US embassy cable - 05TELAVIV430

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000430 
 
SIPDIS 
 
E.O. 12958: DECL: 01/24/2015 
TAGS: PREL, ECON, KWBG, IS, GAZA DISENGAGEMENT, ISRAELI-PALESTINIAN AFFAIRS 
SUBJECT: JUSTICE MINISTRY DG PROVIDES DISENGAGEMENT UPDATE 
 
 
Classified By: DCM Gene A. Cretz for Reasons 1.4 (b,d) 
 
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Summary 
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1. (C) Looking visibly tired, Justice Ministry DG Aaron 
Abramovich updated Economic Counselor and Deputy on the 
"hectic" period ahead on disengagement.  He said he and his 
team were about to embark on a week of intensive 
consultations with the Finance Committee Disengagement 
Subcommittee prior to what he hoped would be an early 
February Knesset vote on disengagement legislation. 
 
2.  (C) During the meeting, the DG noted that: 
 
-- Negotiations with the Knesset were going well, but that a 
large number of issues remained outstanding; 
-- MoJ was currently estimating civilian costs of 
disengagement at NIS 3 billion; 
-- The settlers were pushing to triple this amount; 
-- The GOI is aiming for disengagement to be completed by 
July; 
-- MoJ was working to provide settlers "choice" by offering a 
number of compensation packages; 
-- Time was running out to establish a marketplace to bring 
sellers and Palestinian buyers of settlement assets together; 
-- Settlers still believed something mystical would happen to 
forestall disengagement.  End Summary. 
 
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Emotional Work with the Settlers/Knesset 
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3. (C) Abramovich said the subcommittee, headed by Labor 
Party MK and former Finance Minister Beiga Shochat, was 
comprised of "very experienced professionals" with whom he 
was having a "good ... dialogue."  Abramovich said many of 
the meetings included representatives of settler groups; 
These meetings tended to be "very emotional."  The settlers, 
all of whom were strenuously opposed to disengagement, were 
pressing for a massive increase ("a tripling") in 
compensation amounts.  At this point, the GOI was estimating 
that the civilian component of disengagement totaled NIS 3 
billion; the question now was how high the final figure would 
go.  Abramovich stressed the complexity of these 
negotiations, involving as they do the GOI, settlers, settler 
lawyers, and Knesset members, all with differing agendas. 
Abramovich is working under a tight timeline: he wants to 
move directly from a successful Knesset vote to the Cabinet, 
and then to a five-month preparation period leading to a 
completed disengagement process by the end of July. 
 
4.  (C) The Justice DG outlined just some of the legislative 
details requiring final Knesset agreement.  Who will actually 
"do" disengagement?  The police?  The army?  In what order 
will the settlements be evacuated?  Do you punish residents 
who refuse to move?  If so, in what way?  The latter set of 
questions was particularly sensitive; Abramovitch assumes 
"many won't go -- people will be pulled out of their homes on 
the last day..." 
 
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Settlers' Choice 
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5.  (C) Abramovich outlined the biggest compensation 
categories: dwellings, businesses, workers, cooperative 
societies, and public institutions.  Justice aimed to provide 
the settlers with a set of standardized compensation 
packages.  There are two basic options on dwellings: the 
first is completely standardized and based on the length of 
time a dwelling was owned and how much its construction cost. 
 If the owner lived in the property herself no later than 
June 6, 2004 she would also receive money for land on which 
it sat, based on the value of a comparably sized land parcel 
located in a non-central area of Green Line Israel.  Under 
what he called the "golden faucet" option, a homeowner could 
argue that his home was in some way special and request a 
formal assessment of its value.  Business owners could decide 
whether they wanted to base their compensation on the 
property value of their business or on the revenue value. 
 
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A Lost Opportunity 
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6. (C) Abramovich expressed concern over the lack of 
preparations for enabling the transfer of property and 
businesses to Palestinians.  The GOI had decided to offer the 
same level of compensation to settlers regardless of whether 
such a sale was made in order to encourage such transfers to 
take place (Note: In other words, settlers had nothing to 
lose by making a sale to Palestinians).  The DG said that, 
for these sales to become general practice, there would have 
to be an efficient way to bring buyers and sellers together 
through the establishment of a marketplace.  As far as 
Abramovich knew, no one had worked to establish such a 
marketplace, including the World Bank.  He felt such a 
mechanism would be especially effective for businesses in 
Erez, and admitted it probably would make little difference 
for other businesses as "these decisions will be made on 
ideological grounds, not profit-loss calculations." 
 
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Tax-Evading Settlers Exposed 
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7.  (C) Abramovich noted a couple of the many details 
involved in establishing compensation.  Although Justice was 
trying to give fair value by using an average of five years 
of tax returns to establish a fair market value for a 
business, the question arose of what to do with those 
settlers who had not been declaring the entirety of their 
revenues.  Abramovich noted the calculation of home values 
was also complicated by the fact that the official value had 
to be based on legal construction permits alone. 
 
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Waiting for God 
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8. (C) Abramovich hoped rapid movement on the compensation 
legislation would allow the GOI to begin compensation payouts 
as early as mid-February.  He said he did not expect many to 
request such compensation: "The settlers are convinced 
something will change -- God will intervene -- and 
disengagement won't happen.  Perhaps they'll change their 
mind when the legislation passes, but I doubt it." 
 
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Trade Issues: We're out of It ... for Now 
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9. (C) At the end of the meeting, EconCouns raised a number 
of trade issues, including data exclusivity and copyright 
reform.  Abramovich noted that action on these issues had 
moved to the Trade Ministry (MOIT) approximately six months 
ago but hinted the new Justice Minister wanted to get the 
ministry involved again.  "Check back with me in a couple of 
weeks to see if I'm involved again..." 
 
 
 
 
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