This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 001932 
 
SIPDIS 
 
DEPT FOR THE SECRETARY AND NEA A/S WELCH 
NSC FOR NSA HADLEY AND DAPNSA ABRAMS 
 
E.O. 12958: DECL: 05/16/2016 
TAGS: PREL EAID PTER KWBG KPAL IR IS ISRAEL RELATIONS
SUBJECT: ADDITIONAL TOPICS FOR OLMERT MEETINGS IN WASHINGTON 
 
Classified By: Ambassador Richard H. Jones; Reasons 1.4 (B and D). 
 
¶1. (C) Summary: Ehud Olmert's main public goal for his first 
trip to Washington as prime minister is to win U.S. support 
for what he calls the "convergence plan," which will relocate 
60,000 - 80,000 settlers from isolated areas in the West Bank 
to other settlement blocs west of the separation barrier 
(septel).  Despite this focus, Olmert has other important 
issues on his plate as well.  According to his advisers, 
Olmert also plans to discuss the Iranian nuclear threat, 
humanitarian assistance for the Palestinians, contacts with 
the Palestinians, the isolation of Hamas, and Lebanon/Syria 
when he sees the President on May 23.  As appropriate, we 
recommend that the U.S. side in Olmert's meetings raise 
trafficking in persons, efforts to win Israeli membership in 
the Red Cross/Red Crescent movement, and 
settlements/outposts.  Olmert's domestic position has been 
bolstered recently by the strength of Israel's 6.6 percent 
first-quarter 2006 growth report and the USD 4 billion cash 
purchase of an Israeli company by super-investor Warren 
Buffet.  End summary. 
 
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Ending Iran's Nuclear Weapons Program 
------------------------------------- 
 
¶2. (C) Israelis believe that the Iranian nuclear weapons 
program threatens their very existence.  Olmert will want to 
discuss the United States strategy to ensure that the 
international community takes the necessary steps to prevent 
Iran from developing nuclear weapons.  Israelis 
enthusiastically welcomed the President's statement at the 
American Jewish Committee affirming America's strong, 
enduring, and unshakeable commitment to Israel's security. 
Israeli intelligence services, under standing instructions to 
present only worse-case scenarios, predict that Iran will 
reach the "point of no return" soon.  These estimates are 
more alarmist than those prepared by the rest of the 
international community, including the United States.  Israel 
has maintained what it considers to be a low-key posture in 
the realization that its open involvement in the dispute 
would likely be counterproductive.  Nonetheless, Iranian 
President Ahmadinejad's inflammatory rhetoric has inevitably 
goaded Israeli officials to respond sharply on occasion. 
 
-------------------------------------------- 
Palestinian Issues: Aid, Contacts, and Hamas 
-------------------------------------------- 
 
¶3. (C) Olmert wants to work closely with the United States on 
continued assistance to the Palestinians.  He will want to 
know U.S. views regarding which types of projects should 
continue.  Israeli officials say that Olmert will likely seek 
the removal of the hold placed on USAID's Palestinian 
Integrated Trade Arrangements (PITA) projects, which, i.e., 
provide USD 50 million for scanners for border crossings. 
While the Israelis want maximum pressure on Hamas, they 
realize that it is not in their interest to have a 
humanitarian crisis in the Palestinian territories.  Their 
goal is to ensure that assistance to the Palestinian people 
does not benefit Hamas.  They fear that the mechanism the EU 
is developing for providing assistance will be used to pay 
salaries or lead to contacts with Palestinian ministries. 
Nonetheless, current Israeli thinking on which projects 
should be supported on humanitarian grounds may be more 
flexible than that of the United States.  The GOI supports 
maintaining many private-sector development and 
infrastructure projects, such as the Hebron sewage treatment 
plant, agribusiness partnerships, small business assistance, 
and micro-loans, all of which arguably also benefit Israel. 
In addition to paying Palestinian bills for electricity and 
water, FM Livni has expressed a willingness to consider using 
collected Palestinian Authority tax revenues for humanitarian 
assistance, most notably medical equipment, but the Israelis 
must first develop a system, including the legal means, of 
doing so.  At this point, they may work through NGOs, 
international organizations, or directly with hospitals, 
including those in East Jerusalem.  Livni has been unwilling 
to consider paying Palestinian fuel bills, but did not rule 
out the possibility of supporting a humanitarian fuel reserve. 
 
