to withdraw from Hebron by March 1996, but 400 settlers remained.

HUSSAM EDIN AALA (Syria) said the Arab people of the occupied Golan had a right to exercise sovereignty over their resources. The Government of Israel seemed set on expanding territories at the expense of the right of the Arab peoples. Israeli settlements had always constituted an impediment to peace and international law. The Security Council had recognized the illegality of Israel's settlement policies, citing them as a danger to lasting peace and security. It had also affirmed the applicability of the 1949 Geneva Conventions to the occupied territories. Israel's decision to annex the Golan had no legal force.

The peace process that began in Madrid in 1991 was based on Security Council resolutions. Despite that fact, Israel continued to defy the international community by building settlements. Financial and tax incentives were being used to expand the 40 Israeli settlements in the occupied Golan.

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Some 120 families had recently been settled in the course of two months; the objective was to settle an additional 1,000 families in the territory. Syrian Arabs had seen their lands occupied and their livestock seized. They suffered from exorbitant taxation and enjoyed no basic health services. An Israeli identity was being imposed on the people of the territory.

SLAHEDDINE ABDELLAH (Tunisia) said that while international public opinion was watching with anxiety, Israel was failing to meet its obligations under agreements reached with the Palestinian Authority, and official statements were being made in support of expansion and further settlements. "As a result, we have grounds for questioning the intentions of Israel and we must wonder if Israel is ready to announce its accomplishments as a fait accompli." The establishment of Israeli settlements in the occupied territories stood in violation of numerous United Nations resolutions.

The confiscation of Arab land for the purpose of expanding settlements was being carried out with total disregard for the needs of the people of the territories, he said. The situation was all the more serious in light of continuing political events in the region. The Arab States, which cherished peace, had reaffirmed their adherence to the principles for a settlement laid out in United Nations resolutions. No security could be ensured without the establishment of a just peace which would guarantee a return of territories to their owners as well as dignity for all. The international community had a responsibility to induce the new Israeli Government to dismantle settlements and abide by the principle of land for peace so that the countries of the Middle East could finally enjoy peace.

MANSUR RAZA (Pakistan) said that he had found it "dispiriting" to read in the report that even after the signing of the peace agreements, Palestinian and Arab peoples under occupation were unable to exercise sovereignty over their land and water resources. Israeli settlements were still being built and expanded, land continued to be expropriated and water continued to be diverted for Israel's needs.

The facts detailed in the report of the Secretary-General had pertained to the previous government, he noted. Given the recent change of government in Israel the situation in next year's report promised to be even more bleak. The Council should subject the Israeli settlement policy to close and careful scrutiny. It should place the issue squarely on the agenda of the Organization, stating that the politics of dispossession were in arrogant disregard of international law and of the peace process.

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