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Cablegate: Turkish Next Steps On Erez Zone

VZCZCXYZ0000
RR RUEHWEB

DE RUEHAK #1033/01 1221452
ZNR UUUUU ZZH
R 021452Z MAY 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 1931
INFO RUEHIT/AMCONSUL ISTANBUL 2624
RUEHJM/AMCONSUL JERUSALEM 0293
RUEHTV/AMEMBASSY TEL AVIV 0133

UNCLAS ANKARA 001033

SIPDIS

SIPDIS
SENSITIVE

EEB ALSO FOR A/S DAN SULLIVAN
NEA FOR FRONT OFFICE; NEA/IPA
NSC FOR ABRAMS/DORAN/WATERS
PASS USAID FOR KUNDER/MCCLOUD/BORODIN

E.O. 12958: N/A
TAGS: ECON EINV EAID KWBG BEXP TU
SUBJECT: TURKISH NEXT STEPS ON EREZ ZONE

REF: JERUSALEM 717

SENSITIVE BUT UNCLASSIFIED.

1. (SBU) Summary. In a May 1 meeting, Guven Sak, the brains
behind the Turkish business association TOBB's effort to develop the
Erez industrial zone in northern Gaza, described his planned next
steps. Consonant with reftel reporting, Sak believes that a
security arrangement covering movement of goods is key. Once this
is accomplished, he believes it will be easier to obtain Palestinian
business and government support and garner investor interest. The
USG could consider helping the initiative by 1) supporting agreement
on security arrangements, 2) offering advice on how to navigate the
Palestinian angle, and 3) supporting investor recruitment in
cooperation with the private sector, including the U.S. Chamber of
Commerce. End Summary.

2. (SBU) Sak will go to Tel Aviv May 7 to give a presentation at a
dinner hosted by the Israeli Manufacturers Association, TOBB's
Israeli partner. On the 8th, Turkish Ambassador Namik Tan has
arranged a meeting with MOD advisor Haggai Alon to discuss the
security agreement. Sak understands from Tan that Ambassador Jones
may also attend this meeting (nfi). On the 8th, he meets with MOD
official Amos Gilad, Palestine Investment Fund Director Muhammad
Mustafa, and Former PA Industry Minister Mazen Sinokrot -- who Sak
says is a key Palestinian supporter. He also hopes to see Saeb
Erekat, and may also meet DPM Peres to discuss a proposal made by
Peres for Turkish-Israeli cooperation to develop an industrial zone
in southern Lebanon.

Security Agreement
------------------

3. (SBU) Sak's priority is to make substantial progress on an
agreement covering security and movement of goods between the zone
and Israel. He said he had been exchanging ideas with Gilad in
writing. Sak is arguing that traditional Israeli reliance on
security checks of trucks at the border will not work and that a
"new security concept" is necessary. This new concept would involve
surveillance and monitoring within the enclosed border zone,
including by trusted third parties (such as a foreign security firm)
trained by Israelis. He thinks this would give deeper protection
than border checks and ease the flow of goods. He said that Israeli
Manufacturing Association official Dan Katarivas had recently
visited Ankara and was helping lobby Israeli officials, like Deputy
Defense Minister Sneh, on the concept. Uncertainties about the
future of Minister Peretz (another supporter) are a complicating
factor in getting an agreement.

Palestinian Support
-------------------

4. (SBU) Sak said he recognized that TOBB had not done a good job
selling the project to the Palestinian business community. He plans
to begin rectifying that by hiring locally-based staff and opening
offices in East Jerusalem and Gaza. He has hired former Free Zones
Authority head Nasser Jaber (who he described as a technocrat booted
by Hamas) for the Jerusalem office and is working with Palestinian
contractor Abu Shahla (phonetic) to find space in Gaza. He said he
agrees that Palestinian businesses should be partners in zone
projects, but admitted that those opportunities had not been clear.
Once he has the staff in place, he plans to market the project
actively, including by holding a "town meeting" in Gaza.

5. (SBU) On the concession agreement, Sak said he had raised with
the PIF's Sami Aburosa the idea of the Free Zones Authority (PIEFZA)
delegating licensing authority to the PIF. He said that Mazen
Sinokrot, a member of the PIF board who has good relations with
Hamas, had also suggested this and could be helpful.

Investor Marketing
------------------

6. (SBU) Finally, Sak is thinking ahead to the next stage of
recruiting investors. He plans to approach representatives of the
"Chicago Ten" interfaith group of businesspeople, who had previously
shown an interest in the project. Following up on the April meeting
between TOBB President Hisarciklioglu and A/S Sullivan in
Washington, Sak said he had nearly finalized a letter from
Hisarciklioglu and his Israeli and Palestinian counterparts inviting
the U.S. Chamber of Commerce to become an observer to the Ankara
Forum. He said he had been in touch with Chamber officials, who
indicated their readiness to be supportive.

Comment: Possible USG Support

------------------------------

7. (SBU) Sak is results-oriented and can be expected to get done a
lot of what he plans to do. His comments seem to address the points
raised in reftel. (Sak said he had heard about ConGen Jerusalem's
inquiries and appreciated the interest.) Based on our meeting with
Sak and reftel, following are some ideas from our perspective about
how the USG could support this initiative.

-- Advice on how to secure Palestinian business community support.
Sak said that the more he learns the less he understands about
Palestinian politics. He understands that there may be factions and
groups that he has to bring on board of which he is not even aware.
He is getting some advice from Israelis, but is not sure how
reliable it is. Some objective advice on how to navigate
Palestinian politics and the Palestinian business community would
probably be useful. Perhaps there is a US-based Palestinian or
business association with Palestinian ties that we could recommend.

-- Support for a security agreement with Israel. Sak said these
discussions are not yet at a critical point. If they come to such a
point, Sak said he may ask for U.S. help and expertise to weigh in
with Defense Ministry or other Israeli decisionmakers.

-- Marketing to investors. Sak said the Turkish government would
provide export credits to help Turkish businesses transfer capital
goods to Gaza. The USG could consider making similar support
available to U.S. investors, including Exim and OPIC support. Post
urges that Department consider this and be in touch with Exim and
OPIC, as appropriate. In addition, the U.S. Chamber's network
should be valuable in reaching out to potential investors.
Wilson

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