Submitted to the director-general of the Prime Minister's Office, Raanan Dinur, and the director-general of the Vice Premier's Office, Efrat Duvdevani, by Shuli Dichter - co-executive director of Sikkuy and Helmi Kittani - co-director of the Center for Jewish-Arab Economic Development - August 2006

Background: The anticipated momentum for development of the Galilee must include Arab citizens - both to close the existing gaps in education, housing, tourism, transportation and infrastructure, and to involve them in economic activity that could leverage growth in the entire Galilee.

Below is a partial list of emphases for developing the Galilee in Arab communities, which should leverage economic activity:

Government resources are not accessible to Arab citizens in the Galilee, primarily because of problems of language, alienation from the system, and a sense of weakness that engenders alienation and despair about a productive connection with the government.

The government must invest substantial efforts in drawing these Arab citizens closer - through intelligent publicity campaigns over time. In the shadow of the alienation - that only grew stronger during the war - there is a need during the coming year for four advertising campaigns focused on making government services more accessible to the Arab public.

The publicity campaigns will reflect the activity of government ministries in Arab communities. The overt and subliminal message in this process will be to give a feeling of belonging and mainly to emphasize that Arabs in the Galilee are desired citizens in the state. The content should concentrate on practical ways of integrating them in the expanding economy.

The goal: Transforming the Arab communities into magnets for investments and factories in their industrial zones.

The method:

First step for developing capabilities: Establishing a team of 10 Arab project managers who have appropriate education, and training them to act within the large Arab local authorities to attract investments and investors. They should be mentored during the first two years. In due course (already in the first year), these project managers will become experts in helping Arab local authorities to access budgets from the economic ministries and will serve as a liaison between local authority and government bodies for promoting new economic initiatives in the local authority. During the first two years, the financing will be divided between the economic ministries and, subsequently, the local authority.

There are 11 regional industrial zones in the Galilee, which constitute regional development and employment centers, and generate tax revenues for the local institutions for the welfare of its residents. All of the regional industrial zones are located within Jewish local authorities and only three of them include four Arab communities in their directorates. There are 45 additional Arab communities waiting to be included in the framework of directorates of regional industrial zones with National Priority A status.

Our proposal: During the year 2006-2007, intensive negotiations will be conducted to bring Arab localities into all of the existing directorates. For this purpose, a special coordinating office and staff of experts in the field will be formed.

This operational headquarters will have two main tools at its disposal:

A. The state will allocate an incentive of NIS 15 million to each industrial zone that absorbs Arab communities in its directorate. This incentive will be transferred via tax breaks, benefits and special development budgets for attracting factories.

B. During the coming months, government decision 4130 will already be implemented. The decision, adopted on August 9, 2005, calls for legislation to improve the efficiency of revenue allocations in local authorities. According to this decision, the interior minister will be authorized by law to issue an order mandating the inclusion of neighboring localities in the directorates of development regions in a neighboring authority.

Establishing a loan fund for businesses started and owned by women, which would include a package of services: professional training - management; business mentoring for a period of two years; networking.

Professional training and career retraining for 2,000 Arab women in the Galilee, including an incentive for employers of NIS 1,500 per woman,

A. Training 2,000 people (NIS 5,000 per candidate = NIS 10 million). 1,000 will be placed in jobs.

B. Mentoring (of the worker and the place of work) at the new place of work (60 hours per worker X 1,000 new works = NIS 18 million).

C. Hiring incentives for employers (NIS 2,500 per worker = NIS 25 million).

About NIS 230 million are expected to be invested in the Galilee.

The criteria should be revised and adapted so that industrial factories and workshops in Arab communities can also join the circle of economic development in the Galilee. We suggest that this investment focus on converting factories from simple technology to advanced technology.

Encouraging employment - we suggest lowering the minimum scope of the workplace required for investment encouragement to five workers.