US embassy cable - 04TELAVIV6209

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 006209 
 
SIPDIS 
 
NEA/IPA 
 
E.O. 12958: DECL: 12/08/2014 
TAGS: KWBG, ECON, IS, GAZA DISENGAGEMENT, ISRAELI-PALESTINIAN AFFAIRS 
SUBJECT: GAZA DISENGAGEMENT: EXAMINING PROGRESS AT KARNI 
AND EREZ 
 
Classified By: DCM Gene A.  Cretz for reasons 1.4 (b) and (d) 
 
1.  (C) Summary: In their discussions of Israel's 
disengagement plan, the World Bank continues to highlight the 
Gaza Strip's border crossings as key to Gaza's economic 
success.  The international donor community has approached 
the Israelis about humanitarian and economic problems that 
arise from slowdowns and closures at Karni and Erez crossing. 
 The GOI acknowledges these issues and is taking steps to 
improve the crossings regime.  UNRWA, which imports some 
2,500 containers annually, describes Karni terminal as a 
hopeless case that has cost UNRWA some USD one million in 
per-container costs, and says it believes increased container 
capacity at Rafah crossing is the best solution.  Gazan 
businessmen dependent on imported raw materials are also 
pessimistic, citing 20-day delays for goods at Karni, and 
five-hour holdups for businessmen at Erez that make it 
impossible for Gazans to do business in Israel or the West 
Bank on 12-hour permits issued by COGAT.  COGAT, in turn, 
states that the GOI is fully committed to "increasing trade 
with Gaza" by increasing capacity at Karni and Erez and by 
"making sure businessmen can get out" of the Strip.  GOI 
interlocutors are confident that "technological fixes" at the 
crossings will solve the problem, but say the GOI will need 
substantial assistance from the U.S. and other donors to make 
this work.  End Summary. 
 
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UNRWA: Debacle at Karni Costing USD One Million 
--------------------------------------------- -- 
 
2.  (C) Olaf Molander, who handles shipping of humanitarian 
supplies for UNRWA and the several relief organizations under 
UNRWA's shipping umbrella, told Econoff November 10 UNRWA has 
been hit especially hard by the GOI's policy of enhanced 
screening at Karni terminal for empty containers leaving the 
Gaza Strip, which was put in place after March's suicide 
bombing at Ashdod port.  The change has caused Turkish, 
Cypriot, and Israeli shipping companies to charge extra for 
each day the containers are stuck in storage.  Molander said 
this delay has raised UNRWA's per-container costs from an 
already high USD 300 during the intifida period to USD 600 
since August.  (Note: Pre-intifada per-container costs 
averaged USD 150.  End note.)  Since UNRWA brings between two 
and three thousand containers into the Gaza Strip each year, 
Molander said, this figure has become unwieldy -- the 
organization has paid out over USD one million in storage 
fees. 
 
3.  (C) Ostensibly to alleviate this problem, said Molander, 
the GOI fitted one of Karni's terminals with an x-ray machine 
in August.  The machine is supposed to scan empty containers 
leaving Gaza at a rate of 500 per day, he explained, but 
staffing shortages, technical problems, and what he terms "a 
simple lack of will" have kept this daily output closer to 
only 100 for months now.  In Molander's view, bureaucratic 
differences among the various GOI agencies has contributed to 
Karni's "unacceptable" operation.  While the semi-private 
Israeli Airports Authority, who runs the terminal and makes 
money off of each screening, would like to provide better, 
faster service, the security concerns of the Shin Bet and the 
Israeli police inevitably slow functioning at the terminal. 
 
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Rafah Should Increase Container Screening 
----------------------------------------- 
 
4.  (C) Molander said goods have been moving so slowly 
through Karni that UNRWA has been considering the potential 
of the Rafah crossing, on Gaza's southern border with Egypt, 
as an alternative container terminal in the future.  This 
cannot happen soon, he explained, since at present Rafah only 
has capacity to handle palletted cargo, not the container or 
bulk packaging that UNRWA uses to import most of its 
humanitarian supplies.  He predicts, however, that within a 
year following disengagement the Egyptian government will 
begin serious maneuvering to "get in on" some of the trade 
into and out of Gaza, which the Haifa and Ashdod ports 
currently control.  He argued that this is not a political 
issue, but simple economic opportunity for Egypt.  As such, 
he posited that it can and will occur whether Israel retains 
control over the Philadelphi corridor or not. 
 
