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Lord Bernstein of Craigweil: My Lords, in a modest way, I have tried to improve Arab-Jewish relations in Jerusalem. I believe strongly that the Palestinians are entitled to live a secure and decent life in a state governed by their own people. The problem is how they can achieve that when they are faced by the realities on the ground.

An article in the Guardian today, headlined Lawless in Gaza, gives an alarming and dispiriting account of the violence that is taking place there, with Palestinians turning guns on each other in a way that they previously had done against the Israelis. This breakdown in society is sometimes blamed on Israeli policies, but it is largely a legacy of the irresponsible and corrupt leadership of the late Yasser Arafat. The Palestinian Authority, now under the leadership of Mahmoud Abbas, is well aware of the need to improve both the political and economic situation, but with continuing corruption and massive unemployment, it may not have the ability to do so.

The increasing political power of Hamas adds a further complication. Possibly, Hamas is beginning to believe that its involvement in the political process may further its cause more than violence. But that is an optimistic view, and optimism in the Middle East has seldom been justified. Will Fatah and Hamas be able to settle their differences without yet more violence?

The British Government have been constructive and forceful in trying to achieve a just settlement in the Middle East. I hope that they will continue to do so, in particular to help the Palestinians establish a peaceful
 
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and just society. The Israelis also need to be convinced that a future Palestinian state will not be a lawless and violent neighbour. Without that, it will be extremely difficult for Israeli politicians to convince their public to accept the inevitable compromises that any settlement will entail.

Lord Chidgey: My Lords—

8.12 pm

Lord Young of Norwood Green: My Lords, I shall make a couple of brief points. Most of the points have been made already. I welcome progress on the Israeli side. It needs to be welcomed; it needs to be encouraged. While we all want to see faster progress, movement is in the right direction. Interestingly, despite what looks like the final departure of Mr Sharon, Kadima has created a base and it looks like it is going to make real electoral progress. It is going to be supported by the acting Prime Minister. Surely that is a movement in the right direction. The withdrawal of all settlements from Gaza and a small number in the West Bank during the summer; the Rafah border agreement in November; the acceptance of the need to reduce movement restrictions; and a widespread acceptance in Israel ahead of the elections that further withdrawals from the West Bank will be necessary in the future are surely all welcome signs of progress.

It is not to blame everything on the Palestinians, but we have to recognise that there has been a lack of reform in the Palestinian Authority which stands in the way of Palestinian state-building and makes it harder for Israel to make progress on easing the burden on Palestinians.

I wish to make a final point. Will the Minister say what practical steps the Government can now take to ensure that Palestinians fulfil their commitments to put in place democratic and accountable institutions of state, ending the reign of violence, chaos and corruption? What developments will it take for Israel to further relax its restrictions on Palestinian movement?

8.14 pm

Lord Chidgey: My Lords, I apologise to the noble Lord for interrupting his flow in my enthusiasm to get to my feet. He and many other noble Lords have set out so eloquently the fact that we are being drawn to treat with Hamas by virtue of the likely outcome of a democratic process in the Palestinian legislature. It presents us, the European Union, the United States and indeed Israel with both threats and opportunities in pursuit of the peace process.

The threat is the challenge to Israel's very existence by Hamas Islamists, and to the western and moderate Arab nations who regard Hamas as a terrorist movement. The opportunity lies with both Hamas and Israel changing their methods, with the US and the EU rethinking their approach to the peace process. We need to accept the democratic outcome of the Palestinian elections, and conditionally to engage with Hamas.
 
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Hamas needs to extend the current truce and cease all attacks on civilians in recognition of its democratic mandate and responsibility. We should be urging the US in particular to put pressure on Israel to halt the construction of new settlements and to halt the land grab. Without such action, at the very least, stability in the region will not be achieved. The creation and acceptance of two states, secure within defined borders, will remain a forlorn aspiration.

8.15 pm

Lord Astor of Hever: My Lords, we must do everything that we can to assist Israelis and Palestinians to negotiate an agreement that guarantees a secure Israel and establishes a viable democratic state of Palestine.

The Israeli withdrawal from Gaza had given hope to a renewed peace process, but instead has seen the area plunge into in-fighting. What investigation have Her Majesty's Government taken into the allegations that Iranians are delivering missiles that can reach targets deep into Israel?

