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Cablegate: Israelis and Palestinians to Continue Economic

VZCZCXYZ0038
OO RUEHWEB

DE RUEHTVA #0502 0461530
ZNR UUUUU ZZH ZUI RUEWMCE0746 0461556
O 151530Z FEB 07
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC0000
INFO ARAB ISRAELI COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS TEL AVIV 000502

SIPDIS

SENSITIVE
SIPDIS

NEA/FO FOR DANIN; NEA/IPA FOR WILLIAMS, SHAMPAINE,
BELGRADE, ZIMMER; EB/IFD FOR GARRY; NSC FOR
ABRAMS/DORAN/WATERS; TREASURY FOR HIRSON

E.O. 12958: N/A
TAGS: ECON ETRD PREL KWBG IS
SUBJECT: ISRAELIS AND PALESTINIANS TO CONTINUE ECONOMIC
DEVELOPMENT DIALOGUE

REF: TEL AVIV 422

1. (SBU) SUMMARY: AS ONE ELEMENT OF THE ONGOING EFFORT TO
IMPROVE IMPLEMENTATION OF THE AGREEMENT ON MOVEMENT AND
ACCESS (AMA), ISRAELI AND PALESTINIAN DELEGATIONS MET ON
FEBRUARY 13 AT THE CHIEF OF MISSION'S RESIDENCE TO DISCUSS
ACTIONS THAT COULD AID A REVIVAL OF ECONOMIC ACTIVITY IN THE
WEST BANK AND GAZA. MINISTER OF DEFENSE AMIR PERETZ AND
DEPUTY MINISTER OF DEFENSE EPHRAIM SNEH HEADED THE ISRAELI
DELEGATION, WHILE CHIEF PLO NEGOTIATOR SAEB EREKAT LED THE
PALESTINIAN DELEGATION, WHICH ALSO INCLUDED PRIVATE SECTOR
REPRESENTATIVES. THE PARTICIPANTS HELD WIDE-RANGING
DISCUSSIONS ON ELEMENTS OF THE AMA, AND ENGAGED IN A
CONSTRUCTIVE EXCHANGE OF VIEWS TO IDENTIFY PRACTICAL STEPS
FOR PROMOTING PALESTINIAN ECONOMIC DEVELOPMENT UNDER THE
LEADERSHIP OF THE PRIVATE SECTOR. THE PALESTINIANS CALLED
FOR DECISIVE ACTION, NOTING THAT ISRAELI SUPPORT WOULD BE
VITAL TO SPURRING PALESTINIAN PRIVATE SECTOR ACTIVITY. SNEH
COMMITTED TO WORK WITH THE PALESTINIANS, AND SUGGESTED
CREATING A BI-LATERAL "ECONOMIC COMMITTEE" THAT WOULD CONVENE
EVERY TWO WEEKS AS A PERMANENT FRAMEWORK FOR PROMOTING
ECONOMIC DEVELOPMENT. END SUMMARY.

----------------------------
PALESTINIANS CALL FOR ACTION
----------------------------

2. (SBU) EREKAT CALLED FOR DECISIVE ACTION, STRESSING THAT
THE BEST INSURANCE POLICY TO GUARANTEE SECURITY INVOLVES
ISRAEL HAVING A NEIGHBORING PALESTINIAN STATE THAT PROSPERS
ECONOMICALLY. HE EMPHASIZED THAT PA PRESIDENT MAHMOUD ABBAS
(ABU MAZEN) IS COMMITTED TO A TWO-STATE SOLUTION, ADDING THAT
"WE ARE NOT GOING THE WAY OF HAMAS." BASSAM KHOURY, CHAIR OF
THE PALESTINIAN FEDERATION OF INDUSTRIES AND SECRETARY
GENERAL OF THE PALESTINIAN PRIVATE SECTOR COORDINATION
COUNCIL, OPINED THAT ONE KEY TO SPURRING ECONOMIC DEVELOPMENT
IS TO FIND PRACTICAL SOLUTIONS THAT CAN REDUCE REDUNDANT
BUSINESS COSTS ASSOCIATED WITH THE ISRAELI CHECKPOINT AND
CLOSURE REGIME. HE SUGGESTED, FOR EXAMPLE, THAT HAVING AN
OPEN AND TRANSPARENT SYSTEM OF PRE-SCHEDULING GOODS TO
TRANSIT THROUGH THE KARNI (AL-MINTAR) CROSSING POINT WOULD
ENSURE THAT PALESTINIAN BUSINESSMEN HAVE A FAIR CHANCE TO
SCHEDULE A "TURN" THROUGH THE CROSSING, INSTEAD OF PAYING THE
CURRENT "MARKET" RATE, WHICH CAN BE UP TO FOUR TIMES AS
EXPENSIVE AS THE PUBLISHED RATE.

