US embassy cable - 05TELAVIV570

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000570 
 
SIPDIS 
 
E.O. 12958: DECL: 01/26/2015 
TAGS: EFIN, PREL, ECON, KWBG, IS, ECONOMY AND FINANCE, U.S.-ISRAEL RELATIONS, GAZA DISENGAGEMENT, ISRAELI-PALESTINIAN AFFAIRS 
SUBJECT: ISRAEL'S COMMITMENTS TO THE USG AND THE WORLD BANK 
PROCESS: A PERFORMANCE BASELINE 
 
 
Classified By: Ambassador Daniel C. Kurtzer for Reasons 1.4 (b,d) 
 
1. (S) Summary.  As of the end of January 2005, the GOI had 
shown various levels of commitment to fulfilling its 
"Weissglas" commitments to the USG.  It is following through 
more consistently on its promise to engage on the World Bank 
process dedicated to facilitating a viable, 
post-disengagement Palestinian economy.  Specifically the GOI 
has: 
-- Reduced the number of permanent West Bank checkpoints from 
28 in January 2004 to 13 a year later; 
-- Removed no outposts since June 2004 at which point the 
number of post-March 2001 outposts stood at 44; 
-- Not responded to the USG on the "construction line" 
project; 
-- Continued with its revenue transfers to the PA, including 
the provision of previously attached revenues.  The next 
transfer, on January 30, will amount to NIS 313 million; 
-- Agreed to fund technological upgrades at Karni and other 
crossings, with a GOI-PA cost-sharing scheme underway.  End 
summary. 
 
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Checkpoints and Roadblocks 
-------------------------- 
 
2. (S)  The number of permanent checkpoints in the West Bank 
decreased by half in 2004, from 28 in January 2004 to 14 in 
December 2004.  The GOI decreased the number of checkpoints 
again by one in January 2004, to a total of 13, and a GOI 
official told the Ambassador that if the Palestinian 
Authority takes positive steps to control the violence, the 
trend of reducing the number of checkpoints would continue. 
The number of roadblocks also decreased in early 2004, but 
that pattern was reversed after the Be'er Sheva double 
suicide bombing in August.  The IDF had reduced the number of 
roadblocks from over 200 in January 2004 to 115 in the 
summer, but the figure has increased to 130 from September 
through December 2004.  (Note: According to OCHA, the number 
of IDF-imposed closures, for which the organization counts 
both checkpoints and other physical obstacles hindering 
freedom of movement in the West Bank, went up from 659 in 
July of 2004 to 680 in November of 2004.  OCHA breaks down 
these obstacles into 67 checkpoints and 613 "physical 
obstacles," i.e., earth mounds, road blocks, road gates and 
trenches.  End note.) 
 
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Outpost Removals 
---------------- 
 
3. (S)  There has not been any progress on outpost removals 
since June 2004.  Two new outposts were added since that 
time, bringing the total number of post-March 2001 outposts 
to 44. 
 
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Limiting Growth of Settlements 
------------------------------ 
 
4. (S)  Embassy Tel Aviv has not received a response from the 
GOI on drawing "construction lines" around built-up areas of 
settlements.  Ministry of Defense officials have told the 
Ambassador that the GOI has collected much data on the legal 
status of each settlement and has current aerial photographs 
of the settlements, but it needs to check and analyze the 
information before sitting down with the U.S. team on the 
demarcation exercise. 
 
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Revenue Transfers: The Good News Continues 
------------------------------------------ 
 
5. (C) The GOI has maintained its regular transfer to the PA 
of customs and other tax revenues collected on the PA's 
behalf.  It has concurrently moved forward with the transfer 
of revenues previously attached by Israeli courts against 
Palestinian parties.  According to the Finance Ministry's 
Rani Loebenstein, the next transfer will occur on Sunday, 
January 30 and will amount to NIS 313 million, broken down as 
follows: NIS 90 million in attached revenues and NIS 223 in 
customs and other collections.  Loebenstein noted that 
approximately NIS 260 remains in attached revenues not 
connected to terrorism cases.  PA Finance Minister Salaam 
Fayyad, according to Loebenstein, is negotiating directly 
with Israeli courts on the release of an additional NIS 200 
million in attachments related to acts to terror. 
 
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World Bank Timeline 
------------------- 
 
6. (C) On June 23 the World Bank released its report 
"Disengagement, the Palestinian Economy and the Settlements," 
which argued that Israel's planned disengagement will not 
slow Palestinian economic decline unless accompanied by GOI 
reform of the crossings regime and PA security advances.  In 
the run-up to the December 8 Capitals-level Task Force on 
Palestinian Reform (TFPR) and Ad-Hoc Liaison Committee (AHLC) 
meetings in Oslo, the Bank released four technical reports on 
trade and exports, settlements, industrial estates, and 
borders and trade logistics, which prescribed 18 steps the 
GOI and the PA should take before the donor community can 
reasonably increase assistance levels.  Of the 12 prescribed 
GOI steps, four key actions are replacement of back-to-back 
shipping, maintenance of Palestinian labors flows into 
Israel, removal of internal West Bank checkpoints, and 
allowing the construction of a fixed-wing airport and 
eventual deep-water seaport in Gaza.  On the PA side, steps 
include security and judicial reforms, reduced spending, and 
reforming and unifying pensions.  The Bank has advised 
against a pledging conference until it can recommend to 
donors that there have been significant policy changes from 
both the GOI and the PA to justify increased inflows of donor 
assistance. 
 
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GOI Engagement With the Bank Process 
------------------------------------ 
 
7. (C) Deputy PM Shimon Peres' new role in managing economic 
aspects of disengagement, coupled with joint GOI-PA plans now 
underway to upgrade Karni and other border crossings, may 
indicate more rapid movement on Palestinian economic recovery 
than anticipated at the start of the World Bank process.  GOI 
progress on other aspects of the process has been ambivalent, 
however.  GOI officials say Israel objects to the Bank's 
language of "monitoring and benchmarks," but have indicated 
it will accept a similar process under a different name. 
Additionally, the GOI has not committed to replacing 
back-to-back shipping or allowing the development of 
full-service air- and seaports, but claims it is considering 
both recommendations if and when the security situation 
allows. 
 
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KURTZER