(Communicated by the Prime Minister’s Media Adviser)

Prime Minister Ariel Sharon met this afternoon (Tuesday), 21 December 2004, with World Bank President James D. Wolfensohn, who arrived in Israel in the framework of a regional visit during which he met with Jordanian King Abdallah II and Iraqi Prime Minister Irak Allawi.  In Israel, he met with Foreign Minister Silvan Shalom, Defense Minister Shaul Mofaz, Labor Party Chairman MK Shimon Peres.  In the Palestinian Authority (PA), he is due to meet with Abu Mazen, Abu Ala and Salam Fayad.

Since the formulation of the Disengagement Plan, Israel has held contacts with the forum of donor countries, via the World Bank; five working groups have been established on the following issues:

* The transfer of assets.
* Industrial zones;
* Crossings;
* Economic insurance and trade;
* Transportation continuity in Judea and Samaria.

Prime Minister Sharon briefed World Bank President Wolfensohn on the diplomatic situation, explained that Israel will implement the Disengagement Plan according to the timetables that have been determined, and discussed the steps that Israel would take in order to assure a proper elections process in the PA.

During the meeting on reforms and the meeting of the donor countries that were held this past April, Israel was commended for its policy.  It was said that Israel has been greatly esteemed for the Disengagement Plan, for its determination to implement it and for its willingness to coordinate various disengagement-related issues with the Palestinians.

Israel has been similarly commended regarding the transfer of funds to the Palestinians (most of the Palestinian budget comes from funds held in
Israel) and the assistance that Israel is rendering to the PA elections (i.e. the declaration that the IDF would leave town centers during the elections, voting by residents of eastern Jerusalem, and the participation of international observers).

Prime Minister Sharon said that receiving World Bank assistance would be important in upgrading two or three of the crossings since this would improve and ease Palestinians’ freedom of movement and the transit of Palestinian goods.  The two men discussed additional economic ideas in which Israel and the World Bank could cooperate.  The Prime Minister added that 2005 would be a year of opportunity and said that he doesn’t intend to waste this opportunity: “The Palestinians will receive all the assistance that they seek on the condition that there is a genuine war on terrorism.”

World Bank President Wolfensohn agreed with Prime Minister Sharon that 2005 would be a year of opportunity and said that the World Bank would do its utmost to assist the sides in advancing the peace process.  He added that the PA elections could lead to a new leadership and a new outlook on the conflict, and could give hope to the younger generation.  The way to do this, he said, is by means of a better economy and emphasized that the best way that the Palestinian leadership that will be elected could prove that it is in control on the ground would be to halt terrorism.  He said that in his PA meetings, he would try to gauge how existing programs to strengthen regimes, like those in Bosnia and other places, could be applied in the PA: “We are not inventing anything new for the Palestinians but will apply successful past examples, if the terrorism stops.”

World Bank President Wolfensohn emphasized that the goal of his visit is to help Israel and the PA: “We believe that Israel is serious and we will try to push the Palestinians into moving forward.  If there is a diplomatic process, we will raise the funds to assure peace in the region.”

In wake of the dialogue with Israel and the Palestinians, the World Bank is interested in making tangible progress in the PA reform process before they are given additional aid (currently at $1 billion per annum).

On the Egyptian issue, Prime Minister Sharon said that he hopes that the Egyptians would fulfill a more important role in Gaza in the future, especially vis-a-vis smuggling from Sinai.

Prime Minister Sharon explained that a ceasefire could not be an alternative to a war on terrorism: “I have told this to Abu Mazen in the past.  A ceasefire is temporary because it is impossible to know when the terrorist organizations will decide to dispatch a suicide bomber and sabotage the process.  We are prepared to do more but we must have cooperation from the other side.”

Prime Minister Sharon said that the greatest danger for the new Palestinian leadership is Hezbollah because it is interested in the continuation of terrorism and because it is taking steps to encourage terrorism and terrorist actions.

Prime Minister Sharon invited World Bank President Wolfensohn to visit Shikmim farm; the former invited the latter to visit his farm in Australia.