DRAFT ANNEX TO PALESTINE-ISRAEL-MFO PORT MEFTA TREATY

PREAMBLE

The Multinational Force and Observers (hereinafter "the MFO"), the future Government of the Arab Republic of Palestine, herein represented by the Government of the Palestinian National Authority (hereinafter "the PNA") and the Palestine Liberation Organization (hereinafter “the PLO”), (the PNA, the PLO and the future Government of the Arab Republic of Palestine hereinafter jointly "Palestine"), and the Government of the State of Israel (hereinafter "Israel", with Israel and Palestine hereinafter also referred to as "the Governments"),

Recognizing that the Palestine-Israel-MFO Port Mefta Treaty (hereinafter "Port Mefta Treaty") incorporates this Annex and provides for the establishment in the Gaza Strip of a Port Mefta, a power/desalination plant and a sunken highway between Port Mefta and the West Bank and Jordan, which are referred to in the following provisions of the Port Mefta Treaty:

" ARTICLE I - Establishment of Port Mefta

1. The Governments agree that when this Treaty enters into force, Palestine shall lease to the MFO a 7-square-kilometers area along the coast between Deir El Balah and the former Gush Katif, as designated in the attached Boundaries Annex, to establish and administer a Middle East Free Trade Area port ("Port Mefta") for a period of 35 years. Port Mefta shall be a free port/special economic zone open to companies of all nationalities to do low-labor-cost free trade business pursuant to the attached Port Mefta Annex.

2. In return for the lease, the MFO shall pay to Palestine 20 percent of all rentals paid by acceding parties to this Treaty for land sites for such parties and their companies they designate to construct buildings in Port Mefta. The lease shall automatically be renewed for successive 15-year periods unless Palestine, for any reason, terminates the lease on five years' written notice. Upon termination of the lease the entire area of Port Mefta, with its harbor and other infrastructure shall come under the sovereignty of Palestine. The MFO agrees that Palestine and its companies shall have normal access to the harbor in Port Mefta at operating cost and Palestine agrees to limit a Gaza City harbor to fishing vessels.

3. The Governments and the MFO agree that the MFO shall ensure equal treatment in Port Mefta to Palestine and Israel. In particular:

a. the MFO international police force shall include equal numbers of former Palestinian and Israeli police in addition to MFO nations' police and police of the Arab Republic of Egypt (hereinafter "Egypt") and the Hashemite Kingdom of Jordan (hereinafter "Jordan");

b. the MFO shall provide to Palestine and Israel equal areas of land sites free of rent for them and their companies they designate to construct buildings;

c. the MFO shall provide to a designee of Palestine two rent-free land sites to exclusively build and operate a temporary and a permanent gambling casino, and Israel shall permit all Israelis to visit the casino along with all other tourists.

4. The Governments and the MFO agree that all nonexecutive labor, as defined in the Port Mefta Annex, employed by businesses in Port Mefta shall be Palestinians approved by Palestine, and Palestine agrees that the wage for each such laborer shall not be greater than the average wage for corresponding Palestinian labor in the Gaza Strip.

5. The Governments agree that in Port Mefta the MFO shall have exclusive jurisdiction over all non-Palestinians and non-Israelis.

6. The Governments agree that in Port Mefta the MFO shall have exclusive jurisdiction over the crimes of terrorism and smuggling (as defined by the MFO), crimes and civil disputes involving citizens other than Palestinian and Israeli citizens, and crimes and civil disputes between an Israeli citizen and a Palestinian citizen. The MFO agrees that, except for the crimes of terrorism and smuggling, Israel shall have exclusive jurisdiction over crimes and civil disputes solely involving Israeli citizens and Palestine shall have exclusive jurisdiction over crimes and civil disputes solely involving Palestinian citizens.

7. The Governments and the MFO agree that Port Mefta shall provide a terminus for a sunken highway and accompanying desalinated water pipe and electricity/communication lines and towers (hereinafter jointly "highway facilities") connected to a terminus near Hebron, and Palestine (including the PLO and PNA individually) and Israel shall each grant a 35-year easement to the MFO for the highway facilities, and also a 35-year easement to the MFO for an extension of the highway facilities to the border of Jordan. The easements shall automatically be renewed for successive 15-year periods unless Israel or Palestine, for any reason, terminates either or both easements on five years' written notice. The Governments shall delegate sole patrol of the highway surface to the MFO.

