Cablegate: Goi Considers September 2 Jec Meeting Constructive

DE RUEHTV #1950/01 2470824
P 040824Z SEP 09




E.O. 12958: N/A

1. (U) SUMMARY: The September 2 Israeli-Palestinian Joint
Economic Committee (JEC) meeting marks the first
ministerial-level meeting between the Netanyahu government
and the PA and the first time in recent memory that the JEC
has been chaired at the ministerial level. Vice PM and
Minister for Regional Cooperation Silvan Shalom and PA
Economy Minister Bassem Khoury co-chaired the three-hour
Jerusalem meeting to enhance economic cooperation. The
atmosphere was described by representatives of the Regional
Cooperation Ministry (MRC), Foreign Ministry (MFA), Ministry
of Finance (MOF) and Coordinator for Government Activities in
the Territories (COGAT) as constructive, friendly,
productive, and non-political. Issues discussed included
frequency allocation for Wataniya, dual-use imports,
agriculture, tourism, Allenby and other commercial crossings,
investment, visas/entry stamps, Israeli hospitals, and Gaza.
Subcommittees were formed to follow-up on issues related to
tourism, industry, agriculture and health. The GOI praised
the PA for improving internal security, enabling GOI actions
to relax checkpoints and thus allow the PA to demonstrate to
West bank Palestinians, before the upcoming PA elections,
that improvements are permanent and reliable. Participants
agreed that JEC meetings will take place every six weeks
until the end of the year. END SUMMARY.

2. (SBU) INVESTMENT. Accordion to MFA's Yael Ravia-Zadok,
the PA expects five to seven percent growth in the West Bank
in 2009, and investment is up 600 percent over the previous
year as a result of the Bethlehem and Nablus conferences,
coupled with the effect of the global financial crisis on
Gulf investor strategies. The GOI agreed that investment is
key to continued economic success. The PA requested
"permanent" multiple-entry visas for Jordanian investors and
promised to forward examples of relevant cases. The GOI
noted that it had already issued such a visa to
Jenin-investor Khoury, and would consider other cases. When
the PA raised the issue of 'West Bank Only' stamps placed in
passports at Allenby and Ben Gurion and the potential for
adverse effects on business and investment from abroad, the
GOI responded that they are aware of the issue, that the
Ministry of Interior is working on addressing these concerns,
and that it will be raised in the next meeting of the GOI
Interministerial Committee on Improving the Situation of
Palestinians of Judea and Samaria.

3. (SBU) WATANIYA. The GOI learned that 3.8 MHz bandwidth
would allow Wataniya to offer SMS and voice service only,
while 4.8 MHz would allow Wataniya to offer
commercially-viable 3rd-generation wireless service. The PA
explained that if 4.8 MHz is not made available by September
15th, Wataniya investors would withdraw their $140 million
investment, thereby damaging the PA's efforts to market the
West Bank as an investment destination. MRC representative
Yishay Sorek and MFA's representative Yael Ravia-Zadok said
that the GOI takes these concerns very seriously and noted
that Jawwal needs to return the 1 MHz temporary allotment so
that it can be reassigned to Wataniya. Discussions are
ongoing within the Ministry of Defense (MOD), but no clear
decision has been taken.

4. (SBU) INDUSTRY. A subcommittee was established to
facilitate frequent and direct dialogue on issues related to
the proposed internationally-backed industrial zones.
Further, the PA expressed interest in improving its
industrial infrastructure. Updated technology would improve
competitiveness of PA industries, MFA's Yael Ravia-Zadok
reported, and this would require new equipment to be allowed
through the crossings.

