WHILE the Clinton administration will direct most of its energies for the rest of 1996 into the president’s re-election, support for the Middle East peace process remains a large concern.

Stuart Eizenstat, the new trade under-secretary at the Commerce Department, returned from a recent visit to Israel, Egypt, Jordan and Gaza, brimming with plans for the region and warning that it is ‘critical’ that Palestinians and Jordanians see ‘tangible peace dividends’ soon if terrorism is to be prevented from undermining the peace.

Along with other administration officials with Joan Spiro, State Department under-secretary for economics in the lead Eizenstat is pushing hard for a successful Cairo economic summit in November.

Eizenstat said the US will press other govenrments to encourage strong private sector involvement during the summit, which is due to open in Cairo on 12 November. The Commerce Department, urging the attendance of more than 100 US companies, is presenting the event as an opportunity for Cairo to showcase its reform efforts to attract joint ventures and other investment.

Ruth Harkin, president of the Overseas Private Investment Corporation, expects to attend the summit to announce the start of lending from the first tranche of investment in the agency’s $250 million Mideast Fund.

She will also announce creation of a $45 million Inter-Arab Fund to make investments in the West Bank, Gaza and Jordan.

High on the US agenda is the intention to push Israel and its Arab neighbours towards ‘economically correct’ reforms – stable budgets, regulatory reforms, privatisation and trade liberalisation. In Tel Aviv, Eizenstat also urged stronger protection of intellectual property, specifically films and software. He says he received specific assurances from Israeli officials that their portion of the proposed Egypt-Israel natural gas pipeline would be financed and built privately.

Eizenstat also asked Tel Aviv to submit an improved offer in the telecommunications talks under the World Trade Organisation. This would be ‘a litmus test’ of Israel’s privatisation intentions and encourage rapidly developing countries in Asia and Latin America to follow suit.

He further urged the appointment of senior negotiators to get final agreement on the establishment of the proposed industrial zone just inside Gaza at the border with Israel. The long-discussed project could ultimately provide up to 20,000 Palestinian jobs, easing the pressures caused by Israel’s frequent border closures.

Progress towards the establishment of the industrial zone could be ‘a positive deliverable’ at the Cairo summit in November, he says. Israel has provisionally allocated $14 million towards the scheme and the US has chipped in with another $4 million, but progress has been delayed by security concerns and the stalled peace process which has seen no significant talks between Israel and the Palestinians for several months.

Eizenstat says he is shocked by the increased numbers of foreign non-Arab workers in Israel, who account for 10 per cent of the total workforce, up from zero in 1993. Half of the new migrants are illegal, posing a threat of new social tensions in the region. Eizenstat is convinced that Prime Minister Benjamin Netanyahu is pursuing a policy of ‘reciprocity,’ and will open the doors wider to Palestinian workers in exchange for assurances about security.

We recognise the balance that needs to be made between Israel’s personal security and protection of its citizens,’ he says. ‘This has to be balanced against the needs of Palestinians. The closure is having a profound economic impact.’

The under-secretary worries that foreign companies will be discouraged from investing in the Middle East until goods can flow more freely in the region. The low level of internal Middle East trade also needs to rise. He bemoans the lack of diversification, the poor product mix and the pursuit of economic policies which have retarded trade and investment. Differences of religion, wealth, culture and ancient animosities can be overcome, he says, but only if the right prescription is followed for economic health.