¶4. (C) Although the Israelis say they are willing to give 
negotiations with the Palestinians a chance prior to 
unilateral moves, Olmert has told many U.S. visitors that 
there is no Palestinian partner.  The Hamas government has 
declined to accept the three U.S./Israeli conditions for 
dialogue, and Olmert views President Mahmud Abbas (Abu Mazen) 
as well meaning but ineffective.  The Israeli Government 
would have preferred to boycott any foreign official who 
meets with any Palestinian Authority official, including 
Abbas, but instead developed a more nuanced policy once it 
became clear that the United States would continue to deal 
with the Palestinian President.  Olmert's advisers justify 
their disdain for engaging with Abbas by insisting that Hamas 
is using the office of the president to gain international 
legitimacy.  The Labor Party and parts of Olmert's own Kadima 
Party favor renewing negotiations with Abbas.  Olmert's 
advisers have hinted that he may do so sometime in June. 
Peretz stated this as fact to the Ambassador on May 17. 
 
¶5. (C) Olmert and his staff remain concerned that the UN, 
Russians, and European Union will gradually break ranks with 
the international community's insistence that Hamas recognize 
Israel, renounce violence, and accept previous agreements 
such as the Roadmap and the Agreement on Movement and Access. 
 He will want reassurances that the United States will not 
only maintain its current policy, but also continue efforts 
to keep others on board. 
 
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Lebanon/Syria 
------------- 
¶6. (C) Although casualties along Israel's northern border 
have decreased since 2000 when Israel withdrew its forces 
from southern Lebanon and adjusted its "blue line" (de facto 
border) under UN supervision, Israel continues to face 
Hizballah attacks and to conduct reconnaissance overflights 
of Lebanese airspace.  The Israelis are privately supportive 
of U.S. policy on Lebanon, particularly Franco-American 
initiatives at the UN calling for the disarmament of armed 
militias (UNSCR 1559) and investigation of responsibility for 
the murder of former Lebanese PM Hariri.  At our urging, they 
have maintained a low public profile on these issues, despite 
their frustration with the failure of the Lebanese Armed 
Forces to displace terrorist militias in the border region. 
The exceptions to this low-profile approach are frequent 
Israeli violations of Lebanese airspace, often to remind the 
Lebanese of Israeli military dominance.  Olmert and his 
advisers strongly support the U.S. policy of isolating the 
Asad regime in Damascus, but have expressed concern that 
regime change could result in a less stable and more 
dangerous Syrian government. 
 
---------------------- 
Trafficking in Persons 
---------------------- 
 
¶7. (C) The Government of Israel has made appreciable progress 
in fighting trafficking in women.  Problems remain, however, 
in Israeli efforts to combat labor trafficking, and these 
problems may lead the U.S. Government to downgrade Israel's 
status in the annual trafficking report, due out in June. 
Such a downgrading will be an embarrassment to the GOI, which 
was originally categorized as a Tier 3 country, the lowest 
ranking, but advanced to Tier 2 status by virtue of its 
active and largely successful efforts in recent years to 
combat sex trafficking.  Olmert reportedly raised with 
Foreign Minister Livni at a May 14 Cabinet meeting the need 
for further GOI action to combat labor trafficking.  The 
Ambassador has pressed Livni, Justice Minister Ramon, Defense 
Minister Peretz (in his capacity as head of the Labor Party), 
and other senior officials to take expeditious action.  Given 
the President's stated personal determination to combat 
trafficking in all forms, and the seriousness of a partial 
downgrading of Israel's ranking, USG officials should use the 
visit to press Olmert for action.  If the issue is discussed 
in Washington, Olmert may press for U.S. assistance in 
securing Israel's border with Egypt, which Israeli officials 
claim is a prime conduit for sex trafficking victims, but 
which contributes only little to the overall trafficking 
problem.  FM Livni made such a pitch in April, maintaining 
that an increase in border security would improve Israeli 
security against infiltration by terrorists, criminals, and 
traffickers from the Sinai.  Israel does not, however, want 
to see an enhanced Egyptian troop presence along the border. 
 