8. The time line in the attached Time Line Annex sets forth an agreed schedule for implementation of the Articles.
 
“ARTICLE II - Establishment of Normal Business Relations in Port Mefta

1. The Governments shall maintain normal business relations in Port Mefta as set out in the attached Normal Business Relations Annex.

2. Port Mefta shall be independent and free of Palestine's and Israel's economic, political and military control.

3. The Governments shall cooperate in promoting calm, stability and development in Port Mefta and shall settle all disputes between them concerning Port Mefta by peaceful means.

4. The Governments recognize a mutuality of interest in good business in Port Mefta and for this purpose shall:

a. cooperate to provide normal postal, telephone (including mobile phones), telex, data, facsimile, wireless, satellite and cable communications and television relay services by cable, radio and satellite in Port Mefta on a nondiscriminatory basis in accordance with relevant international conventions and regulations;

b. cooperate to generate tourism in Port Mefta and their region, especially in Egypt and Jordan.

“ARTICLE III - Security Arrangements With Respect to Port Mefta

Recognizing the importance of security for both Governments as an important element of peaceful business coexistence and stability with respect to Port Mefta, the Governments shall employ security arrangements to build mutual confidence in the implementation of this Treaty and to provide for the security needs there of both Governments in accordance with the attached Security Annex, and in particular --

1. The Governments each undertake to refrain from organizing, instigating, inciting, assisting or participating in any acts or threats of violence against the other, its citizens or their property in Port Mefta, and each shall take effective measures to ensure that no such acts occur from, or are supported by individuals on, its territory. In this regard, without prejudice to the basic rights of freedom of expression and association, each shall take necessary and effective measures to prevent the entry, presence and operation in its territory of any group or organization, and their infrastructure, which threatens the security of the other by the use of, or incitement to the use of, violent means in Port Mefta.

2. Both Governments recognize that international terrorism in all its forms threatens the security of Port Mefta and therefore share a common interest in the enhancement of joint and international cooperative efforts to deal with this problem.

3. The Governments shall establish a direct liaison and coordination mechanism between them as described in the Security Annex to facilitate implementation of the security provisions in this Treaty. Its responsibilities shall include: direct and real-time communication on security issues, addressing any problems arising during the implementation process, helping to prevent errors or misinterpretations, and maintaining direct and continuous contacts with the MFO.

“ARTICLE IV - Water

1. The Governments shall establish a Joint Water Committee and cooperate on water-related matters in Port Mefta in cooperation with the MFO pursuant to the attached Water Annex.

2. The Governments agree to jointly support the construction by the MFO in Port Mefta of a power/desalination plant as specified in the Water and Port Mefta Annexes.

3. The Governments agree to jointly support the development of natural gas deposits in the territorial waters of Palestine; and the power/desalination plant shall be entitled to priority in the use of such gas and at a price equal to production cost excluding donated capital expenditures.”

Have agreed to the following details concerning the establishment of Port Mefta in the Gaza Strip, with a power/desalination plant and a sunken highway between Port Mefta and the West Bank and Jordan:

ARTICLE PMX1 - PORT MEFTA

1. Summary

a. Port Mefta shall be a free port/special economic area like Singapore, but with an import duty of zero percent. All imported goods, from food to construction materials to automobiles, shall be free of duty, tax and nontariff barriers. English shall be the official language and the United States dollar the official currency. Port Mefta shall be open to companies of all nationalities, especially Palestinian and Israeli, who shall do low-labor-cost free trade business. It shall have gambling and duty- and tax-free shopping facilities under the control of the MFO though all profits of a large gambling casino shall go the builder/operator of the casino. Port Mefta's business laws shall duplicate Singapore's to the extent applicable. It shall have business communities for manufacturing, commerce, tourism, and research and development, many with their own executive housing. Its deepwater port shall be constructed by the United States Army Corps of Engineers. The Gaza International Airport near Rafah shall be substantially expanded to add an exclusive Mefta facility under MFO administration (hereinafter "Mefta International Airport"). Mefta air controllers shall supplement Palestinian controllers and handle the Mefta air traffic.

b. The MFO shall establish a Mefta Authority Cabinet to govern Port Mefta and set policy guidelines. The Cabinet shall comprise the MFO participatory states -- Australia, Canada, Colombia, Fiji, France, Hungary, Italy, New Zealand, Norway, United States and Uruguay -- plus China, Egypt, European Union, Israel, Japan, Jordan, Palestine, Russia, Saudi Arabia and the United Kingdom. The United States shall be chairman and the European Union vice chairman. The members of the Cabinet and their staffs shall be paid by the countries of their nationality.

