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Cablegate: World Bank Red-Dead Feasibilty Study Commences As The

VZCZCXYZ0006
RR RUEHWEB

DE RUEHAM #1882/01 1770619
ZNR UUUUU ZZH
R 250619Z JUN 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 2939
INFO RUEHTV/AMEMBASSY TEL AVIV 1231
RUEHJM/AMCONSUL JERUSALEM 5069
RUEHTH/AMEMBASSY ATHENS 0786
RUEHGB/AMEMBASSY BAGHDAD 6013
RUEHLB/AMEMBASSY BEIRUT 2870
RUEHEG/AMEMBASSY CAIRO 3701
RUEHCP/AMEMBASSY COPENHAGEN 0054
RUEHDM/AMEMBASSY DAMASCUS 3915
RUEHLO/AMEMBASSY LONDON 1224
RUEHFR/AMEMBASSY PARIS 1521
RUEHRH/AMEMBASSY RIYADH 1972
RUEHSM/AMEMBASSY STOCKHOLM 0066
RUEHKO/AMEMBASSY TOKYO 0279
RUEHTC/AMEMBASSY THE HAGUE 0347
RHMFIUU/HQ EPA WASHDC
RUEHDOI/DEPT OF INTERIOR WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS AMMAN 001882

SENSITIVE
SIPDIS

STATE FOR NEA/ELA, NEA/RA, AND OES
STATE PASS TO USAID
EPA FOR INTERNATIONAL
USDA FOR FOREST SERVICE/INTERNATIONAL
INTERIOR FOR INTERNATIONAL/WASHBURNE
CAIRO FOR VIALA

E.O. 12958: N/A
TAGS: SENV EAGR PGOV PREL JO IS
SUBJECT: WORLD BANK RED-DEAD FEASIBILTY STUDY COMMENCES AS THE
PRIVATE SECTOR PUSHES OTHER PROPOSALS

REF: A) Amman 409
B) Amman 228

(U) SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET DISTRIBUTION.

1. (SBU) Summary: The Red Sea - Dead Sea conveyance pipeline to
move water from the Gulf of Aqaba into the shrinking Dead Sea has
long been discussed in the region as a savior for the region's water
woes (reftels). The USG and several other donors have contributed
to the World Bank feasibility study, which commenced in May 2008
with the participation of the beneficiary parties (Israel, Jordan,
and the Palestinian Authority). While the World Bank study still
needs additional funding support, it is the only "official" Red-Dead
activity underway. Two competing private sector firms have also
offered proposals with a broader approach, including the development
of economic zones and tourism, and are vying for attention. The
prospects for any of these mega-projects as a long-term solution to
regional water problems remains unclear. End Summary.

World Bank Red-Dead Feasibility Study Commences
--------------------------------------------- --

2. (U) The Red-Dead conveyance mechanism is seen by many in the
region as a long-term savior to the region's water woes. Besides
conveying large quantities of water from the Red Sea to rehabilitate
the shrinking Dead Sea, the conveyance would also desalinate as much
as 600 million cubic meters (MCM) of drinking water for Jordan, and
generate hydropower for desalination and electricity. Another 250
MCM of drinking water is planned to be available for the Palestinian
Territories.

3. (SBU) The USG and several other donors (France, Japan, the
Netherlands, and Greece) have provided financial assistance to the
World Bank to lead a two-year, $14 million Red-Dead Study (RDS).
Despite a $3.5 million funding shortfall, the World Bank in April
2008 awarded one tender to the French company Coyne et Bellier for a
technical/financial feasibility study, and another to Environmental
Resources Management of Britain to carry out an environmental and
social assessment. The GOJ has requested USAID Jordan to augment
its initial $1.5 million in funding for the study. NOTE: USAID is
currently exploring additional funding options for the RDS, but has
made no commitment to increase financial support for the activity to
date. END NOTE. Other potential donors include Sweden and Denmark.
Without the additional funds, components of the technical and
financial feasibility study will be dropped or truncated, including
examination of alternative scenarios to the Red-Dead canal which was
strongly pushed by environmental NGOs and other stakeholders opposed
to the project.

