US embassy cable - 05TELAVIV575

C O N F I D E N T I A L TEL AVIV 000575 
 
SIPDIS 
 
E.O. 12958: DECL: 01/28/2014 
TAGS: ECON, EFIN, KWBG, IS, GAZA DISENGAGEMENT, ISRAELI-PALESTINIAN AFFAIRS, ECONOMY AND FINANCE 
SUBJECT: ISRAELI BUSINESS LEADER ENVISIONS A 
POST-DISENGAGEMENT GAZA ECONOMY 
 
 
Classified By: DCM Gene A. Cretz for reasons 1.4 (b) and (d) 
 
1.  (C) Summary: Dov Lautman, chairman of the board of the 
Israeli textile giant Delta, talked to EconCouns January 23 
about economic prospects for a post-disengagement Gaza Strip. 
 Emphasizing that it is impossible to "predict the future" of 
security and politics, Lautman argued that donors must focus 
on projects that are viable in any environment.  In his view, 
the construction sector can provide up to 70,000 new jobs 
immediately following disengagement, and in the longer term 
Gaza can become a "consumer goods hub" for Europe, producing 
everything from furniture and apparel to cellular phones.  He 
said he supports Deputy PM Shimon Peres' initiative to 
encourage European investment in industrial zones, explaining 
that Israel should not be directly involved with the economic 
development of the territories post-disengagement.  Lautman 
was ambivalent on the prospects for continued cooperation 
between the Israeli and Palestinian private sectors following 
the withdrawal, stating that only a year of quiet would 
encourage those Israeli companies who left the Erez 
Industrial Zone to reinvest in Gaza.  End summary. 
 
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Despite Instability, Gazan Economy Can Grow 
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2.  (C) Dov Lautman, chairman of the board of the Delta Galil 
textile company, which employs some 4,500 people in its 
Egyptian factory as one of Egypt's largest exporters to the 
U.S. under the QIZ, spoke to EconCouns January 23.  Lautman 
said that while it is impossible to know what will happen on 
the security and political fronts in a post-withdrawal Gaza 
Strip, the donor community must focus on economic projects 
that are viable in any scenario.  The construction sector is 
an industry in which Gazans have extensive experience, he 
said.  It can provide jobs immediately after disengagement, 
and can grow independently of Israel.  Although home building 
is a highly politicized issue within the PA, he said, 
construction of high-rise apartment buildings on evacuated 
settlement lands and elsewhere in the Gaza Strip could 
"revolutionize" the Gazan economy by providing up to 70,000 
jobs. 
 
3.  (C) In the longer-term, Lautman explained, Gaza's 
proximity to Europe and abundance of cheap semi-skilled labor 
could enable it to become a "consumer goods hub" for the 
West.  "It takes three days by ship for goods to get from 
Gaza to England, versus three weeks from the Far East," he 
said, adding that Gazan factories could produce anything from 
apparel and flowers to furniture and cellular phones for EU 
markets.  Lautman supports Deputy PM Shimon Peres's idea to 
encourage European investment in Palestinian industrial 
zones, and said that starting this project immediately can 
potentially improve the security situation by giving young 
Palestinians "hope for a decent job in their future." 
Israel's role, he said, will be to facilitate European and 
American investment in the territories -- the GOI should not 
be the one to pay for new roads, homes, and factories in Gaza 
and the West Bank. 
 
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How Relevant is "Separation Ideology?" 
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4.  (C) "It is a waste to tell Israelis the peace days have 
come," Lautman said, noting that PM Sharon's initial 
justification for disengagement -- the alleged hopelessness 
of any attempt to negotiate a peaceful settlement with the 
Palestinians -- still has emotional resonance within Israeli 
society.  Yet the lure of cheap Gazan labor may induce 
Israeli private enterprise to return to the Strip.  In his 
view, those Israeli businesses who have pulled out of the 
Erez Industrial Zone will need to see six months or a year 
free of terrorist attacks before they agree to reinvest.  On 
labor inflows, Lautman said that the Israeli public is 
currently against Palestinian laborers continuing to work in 
Israel, but that if the security situation changes they may 
begin to prefer Palestinian workers over foreign workers, 
since foreign workers effectively live in the country and 
present a "demographic threat" whereas Palestinians return to 
their homes at the end of the workday. 
 
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