3. (SBU) MUHAMMAD MUSTAFA, ECONOMIC ADVISOR TO PRESIDENT
ABBAS, LAMENTED THAT THE ANTICIPATED ANNUAL COST JUST TO KEEP
THE PA GOVERNMENT OPERATING WOULD BE BETWEEN USD 1 AND 1.5
BILLION -- MONEY HE DID NOT EXPECT THE PA TO HAVE. THIS
ESTIMATE DID NOT INCLUDE ANY EXPENDITURES ON INFRASTRUCTURE
OR DEVELOPMENT. HE SAID THAT A SUSTAINABLE AND SUCCESSFUL
PALESTINIAN ECONOMY WOULD REQUIRE A VIBRANT PRIVATE SECTOR TO
MOVE AWAY FROM DEPENDENCE ON A BLOATED PUBLIC SECTOR AND
DONOR SUPPORT. HE ADDED THAT FOUR ACTIONS WOULD BE REQUIRED:
INCREASING MOBILITY AND ACCESS FOR PALESTINIANS; DEVELOPING
PUBLIC INFRASTRUCTURE IN CRITICAL SECTORS SUCH AS
TRANSPORTATION, WATER, AND ENERGY; INCREASING ACCESS TO
CREDIT; AND DIVERSIFYING THE PALESTINIAN ECONOMY. MUHAMMAD
SHTAYYEH, FORMER HOUSING AND PUBLIC WORKS MINISTER, SAID THAT
SUCH EFFORTS WOULD ALSO HELP COUNTER THE EMIGRATION OF
TALENTED PALESTINIAN ENTREPRENEURS AND PROFESSIONALS. ABDUL
MALIK JABR, CEO OF PALTEL, SAID JOB-CREATION PROJECTS IN THE
IMMEDIATE FUTURE WOULD HELP STIMULATE THE ECONOMY, INCREASE
TAX-BASED REVENUES, AND PROVIDE PALESTINIANS ALTERNATIVES TO
JOINING MILITIAS. HE HIGHLIGHTED SEVERAL PROMISING
PRIVATE-SECTOR INITIATIVES, INCLUDING A PROJECT TO BUILD A
CITY NEAR RAMALLAH THAT WOULD PROVIDE 20,000 NEW JOBS AND
CREATE 7,000 NEW HOUSES. HE UNDERSCORED THAT ISRAELI SUPPORT
WOULD BE VITAL TO BRINGING THESE PLANS TO FRUITION.

-----------------------------------
GOI TO CONSIDER PRACTICAL SOLUTIONS
-----------------------------------

4. (SBU) MINISTER PERETZ EMPHASIZED THAT HE IS AN
"UNCONDITIONAL PARTNER" IN WORKING TO LESSEN THE HARDSHIPS ON
THE PALESTINIAN PEOPLE AND IMPROVE THE PALESTINIAN ECONOMY.
SENIOR MINISTRY OF DEFENSE (MOD) ADVISOR HAGGAI ALON STRESSED
THAT HIGH-LEVEL COOPERATION IS MUTUALLY BENEFICIAL, AND
CONVEYED THAT THE GOI UNDERSTANDS THAT IT NEEDS TO BE "AN
ACTIVE PLAYER" IN PROMOTING ISRAELI-PALESTINIAN ECONOMIC
DEVELOPMENT. MOREOVER, HE NOTED THAT THE MOD IS TAKING A
MODIFIED APPROACH TO COORDINATING WITH PALESTINIANS THAT IS
NOT AS SECURITY-CENTERED. THE COORDINATOR FOR GOVERNMENT

AFFAIRS IN THE TERRITORIES (COGAT), MAJOR GENERAL YUSSEF
MISHLEV, OUTLINED SEVERAL MEASURES -- INCLUDING INCREASING
PERMITS AND EASING MOVEMENT THROUGH CROSSING POINTS -- THAT
COGAT HAS EITHER TAKEN OR HAS PLANNED THAT WOULD CONTRIBUTE
TO PALESTINIAN ECONOMIC DEVELOPMENT. DEPUTY DEFENSE MINISTER
SNEH AGREED WITH THE AMBASSADOR AND THE CONSUL GENERAL THAT
THE PARTIES NEED TO FOCUS ON PRACTICAL SOLUTIONS, AND PRAISED
THE PARTICIPANTS FOR THEIR CANDID CONTRIBUTIONS.