c. The Mefta Authority Cabinet shall appoint a Mefta Administration comprising English-speaking civil servants of many nationalities -- particularly Palestinian, Israeli, Egyptian and Jordanian -- to administer Port Mefta. An English-speaking Mefta International Police Force shall include those nationalities plus MFO states' police, starting with the MFO Fiji Battalion. The employees of the Mefta Administration shall be paid by the MFO.

d. The Mefta Administration shall allocate building sites, pursuant to a Port Mefta Master Plan for the development of Port Mefta, to the Port Mefta Treaty parties for lease by them and their companies to construct buildings at their own expense. The MFO shall lease the sites according to a priority system directly to designated companies of the Treaty parties, or to the parties for their own buildings. The Treaty parties and designated companies shall pay the rent to the MFO. The structures on the sites shall be wholly financed by the lessees, and be subject to architectural guide lines of the Port Mefta Master Plan. The Mefta Administration shall set terms, rents, escalations and other conditions for leases on each of the sites. The best sites shall be allocated to Palestine and Israel.

e. Port Mefta shall be fully funded by the site lease rentals and profits from the duty-free shopping businesses, and donations by the international community, all funds going directly to the MFO. The MFO shall pay Palestine 20 percent of the received site rents, but Palestinian and Israeli site leases shall be rent free.

f. Company executives can be of any nationality including Palestinian, but Palestinians shall have the exclusive right to all nonexecutive jobs in Port Mefta. Those are unskilled, semi-skilled, skilled, clerical and secretarial workers but not foremen, supervisors and managers. Palestine shall issue the work permits to those workers it approves that are first selected for employment by parties and companies in Port Mefta. Palestinian workers may not live in Port Mefta and must commute from Palestine. Palestinian executives may live in Port Mefta. The Palestinian executives residing in Port Mefta shall travel under Mefta or Palestine passports, at their option. The Israelis residing in Port Mefta shall travel under Mefta or Israeli passports, at their option. Palestinians shall require Israel visas to enter Israel. Israelis shall require Palestine visas to enter Palestine, but not solely to traverse Palestine to enter and exit from Port Mefta.

g. The Port Mefta harbor shall initially accommodate barges, then vessels up to 5,000 dead-weight tons (dwt) (Phase I). The harbor basin shall be 400 meters in berth length and 11 meters deep. Subsequent phases shall increase berth length to 600 meters and deepen the harbor basin to accommodate vessels up to 15,000 dwt (Phase IB), add a modern container gantry crane to accommodate full-fledged container vessels and convert the remaining facilities to a bulk terminal (Phase II). Then the main breakwater shall be extended to accommodate vessels of 50,000-70,000 dwt with a multi-purpose terminal (Phase III).

h. The construction of the Port Mefta infrastructure shall be expedited by the "fast track" method. The method, based on modern planning and projection techniques, permits design, procurement and construction to proceed simultaneously. The United States Army Corps of Engineers shall be the MFO's construction agent in Port Mefta.
 
i. Port Mefta shall be enclosed along its land boundary by an Israeli-designed high-technology anti-smuggling barrier to help prevent duty- and tax-free goods from being smuggled out, and drugs, arms, explosives and terrorists from being smuggled in.

2. Mefta Authority Cabinet and Mefta Administration

a. The Mefta Authority Cabinet shall administer all trade and tourist activities in Mefta, and all other nonsecurity matters, aided by the Mefta Administration. Security shall be the sole responsibility of the Mefta International Police Force appointed by the American Director-General of the MFO. The Police Commander shall follow the nationality of the MFO Force Commander (presently Italian).

b. The Mefta Authority Cabinet shall govern Mefta like the government of a small state in the United States. It shall be responsible for providing all necessary services including construction and repair of roads, electricity, gas, water, telecommunications, hospital, ambulance, sewage, garbage and rubbish disposal, and fire protection. All actions shall be by majority vote, with the president breaking any tie vote.

