US embassy cable - 05TELAVIV3000

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 003000 
 
SIPDIS 
 
E.O. 12958: DECL: 05/06/2015 
TAGS: ECON, EAID, KWBG, PREL, IS, GAZA DISENGAGEMENT, SETTLEMENTS 
SUBJECT: SOME GAZANS QUESTION THE NEED FOR SETTLEMENT 
GREENHOUSES 
 
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d) 
 
This cable was cleared with Consulate General Jerusalem. 
 
1.  (C) Summary and comment: Some elements within the Gazan 
business community have questioned the importance of intact 
transfer of the settlement greenhouses following Israeli 
withdrawal, suggesting that the GOI, the donor community, and 
the PA have done insufficient work convincing the private 
sector of the economic benefits of the proposal.  Certain 
contacts argue that the PA and donors should prioritize 
investment in existing Palestinian-owned Gaza greenhouses 
over rehabilitation of settlement greenhouses, while others 
claim that maintaining the greenhouses will prevent 
much-needed long-term residential and commercial planning for 
settlement lands.  Continued reports of PA uncertainty over 
the proper mechanism to handle transfer of the assets, as 
well as announcements that the PA will not recognize private 
purchases of settlement assets, have led some within the 
Gazan private sector to doubt that the greenhouses will 
continue operating after Israeli  withdrawal.  GOI 
disengagement administration head Yonathan Bassey concurs 
that settlers will dismantle their greenhouses unless they 
can find buyers within the next several weeks, but some Gush 
Katif settlers are reportedly maintaining their agribusiness 
assets in the hope that disengagement will not be carried 
out.  End summary. 
 
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GOI and Donors Need PA Decision to Move on Assets 
--------------------------------------------- ---- 
 
2.  (C) Disengagement planning on the Israeli side has 
prioritized the intact transfer of some 4,000 dunams of 
high-tech greenhouses into Gazan hands following withdrawal, 
and GOI officials say they are now waiting for the PA to 
designate a custodial body for the greenhouses and other 
agribusiness assets.  (Note: According to ConGen discussions 
with senior PA officials involved in disengagement 
coordination and planning, the PA plans to be the custodian 
of properties until decisions on the disposition of the 
assets are made, whether to keep and privatize the assets, 
return assets to Palestinians with pure legal title, or 
settle disputed claims.  End note.)  USAID,s Palestinian 
Agribusiness Partnership Activity (PAPA) program, designed to 
help safeguard the greenhouses during the transfer and to 
facilitate Gazan-Israeli marketing and shipping links 
post-disengagement, is ready to assist the PA as needed. 
 
3.  (C) Gazan private sector contacts claim PA positions on 
the transfer of assets have focused in part on the need to 
avoid de-facto legitimization of Israeli ownership. 
According to staffers working for Israeli Vice PM Shimon 
Peres, PA officials have been reluctant to consider 
third-party custodianship, only recently acknowledging to 
Peres that they may be willing to hire the Dutch body that is 
slated to take over the 200 dunams of agricultural land owned 
by the Peres Center for Peace.  (Note: PA officials working 
on the disengagement portfolio told ConGenOffs that the GOI 
has yet to respond to its questions about the possible role 
of third parties, including in the verification of assets 
pre-disengagement.  End note.)  The PA,s Disengagement 
Ministerial Committee announced April 13 that any contracts 
to purchase land or assets from which Israel would evacuate 
would be considered void, thereby nullifying a small number 
of settlement asset purchases that three major Gazan firms 
reportedly made in late March and early April.  "The PA says 
the assets belong to the people and they don,t want private 
businesses to come in," Pepsi CEO and Chairman of the 
Palestinian Business Association Mohammed Yazgi told Econoff 
April 15, "but they have no plan for what to do with them." 
 
---------------------------- 
Some Gazans Ask, Why Bother? 
---------------------------- 
 
