US embassy cable - 04TELAVIV6375

C O N F I D E N T I A L SECTION 01 OF 04 TEL AVIV 006375 
 
SIPDIS 
 
E.O. 12958: DECL: 12/15/2014 
TAGS: PREL, KWBG, IS, GAZA DISENGAGEMENT, ISRAELI-PALESTINIAN AFFAIRS, GOI INTERNAL 
SUBJECT: THE LOW-DOWN ON DISENGAGEMENT LEGISLATION 
 
Classified By: Economic Counselor William Weinstein for reasons 1.5 (b) 
 and (d) 
 
1.  (C)  Summary:  Embassy economic officer on December 9 met 
with Dr.  Shavit Matias and Malkiel "Mike" Blass, Deputy 
Attorneys General at the Ministry of Justice, to discuss the 
details of the evacuation legislation.  While there have been 
complaints from settlers and MKs that the compensation 
amounts are too low, the MOJ lawyers stressed that the GOI is 
trying to be generous and fair, and that it understands the 
potential trauma evacuation may have on the settlers.  To 
this end, the MOJ has devised a compensation package, with 
about 100 academics and businessmen, that includes 
compensation for homes, land, lost income, various grants, 
and also includes monetary help for businesses that will have 
to be closed down with disengagement.  End summary. 
 
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We Want to be Fair 
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2.  (C)  Dr.  Shavit Matias, Deputy Attorney General at the 
Ministry of Justice (MOJ), explained to econoff on December 9 
that with respect to compensation for evacuating settlements, 
"the idea was to be generous" but not extravagant.  While the 
MOJ thinks it is giving the settlers a good deal, it will not 
object if the GOI ultimately decides to compensate the 
settlers with more money.  In order to come up with the 
compensation figures, the MOJ led a team of about 100 
government officials, businessmen and academics to work out 
the package.  According to Matias, settlers were invited to 
the negotiations but they did not want to come, although she 
acknowledged that some sent lawyers in their place.  Matias 
stated that if Labor and Shas join the government coalition, 
the settlers will realize disengagement will be a reality and 
they will eventually get more involved in the process and 
actively lobby the Knesset for what they want. 
 
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Killer Bureaucracy 
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3.  (C)  Malkiel "Mike" Blass, Deputy Attorney General at the 
MOJ, told econoff that the legislation for the disengagement 
plan for now consists of 150 provisions, and the Knesset is 
negotiating hard time on everything down to the last comma. 
So far the MOJ has had at least four meetings with the 
Knesset Law Committee and one meeting with the Knesset 
Finance Committee to explain the provisions of the law, and 
Blass expects that there will be many more meetings in the 
future.  Blass related that one of the biggest challenges of 
disengagement would be to keep the bureaucracy from killing 
the process, but he explained that it was important to 
undertake disengagement in a democratic manner regardless 
because Knesset approval is the only way for the plan to gain 
legitimacy in the eyes of Israelis. 
 
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The Disengagement Authority's Responsibilities 
--------------------------------------------- - 
 
4.  (C)  In a presentation to econoff of the actual 
legislation, Blass explained that the purpose of the law was 
"regulating all matter of implementation of the disengagement 
plan, evacuation of Israelis and their properties, and giving 
fair and just compensation from the State to those entitled." 
 The law gives the GOI the authority to establish the 
Disengagement Authority -- SELA headed by Yonatan Bassi -- 
and states that the main job of this entity will be to decide 
who is entitled to compensation and to decide on places for 
relocation, whether they be agricultural plots in kibbutzim 
or moshavim, or whether whole communities move together. 
 
5.  (C)  Blass opined that the option of moving entire 
communities together was the best for psychological and 
social reasons since people would be moving with their 
families, friends and neighbors, but also the most 
complicated because the residents all have to agree amongst 
themselves whether this is what they want and because it 
usually takes three years to establish a new community from 
the ground up.  As a result, the GOI is looking at small 
existing communities within Green Line Israel that already 
have the required zoning permits and infrastructure so that 
settlers can relocate to their new homes as quickly as 
possible. 
 
6.  (C)  Blass said that in order to determine who is 
entitled to compensation, the GOI will establish an 
Entitlement Committee with a judge appointed by the MOJ to 
serve as chairman, either Bassi or his deputy from SELA, and 
an accountant from SELA.  They will study the cases and 
conduct negotiations with approximately 1500 families and 
hundreds of businesses affected, and they will have the 
authority to verify documents and sign contracts relating to 
compensation on behalf of the GOI. 
 