c. Generally following the country roles in the MFO operation in the Sinai, the President of the Mefta Authority Cabinet shall be nominated by the United States, Vice President by Australia, Transportation Minister by France, Communications Minister by Canada, Justice Minister by Uruguay and Maritime Minister by Italy. Also, the Agriculture Minister by China, the Tourism Minister by Egypt, the Commerce Minister by the European Union, the Duty-Free Shopping and Gambling Minister by Israel, the Construction Minister by Japan, the Water Minister by Jordan, the Power Minister by the United Kingdom, the Health Minister by Palestine, the Labor Minister by Russia and the Energy Minister by Saudi Arabia. Fiji, Colombia, Hungary, Norway and New Zealand shall appoint ministers without portfolio available to assume other areas of responsibility. The members of the Cabinet shall serve four-year renewable terms. Half shall initially serve two-year terms so that terms shall thereafter overlap. The salaries and expenses of all Cabinet officers and their staffs shall be paid by their countries of nationality.

d. The Mefta Authority Cabinet shall raise capital by the sale of tax-exempt, interest-bearing bonds to finance the costs of startup and early administration, and the construction of the infrastructure, to the extent the international community does not finance those costs by donations. Capital from bonds shall also pay for the construction of nondonated Mefta Authority Cabinet and Mefta Administration office buildings, police stations, hospitals and prisons.

e. The Mefta Authority Cabinet shall delegate the building and operation of exclusive gambling facilities and duty- and tax-free shopping facilities to qualified jointly-owned companies providing the MFO retains control of each of such companies by a majority of the voting shares of each of such companies. Palestine shall designate the builder/operator of the gambling casino facilities. Israel shall designate the builder/operator of the duty- and tax-free shopping facilities.

f. The Mefta Authority Cabinet shall appoint a Secretary General, who shall be the chief administrative officer of the Mefta Administration, and an Under Secretary General and Deputy Secretary General. They shall be of different nationalities and English-speaking.

g. Pay scales for senior civil servants shall follow Singapore's formula to encourage good and able men and women to serve (under a relatively corrupt-free environment) without sacrificing their financial livelihood. Thus, the salaries of senior Mefta Administration executives shall be two thirds of the salaries of the private sector in Port Mefta, with a two-year time lag.

h. The Mefta Authority Cabinet shall appoint a planning board and an appeal board, each consisting of five English-speaking members. The planning board shall administer the Port Mefta Master Plan. The plan shall include the locations of all businesses -- including hotels, factories, industrial parks, gambling casinos and duty-free shopping centers -- and residential buildings, and consulates and international organizations. Each board shall comprise professionals of different nationalities -- an architect, engineer, lawyer, businessman and diplomat. The diplomat shall be the head of each board. The planning board shall consider zoning variances and the like, with appeals taken to the appeal board. No appeal can be taken from the appeal board.

i. All member countries of the United Nations can be Treaty parties except those subject to United Nations sanctions (Angola and Somalia).

3. Mefta International Police Force

a. The MFO shall organize and control the Mefta International Police Force, headed by the Police Commander, which shall have the sole responsibility for all security matters. The Police Commander shall have full command authority over the police force and shall promulgate its Standing Operation Procedures. The police force shall otherwise be governed by current MFO regulations, customs and traditions.

b. The Mefta International Police Force shall include English-speaking police of the MFO nationalities, comprising one half of the force, plus Palestinians, Israelis, Egyptians and Jordanians, jointly comprising the other half. The Palestinians and Israelis shall each have one sixth of the total number of police in the force, and the Egyptians and Jordanians shall each have one twelfth, with each of the four contingents having its own captain under the command of the Police Commander. Palestinians, Egyptians and Jordanians in the force shall primarily police Palestinians and other Arabs in Mefta. Israelis in the force shall primarily police Israelis in Mefta.

4. Free Trade in Mefta

a. Port Mefta's business administration and operation shall essentially duplicate that of Singapore but with no import tax. (Singapore has a Goods & Services Tax at the rate of 3 percent of CIF value, plus commission and other incidental charges.) All goods used in trade, industry and consumption shall be allowed into Port Mefta free of duty, tax and nontariff barriers except for controlled imports. Domestic sales shall be unrestricted within the area. The available work force shall be diligent, most English-literate and well trained to meet manpower needs. There shall be industrial, warehousing, distribution and light manufacturing facilities. Ready-built, fully serviced factory buildings, industrial parks and modern offices shall be readily available enabling companies to start up operations in the shortest time possible. Business startups shall be arranged at a single location and shall be uncomplicated due to little or no red tape. Port Mefta shall have minimal regulatory restraints, no taxes and prompt dispute arbitration. Trade documents shall be speedily processed through an electronic data interchange system. Port Mefta shall have a well-developed communications infrastructure. The Port Mefta harbor and Mefta International Airport shall be efficient.