4. (SBU) The World Bank and the beneficiary parties officially
launched the RDS project in late May. Despite high-expectations
from the governments, the World Bank has been careful to note that
the RDS is a feasibility study, and there is no forgone conclusion
that a water conveyance structure will be built. While the
beneficiary parties strongly support the process for its
cross-cutting benefits including regional cooperation, the political
viability of such cooperation will add to the project's complexity.


Montgomery Watson Harza Proposal
--------------------------------

5. (SBU) Montgomery Watson Harza (MWH), a global vendor of water
management and engineering services based in the U.S., has developed
its own proposal for a Red-Dead canal, which includes the creation
of several lakes along the Jordan-Israel border to attract tourism


and create economic development zones that draw industry and
employment to the area. Relying on the experiences of similar
projects in Arizona and Nevada, MWH believes its proposal is
financially sustainable and more likely to attract the necessary
private sector financing to assure the project's viability. The MWH
proposal is not positioned as a competitor to the RDS, but expects
to use the results of the RDS as input to commencing its project.

6. (SBU) MWH representatives have been promoting the proposal in
Jordan, Israel and the Palestinian territories for more than a year.
Noah Kinnarti, an Israeli Presidential advisor and longtime water
expert who participated in crafting the water provisions of the
Israel-Jordan 1994 peace treaty, noted that the MWH proposal is not
viewed favorably in Israel. Recent discussions with Jordan's
Minister of Water, however, indicate that the MWH proposal is
gaining traction in Jordan. Noting the lengthy World Bank
procurement and project cycles, as well as the inherent difficulties
in regional concurrence, Jordan's Water Minister Raed Abu Saud told
NEA Senior Science and Technology Advisor Charles Lawson that Jordan
will need to speed up implementation of the Red-Dead project once
the RDS is completed. Abu Saud went on to note that he will engage
MWH to begin planning for Jordan-specific implementation of the
project once the RDS is completed.

Israeli Real Estate Mogul Tshuva Joins the Fray
--------------------------------------------- --

7. (SBU) Israeli real estate mogul Yitzhak Tshuva unveiled his own
construction plans in May 2008 for building a water conveyance from
the Red Sea. While similar to the MWH proposal, it has two main
differences: 1) a large 200 MCM desalination plant would be built
on the Aqaba-Eilat border to move the desalinated water to five
lakes and different economic zones and tourism sites along the
border up the Arava valley (other plans call for power generation
from the 500 meter drop in altitude down to the Dead Sea and
desalination nearer to that site); and 2) the canal would not go all
the way north to the Dead Sea. Tshuva envisions having an
additional three million Jewish inhabitants populate the Wadi Arava
desert surrounding the canal and lakes. The canal area would also
be a free-trade zone, in order to provide incentives and encourage
foreign companies to take part in the project and build factories
and convenience stores along the canal. Tshuva reportedly said that
the project could be completed in two years and has the potential of
creating more than one million new jobs. The Israeli billionaire
has supposedly enlisted the support of Saudi Prince Al-Walid bin
Talal, and other prominent business people to form a regional
council for this project.

8. (SBU) Kinnarti noted that Tshuva's proposal -- which has no
connection to the RDS -- has been presented to Israeli President
Peres and Jordan's King Abdullah and received a favorable response.
Tshuva's project also builds on a regional framework requiring close
collaboration between the core parties, leading Kinnarti to state
that Peres' vision has yet to generate 1 cm of water.

9. (SBU) Comment: The start of the RDS marks a significant
milestone for the beneficiary parties who are eagerly awaiting some
tangible results after many years of discussion. While all the
proposed solutions are premised on regional cooperation, there
exists the potential for either Jordan or Israel to consider
implementing a scenario on their own to short-circuit the political
concurrence requirements. As the different scenarios play out, the
progress and results of the RDS will be watched with keen interest.
Even with a positive go-ahead after the RDS, it is unlikely that the
donor community would contribute the billions of dollars required
for implementing such a large-scale project, which may make the


private sector proposals appear more attractive. Moreover, USAID
Jordan maintains that large projects like Red-Dead should not be
viewed as a panacea to water scarcity in the region. At least in
Jordan, there continues to be a critical need to examine current
water allocations in the country and to increase the overall
efficiency of water use. End Comment.

10. (U) This cable has been coordinated with NEA/RA Chuck Lawson and
Embassy Tel Aviv.

Visit Amman's Classified Web Site at
http://www.state.sgov.gov/p/nea/amman

HALE

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