Israel will encourage transfer of Gaza businesses to Palestinians

A business-owner may sell to a Palestinian and make a profit in addition to state compensation.

Against the backdrop of today's summit in Sharm el-Sheikh, Israel is continuing economic preparations for the withdrawal from the Gaza Strip, in coordination with international economic organizations.

A senior military source told "Globes" that a key goal was to encourage the transfer of Israeli businesses in the Gaza Strip slated for evacuation to Palestinian ownership as going concerns. The businesses concerned are greenhouses in Gush Katif, and factories in the Erez industrial zone.

Under the evacuation-compensation bill, passed today by the Knesset Finance Committee, a business-owner receiving compensation as part of the disengagement plan will retain ownership of the business, in contrast to ownership of homes, which will be transferred to the state. If a business-owner sells the business to a Palestinian, he may make a handsome profit over and above compensation received from the state, in contrast to business-owners who decide to dismantle their greenhouses and factories.

Palestinian businesspersons may buy agricultural and industrial assets directly from their Israeli owners, paying purchases taxes to the Palestinian Authority (PA). This tax is designed to encourage the PA to recognize the legitimacy of buying properties, and validate any deals made.

The military source said negotiations were underway with a number of international organizations interested in brokering and providing third-party guarantees and risk insurance for these deals. However, any deals will be made directly between Israelis and Palestinians, rather than through collective sales by the Israeli government to international organizations.

Published by Globes [online], Israel business news - www.globes.co.il - on February 8, 2005

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