b. There shall be no duties, customs, tariffs, licenses, quotas or taxes levied on goods or services, including financial and investment services, which are imported or exported, and no restrictions on the movement of capital. There shall be no labeling, standards, sizing, language or other nontariff trade barriers. There shall be no charges for goods that are manufactured, loaded, unloaded, bought, sold, repacked or reshipped, except for services rendered. There shall be no laws, regulations, policies or other nontariff practices restricting trade. There shall be no monopolies, except for the MFO-controlled gambling and duty-free shopping facilities. There shall be a free press with no censorship. There shall be no limitation on the creation of investment banks or funds to serve as the lending agencies for the development of businesses. However, banking shall be regulated by the Mefta Authority Cabinet. All parties to the Treaty shall afford all goods coming from Mefta the same duty-free treatment as goods coming from Jordan under the United States-Jordan Free Trade Agreement, including its Rules of Origin except that there shall be no requirement of Israeli content. The remaining international community, hopefully, shall also afford Mefta goods similar duty-free treatment. Goods exported from Mefta can be marked "Made in Mefta" if they comply with said Rules of Origin.

c. Social security and medical insurance payments shall be withheld from the salaries of all Palestinian and Israeli workers in Mefta. The social security and medical insurance payments withheld from Palestinians working in Mefta shall go to Palestine at the then current Palestine rates, and Palestine shall pay for the corresponding benefits as if the Palestinians worked in Palestine. The social security and medical insurance payments withheld from Israeli workers in Mefta shall go to Israel at the then current Israeli rates, and Israel shall pay for the corresponding benefits as if the Israelis worked in Israel. Other nationals working in Mefta shall pay for and receive social security and medical benefits as if they worked in their own countries. All nationals, including Israelis, shall be subject to their own country's income and capital gains taxes applicable by their country to taxable persons working abroad. Similarly, corporations doing business in Mefta shall be subject to their own country's taxes applicable to that country's corporations doing business abroad. There shall be no Mefta income or capital gains tax or real estate tax. Nations can provide tax benefits including waivers to their nationals who invest and work in Mefta to encourage its success.

d. Singapore's list of controlled imports includes the following, which also shall be controlled in the Gaza Strip: (1) arms and explosives; (2) articles of asbestos; (3) bullet-proof vests; (4) chlorofluorocarbons; (5) pistol-shaped cigarette lighters; (6) fire crackers; (7) handcuffs; (8) nitro-cellulose; (9) poisons and hazardous chemicals; (10) radioactive materials; (11) toy currency; (12) toy guns. These items shall require import certificates from the appropriate agencies of the Mefta Administration and Palestine.

5. Palestinian Job Priority and VAT in Mefta

a. Palestinians living in the Gaza Strip shall have job priority for nonexecutive jobs in Mefta, followed by Palestinians living in Jordan who originated in Gaza and then West Bank Palestinians. Job quotas shall be set by Palestine and Jordan. Non-Gaza Palestinian executives shall only have the right to immigrate to Mefta upon proof of a permanent and authentic job there and a separate residence for their family plus a work permit from Palestine, but single Palestinian immigrant executives can share rooms. The Police Commander, with the advice of the Israeli and Palestinian security services, shall have the unlimited right to exclude from Mefta those persons deemed by him to be security risks, with no right of review. Illegal persons can be deported from Mefta by the MFO with no right of review. The United Nations Education, Scientific and Cultural Organization (UNESCO) and United Nations Relief and Works Agency (UNRWA) shall be requested to train Palestinians for construction jobs and basic trades like apparel, shoe and electronics manufacturing. Palestinian women shall be trained to machine sew for piece work at home or in factories where the supervisors and workers are all women.

b. Purchases by Palestinian executives living in Port Mefta shall be tax and duty free. But such purchases imported into Palestine shall be subject to the Palestine value added tax (VAT, presently 17 percent which, hopefully, will be lowered to 5 percent), which shall go to Palestine. Purchases in Port Mefta by commuting Palestinian workers shall be subject to the Palestine VAT. (That shall expedite the movement of Palestinian workers carrying goods from Mefta to Palestine, and permit Palestine stores to compete with Mefta stores.)

c. Purchases by Israeli executives living in Port Mefta shall be tax and duty free. But such purchases imported into Israel shall then be subject to the Israel VAT (18 percent). Purchases by commuting Israelis in Port Mefta shall be subject to the Israel VAT, which shall go to Israel.

