US embassy cable - 05TELAVIV1847

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001847 
 
SIPDIS 
 
NSC FOR ABRAMS/DANIN 
 
E.O. 12958: DECL: 03/25/2014 
TAGS: KWBG, PREL, EFIN, EAID, IS, GAZA DISENGAGEMENT, ECONOMY AND FINANCE, ISRAELI SOCIETY, ISRAELI-PALESTINIAN AFFAIRS 
SUBJECT: SHIMON PERES ON DISENGAGEMENT, PALESTINIAN SOCIAL 
SECURITY, NEGEV DEVELOPMENT 
 
 
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d) 
 
1.  (C) Summary:  Vice Prime Minister Shimon Peres told NSC 
director Elliott Abrams, NEA Assistant Secretary David Welch, 
and the Ambassador March 23 that the economic needs of the 
Gaza Strip and West Bank are immediate and pressing, while 
solutions are slow in coming.  In his view, the PA is torn 
between its high hopes for disengagement and its reluctance 
to "come to the table" with the GOI on specific issues like 
passages, settlement assets, and Israeli-Palestinian 
agribusiness cooperation.  The Palestinians will be starkly 
disappointed after withdrawal, he warned, unless they 
coordinate with the GOI on these issues immediately.  Peres 
emphasized the need for a Palestinian social security 
program, saying that Spain has pledged 30 million Euros for a 
"safety net" that will provide 100,000 families in Gaza with 
USD 100 per month.  He also touched on the USD 140 million 
plans to improve border crossings, noting that the World Bank 
has pledged half of this amount.  Finally, Peres discussed 
his hopes for developing the Negev and Galilee in tandem with 
disengagement, stating that this can serve as the "positive 
message" to counteract the difficult optics of evacuation. 
He requested USG assistance on Negev development, suggesting 
a meeting with Secretary Rice to name top U.S. businesses 
that might lead the way in investment.  End summary. 
 
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PA Ambivalence Will Harm Palestinians 
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2.  (C) Vice Prime Minister Shimon Peres spoke to NSC 
director Elliot Abrams, NEA Assistant Secretary David Welch, 
and the Ambassador March 23 about the gap between "immediate 
and pressing problems" within the Palestinian economy, and 
"solutions that are slow in coming."  He lamented the PA's 
reluctance to talk to Israel on the economic aspects of the 
disengagement plan, particularly the transfer of settlement 
assets and hothouses.  Although the Aspen Institute is 
looking into ways to cover the difference between the GOI's 
settler compensation and the total value of settlement 
agribusiness, he said, the PA rejects the concept of 
third-party purchase of settlement assets because in its 
view, settlements do not belong to Israel.  He warned, 
however, that Gazans will be "very disappointed" following 
withdrawal if they find Israeli settlers have dismantled 
their hothouses because no arrangements were made for their 
purchase and transfer.  Peres mused that the Palestinians 
have "no experience governing, only with rebelling," a fact 
resulting in expectations disproportionate to the PA's 
ability to act. 
 
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Social Security Program in the Works 
------------------------------------ 
 
3.  (C) Peres said that a major Hamas win in the upcoming PLC 
elections could freeze any nascent GOI-PA coordination on 
disengagement and the larger peace process.  A PA social 
security program could undercut Hamas popularity, he said, 
noting that Spain has pledged 30 million Euros for a program 
that would provide some 100,000 Gazan families with USD 100 
per month.  At the EU's request, Peres and PA Finance 
Minister Salaam Fayyad sent congruent letters to the EC 
requesting further assistance.  A decision on this issue was 
ostensibly taken March 22, Peres said, and he expects an 
answer shortly. 
 
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Donors Key in Post-Disengagement Economy 
----------------------------------------- 
 
4.  (C) In Peres' view, "a strong economy is the foundation 
for democratization" within Palestinian society.  He proposed 
a QIZ after the fashion of Jordan and Egypt in the Gaza 
Strip, and encouraged EU as well as U.S. private sector 
investment in Palestinian industrial zones.  Peres 
underscored as well the importance of the donor community in 
building a post-disengagement Gaza economy.  Noting that the 
Norwegians have been "confused" since the London Meeting, he 
suggested a donor conference in April as opposed to May. 
Peres said that the World Bank can play a key role by 
contributing half of the USD 140 million Israel needs to make 
immediate improvements at the border crossings, despite 
internal Bank difficulties precipitated by the imminent 
departure of president James Wolfenson. 
 
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Developing the Negev and Galilee 
--------------------------------- 
 
5.  (C) Disengagement is necessary, Peres said, but it is a 
"negative message" for the Israeli people.  He hopes that 
economic development of the Negev and Galilee regions in 
tandem with the pullout can provide the balm of a clearly 
positive step forward.  In Peres' view, Israel has "lost one 
million dunams of Negev land to the Bedouin", some 65,000 of 
whom reside in unrecognized settlements on state lands from 
Dimona to Beer Sheva.  The Arab sector in both the Negev and 
the Galilee is poor, he said, and if their sense of 
oppression is not relieved a social crisis will undoubtedly 
erupt.  Development of these regions can therefore relieve 
what Peres termed a demographic threat.  Peres requested U.S. 
assistance in this area, pointing to President Bush's 
expression of support for Negev and Galilee development in 
his April 2004 letter on the disengagement plan.  He 
suggested that he meet with Secretary Rice to discuss the 
possibility of U.S. assistance in developing the tourism and 
high tech sectors as well as the education system, and he 
raised the idea of selecting top U.S. companies to invest in 
Gazan industrial zones. 
 
6.  (U) NSC Director Abrams and A/S Welch cleared on this 
cable. 
 
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KURTZER