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May 17, 2003

Bush peace plan includes U.S.-Mideast trade zone

COLUMBIA, S.C. — Asserting that prosperity is the key to peace in the Middle East, President Bush proposed a free-trade zone yesterday to spur the Arab world toward freedom and Israelis and Palestinians toward two independent states.

"Across the globe, free markets and trade have helped defeat poverty and taught men and women the habits of liberty," the president told 1,200 graduating seniors at the University of South Carolina. "So I propose the establishment of a U.S.-Middle East free-trade area within a decade to bring the Middle East into an expanding circle of opportunity, to provide hope for the people who live in that region."

Bush's initiative marks a shift in policy for the administration — bringing U.S. economic strength to bear alongside its military and diplomatic influence to push for an end to violence and terrorism in the region. The initiative is also a tacit acknowledgment that the poverty and autocracy of many friendly Arab countries create breeding grounds for terrorism.

"The way forward depends on serving the interests of the living instead of settling the accounts of the past," Bush said.

The president used his strongest words yet to describe his vision of an independent Palestinian state.

"If the Palestinian people take concrete steps to crack down on terror, continue on a path of peace, reform and democracy, they and all the world will see the flag of Palestine raised over a free and independent nation," he said.

Last week, the administration released a series of steps it says Israelis and Palestinians should take to end their conflict, establish a Palestinian state and learn to live in peace.

The plan has been received coolly on both sides, and observers say it is unlikely to make progress unless the president is personally and deeply committed to it.

Bush expressed such a commitment yesterday.

"America will work without tiring to achieve two states, Israel and Palestine, living side by side in security and prosperity and in peace," he said.

Israeli officials have said their side will not make concessions until all Palestinian terror ceases. But Bush made clear that he expects immediate action.

Israel "must take tangible steps now to ease the suffering of Palestinians and to show respect for their dignity," he said. "And as progress is made toward peace, Israel must stop settlement activity in the occupied territories."

Bush said he was accelerating diplomacy by dispatching Secretary of State Colin Powell to the Middle East last night. The White House also announced Israeli Prime Minister Ariel Sharon will visit Bush in Washington, D.C., on May 20.

Bush's call for a Mideast free-trade zone — in which tariffs and other trade barriers would be eliminated — is an extension of his argument that the best way to combat terrorism is to promote democracy across the Muslim world.

"Free governments do not build weapons of mass destruction for the purpose of mass terror," the president said. "Over time, the expansion of liberty throughout the world is the best guarantee of security throughout the world. Freedom is the way to peace."

Bush also took aim at people who believe democracy is not possible in Muslim countries, comparing such convictions to those in earlier eras when Germans, Japanese and Russians were deemed incapable of democracy.

"Every milestone of liberty over the last 60 years was declared impossible until the very moment it happened," the president said. "The history of the modern world offers a lesson for the skeptics: Do not bet against the success of freedom."

The United States has free-trade agreements with Israel and Jordan. Under Bush's plan, similar bilateral pacts would be sought with Arab countries willing to take the necessary steps toward openness and accountability. When enough countries made such agreements, the United States would move to put them under a single free-trade pact.

Such negotiations are painstaking. Although the United States has made some progress persuading several Middle Eastern countries to pursue trade liberalization, Bush administration officials have acknowledged that forging a regional free-trade area would be extremely difficult.

"You have countries that are vastly different. You'd basically be going as fast as the slowest person," said one administration official. "You have countries that range from wealthy Gulf states, that don't do anything except make oil, and very poor countries like Egypt and others."

Petroleum wealth can be a disincentive to trade liberalization, the official said. With a steady stream of revenue, oil-rich countries feel less pressure to open up other sectors of their economies to outside participants.

But Edward Gresser, trade-policy director at the Progressive Policy Institute, a Washington, D.C., think tank, said large benefits can come in short order. He said that since Jordan opened up its economy to the United States in the late 1990s, its exports have grown from $500,000 a month to $40 million a month — an 80-fold increase — and created more than 40,000 new jobs.