--------------------------------------------- ----- 
Gazan Businessmen: Goods Still Blocked at Karni... 
--------------------------------------------- ----- 
 
5.  (C) Gazan factory owners and other manufacturers who 
depend on imports of raw materials for their businesses say 
they have seen "effectively no" improvement at Karni or Erez 
since the intifada began, and they remain pessimistic about 
the future.  In a December 2 conversation with Econoff, 
Mohammed Yazgi, owner of Gaza's Pepsi bottling plant and 
member of the Palestinian Business Association, conceded that 
shipments of fresh fruit and concrete are not limited in 
number and have indeed been moving somewhat more quickly 
through Karni over the past several months, due in part to 
the interest of the Israeli produce shipping giant Agrexco. 
Essential materials like sugar, flour, bottles and other 
packaging items, however, are still routinely held 20 days or 
more at the border.  For himself and other manufacturers, 
Yazgi said, these are the goods that really matter. 
 
6.  (C) An average of 100 containers per week of these types 
of commodities comes into the Gaza Strip, Yazgi said, whereas 
before the intifada that number was over one thousand.  This 
delay is not caused by the Israeli Airports Authority staff 
who man Karni -- recently the IAA agreed to keep the terminal 
open until 11:00 at night, and Yazgi says he has often seen 
employees working late -- but rather by the IDF and other GOI 
agencies who have limited the number of trucks that can even 
approach the terminal to only five or six per day. 
 
----------------------------------------- 
... And Businessmen Still Blocked At Erez 
----------------------------------------- 
 
7.  (C) "Erez crossing is the real disaster," Yazgi said. 
"Imagine that all of Gaza has to move through one 
six-meter-wide lane, with a gate at the end of it allowing 
one person through at a time."  Yazgi described a regime in 
which terminal staff accepts groups of ten to fifteen 
individuals every two to three hours for extensive screening 
procedures that take another hour and a half.  Businessmen 
are generally not a "priority group" and are called for 
screening only after humanitarian cases, of which there are 
frequently dozens, are cleared to cross.  This means that 
businessmen arriving at Erez 7:00 or 8:00 in the morning are 
only able to enter Israel in the afternoon.  Meetings in the 
West Bank, Tel Aviv, or Haifa are then almost impossible, he 
said, since permits are limited to one day.  By the time a 
businessman reaches his destination, he barely has time to 
turn around and get back to Erez on time. 
 
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COGAT: GOI Committed to Better Crossings 
But Needs Money 
---------------------------------------- 
 
8.  (C) Yitzhak Gurvitch, head of COGAT's economic division, 
told Econoff November 20 that the GOI has adopted a clear 
goal of increasing trade into and out of the Gaza Strip by 
increasing capacity at the Karni terminal in tandem with 
disengagement.  Before the intifada, he said, Karni was 
processing some 700 container-bearing trucks per day, and 
sometimes up to 1,000.  The terminal has the potential to 
process between 1,000 and 1,500 containers per day with the 
installation of two new movable container scanners and 
complete utilization of a two-shift schedule.  These two 
scanners are in addition to the scanner the PA purchased and 
the GOI installed at Karni in August.  The GOI's November 
response to the World Bank's report states that waiting time 
at Karni can be reduced to as low as 24 hours, depending on 
the establishment of a center for ordering and coordination. 
There is only one problem, he said -- the GOI does not have 
enough money for these improvements.  It can be done only 
with assistance from the U.S., the World Bank, or the 
international donor community. 
 
9.  (SBU) In November meetings with USAID representatives, 
Dr. Yair Hirschfeld of the Economic Cooperation Foundation 
said that the GOI is considering investing USD 20 million in 
a complete overhaul of the Erez crossing.  The overhaul would 
enable the terminal to accommodate a greatly increased number 
of passengers, as well as serve as the primary terminal for 
the import of container goods into the Gaza Strip.  A 
proposed rail line from Ashdod to Erez would bring imports to 
the terminal much faster than they are currently arriving. 
This would free up Karni to deal primarily with the export of 
empty containers and Gazan products, and ensure redundancy in 
the crossings regime. 
 
10.  (C) Gurvitch added that improved security technology at 
Erez would enable the GOI to issue a much higher number of 
business permits to Gazans, in principle "without limit," 
under similar standards as those used currently, including 
references from Israeli counterparts or membership in a 
chamber of commerce.  "The important thing is not that 
Israeli businessmen can get into Gaza, but that Gazan 
businessmen can get out," he said. 
 
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