US embassy cable - 05TELAVIV1731

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001731 
 
SIPDIS 
 
E.O. 12958: DECL: 03/22/2015 
TAGS: IR, IS, MNUC, OREP, PGOV, PREF, PTER, SY, GAZA DISENGAGEMENT, ISRAELI-PALESTINIAN AFFAIRS, GOI INTERNAL, ECONOMY AND FINANCE 
SUBJECT: SHIMON PERES TELLS CODEL REID TO LOOK AHEAD 
 
Classified By: Daniel C. Kurtzer for reasons 1.4 (b,d). 
 
 1.  (C) Summary:  In a meeting on March 20, Codel Reid and 
Vice Prime Minister Shimon Peres discussed the economic 
future of Israel and post-disengagement Gaza, the U.S. 
position on Syria and Iran, the impact of the separation 
barrier on the lives of Palestinians, the run-up to the 
budget vote in the Knesset, and other issues.  Peres 
emphasized the importance of looking ahead to the day after 
disengagement from Gaza and the crucial role private 
investment by U.S. companies can play in supporting the 
Palestinian economy.  End Summary. 
 
2.  (U) The delegation, consisting of Senators Harry Reid, 
Richard Durbin, Barbara Boxer, Patty Murray, Robert Bennett, 
Lamar Alexander, and Ken Salazar, and Senate staff, was 
accompanied by Ambassador Kurtzer and poloff notetaker. 
 
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A Whole New World 
----------------- 
 
3.  (C) Peres reflected that the Cold War divisions between 
North and South, East and West have been replaced by a world 
divided between states that fight terror and those that 
support it, and in which there is no room for neutrality. 
Economic development, he said, is the peace strategy of our 
time as it fosters democracy and renders military control of 
societies untenable.  Asked how the U.S. can help facilitate 
the peace process, Peres said there are two things the U.S. 
can do: 1) keep a watchful eye on Palestinian security 
developments and help enable the Palestinians to become 
responsible for as much of their own land and security as 
possible, and 2) look ahead to "the day after" disengagement 
and encourage large-scale private U.S. investment in Gaza. 
Using Jordan as an example, Peres referred to the QIZ concept 
as "the greatest success in the Middle East" for fostering 
the growth of Jordan's exports to the U.S. over the last six 
years.  He also noted the efforts of U.S. companies that have 
modernized the educational system in Jordan through direct 
investment.  He said he hopes similar investment interests 
will emerge in Gaza. 
 
4.  (C) Turning to the future of economic development in 
Israel, Peres said that Israel's economic future depends on 
developing new patents and focus areas for research and 
development.  Nanotechnology is a specific area of innovation 
where Israel should focus its efforts.  Tourism, which Peres 
said comprises 12% of the economy, is now beginning to gain 
strength again following years of decline during the 
Intifada.  In consultation with some U.S. companies, Israel 
is attempting to revitalize tourism in the Galilee region. 
Adding that some of the best beaches on the Mediterranean are 
located in Gaza, Peres said that helping Gaza build a tourism 
industry would not only be good for Gaza's economy, but would 
provide an incentive to end terrorism. 
 
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On Syria and Iran 
------------------ 
 
5.  (C) Asked for his views on U.S. policy toward Syria and 
Iran, Peres said that because of U.S. involvement in Iraq, 
Syria now likely believes that the U.S. will act on its 
warnings.  Although Syria is no longer a real military 
presence in the region since its economy cannot support the 
weapons it acquired from Russia during the Cold War, its 
interests in Lebanon remain strong, he said.  Some 20 percent 
of the Syrian economy, he said, depends on the employment of 
Syrian workers in Lebanon.  Recent stirrings of independence 
in Lebanon have revealed some of the economic and political 
shortcomings of Syrian presence there. 
 
6.  (C) Turning to Iran, Peres said that the Iranian 
government is "Machiavellian" in its belief that its goals 
justify its means.  Iran, Peres said, has oil, ambition, and 
the most corrupt government.  He said that internal change is 
only a matter of time, since Iran's women are sick of 
subjugation and its young people are looking for a better 
future.  Unfortunately, he continued, no one can guarantee 
when this change will come.  Peres laid out what he sees as 
the three options for U.S. policy toward Iran: 1) use of 
force, 2) political pressure, and 3) economic sanctions. 
Peres said that if the U.S. opts to use political pressure or 
economic sanctions against Iran, it will need to form a 
coalition with Europe.  The U.S. could go along with the 
Europeans in using political and/or economic pressure, with 
the understanding that if this approach doesn't work, Europe 
will support the U.S. in exerting force. 
 
---------------------- 
The Separation Barrier 
---------------------- 
 
7.  (C) Asked how closely the separation barrier tracks with 
prospects for ultimately allocating land to the Palestinians, 
Peres mused that in politics, one has to jump to great 
lengths, not heights.  By jumping too high, one risks a 
deadly fall.  The mistake at Camp David, he continued, was 
that the parties wanted to solve all the problems all at 
once.  Right now Israel is making a jump out of Gaza.  Next 
will come parts of the West Bank.  Eventually, he said, the 
time will come for discussions on land allocation.  Peres 
acknowledged that the barrier was conceived as a security 
mechanism only, but political appetite for land led to a 
placement that bred resentment against it.  He noted that the 
controversy over the barrier is more limited now that its 
route has been changed by order of the Israeli Supreme Court. 
 The barrier now leaves only 5.5% of the West Bank on the 
Israeli side, and the idea of an eventual land swap is on the 
table.  Peres reflected that once there is no terror, the 
barrier will come down, but as long as terror remains, the 
barrier is necessary. 
 
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The Budget 
---------- 
 
8.  (C) Asked about the budget, Peres explained that the 
presence of 12 parties in the Knesset makes it very hard to 
get votes.  Essentially, there is a different coalition for 
every issue.  Chances are that the budget will pass, he said, 
although some of its supporters may end up not voting for it. 
 The Shinui party, for example, while in favor of the budget 
and disengagement, will likely vote against the budget 
because it opposes its allocation of money to religious 
interests. 
 
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The China Challenge 
------------------- 
 
9.  (C) Peres said he views China as the greatest future 
challenge for the U.S.  China's 50-year economic plan, 
unexpected economic growth rate, and exponential consumption 
of energy and oil will challenge U.S. economic strength. 
Only if the U.S. stays at the forefront of technology, he 
added, will it have a chance to maintain its first place 
position in the global economy. 
 
10.  (U) Codel Reid cleared this cable. 
 
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