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By Allyn Fisher-Ilan
JERUSALEM (Reuters) - The Middle East conflict cast a shadow Monday over Israel's first conference as a member of the Organisation of Economic Cooperation and Development, with Palestinians urging members to boycott the Jerusalem meeting.
Israel joined the club of free market democracies on May 10, in what its central bank governor, Stanley Fischer, called "an important milestone for the integration of Israel into the global economy."
But chief Palestinian peace negotiator Saeb Erekat said on Monday OECD members should "cancel their participation" in the October 20-22 annual conference to protest against Israeli occupation of East Jerusalem. The meeting's theme is tourism.
According to Israeli Tourism Minister Stas Mizeshnikov, 28 of the 33 OECD members have agreed to participate.
Media reports say Spain, Britain and Turkey would not take part. A Palestinian official said Canada has also said it was not participating.
"It's a real honour for Israel, as a new member of the OECD, to host this summit," Mizeshnikov told reporters. "I don't know of any countries that have boycotted Israel."
Israel's candidacy was accepted despite protests from human rights campaigners and pro-Palestinian groups.
Erekat accused Mizeshnikov in a statement of boasting in Israeli media at the weekend that playing host to the OECD in
Jerusalem constituted "a seal of approval" for Israel's disputed claim to the city as its undivided capital.
OECD COMPLAINT
Mizeshnikov denied this. However, OECD Secretary-General Angel Gurria had complained to Israeli Finance Minister Yuval Steinitz in Washington earlier that the conference was being politicized by Mizeshnikov, an Israeli official said.
In a letter to Prime Minister Benjamin Netanyahu, reported in Israeli media, Gurria said that "in order to move forward ... the tourism minister should correct the misperceptions created and put the meeting in its proper perspective."
Most of the international community has never recognized Israel's annexation of East Jerusalem after its capture it in the 1967 war.
The future status of the holy city, and Palestinian claims to East Jerusalem as their capital, are key issues in the currently deadlocked Middle East peace talks.
"The capital of Israel is Jerusalem," Mizeshnikov said. "That's a fact, not an arguable fact. But it doesn't in any way connect" this issue to the OECD conference.
The decision to hold the annual meeting in Jerusalem was "a very good example of how members of the OECD evaluate Israel as a very strong state, economically," he added.
The OECD, rooted in Europe's reconstruction after World War Two, deals strictly with economic issues.
Despite a world financial crisis, Israel expects to see a record 3.2 million tourists in 2010, up from an earlier record of three million in 2008, Mizeshnikov said.
(Additional reporting by Mohammed Assadi in Ramallah and Steven Scheer in Jerusalem)
(Editing by Douglas Hamilton and Paul Taylor)