The political landscape looks set for change and uncertainty. Many noble Lords have mentioned the prospects of Kadima in Israel. The Palestinian Authority has been accused increasingly of political ineptitude and rampant corruption. Some 80 per cent of people in Gaza are unemployed and 68 per cent live below the poverty line. What action are Her Majesty's Government taking to ensure that the Palestinian authorities are being made transparent and accountable? International financial assistance is needed, but, in light of the levels of corruption, it is vital that we take steps to check that the aid gets to the people whom it is designed to help. The situation in Gaza is winning Hamas unprecedented popular support.

8.17 pm

Baroness Royall of Blaisdon: My Lords, I am grateful to the noble Lord, Lord Dykes, for tabling this timely debate. Its importance is underlined by the number of speakers. It is clear that a longer debate is needed and I trust that we will have one in the near future, perhaps to coincide with the important elections in Israel.

As many noble Lords have said, this is a key moment for the peace process, with the first elections to the Palestinian Legislative Council since 1996 due to take place in just two days. The actions of the legislative council and of the Palestinian Authority in the coming weeks and months will truly have a significant impact on the viability of a future Palestinian state, as will developments in Israel.

The noble Lords, Lord Wright, Lord Janner and Lord Mitchell, understandably raised the issue of Hamas. As my noble friend Lord Triesman stated in the House last week, our position is clear: we welcome the participation of a wide range of parties in all elections, and it must be for the people of the area to make their decisions. That is democracy; but I do not think that it would be appropriate for me to comment at this stage on the outcome of the elections.
 
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However, after the elections, together with the international community, we will of course have to consider our position. I should make it clear to the noble Lord, Lord Wright, that the recent suspension of EU funding has nothing to do with the elections. That decision was taken last month because the Palestinian Authority has not met the financial benchmarks that have been agreed. However, we hope that disbursement will be possible in the spring or summer. I should tell the noble Lord, Lord Astor, that that is a good example of the way that we are trying to ensure that the Palestinian Authority works in a much more financially accountable way.

My right honourable friend the Foreign Secretary said in another place on 29 November that the prospects for peace in the Middle East were better now than at any time in the past four and a half years. Much has happened since then, including the tragic illness of Prime Minister Ariel Sharon. His plan for disengagement from Gaza and parts of the northern West Bank was a significant first step towards the creation of a separate and viable state of Palestine, alongside a secure state of Israel. Naturally the Government welcome all efforts to bring that about at government and official level. We salute what has been happening.

We also salute and pay tribute to those working with civil society. My noble friend Lady Hayman referred to One Voice, which is a fine example of an organisation that is nurturing understanding and trust across borders. The noble Lord, Lord Dykes, mentioned the sterling work of Daniel Barenboim and many others. He is right to say that both Israel and the state of Palestine would have much to offer both as people and the wider world.

We fully support the work of quartet special envoy, James Wolfensohn, in following up that plan to support the Palestinian Authority in creating strong and viable institutions to improve the economy and governance. That is imperative for the future of the peace process. My noble friend Lord Bernstein and other noble Lords referred to the need to create jobs because unemployment has been such a problem in the Palestinian Authority. I am pleased to report that we fully support the job creation initiatives of Mr Wolfensohn. In working with UNRA, we assisted with the creation of 7,000 jobs in the West Bank and Gaza last year, and we hope that a further 14,000 will be created in 2006.

As part of the road map commitments, the Palestinian Authority is undertaking a series of comprehensive political reforms in preparation for statehood, including drafting a constitution, and free, fair and open elections. The elections have given a renewed democratic mandate to the PA. The EU supports this process and has sent a substantial election-monitoring mission. We are pleased with the progress being made, but more concerted action needs be taken by the PA to take these initiatives forward to make their institutions credible. We, along with the international community, will do all that we can to
 
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help, but it is up to the PA to push the agenda forward. As my noble friend Lord Winston said, the Palestinian people want normality.

The security situation in the West Bank—especially Gaza—is a cause of growing concern. The PA needs to take steps to effectively tackle terrorism and impose law and order for the sake of wider peace, but just as importantly in the interests of its own people. The work of James Wolfensohn and US security co-ordinator, General Dayton, and his predecessor, General Ward, has been vital. The Palestinian Authority has begun the task of strengthening the capacity of its security forces. The challenge is huge, but the international community, including the UK, is providing active support.