7.  (C)  Blass explained that settlers will have up to three 
years to claim their compensation with very clear evidence 
for their requests, but said that the GOI hopes settlers will 
submit their claims before the evacuations.  In response to 
econoff's question, Blass said the GOI expected many 
ideological settlers to hold out "on principle" and related 
the story of a settler who left Yamit in 1982 but did not 
claim his compensation for another 15 years.  Blass said SELA 
will give its decision in writing, and that settlers will be 
able to appeal in Magistrate Courts exclusively in Jerusalem 
because the GOI wants judges to build up expertise on 
disengagement. 
 
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Evacuation is the Heart 
----------------------- 
 
8.  (C)  While compensation provisions account for 90 percent 
of the legislation, Blass said the evacuation provisions were 
naturally the heart of the matter.  He explained that the law 
gives the GOI the authority to evacuate the settlers, but at 
the end of the day Prime Minister Ariel Sharon will decide 
which group goes on which day.  In response to econoff's 
question, Blass replied that there was nothing written down 
about giving the settlers a warning of their evacuation date, 
but the MOJ is negotiating this point with the Knesset. 
 
9.  (C)  Blass also said the PM, the Ministry of Defense and 
the Ministry of Internal Security will all agree on a date 
before evacuation on which entry into the settlements will be 
limited.  The rationale behind this is that the GOI does not 
want sympathizers to go into the areas beforehand and cause a 
"big balagan."  Blass explained that between this day and the 
day of actual evacuation, visitors will need permits to enter 
the settlements but he acknowledged that working out a 
description of what constitutes a visitor versus a 
sympathizer will be difficult.  He concluded that the more 
violent settlers and their visitors become, the more 
restrictive the GOI will be. 
 
10.  (C)  According to Blass, on the day of evacuation the 
settlers' right to the land will be canceled and they will 
return the property to the authorities when they leave.  They 
should be prepared to move all fo their possessions ahead of 
time because any furniture left behind will become the 
property of the GOI.  In addition, the security forces will 
have the authority to evacuate those who remain illegally 
with "reasonable force" and the MOJ has suggested creating a 
category of "special offenses" that would be different from 
criminal offenses for anyone who tries to stay, although it 
is negotiating this point with the Knesset, as well. 
 
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The Complicated Compensation Package 
------------------------------------ 
 
11.  (C)  Blass explained that the calculation of 
compensation packages will be very complicated but basically 
settlers will be compensated for the house and land, for loss 
of income, and for the loss of a business.  In response to 
econoff's question, Blass replied that even if settlers are 
leasing the land but do not own it, they will still receive 
compensation (Note:  in many cases, settlers have 49- or 
50-year leases with the GOI but they do not technically have 
a title to the land, even if they may own the house on it. 
End note).  Blass said that since these settlers had an 
expectation that they would be able to live on this property 
for 49 years, they should "get something." 
 
12.  (C)  To compensate for the house and land, the MOJ has 
broken down the package into three options.  Option A is for 
settlers who have lived in the houses for a short time, 
perhaps two years, or for settlers who own the property but 
do not live in it and rent it out instead.  In this case, the 
compensation breaks down as follows: 
 
--Self-built house:  $900/square meter 
--Government-built house:  $750/square meter 
--Pre-fabricated house:  $600/square meter 
 
This is further broken down by the actual size of the house: 
 
--160 or less meters:  100 percent of the value 
--161-200 meters:  90 percent of the value 
--200  meters:  80 percent of the value 
 
According to Blass, the thought behind giving less money to 
settlers with the biggest houses is that the concept of 
economies-of-scale means it actually costs less to build a 
house the bigger it is. 
 
13.  (C)  Option B is for settlers who have lived in their 
homes longer than two years and therefore have "stronger 
rights" to the property.  In these cases, the settlers will 
receive compensation for the house as well as NIS225,000 for 
the land if they live in community settlements or NIS360,000 
if they live in agricultural settlements.  Settlers will 
receive a percentage of the value based on how long they have 
lived in the settlement up to eight years, at which point 
they will receive 100 percent of the value.  Blass stated, 
however, that settlers will only be compensated for one house 
even if they own more than one. 
 
14.  (C)  Blass related that Option C is for settlers who 
have short-term rental contracts with the GOI in public 
housing, and that this will apply to approximately 100 
families in Neveh Dekalim and the northern West Bank 
settlements.  If settlers have lived in public housing for 
more than eight years, they will receive NIS160,000 and will 
be entitled to public housing in Israel but not to land. 
Blass said the Knesset will likely increase this amount in 
the end. 
 
15.  (C)  Blass acknowledged that the MOJ has received 
complaints that the compensation is too low, but in a 
presentation to the Knesset, Minister Meir Sheetrit said that 
if the MKs want to increase the packages, they will have to 
decide where cuts will be made in the rest of the budget 
because this money is coming out of the GOI's pockets. 
According to Blass, some MKs asked Sheetrit why the GOI did 
not ask "our friends" the Americans for help, but Sheetrit 
allegedly responded that for now the NIS2.5-3 billion for 
compensation and NIS2 billion for security is coming from 
Israeli funds.  Blass also said the GOI was changing the law 
to increase the budget deficit to finance evacuation. 
 