----------
NEXT STEPS
----------

5. (SBU) SNEH SUGGESTED CREATING A BI-LATERAL "ECONOMIC
COMMITTEE" THAT WOULD CONVENE EVERY TWO WEEKS AS A PERMANENT
FRAMEWORK FOR PROMOTING ECONOMIC DEVELOPMENT. MAJOR GENERAL
MISHLEV WOULD SERVE AS THE ISRAELI CHAIR OF THE GROUP, WHICH
WOULD ALSO INCLUDE ALON AND REPRESENTATIVES FROM THE ISRAELI
AIRPORT AUTHORITY AND MINISTRY OF FINANCE. THE PALESTINIAN
CONTINGENT WOULD BE LED BY SA'EB EREKAT, AND INCLUDE
PROMINENT PRIVATE-SECTOR REPRESENTATIVES. THOUGH THE
"ECONOMIC COMMITTEE" WOULD BE BI-LATERAL IN NATURE, THE
PARTICIPANTS WELCOMED USG INVOLVEMENT, AND WERE GRATEFUL THAT
THE AMBASSADOR HOSTED AND FACILITATED THE DIALOGUE. THE
AMBASSADOR EMPHASIZED THAT THE USG WOULD BE HAPPY TO PLAY A
CONSTRUCTIVE ROLE. AS REQUESTED BY THE PARTIES, FUTURE
MEETINGS COULD BE HELD AT THE CMR OR THE CONSUL GENERALS
RESIDENCE IN JERUSALEM.

---------
ATTENDEES
---------

6. (SBU) THE PRIMARY PARTICIPANTS IN THE DISCUSSION WERE AS
FOLLOWS:

U.S. DELEGATION
---------------

EMBASSY TEL AVIV
----------------

AMBASSADOR
DCM
USAID DIRECTOR
ECON COUNSELOR
POL COUNSELOR
SPECIAL ADVISOR TO THE AMBASSADOR
NAVAL ATTACHE

CONGEN JERUSALEM
----------------

CONSUL GENERAL
ECON CHIEF

USSC
----

ADVISOR


ISRAELI DELEGATION
------------------

MINISTER OF DEFENSE AMIR PERETZ
DEPUTY MINISTER OF DEFENSE EPHRAIM SNEH
COGAT MAJOR GENERAL YOSSEF MISHLEV
MOD SENIOR ADVISOR HAGGAI ALON
LT. COL. ODED HERMAN, ADVISOR TO POL-MIL DIRECTOR GILAD
IRIT BEN-ABBA, MFA HEAD OF BUREAU FOR MIDDLE EAST ECONOMIC
AFFAIRS

PALESTINIAN DELEGATION
----------------------

PLO CHIEF NEGOTIATOR SA'EB EREKAT
FORMER PA MINISTER OF HOUSING & PUBLIC WORKS MUHAMMAD SHTAYYEH
PA PRESIDENCY ECONOMIC ADVISOR MUHAMMAD MUSTAFA
ABDUL MALIK JABR, CEO OF PALTEL
BASSAM KHOURY, CHAIR, FEDERATION OF INDUSTRIES (PFI)
NISREEN HAJ AHMED, ECONOMIC ADVISOR TO PRESIDENT ABBAS
INES ABU LABAN, NEGOTIATIONS SUPPORT UNIT

********************************************* ********************


VISIT EMBASSY TEL AVIV'S CLASSIFIED WEBSITE:
HTTP://WWW.STATE.SGOV.GOV/P/NEA/TELAVIV

YOU CAN ALSO ACCESS THIS SITE THROUGH THE STATE DEPARTMENT'S
CLASSIFIED SIPRNET WEBSITE.
********************************************* ********************
JONES

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