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DLA Piper partner Berl Bernhard often repeats a mantra when discussing the Middle East Investment Initiative (MEII), the nonprofit that he and DLA partner James Pickup willed into being a year ago: People who have nothing have nothing to lose. And when the people in question are living in the West Bank, where unemployment hovers around 20 percent and the economy is stagnant, loss is a fact of life. “If people have something, then they will want to protect their own future,” says Bernhard, a former senior adviser to Secretary of State Edmund Muskie during the Carter administration. “If you don’t improve the economy and you don’t improve jobs, then people give up hope.” MEII, which launched in Ramallah in July 2007, is intended to help revitalize the West Bank’s economy by providing up to $228 million in loans to small and medium-size businesses over the next 10 years. MEII grew out of the Aspen Institute‘s Middle East Strategy Group, which had been working on a series of initiatives in the Palestinian territories since 2005. But Aspen, which ran forums and seminars, had never operated a real program. So the group turned to Bernhard, a trustee and past chair of the Institute, and Pickup, who has a fellowship at Aspen, to “go operational” and set up MEII. MEII’s mandate, says Bernhard, is to change the nature of borrowing in the West Bank by bypassing the collateral-based system used by most banks in the area. Its loan guarantees, he says, will increase the vitality of the credit market, helping West Bank businesses launch and expand and creating new jobs in a region that desperately needs them. As veterans of the Washington, D.C., power structure, Bernhard and Pickup knew how to work the political system. First they incorporated MEII as a nonprofit — with Bernhard as MEII’s chairman and Pickup as the organization’s general counsel, vice president and treasurer. Then they sought, and won, $110 million in loans from the Overseas Private Investment Corporation, an independent government agency that provides loans to American businesses and nonprofits operating abroad. OPIC is required to notify Congress when approving grants, so Pickup worked with House and Senate staffers as well as officials from the U.S. Department of State and National Security Council. Then came the hard part. In the Middle East, Bernhard and Pickup worked with the Palestinian Monetary Authority and the Palestinian Investment Fund, an independent Ramallah-based fund that agreed to guarantee $50 million in MEII loans. MEII also received letters of support from Shimon Peres and other members of the Knesset, Israel’s parliament. “It took us two years to work through all the agreements and political issues,” Bernhard says. “There is no reservoir of trust or affection in the West Bank, so we had to be very careful and very diplomatic.” Bernhard and Pickup continue to raise money for MEII’s operational fund, which is financed by grants and individual donations, including $5 million from the government of Norway and $100,000 from Saudi Arabia. In addition to securing financing, the DLA partners crafted a master agreement for the individual Palestinian banks that will offer the loans. So far, seven Palestinian banks have been approved by the nonprofit; Pickup says they hope to approve three more by the end of the year. The banks act as middlemen between borrowers and MEII, receiving and evaluating loan applications with advice from MEII’s designated agent, CHF International, a nongovernment organization focused on economic development. MEII and OPIC check loan applicants for terrorism connections (since government money is involved), but it is up to each participating bank to decide whether to provide a loan. MEII guarantees up to 70 percent of each approved loan. The first loans started going out in November. So far, MEII has guaranteed a total of $4 million in loans, which, Bernhard says, has led to the creation of 150 jobs. By the end of 2008, he says, MEII hopes to have guaranteed $40 million, which could mean another 10,000 jobs in the West Bank. Toni Verstandig, the director of the Middle East Strategy Group at the Aspen Institute and a former deputy assistant secretary for the Middle East in the Clinton administration, says that MEII has already broken new ground by employing a public-private partnership between the U.S. government and a Palestinian investment fund. “These are the tools of the future of social philanthropy,” says Verstandig. “It’s important to see this kind of partnership.” Now the DLA partners are talking about creating an affordable housing program in Jordan, which they’ve begun to discuss with Jordanian government officials. They’re also working on an initiative to create a $500 million mortgage facility in the West Bank. “Someone told me there has been no urban planning in 3,000 years,” Pickup says. With hundreds of hours from Bernhard and Pickup and other lawyers pitching in as well, DLA estimates that it has spent about $4.5 million in lawyer time on MEII. “Fortunately, the firm hasn’t winced yet,” jokes Bernhard. But on the West Bank, DLA expects a substantial return.

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