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Throwing in Some Grants 
----------------------- 
 
16.  (C)  Blass explained that in addition to compensation 
for the house and land, settlers who live in their homes -- 
versus renting the homes out to others -- will also receive 
grants from the GOI.  One of these grants is a moving grant 
which Blass claimed is "more than generous" for one move, 
although it may fall a little short if a second move is 
needed.  For a family of three, the grant is NIS9,000; for a 
family of four or five, the grant is NIS13,500; and for six 
or more, the grant is NIS18,000.  Settlers who cannot move 
directly to their new homes will also get six months worth of 
rent without having to a show a contract.  For a family of 
three, the grant is NIS10,800; for a family of four or five, 
the grant is NIS12,150; and for six or more, the grant is 
NIS13,500.  If these settlers need to rent for longer than 
six months, they can receive an additional six months by 
showing a contract. 
 
17.  (C)  Blass also said there was another grant for "just 
living the area."  He described it as money anyone 21 years 
or older who has lived in a settlement at least five years 
will receive as the GOI's way of recognizing the trauma that 
evacuation may cause.  The grant will be NIS2,400 per year 
that the settler lived in a settlement.  In addition, 
according to Blass, the PM personally added a $30,000 loan to 
settle in the Negev or the Galilee that will become a grant 
after five years if the settler stays in the area.  The last 
incentive for settlers is that if they buy an apartment in 
Israel within four years of evacuation, they will receive a 
refund on the purchase tax, which he said is approximately 
$10,000 for a $300,000 apartment. 
 
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Income Supplements 
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18.  (C)  Blass explained that workers must live and work in 
a settlement to receive compensation for lost income, or an 
"adjustment payment."  Settlers who live in a settlement but 
work within the Green Line will not receive income 
supplements nor will Israelis who live within the Green Line 
but work in a settlement.  According to Blass, the adjustment 
payment for individuals who live and work in a settlement 
will be six months worth of their average annual salary for 
the year before evacuation.  In addition, if they are paying 
into a pension fund, the GOI will pay into the fund for them 
for those six months. 
 
19.  (C)  If the settler is 57 years of age or older, has 
lived in a settlement at least four years, and has worked in 
the settlement at least three years, s/he will also be 
entitled to a "retirement payment" which is 60 percent of the 
adjustment payment but not more than 70 percent of the 
average salary in Israel, or a maximum of NIS5,000 per month. 
 The expectation is that anyone 57 or older may not be able 
to find a job in Israel so settlers will receive this payment 
until they are 67 at which point regular pension and social 
security payments will kick in.  Blass was unsure, however, 
if this payment would take place if the settler could find a 
job despite his or her age. 
 
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Businesses and Public Institutions Get Help, Too 
--------------------------------------------- --- 
 
20.  (C)  Blass said a special team was created to determine 
how to compensate businesses and there will be two options 
for this.  The first option will be based on the value of the 
assets of the business, such as computers, equipment, and 
supplies, and the second option will be based on the 
companies' money flow, or "revenue minus costs."  Another 
special committee wrote the guidelines for how to compensate 
infrastructure companies such as telephone, electricity and 
water, as well. 
 
21.  (C)  Blass explained that the GOI will also have 
non-profit organizations to deal with, such as institutions 
that build swimming pools, synagogues or community centers. 
These organizations have funds that they collect from their 
members, but they will have to be liquidated.  The Gaza Strip 
municipality, from its debts to its workers, will also have 
to be liquidated, although the municipality in the northern 
West Bank will not since only four settlements there will be 
evacuated. 
 
22.  (C)  In addition, Blass stated that the GOI will have to 
work with private banks who have liens on the settlers' 
houses or businesses.  The government wants to avoid a 
situation in which it compensates a settler for a house he 
has not paid off and then the  settler takes the money 
without paying back the bank because then the GOI will have 
to pay twice.  According to Blass, the GOI will publicize 
when a settler will receive compensation so that the banks 
will have advanced notice and can collect. 
 
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Comment 
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23.  (C)  It seems the MOJ has tried to cover every angle 
when determining how to compensate the settlers that will be 
evacuated, and Blass concluded the meeting by stating that 
the legislation also includes provisions to establish a 
Special Committee for cases the MOJ may not have considered 
because it could not "think of everything."  Despite MOJ's 
attempts to be generous and fair, however, the legislation 
faces an uphill battle in the Knesset and Blass's comments 
that the bureaucracy could kill the process should not be 
taken lightly.  End comment. 
 
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