US embassy cable - 05TELAVIV4198

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 004198 
 
SIPDIS 
 
E.O. 12958: DECL: 07/01/2015 
TAGS: KWBG, PREL, EAID, IS, GAZA DISENGAGEMENT 
SUBJECT: GAZAN DISENGAGEMENT-RELATED AGRICULTURE 
COORDINATION: AT A CROSSROADS 
 
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d) 
 
The cable was cleared with Consulate General Jerusalem. 
 
1.  (C) Summary and comment: A series of discussions with 
GOI, PA, and Gazan private sector contacts June 27-29 has 
underscored the pressing need for agreement between the two 
sides on crossings and the transfer of settlement assets.  On 
crossings, GOI representatives said that Karni terminal will 
remain the Strip,s only agriculture crossing for at least a 
year following withdrawal, but asserted that a dedicated lane 
will be sufficient to facilitate the export of 60-70 trucks 
of Gazan agricultural produce daily.  Gazan 
agribusiness contacts countered that political will, not 
technical fixes, is needed to improve the crossings regime. 
On greenhouses, Israeli sources warned that only a formal PA 
statement that Palestinians have use for them after 
withdrawal will enable the donors to provide the GOI with 
extra funding to induce settlers to maintain their assets as 
going concerns.  PA contacts reaffirmed, however, that the PA 
cannot make decisions until the GOI provides a more complete 
asset inventory and is not willing to approve any 
"compensation" to the settlers for the assets.  Einat Wilf, 
advisor to Vice Premier Peres, said that this apparent 
deadlock has convinced Peres that Quartet Special Envoy 
Wolfensohn is stepping back from additional work on this 
issue in favor of more promising avenues for coordination. 
As evacuation draws closer, the lack of a clear transfer 
mechanism for the assets is increasing the likelihood that 
settlement farmers will dismantle or neglect their 
greenhouses, seriously undermining their potential economic 
value to the post-disengagement Gaza economy.  End Summary. 
 
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Karni Controversial as an Agriculture Crossing 
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2.  (C) Ministry of Defense (MoD) representatives Netzach 
Mashiach and Maj. Gen (res) Baruch Spiegel told EconCouns and 
USAID Country Director June 27 that Karni terminal will 
remain the Gaza Strip,s only export point for agricultural 
produce for one to one and a half years following 
disengagement.  Spiegel explained that a dedicated lane will 
enable 60-70 trucks of produce to exit the Strip daily after 
Israeli withdrawal, and the MoD is considering a "one-check" 
system for containerized goods that will make back-to-back 
shipping almost as rapid and cost-effective as the 
door-to-door system he said the PA prefers.  To actualize 
this goal, he explained, some of the USD 50 million earmarked 
for GOI improvements at the border crossings could be spent 
on standardized secure containers and special trucks.  In 
parallel to these upgrades, Mashiach added, the GOI will 
build a new agriculture-only crossing south of Erez, or 
refurbish Sufa or Kissufim terminals for the same purpose, 
within two to three years. 
 
3.  (C) Gazan agribusiness contacts and Israeli NGOs 
expressed skepticism about the potential for improvements at 
the crossings.  Hashim al-Hussaini of PalTrade argued that 
without real political will within the GOI, no amount of 
technical fixes will help facilitate Gazan agricultural 
exports.  He pointed out that setting aside a lane at Karni 
for produce exports is "an old idea that was never 
implemented," and that there have already been several 
discussions in the past on allocating an agricultural 
crossing, including an abandoned 1996 attempt to refurbish 
Sufa.  Dr. Hani Shawa of the Bank of Palestine noted that 
several lanes at Karni terminal have already sat idle for 
months, rendering the idea of a dedicated produce lane 
illogical and moot. 
 
4.  (C) Boaz Karni of the Economic Cooperation Foundation 
(ECF) concurred that politics can overcome both security and 
technical obstacles to smooth export, giving the example that 
in 2002, when Israeli farmers were last required to leave 
land fallow according to regulations based on biblical law, 
Gazan growers supplied the majority of the Israeli market. 
"Security delays were insignificant that season," Karni said. 
 "If you must get lettuce to the orthodox in Jerusalem, the 
government will make it happen."  According to Hussaini, the 
Gazan agribusiness sector needs an agriculture-only crossing, 
not just a dedicated lane, by November in order to meet 
export goals for strawberries, carnations, and cherry 
tomatoes. 
 