6. Mefta Financing

Tax-exempt interest-bearing Mefta bonds used to finance nondonated infrastructure and startup and early Mefta administration costs shall be issued by a United States bank established by the MFO called Mefta Bank Ltd., which shall be domiciled in Washington, D.C. The bonds shall be paid off from rent payments for leased building sites. Mefta Bank's Board of Directors shall consist of the nominees of each of the 21 members of the Mefta Authority Cabinet, with each having an equal amount of stock. The American nominee shall be the chief executive officer. The major powers shall provide most of the nondonated startup financing of Mefta by purchasing Mefta bonds. Other states and private entities can also purchase Mefta bonds.

7. Port Mefta Startup and Master Plan

a. After the Port Mefta Treaty enters into force the MFO shall adopt a Port Mefta Master Plan, and appoint the Mefta Authority Cabinet, Mefta Court and the Commander of the Mefta International Police Force, and establish Mefta Bank Ltd. The Commander shall appoint and train the force subject to the approval of the MFO. The Mefta Authority Cabinet shall appoint the three secretary-generals of a Mefta Administration.

b. The three secretary-generals of the Mefta Administration shall jointly appoint a permanent civil service consisting of English-speaking civil servants in accordance with Mefta Authority Cabinet guidelines and its budget.

c. The Port Mefta Master Plan shall comprise a typical city plan and include all building sites in Port Mefta, as well as architectural guidelines and detailed estimates of the costs of construction of the public infrastructure in order to provide an estimate of the needed capital.

8. Mefta Constitution, Laws and Court System

a. After the Port Mefta Treaty enters into force the MFO shall appoint the judges of a seven-judge Mefta Court which shall sit in three-judge appellate panels and single judge civil and criminal trials. They shall be English-speaking prominent jurists in their own countries. The salaries and expenses of the seven judges and their office staffs shall be paid by their countries of nationality. The chief judge shall be from the United States and shall appoint a court staff comprising lawyers and clerks of different nationalities. The salaries of the court staff shall be paid by the MFO. The MFO shall also appoint replacement judges. The judges of the Mefta Court shall establish their own rules. They shall recommend to the MFO a body of laws, including a Mefta Constitution and very investor-friendly free trade-supporting commercial and company codes (modeled on Singapore's). Before adoption of the body of laws by the MFO, pre-PNA local laws (Ottoman Law, Mandate Law and Israeli Proclamations and Military Orders) shall apply to Port Mefta.

b. The Mefta Constitution shall be the source of all laws, regulations, ordinances and other rules adopted by the MFO to govern Port Mefta. There shall be a presumption in favor of the pre-PNA local laws in the Gaza Strip to the extent not in conflict with MFO-promulgated laws.

c. The Mefta Court shall have exclusive jurisdiction over the crimes of terrorism and smuggling, especially arms, explosives and drugs. It shall also have jurisdiction over all other crimes and all civil matters involving a non-Palestinian or non-Israeli, and between a Palestinian and an Israeli. No jury trials shall be permitted. Serious crimes shall be tried by a three-judge panel appointed by the Chief Judge.

d. Resident and commuting Palestinians shall be under the jurisdiction of their own courts in Palestine, except for the crimes of terrorism and smuggling, and criminal and civil matters involving a non-Palestinian, which shall be tried in the Mefta Court. Other crimes and civil disputes solely involving Palestinians shall fall under the jurisdiction of the Palestinian court system in Palestine. (A Magistrate's Court handles small claims, a District Court handles larger claims and a High Court of Appeals serves as "Supreme Court." Palestinian security courts shall have no jurisdiction over accused Palestinians.) Palestinians convicted of terrorism or smuggling shall be imprisoned in Mefta or in Palestine at the option of the Mefta Court.

e. Resident and commuting Israelis shall be under the jurisdiction of their own courts in Israel, except for the crimes of terrorism and smuggling, and criminal and civil matters involving a non-Israeli, which shall be tried in the Mefta Court. Other crimes and civil disputes solely involving Israelis shall fall under the jurisdiction of the Israel court system. Israelis convicted of terrorism or smuggling shall be imprisoned in Mefta or in Israel at the option of the Mefta Court.