4.  (C) Despite the potential economic benefits of some USD 
80 million worth of advanced agribusiness technology within 
the settlement greenhouses, several Gazan private sector 
contacts have called into question the benefit of maintaining 
them at all.  Dr. Hani Shawa of the Bank of Palestine said he 
believes the settlers hope to sell their greenhouses for 
"hundreds of thousands of shekels," a price far beyond the 
means of most Gazan businesses or the PA.  In Shawa,s view, 
the money the PA and the donors will have to invest in 
maintaining and in some cases refurbishing the Israeli 
greenhouses would be better spent on expanding and improving 
approximately 4,000 dunams of existing Gazan-owned 
greenhouses.  "They may not be as high-tech, but they are 
perfectly suited to growing the main produce exports," Shawa 
said.  He emphasized that donors should not worry about the 
potential loss of employment for some 9,000 Gazans if the 
settlement greenhouses are dismantled or destroyed during 
disengagement -- the boom in construction that he is 
confident will follow Israeli withdrawal from  30% of the 
Gaza Strip,s land will, he asserted, create more than enough 
jobs to make up the loss. 
5.  (C) Housing engineer and ex-Palestinian Investment Fund 
board member Jawdat al-Khoudry told Econoff April 13 that he 
believes most of the Israeli greenhouses should be simply 
torn down and removed.  He views the settlement greenhouses 
as "scattered" throughout Gush Katif, and believes that "they 
will get in the way of long-term planning, which is what Gaza 
actually needs."  Khoudry opined that agribusiness should be 
only one component of a carefully laid-out region including 
high-rise housing for Gazans currently living in refugee 
camps, tourism facilities, and light-industrial development. 
He acknowledged that within this framework, a number of the 
settlement greenhouses could be rebuilt to great benefit, but 
he dismisses donor concerns over the high cost of such an 
enterprise.  With a good 20- to 50-year plan in place, 
Khoudry said, Palestinian and foreign private sector 
investors will be drawn to Gaza on their own. 
 
------------------------------------ 
Potential Problems the Same 
For Settlement and Gazan Greenhouses 
------------------------------------ 
 
6.  (C) PalTrade cash crops project officer Hashim 
al-Hussaini asserted that while the agribusiness sector is 
crucially important to the Gazan economy -- according to him, 
agribusiness employs 30% of Gazans and generates 8% of Gazan 
GDP -- maintaining the settlement greenhouses is not the only 
key to strengthening agriculture.  Initial private sector 
enthusiasm for USAID's PAPA program was strong, he conceded, 
and numerous Palestinian firms will likely compete for 
partnership-building assistance under the program, yet 
according to Hussaini the Gazan growers unions and major 
agribusiness firms are in agreement that existing Gazan-owned 
greenhouses can prove just as effective as the high-tech 
Israeli assets.  Moreover, Hussaini said, potential 
post-withdrawal problems like water shortages and delays in 
market access due to Israeli border closures will be the same 
for either settlement greenhouses or existing 
Palestinian-owned greenhouses in Gaza.  "Whether to invest in 
the settlement assets or the Gazan greenhouses is a political 
question with no real relevance to agribusiness growth," he 
asserted. 
 
7.  (C) Hussaini noted that Palestinian Gazan growers 
exported over 150,000 tons of cash crops to EU markets in 
2003 using only their own greenhouses.  This high volume 
encouraged the EU to grant a tax exemption for up to 250,000 
tons in the 2004 season, potentially promoting even further 
growth of the Gazan agriculture sector, yet IDF-imposed 
security closures at the Gaza border made this total 
impossible to reach.  Hussaini asserted that unless the GOI 
ensures redundancy at the border crossings, and donor efforts 
like PAPA guarantee market access, neither maintenance of the 
settlement greenhouses nor investment in Gazan-owned 
agribusinesses will boost the broader economy.  (Note: 
Several PA officials, including Agriculture Minister Walid 
Abed Rabbo, a former UNDP agriculture consultant, continue to 
express support for PAPA's program to safeguard the 
settlement greenhouses and help ensure intact transfer.  End 
note.) 
 
------------------------------- 
Will Settlers Dismantle or Not? 
------------------------------- 
 
8.  (C) Yonathan Bassey, head of the GOI,s disengagement 
administration responsible for relocating and compensating 
settlers, told EconCouns he expects that unless settlers find 
a buyer for their greenhouses within the next several weeks 
-- whether private Gazans, the PA, or a third party -- the 
settlers will begin dismantling the valuable machinery inside 
their greenhouses in preparation for relocation.  This view 
is reflected within the Gazan private sector, where contacts 
say they expect settlers will "destroy" some 40% of the 
greenhouses out of "spite."  Gush Katif spokesman Eran 
Sternberg told Econoff, however,  that since his community 
believes there is a chance disengagement will fall through, 
they are not dismantling or removing anything, especially not 
greenhouses and other agribusiness assets. 
 
9.  (C)  Comment: While the economic importance of the 
settlement greenhouses has become accepted wisdom within the 
donor community, ambivalence within the Gazan private sector 
suggests that insufficient work has been done to generate 
support for the proposal within Gaza itself.  One reason for 
this might be the fact that the PA was still waiting to 
receive an inventory of settlement assets from the GOI, and 
was developing a mechanism by which to process Palestinian 
ownership claims to the land on which these assets sit.  At 
this point, the private sector may view PAPA's 
partnership-building component, applied towards increasing 
market access for existing Palestinian Gazan-owned 
agribusinesses, as more useful than the intact transfer of 
the settlement greenhouses.  End comment. 
 
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