5. (SBU) DUAL-USE IMPORTS. There is no dramatic change in
the GOI's approach to potentially dual-use products, MRC
representative Yishay Sorek explained. This is a MOD issue
and there is a procedure in place. Referring to the National
Bottling Company (Coke) case as an example, Sorek said the
GOI asked why PA industry could not use the same materials as
their Israeli counterparts, materials that would not be
problematic. MFA's Yael Ravia-Zadok reported that the PA
proposed coordinated security to overcome this issue, but the
GOI rejected this proposal, saying coordination needed to be
developed step-by-step, and this was too far and fast a
development. On September 3, EconCouns reiterated to MOD's
Oded Herman the need to offer mitigation measures as a normal
part of the GOI dual-use review committee's work. Herman
said the committee would be discussing the general issue of
mitigation at its next meeting (not yet scheduled), but
informal polling of its members showed little support for
using the Wassenaar Agreement as a model for
Israeli-Palestinian interaction on dual-use goods.

TEL AVIV 00001950 002 OF 002

views possible PA presence at the Allenby crossing as a
political issue that should be addressed in meetings between
PM Netanyahu and Abu Mazen, not in the JEC, MRC
representative Yishay Sorek explained. MFA's Yael
Ravia-Zadok added that the GOI is not committed to respond to
this request, but is willing to talk about Allenby in the
context of other commercial crossings. The GOI was surprised
and pleased by the PA's report that extended hours at Allenby
had already netted savings of $50 to $100 million in hotel
bills. When the PA stressed the need for strategic
discussion about the crossings, MFA's Yael Ravia-Zadok said,
the GOI responded that it had already sent a letter
expressing willingness to hold such discussions, provided
they do not jeopardize future discussions on permanent
status. Infrastructure on the PA side at crossings such as
Kalandia will be addressed in the next JEC meeting.

7. (SBU) AGRICULTURE (meat, milk,
technology/infrastructure, and access). According to MFA's
Yael Ravia-Zadok, the PA requested improved access to the
Jordan Valley for agriculture. Further, the PA asked to be
allowed to develop agriculture in Area C by building
greenhouses and public buildings. The PA requested the
possibility of importing larger quantities of dairy and meat
(veal, lamb) products into the West Bank, beyond current
quotas, to counteract upward price pressures caused by
limited supplies during Ramadan. The GOI is concerned about
re-importation of these cheaper products into Israel. A
subcommittee, including representatives from the ministries
of Health, Agriculture and Customs, was established to
discuss this request.

8. (SBU) TOURISM. Both sides emphasized that tourism (e.g.,
Bethlehem) is a mutual interest, and established a
sub-committee to study this issue. The PA asked that Israeli
Arabs to be allowed into the West Bank, including to Ramallah
(which cannot be done legally at present), and, stressing the
important role that East Jerusalem plays in the West Bank
economy, underscored the need for improved access.

9. (SBU) HOSPITALS. The GOI noted that Palestinian use of
Israeli hospitals is declining. Learning from the PA that
lower costs in Jordan are attracting Palestinian patients,
the JEC agreed to form a health subcommittee, co-chaired by
the MOF's Michal Finkelstein and Hatem Yousef, to try to
develop packages of services at reduced rates.

10. (SBU) GAZA. According to MFA's Yael Ravia-Zadok, the
PA asked the GOI to reconsider its policy on Gaza, saying
that the current policy strengthens Hamas and does not help
bring home abducted soldier Gilad Shalit. They requested
that a greater variety of products be shipped to Gaza via the
official crossings, that more cash be shipped to non-Hamas
banks in Gaza. Regarding cash, the GOI responded that better
information exchange is key to this process (septel), but
remained noncommittal.

11. (SBU) Comment: The higher-level JEC ushers in improved
PA-GOI communication on problematic issues, but positive
atmospherics aside, little of substance was achieved. Some
hope hinges on the PM's Interministerial Committee on
Improving the Situation of Palestinians of Judea and Samaria,
and its ability to take meaningful action. The
Interministerial Committee, chaired by Deputy PM Silvan
Shalom, is likely to meet within the next two weeks and the
MRC official responsible for setting the agenda has once
againg solicited USG input.

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