Prime Minister,
Mr Börner,
Ladies and gentlemen,

It is my pleasure to be with you today, together with the Palestinian Prime Minister Salam Fayyad. I would like to thank the organizers, the North Africa Middle East Initiative of German Business, the German Association of Chambers of Industry and Commerce, and in particular of course the Federation of German Wholesale and Foreign Trade, whose President Mr Börner has been the driving force behind this event and is our host today.

As we see almost every day, the Annapolis Conference did not improve the difficult situation in the Middle East overnight. But it has given Israelis and Palestinians a new chance of concluding a lasting peace – which is very significant for the key year of 2008.

Only a year ago nobody would have thought it possible. Now, more than any time since the start of the second intifada almost eight years ago, we again have reason for hope in the Middle East. The prospects for agreeing on a two-state solution are better than they have been for a long time.

Let me explain what I mean:

• The Israeli and Palestinian Governments are both determined to negotiate a settlement. Of course domestic problems remain for both sides. But both Prime Minister Olmert and President Abbas have repeatedly stressed that they believe these problems can be overcome.

• A majority of Palestinians and Israelis seem to be ready for a peaceful settlement, even if this means accepting painful compromises.

• The Annapolis Conference additionally showed that for the first time in years the vast majority of Arab states are willing to actively support serious negotiations between Israel and Palestine. This was spectacularly underscored by the broad participation of Arab states in Annapolis.

• And lastly, the process has gained momentum thanks to the unreserved support of President Bush, as displayed most recently on his visit to the region two weeks ago.

As the current crisis in the Gaza Strip shows, obstacles remain. There will be others. But we must seize the present opportunity for the political and economic good of the whole region.

We want to sustain the momentum by doing our utmost to support the efforts of the two parties. The Governments will only be able to bring the political negotiations to a successful conclusion if they have the backing of their people.

But people will only put their faith in their governments if they have faith in their own future. Living conditions thus have to be tangibly improved for people in the region.

Israelis want a life without bomb attacks and Qassam rockets.

Palestinians want security and, above all, an economic perspective. They want to feel that the negotiations and the outcome will directly improve their daily lives.

On the Palestinian side that means rapidly reviving the Palestinian economy.

This is certainly impeded by the many Israeli security checks and restrictions on movement in the West Bank. But the fact remains that economic development in the Palestinian territories must be revived and the economic basis created for that to happen.

Dr Fayyad took the first important step in this direction by drawing up a reform plan in close cooperation with the IMF and the World Bank, which lays the foundations for a revival of the Palestinian economy. I am sure that he will have more to say about it himself.

The challenges facing the Palestinians are huge. The Palestinian economy, which is overwhelmingly based on small and medium-sized enterprises, has to survive in the global market. Since these companies are going to be the bedrock of the economy of a future Palestinian state, they will have a corresponding burden to bear. This is something the Palestinians themselves will have to work on – and you can convince yourselves today of their willingness to do so.

Dr Fayyad is accompanied by Mr Munib Al Masri, one of the top Palestinian entrepreneurs, and Dr Bassam Khoury, the President of the Palestinian Federation of Industries and himself a successful businessman. Both have managed to lead Palestinian firms with great success under adverse circumstances.

It is my opinion that we must support Palestinian entrepreneurship – something the Palestinians are famous for throughout the Arab world. We want to actively support these efforts wherever we can. The Federal Government has been doing precisely that for some time now. It has contributed, for example, to the European Palestinian Credit Guarantee Fund, worked on establishing an industrial park in Jenin and provided business advice.

But it is also vital to help Palestinian companies make contacts with European and German firms. The Federal Government, and I myself, attach great importance to such contacts. This is already the third time within 12 months that Palestinian entrepreneurs have come to Germany, and I am optimistic that this will generate more business, more jobs and more tax revenue for the Palestinians.

It cannot be said that the Palestinian market is the largest Arab market. But its impact is felt across the entire Arab world. Economic engagement in Palestine is noted throughout the region. Stabilizing the Palestinian economy could moreover help bring political stability to the entire region. And – as proven by Mr Al Masri and Dr Khoury – it is also possible to earn money in the process!

Ladies and gentlemen, let me at this juncture also say a few words about the Future for Palestine initiative Prime Minister Fayyad and I have presented today.

What we are aiming for is fairly small-scale projects that can be quickly implemented and produce visible benefits for people in a short time, parallel to the ongoing negotiations. People need to feel a real difference to their lives.

That is exactly what the Future for Palestine initiative is all about: quickly realizable, small-scale projects in the order of some 100,000 euro which we can start implementing already in the next few weeks and months. The initiative is intended to complement other international efforts. It will also be additional to classic cooperation activities, especially since it will be taken forward after the start-up phase mainly by civil society actors based in Germany.

The initiative will intentionally focus on relatively modest projects so as to ensure implementation remains manageable, speedy and transparent. The projects themselves will be developed directly with our Palestinian partners and implementation will start this coming February with the support of Germany's Representative Office in Ramallah and the Gesellschaft für Technische Zusammenarbeit (GTZ).

The initiative's first projects – based on Prime Minister Fayyad's suggestions – have already been identified and are now at the planning stage. Their aim is to create a better learning environment for children in schools and pre-schools. The Federal Foreign Office will provide start-up funding for 6 projects and we hope sponsors from Germany's business community, associations and other sections of society will agree to support further schemes on the same scale. We have already received pledges of support from Daimler and Software AG, from our kind host Mr Börner as well as from the Henkel and the Körber Foundations. With other companies and foundations we are holding discussions. And perhaps one or other of the present company might be interested, too. My aides will be very pleased to provide you with further information.

This brings me now to our guest of honour today, Prime Minister Salam Fayyad.

Dr Fayyad is one of the key figures in this whole process. Despite the immense workload he has at home, he is our guest today in Berlin. He is a man who believes in practical action, every day he toils to build step-by-step a better future in which Palestinians and Israelis can live side by side in mutual respect in an economically flourishing Middle East.

And I would point out to the business community that Dr Fayyad is also a man who understands business. On gaining a doctorate in economics from Texas University, he went on to be adviser to the Executive Director of the IMF and later became the Fund's regional representative in Gaza. After a spell as regional director of the Arab Bank Palestine, he was appointed the first Finance Minister of the Palestinian Authority by the then Palestinian President Arafat. Since June 2007 he has been Prime Minister as well as Finance Minister of the caretaker Palestinian Government.

Dr Fayyad, the floor is yours!