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Greenhouse Transfer Does Not Look Promising 
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5.  (C) Boaz Karni described the GOI,s current plan for 
transferring the settlement greenhouses to the PA intact, 
stressing that the PA must first give the donor community a 
written statement that it wants the greenhouses.  This will 
allow donors to provide Israeli agricultural marketing firm 
Agrexco or another Israeli middleman with financial 
assistance to additionally compensate settlement farmers, 
ostensibly for maintaining their assets as going concerns. 
Agrexco, which is the chief marketing agent for Gazan 
exports to Israel and the EU, would only compensate the 
farmers once the PA has taken possession of assets and has 
confirmed that they are functional and complete.  The ECF 
hopes to complete the handover seven to fourteen days prior 
to the start of withdrawal, he said, giving the PA the 
incentive to properly secure the assets that will then belong 
to it.  (ConGen Note: PA senior officials have repeatedly 
stated that they cannot approve compensation, specifically, 
to settlers for their greenhouses.  However, there may be a 
way for supplemental funds to be paid to settlers in a manner 
that does not appear as "compensation," for example, paying a 
fair market price for used equipment that would otherwise 
have to be procured on the open market.  End Note.) 
 
6.  (C) Karni emphasized the potentially great value of the 
greenhouses to Gaza,s post-disengagement economy, noting 
that "their produce is worth USD 75 million at the gate, and 
probably twice that in EU markets."  According to him, 
Agrexco is enthusiastic about continuing to market Gazan 
produce after disengagement, and Ministry of Agriculture 
officials expressed confidence that Gazan management of the 
greenhouses could potentially increase the value of produce 
exports to USD 100 million per year.  Some Gazan private 
sector contacts have expressed doubt over the economic 
necessity for the settlement greenhouses, however (reftel). 
Additionally, PA Negotiation Support Unit lawyer Lamia Matta 
told EmbOffs and ConGenOffs June 28 that because the GOI has 
still not handed over a sufficient inventory of the 
settlement assets, the PA has no way of knowing whether the 
greenhouses are appropriate or useful to Gazan agribusiness. 
Until the PA has the information it needs to determine their 
worth, she explained, it is disinclined to expend "political 
energy" on ensuring their intact transfer.  Moreover, without 
a commitment from the GOI on ensuring the free flow of goods 
through Gaza's border crossings, the value of any 
agricultural asset is inherently questionable. 
 
7.  (C) Einat Wilf, senior advisor to Vice Premier Peres, 
told EconCouns June 30 that in recent meetings with Peres, 
Quartet Special Envoy Wolfensohn was pessimistic about the 
potential for progress on the transfer of greenhouses. 
According to Wilf, Wolfensohn emphasized strong donor 
reluctance to contribute assistance that would be used to 
compensate the settlers.  Unless the PA expressed overt 
interest in receiving the greenhouses and gave its blessing 
to donor involvement in the transfer process, he reportedly 
explained, he would discontinue his efforts to bring the two 
sides to the negotiating table on this issue. 
 
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For Settlement Farmers, Compensation is Key 
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8.  (C) GOI sources and Israeli media have provided 
conflicting reports on settlement farmer activities in the 
run-up to evacuation, ranging from plans to smash greenhouses 
"out of spite" within two weeks, to 
under-the-table deal-making with prospective Gazan buyers, 
though the PA cabinet has declared any such deals null and 
void.  Settlers told USAID contractors during a June 28 site 
visit to Gush Katif that work continues in a majority of 
agribusiness enterprises, and contractor visits to 
approximately half the greenhouses revealed very little 
removal of any of their high-tech components.  Farmers said 
that most of them hope Gazan growers will be able to take 
over the greenhouses after evacuation, but emphasized that 
without compensation beyond the 67 percent the GOI 
legislation allows, they will not agree to hand over their 
assets intact to the PA.  Boaz Karni affirmed that 
compensation fears are creating an atmosphere of insecurity 
in the settlements, making it difficult to plan for intact 
transfer.  He noted that he had received a phone call earlier 
in the day from a "desperate" settlement farmer asking for 
news of compensation, who told him that a group of farmers 
had recently stopped a colleague from demolishing his 
greenhouse to sell as scrap by reassuring him that he would 
be economically better off waiting for  additional 
compensation. 
 
9.  (C) Comment: As evacuation draws near, both the GOI and 
the PA remain reluctant to nail down a program that will 
ensure intact transfer of the settlement greenhouses, though 
USAID, through its Palestinian Agribusiness Partnership 
Activity (PAPA), is pressing both sides.  While donors are 
amenable to additional compensation for settlement farmers, 
GOI foot-dragging on the provision of settlement asset 
inventory and its reluctance to discuss the details of 
possible third-party involvement, as well as the PA's 
reluctance to engage without inventory details of the 
greenhouses, are holding up forward progress.  Unless the two 
sides reach political agreement on this issue very soon, 
settlement farmers will likely begin dismantling their 
assets, or will decide not to prepare them for the coming 
growing season. 
 
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