f. Nationals of Treaty parties other than Palestine and Israel charged with crimes shall have the right of extradition to their countries for trial, except for the crimes of terrorism and smuggling, which shall be tried by the Mefta Court. If convicted by the Mefta Court, the criminals shall be imprisoned in Mefta or in the country of their nationality at the option of the Mefta Court. Nationals of nonparty states shall be tried for any crime in the Mefta Court and, if convicted, imprisoned in Mefta or their country of nationality at the option of the Mefta Court. There shall be no right of extradition for nonparty states, although the Mefta Court could allow it. Extradition agreements between the MFO and Treaty parties, including Palestine and Israel, shall govern the transfer of accused persons to the jurisdiction where an alleged crime was committed.

g. There shall be no patents and copyrights granted or recognized by Mefta, to avoid expensive and protracted litigation. Trademarks shall only be protected in Mefta from the crime of counterfeiting, and not from confusing similarity. Mefta trademark registrations to prevent counterfeiting shall be limited to marks previously registered in the United States Patent and Trademark Office. Protection from patent, trademark and copyright infringement shall be in the countries of the imported goods and services.

9. Site Priority System

a. There are three types of site priorities: super, primary and secondary. The super priorities recycle three times as often as secondary priorities, and primary twice as often as secondary. Super priorities go to Palestine, Israel, Egypt, Jordan, United States and Russia. The primary priorities go to major powers and the remaining major MFO members -- Australia, Canada, China, Italy, France, Germany, Hungary, Japan, New Zealand, Saudi Arabia and United Kingdom -- in order selected by lot. The secondary priorities go to the remaining MFO members -- Colombia, Fiji, Norway and Uruguay -- and then to the remaining Treaty parties, in order selected by lot.

b. Sites for hotels, office buildings, factories and high-rise apartments, as well as parks for industrial, commercial, residential, and research and development, are allocated by types. Thus, the first six shore front hotel (including harbor front) site choices in the Port Mefta Master Plan shall go to Palestine, Israel, Egypt, Jordan, United States and Russia in that order, as do the next six inland sites and the subsequent six inland sites. The next choices shall be for paired shore front and inland hotel sites. Choices 19 and 28 (depending on selection by lot) could go to Australia, 20 and 29 to Canada, 21 and 30 to China, 22 and 31 to Italy, 23 and 32 to France, 24 and 33 to Germany, 25 and 34 to Hungary, 26 and 35 to Japan, 27 and 36 to New Zealand, 28 and 37 to Saudi Arabia and 29 and 38 to the United Kingdom. The remaining MFO parties follow with one inland site each in order selected by lot. Then the remaining parties follow with one inland site each in order selected by lot. Then the whole site selection process repeats until all available hotel sites for that stage of the Master Plan have been selected. Prime sites shall be allocated to the MFO and the duty- and tax-free shops and gambling facilities, the Mefta Authority Cabinet, the Mefta Administration, consulates and international organizations.

c. If construction of the structure specified on a site by the Master Plan is not begun and finished by the lessee by the completion date set by the Mefta Administration, that site and its investment shall be lost and shall be offered to the next one on the priority list willing to complete construction. Site leases can be swapped but not sold.

10. Privileges and Immunities

The members of the MFO, the Mefta Authority Cabinet and its staff, the Mefta Court and its staff, the Mefta Administration and the Mefta International Police Force shall enjoy in Palestine, Israel, Egypt and Jordan such capacity and such privileges and immunities as are necessary for the exercise of their functions and the fulfillment of the purpose of Mefta. The privileges and immunities shall not be less than those provided to the nationals of the MFO stationed in the Sinai as defined in the criminal and civil jurisdiction provisions of the MFO Protocol to the Egypt-Israel Treaty of Peace. The purpose of Mefta is to advance the causes of peace, stability and prosperity in the Middle East.

ARTICLE PMX2 -SUNKEN HIGHWAY

1. A 70-kilometers sunken highway from Port Mefta to the West Bank shall be the sole safe passage route. The West Bank terminal shall be near Hebron, preferably near the north-south Road No. 60. An optional 50-kilometers Jordan extension shall go to the border at the King Hussein Bridge. The security arrangements for the prior safe-passage route shall govern to the extent applicable. Israel and Palestine shall each delegate criminal and surface traffic law enforcement on the highway surface to the Mefta international police who shall solely patrol the entire highway surface. Reasonable tolls shall be charged depending on the number of wheels of the vehicles and whether travel is between one end and the West Bank or along the full length of the highway.

