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Cablegate: Hebron Businessmen Surviving but Fear Greater

VZCZCXRO4194
OO RUEHROV
DE RUEHJM #0607/01 0941104
ZNR UUUUU ZZH
O 041104Z APR 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7122
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 000607

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/DORAN/WATERS;
TREASURY FOR NUGENT/HIRSON

E.O. 12958: N/A
TAGS: ECON ETRD PREL KWBG IS
SUBJECT: HEBRON BUSINESSMEN SURVIVING BUT FEAR GREATER
ACCESS RESTRICTIONS

1. (SBU) SUMMARY: Hebron business leaders told Econoffs
March 28 that they fear their current access to Israeli
markets through Tarqumiya crossing could quickly deteriorate
if back-to-back procedures are implemented there, since their
products cannot easily be transferred back-to-back. In
addition, internal closures in the Hebron area raise costs
and create uncertainties that impede further investment.
They asked the USG to urge the GOI to maintain Tarqumiya's
current procedures, remove obstacles to movement, and enable
greater access for Palestinian businessmen to Israel. END
SUMMARY.

-----------------------------------
TARQUMIYA CROSSING WORKING, FOR NOW
-----------------------------------

2. (SBU) Econoffs met March 28 with businessmen representing
some of the largest local export industries in Hebron,
including Abed Atrash, owner of a stone and marble factory
(USD 20 million net worth); Nazmi Haddad, owner of a steel
rod factory (USD 20 million net worth); and Wael Herbawi,
owner of a sponge and mattress factory (USD 50 million net
worth) who told us he supplies over half the Israeli hotel
industry. Fifty-five to 68 percent of their sales are to
Israel, which they ship through Tarqumiya crossing in the
southern West Bank. Two of the companies own and operate a
fleet of Israeli-licensed trucks, which can cross Tarqumiya
without undergoing back-to-back procedures. The other avoids
unloading his cargo by using detachable containers that
exchange Palestinian truck cabs for Israeli truck cabs at
Tarqumiya. All three businessmen requested longer operating
hours at Tarqumiya, but said current procedures are otherwise
manageable.

3. (SBU) However, the owners expressed fear that their
products' access to Israel could quickly deteriorate and lead
to the collapse of their businesses if a back-to-back system
is imposed when the new terminal at Tarqumiya opens in May.
Herbawi estimated that a back-to-back system would increase
the time to process trucks from Hebron at least
thirteen-fold. Additionally, each owner said his products
were poorly suited to back-to-back procedures. Existing
scanners cannot scan stone, pallets subject mattresses to
damage, and the logistics of unloading and scanning
twelve-meter steel bars have not been developed. The
businessmen predicted that a back-to-back process would
double costs, damage products, and multiply uncertainties,
leading to roughly 7,000 jobs lost in the stone and marble
industry, 300 jobs lost (75 percent) at the mattress factory,
and the cessation of steel factory operations.

4. (SBU) The businessmen asserted that the GOI recently
published new instructions for West Bank crossing points,
including Tarqumiya, implying that a back-to-back system will
be required. (NOTE: Econoff has acquired a copy of these
instructions. END NOTE.) Owners worry that this is only a
first step toward reduced access from the West Bank to
Israel, on the model of Karni/al-Mintar crossing. This
uncertainty holds back expansion plans of the more prosperous
owners, they said.

---------------------------------------
INTERNAL CLOSURES ARE THE REAL PROBLEMS
---------------------------------------

5. (SBU) Obstacles to movement in and around Hebron
currently have the most immediate impact on businesses.
Flying checkpoints sometimes prevent the import of raw
materials. The main gate to the Hebron industrial estate has
been closed since 2000, requiring detours that clog Hebron
streets while doubling the time and cost to move goods to
Tarqumiya. In one instance, poor roads caused a truck
carrying a 27-ton marble block to lose control, destroying
five other vehicles in its path. Atrash noted that, if the
main gate to the Hebron industrial estate were opened, lower
transport costs would allow him to increase production by up
to 40 percent.

6. (SBU) The steel factory's access to the nearest road has
been blocked by an earthen mound since 2001, and Haddad noted
that workers, truckers, and potential customers have to
trespass on private land to reach the factory. If land
owners cut off access, Haddad said, it will suffocate his
business. (COMMENT: Opening the gate to the industrial
estate and the main highway to the steel factory could help

JERUSALEM 00000607 002 OF 002


these business owners to stimulate production and cushion the
economy during the downturn. END COMMENT.)

----------------------------
FACILITATING BUSINESS TRAVEL
----------------------------

7. (SBU) The owners noted that they had not received a
Businessman's Card (BMC), which once provided preferential
access to Israel for West Bank businessmen. Herbawi argued
that more BMCs need to be issued and the issuance process
should be more transparent. He added that the BMC card is
now valid for only six months, half the period of the
original cards, with more restrictions.

WALLES

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