-------------------------------------------- 
Israeli Membership in the Red Cross Movement 
-------------------------------------------- 
 
¶8. (C) The United States and Israel have worked for decades 
to obtain admission of the Magen David Adom (MDA) first aid 
society into the International Red Cross/Red Crescent 
Movement.  That effort cleared a major hurdle in December, 
when the member countries approved in principle the use of a 
new "red crystal" protective emblem for those countries that 
prefer not to use a cross or crescent.  As the critical 
element of this development, Israel committed to taking 
several actions to bring itself and the MDA into compliance 
with the Movement's provisions.  International delegates will 
convene on June 20-21 in Geneva to vote on amending the ICRC 
statutes and admitting MDA into the movement.  Prior to that 
vote, it is key that -- by May 31, when a compliance visit is 
to be conducted -- the GOI agree to amend the MDA's own 
statutes and to implement an agreement signed in December 
between MDA and the Palestinian Red Crescent Society. 
Failure to do so by that date would be a serious setback in 
our decades-long mutual effort, which we have reinvigorated 
recently through intensive efforts with the highest levels of 
the new GOI (including Livni, Ramon, and Peretz).  While 
Olmert is unlikely to be aware of the details of the 
technical changes, he will certainly understand the 
importance of not missing this opportunity. 
 
------------------------ 
Settlements and Outposts 
------------------------ 
 
¶9. (C) Officials of the new GOI have given assurances that 
Israel plans to carry out its now years-long commitment to 
remove all illegal outposts within one year.  As recent 
violent clashes during the evacuation of Amona outpost 
illustrate, moving settlers from the 22 illegal outposts 
identified by Israel will be quite difficult.  (Note: We 
count 44 illegal outposts established since 2002.  End note.) 
 Justice Minister Ramon stated recently that the separation 
barrier should be completed by the end of 2006.  This 
timetable could be met practically, but litigation before the 
Israeli Supreme Court challenging the barrier's route could 
slow implementation.  Once the barrier is completed, Olmert 
plans to provide compensation to settlers who voluntarily 
leave both illegal and legal outposts and settlements lying 
east of the barrier.  Although he is committed to closing 
illegal outposts as part of his convergence plan, the issue 
still represents a political minefield for him, one he will 
have to tread carefully.  Coalition members such as the 
religious Shas Party and other groups, although not 
representing a majority of the population, remain opposed to 
additional evacuations. 
 
--------------------------- 
Israeli Economy Flourishing 
--------------------------- 
 
¶10. (C) Olmert's domestic position has been bolstered 
recently by good news on the strength of the Israeli economy, 
which grew at the rate of 6.6 percent for the first quarter 
of 2006, compared to an already impressive 5.2 percent rate 
for all of 2005.  This growth report came on top of the news 
of the USD 4 billion cash purchase by Warren Buffet 80 
percent of the Israeli firm, Iscar, which specializes in the 
production of specialized blades and cutting tools. 
Furthermore, several investment and rating firms have come 
out recently with positive reviews of the economy, including 
Morgan Stanley, which called Israel's economic situation 
"almost perfect."  The formation of the governing coalition 
has, however, been expensive, and it is not yet clear how 
strictly the government will adhere to the idea of fiscal 
restraint.  Although there have been press reports indicating 
that the GOI will increase year-to-year expenditures by the 
rate of growth of the population -- 1.7 percent -- instead of 
the one percent to which it is limited by the 2003 
U.S.-Israel Loan Guarantee Agreement, Finance Minister 
Hirchson assured the Ambassador on May 16 that the government 
remains strongly committed to the one-percent figure and to 
careful fiscal restraint.  He noted that as chairman of the 
Knesset's Finance Committee, he had partnered with then 
Finance Minister Netanyahu in securing passage of the 
previous GOI's economic reform package.  There would be no 
roll back of reform on his watch. 
 
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