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The Vatican & Jerusalemsuch sites and preserve their dignity,” not excluding the provision ofinternational guarantees. On the other hand, however, the Holy Seerejected the request of the Palestinian negotiators that any accordshould be incorporated in a clear political frame which explicitlystated the rights of the Palestinians to a state within the borders of1967 and East Jerusalem as their capital, instead submitting a draftwhose preamble merely limited itself to a reference to the 2000 BasicAgreement. On 28 January 2012, the two delegations, led respectivelyby Msgr. Ettore Balestrero, the Vatican undersecretary for Relationswith States, and Ziad al-Bandak, the Palestinian presidential adviserfor Christian relations, met again in the office of the PalestinianPresident. But while the official communiqué stated that “the talkstook place in a positive atmosphere to strengthen further the specialrelations between the two sides,” 179 in reality the discussions hadcome to a dead end. While the Vatican’s negotiators did accept theprinciples of statehood and self-determination, they refused tomention explicitly the borders of 1967 and East Jerusalem as capitalof a future Palestinian state. They also opposed any mention in thepreamble of the status of the Palestinian territories as occupied landunder international law, and rejected any call to upgrade the HolyPope Benedict XVI welcomed by IsraeliPrime Minister Netanyahu and IsraeliPresident Peres, Tel Aviv, 2009. © SipaPope Benedict XVI listening to theMayor of Jerusalem, Nir Barkat,Jerusalem, 2009. © APSee’s diplomatic relations with the Palestinian National Authority or to publicly recognize it as a state. Instead,the officials of the Catholic Church considered the PLO’s insistence on political issues to be a mistake, andreiterated their refusal to be involved in political issues between Israelis and Palestinians.The Draft Economic Agreement between the Holy See and IsraelThe Holy See Under Benedict XVI: Losing its Moral Stance?Further to the Holy See’s refusal to abandon the mere declaratory level and to make a concrete gesturethat would support the political claims of the Palestinian people, new developments occurred recently inthe negotiations between the Holy See and the state of Israel which dramatically strained relations withthe Palestinians. On 10 June 2012, prior to a meeting of the Bilateral Permanent Working Commission inVatican City, a report published by the Israeli newspaper Haaretz revealed that the draft of the economicagreement under discussion failed to make a clear distinction between Israel proper and the occupiedPalestinian territories. 180 The alleged leaked draft, 181 meant to regulate the legal and financial status ofthe activities and properties of the Church in Israel, either did not define precisely the borders of theIsraeli state and the exact location of the discussed sites, or even contained provisions that acceptedthe application of Israel’s domestic legislation to Church institutions located specifically in occupiedPalestinian territories, without further mention of the status of these areas under international law. Inparticular, the draft contained in an annex the so-called ‘Schedule One,’ the list of individual propertiesbelonging to the Holy See and to certain institutions of the Catholic Church that were under discussionwith the Israelis, and which included sites and lands situated in the occupied Palestinian territories andthe annexed part of Jerusalem. The leakage of the document elicited strong reactions of reprobationfrom Palestinian officials, with the PLO issuing an official communiqué which defined the draft agreementas the Vatican’s indirect recognition of Israel’s illegal “exercise of powers and authorities in the occupiedPalestinian territories.” 182 In the statement, the Fatah Commissioner for Foreign Relations and member ofthe Palestinian negotiations team with the Holy See, Dr. Nabil Shaath, urged the Vatican to “reaffirm itshistoric position in favor of the Palestinian people’s inalienable rights in line with international law andrelevant United Nations resolutions.” 183 He detailed the Palestinians’ grievances in these terms:We trust that the Holy See will clarify the situation and affirm that it will uphold its legal andmoral responsibility, as a High Contracting Party to the Fourth Geneva Convention, and ensurethat any agreement upholds the Holy See’s position affirming the Palestinian people’s right to selfdeterminationand independence on the Territory Israel occupied in 1967, including East Jerusalem.[…] The Holy See is part of the international consensus that recognizes the Palestinian Territory,179 “ Holy See and PLO meet in Ramallah,” Vatican Radio, 29 January 2012. http://www.radiovaticana.org/EN1/articolo.asp?c=558584.180 Hass, Amira. “Palestinians: Vatican Set to Indirectly Recognize Annexation of East Jerusale,m” Haaretz, 10 June 12. http://www.haaretz.com/news/diplomacy-defense/palestinians-vatican-set-to-indirectly-recognize-annexation-of-east-jerusalem.premium-1.435558.181 Bilateral Permanent Working Commission between the Holy See and the State of Israel, “Single Document for The OrdinaryMeeting of 25 January 2012. Agreement between the Holy See and the State of Israel Pursuant to Art. 10 § 2 of the FundamentalAgreement Between the Holy See and the State of Israel (Also Referred to as the ‘Economic Agreement’).” Leakeddocument.182 “Parties Say Israel-Vatican Accord Accepts Occupation,” Ma’an News Agency, 11 June 2012. http://www.maannews.net/eng/ViewDetails.aspx?ID=494341.183 “Shomali: Israel-Vatican Agreement is Not Political, Doesn’t Threaten Palestinians,” Palestine News Network (PNN), 11June 2012. http://english.pnn.ps/index.php/national/1887-shomali-israel-vatican-agreement-is-not-political-doesnt-threatpalestinians.58 59