As my noble friends Lady Ramsay and Lord Hogg have noted, the EU has been, and will continue to be, a key investor and catalyst for change in the region, helping to bring about much needed reform. The EU is strengthening its EUCOPPS programme to help transform the Palestinian civil police. Our focus is not just on security but on working to ensure the long-term economic viability of a Palestinian state. Last month Her Majesty's Treasury and the World Bank jointly hosted a conference called, "Promoting Economic Growth in the West Bank and Gaza through the Private Sector". It brought members of the business community together to discuss options for investment in Gaza and the West Bank.

A strong economy will provide Palestinians with greater opportunities, more jobs and ultimately, prosperity. The right reverend Prelate is absolutely right when he says that we must focus on investment. That is what Her Majesty's Government are doing, and will continue to do. We certainly have not been waiting for the elections to foster prosperity, as has been suggested. We have been working bilaterally and with our EU partners for many years.

Also last month, the Foreign and Commonwealth Office co-chaired the Ad Hoc Liaison Committee, the international co-ordinating body for donors, attended by the Palestinian Authority and Israel. The meeting focused on economic developments in 2005, Palestinian reform and mid-term development planning, and looking ahead to a possible pledging conference in spring 2006. Most delegates concluded that they were willing to provide the Palestinian Authority with more assistance but that more work was needed from the PA to ensure that the money that it is given would be used effectively, to create stronger institutions and improve the conditions for wider prosperity.

A key aspect of long term economic viability is access to the outside world, and freedom of movement within the Occupied Territories, as regards which Israel has an important role to play. Last November's agreement on movement and access, including the opening of the Gaza-Egypt border crossing, was a huge step forward. The Rafah crossing point has remained open since 15 November, with the first truck loaded with merchandise leaving Gaza for Egypt on 19 December. The EU has played a vital role in
 
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allowing that to happen, providing a standing team of monitors able to vouch for the proper functioning of the agreement and building confidence between the two parties.

Together with improvements to the movement of goods between Gaza and Israel, those seemingly technical issues are making an important contribution to creating a viable Palestinian state. We hope that other parts of the agreement can be implemented soon, most notably the opening of the sea and air ports—as mentioned by the noble Lord, Lord Hylton—but also truck convoys between Gaza and the West Bank. It is of course for the parties themselves to discuss parts of the agreement such as the construction of the airport and the seaport, but both sides have naturally been preoccupied with the elections. However, we trust that as soon as the election period is over they will resume dialogue on the issue.

Both the Israelis and Palestinians remain committed to implementing the road map. As my noble friend Lady Symons said, we must be frank with both sides, but we must pay tribute when they have achieved many great things. Considerable further action is required from the Palestinian Authority on security issues, good governance and the economy, but there is also more that Israel could do. The road map is clear that Israel should freeze all settlement activity including the natural growth of existing settlements, and dismantle all outposts built since March 2001. Settlement building is contrary to international law and is an obstacle to peace.

There is more that Israel could do to increase confidence and help ensure the viability of a future Palestinian state. We hope that Israel can ease restrictions on movement and access to all parts of Gaza and the West Bank. That includes dismantling checkpoints and roadblocks; all "Marys and Josephs" should be able to pass. The route of the barrier must be amended to ensure that it is on or behind the green line. It is illegal for the barrier to be built on occupied land. We have raised our concerns about that with the Israeli Government on many occasions, and we will continue to do so.

We have also made clear our concerns about Israeli policies in Jerusalem, which threaten to cut off East Jerusalem from the West Bank. Those policies include the routing of the barrier on occupied territory, settlement activity both within and around East Jerusalem, and increasingly restricted access to Jerusalem for Palestinian residents who have blue Israeli identity cards but who live east of the barrier. That risks Palestinian territorial contiguity throughout the West Bank. Those practices fuel Palestinian anger, threaten to cut East Jerusalem off from the West Bank and make it more difficult for there to be a viable Palestinian state.

In response to the noble Lord, Lord Astor, who mentioned Iran and the non-proliferation treaty, the British Government have on a number of occasions called on Israel and other states who accede to the NPT as non-nuclear weapons states and to the Chemical Weapons Convention, and we will continue
 
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to do so. We take appropriate opportunities to discuss all aspects of non-proliferation with representatives of Israel and other governments.

We believe that the road map remains the best way forward in creating a two-state nation and the establishment of a just and lasting peace, but both parties need to fulfil their obligations in order for that to become a reality. The road map provides for a viable and secure state of Palestine and a secure state of Israel, consistent with UN Security Council resolutions and the principle of land for peace. The coming period will be politically charged for both parties, but I hope and trust that their commitment to the principles of the road map will remain undiminished.

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