2. The sunken highway shall be four lanes wide in a five meter-deep trench roofed by chain fencing and edged by Israeli-designed security fences. Additional space for a single railroad track may be optionally allocated. Subject to the approval of the MFO, the U.S. Army Corps of Engineers shall grant the road building and security fence contracts, and any optional railroad track contract, and supervise and approve construction. Israel shall construct the highway and security fences in the portion in pre-1967 Israel, and Palestine in the portions in Palestine and the West Bank, all at competitive prices. Nonexecutive construction labor shall be exclusively Palestinian. The 120-km highway shall be constructed in straight lines to facilitate efficient radar and laser surveillance to help block smuggling of terrorists, explosives, arms, drugs and duty-free goods into Israel, Palestine and the West Bank.

3. The highway entrance and exit in Port Mefta shall be under control of the Mefta international police. The West Bank entrance and exit shall be controlled jointly by Palestinian and Israeli police. The exit in Jordan shall be under sole Jordanian control, with joint control by Jordan and Israel of its entrance at the Israeli side of the border. At the toll stations at the highway entrances in Mefta, the West Bank and the Israeli side of the Jordan border, Mefta international police shall video scan all passengers and use computer face matching to block perceived terrorists from later exiting into the West Bank, Gaza Strip or Jordan. Suspected criminals shall be subject to more intrusive security checks and arrest at the toll stations by Mefta international police. Stolen Israeli and Palestinian vehicles caught using the highway shall be subject to confiscation by the Mefta international police and promptly returned to their owners.

4. Israel shall have complete security control in the air over the highway in Israel, and Palestine over the highway in Palestine and the West Bank. Israel shall also observe the highway in Israel from adjacent free-standing towers and from platforms on nearby electrical power towers, and Palestine shall observe the highway from adjacent free-standing towers and from platforms on nearby electrical power towers in Palestine and the West Bank.

5. All goods exiting the Gaza Strip by land shall be subject to Israeli or Egyptian customs, quotas, labeling and standards regulations. Goods shipped from Port Mefta to the West Bank shall be subject to the same restrictions at the Gaza entrance, because from the West Bank the goods can be sent anywhere in Israel. Goods shipped to Jordan shall be subject to Jordanian customs and regulations at the exit in Jordan. Goods shipped from Jordan to the West Bank shall be subject to Israeli customs, quotas, labeling and standard regulations at the Israel entrance. Goods shipped from Jordan to Port Mefta shall be free of Israeli customs, quotas, labeling and standards regulations.

ARTICLE PMX3 - POWER/DESALINATION PLANT, DESALINATED WATER PIPELINE AND HIGH VOLTAGE/COMMUNICATION TRANSMISSION LINES

1. A power/desalination plant shall be constructed by the MFO on the coast of Port Mefta just south of Deir El Balah to generate affordable electricity and water for the Palestinians and Jordanians as well as Mefta. The plant shall generate 120 megawatts of electric power and 50 million cubic meters of desalinated sea water a year. Germany shall hopefully fund the capital expenditure and Saudi Arabia shall hopefully supply the plant with crude oil at a price low enough to produce drinkable water Palestinians and Jordanians can afford until natural gas from Palestine's territorial waters is available at production cost, excluding donated capital expenditures, to fire the plant.

2. A high-voltage transmission system along the sunken highway shall have a capacity of 240 megawatts for future expansion, with substations at Gaza, the West Bank and the Jordan border. The system shall comprise three conductors of a three-phase 120 kilovolt system plus a ground conductor, each about 2.5 centimeters in diameter, spaced 5.3 meters from each other. The conductors shall be insulatingly mounted adjacent the tops of 17-meter-high towers with eight towers per 1.6 kilometers. The towers shall support an optical communications line, and Israeli observation posts in Israel, and Palestinian observation posts in Palestine and the West Bank. The high voltage transmission system shall connect to the Israel, Palestine, Jordan and Egypt power grids.

3. A desalinated water pipeline shall have a capacity of 100 million cubic meters a year to the West Bank and 50 million cubic meters from there to the Jordan border for future expansion. It shall run underground along the highway route to the Jordan border, with pumping stations at Gaza, halfway to the West Bank and the West Bank. Jordan shall extend the pipeline inland from its border, with a pumping station on its side of the border. The pipe to the West Bank shall be concrete-lined steel with a diameter of 1.2 meters. From there to the Jordan border the pipe diameter shall be .9 meters. Israeli firms shall provide engineering goods and services at competitive prices for the construction and maintenance of the portion of the pipeline traversing Israel, and Palestinian firms for the construction and maintenance of the portion traversing Palestine and the West Bank, all under the overall supervision and approval of the Corps of Engineers.