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 02 TEL AVIV 002053 
 
SIPDIS 
 
E.O. 12958: DECL: 04/01/2015 
TAGS: PREL PGOV KPAL ECON KWBG OREP IS GAZA DISENGAGEMENT ECONOMY AND FINANCE ISRAELI PALESTINIAN AFFAIRS
SUBJECT: SHIMON PERES DISCUSSES DISENGAGEMENT AND ECONOMIC 
DEVELOPMENT WITH SENATOR LEVIN 
 
 
Classified By: Ambassador Daniel C. Kurtzer; Reasons: 1.4 (B) and (D). 
 
¶1. (C) SUMMARY:  During a one-hour meeting in Tel Aviv on 
March 31, Vice Prime Minister Shimon Peres told Senator Carl 
Levin, accompanied by Senate staff and a delegation from the 
Michigan Fund, that he and Prime Minister Sharon have similar 
thoughts on continuing disengagement in the West Bank, but 
differ on timing.  Peres stressed that he will "not 
embarrass" the PM, who wants to see how disengagement 
proceeds and to have proof that the Palestinians are 
dismantling terrorist infrastructure before taking further 
steps.  Peres acknowledged that the Palestinians are 
reluctant to coordinate disengagement, but said he hopes that 
they will cooperate at least on the handover of buildings 
left behind by the settlers.  He maintained that the 
weaknesses of the Israeli electoral system and the lack of a 
Palestinian political system "explain all of the maneuvering 
on the peace process."  In response to questions by Senator 
Levin, Peres gave an Israeli assessment of the situation in 
Iraq and the role played by Jordan, Syria, and Iran.  Peres 
stressed the importance that private groups and companies 
play in fostering peace, welcomed the Michigan Fund 
initiative, and outlined charity, business, and sports 
projects where the group could be of help.  END SUMMARY. 
 
------------------------------------- 
Disengagement: Next Steps and Details 
------------------------------------- 
 
¶2. (C) The CoDel asked about Israeli intentions once 
disengagement is complete.  Peres replied that he believed 
that "after Gaza we have to continue in the West Bank."  He 
acknowledged that PM Sharon wants to see how disengagement 
proceeds and have proof that the Palestinian Authority is 
dismantling terrorist infrastructure before making any 
decisions.  "I am not going to embarrass him," Peres 
insisted, but "I've clearly told him our intentions."  Peres 
said that Sharon had informed him that they "see eye-to-eye 
on all the issues -- the difference is timing."  Senator 
Levin reiterated U.S. support for the disengagement plan. 
 
¶3. (C) Senator Levin asked Peres about coordination with the 
Palestinians and the status of property left behind by the 
settlers.  Peres replied that "the Palestinians will never 
agree to coordinate" the larger aspects of disengagement. 
Cooperation on property would also be difficult, he said, but 
the only other options are destruction by either the Israelis 
or Palestinians.  Peres said it would be a "foolish" public 
relations disaster and a "crime" for Israel to destroy the 
property.  He noted that the greenhouses could employ 
hundreds of Palestinians and suggested that the Palestinians 
convert two or three settlements into resorts. 
 
¶4. (C) Peres maintained that the weakness of both Israeli and 
Palestinian political structures "explains all of the 
maneuvering on the peace process" and "makes us all more 
Machiavellian than we intend."  He said the Israeli electoral 
system results in a multitude of parties in the Knesset, some 
of which (he mentioned Likud and religious parties) are 
themselves divided.  This situation necessitates new 
coalitions on each issue, he added, raising the cost of each 
successive agreement to the point where there is "no chance 
to agree on peace and religion" in one coalition.  He claimed 
the Labor Party had sacrificed all other issues to give PM 
Sharon a majority for the disengagement plan, foregoing the 
job of foreign minister, supporting a budget it did not like, 
and voting for Sharon's proposed expansion of the Cabinet. 
Peres said the Palestinian weakness stems not from their 
political system, but from their lack of one. 
 
--------------------------------------------- --- 
Views on Iraq, Middle East Peace, and the Region 
--------------------------------------------- --- 
 
¶5. (C) Senator Levin asked about Israeli views on Iraq.  "I 
don't know who won the elections in Iraq," replied Peres, 
"but clearly Saddam Hussein lost them."  In Peres' opinion, 
there is no alternative to a unity government that includes 
Sunni representation and an appropriate role for the Kurds. 
Peres described Jordan as "too weak" to play a role in Iraq, 
despite the Hashemite family's historic ties to Baghdad.  He 
labeled Iran's desire for Shia states in Iraq and Lebanon and 
support for Hizballah as "very dangerous."  Peres said that 
Syria is preoccupied with Lebanon, noting that 20 percent of 
Syria's economy and much of the money it needs for arms 
purchases comes from Lebanon. 
 
¶6. (C) While praising the USG's strong pro-democracy agenda 
in the Middle East, Peres cautioned that elections are not 
enough.  He urged the USG to "privatize peace" by building 
the economic basis that leads to societal changes.  He 
praised the role of U.S. companies in computerizing the 
Jordanian educational system and suggested that similar 
efforts would work in Iraq, as they already have in India and 
China. 
-------------------------------- 
Peres Welcomes the Michigan Fund 
-------------------------------- 
 
¶7. (C) Senator Levin introduced members of his delegation 
from the Michigan Fund, explained the organization's 
objectives, and stressed the importance of even symbolic 
success stories.  Peres welcomed the initiative, stressing 
"we need to make peace economic, not just political."  Peres 
outlined his ideas for a social fund to help the Palestinian 
Authority compete with Hamas and avoid a "catastrophe" in the 
July elections.  According to Peres' plan, the fund would pay 
200,000 needy Palestinian families USD 100 per month.  Peres 
noted that he had originally hoped that the USG and the 
Europeans would each fund half of this program, but had faced 
donor fatigue in Europe and complications due to social 
security reform in the U.S.  Peres claimed that he had 
nevertheless obtained a pledge of USD 40 million while in 
Spain and still considers the fund important for its symbolic 
value.  As an alternative, U.S. donors could support 
individual social projects, he said, mentioning successful 
efforts such as a program treating Palestinian children 
traumatized by the Intifada and the work of joint 
Jewish-Palestinian cultural centers. 
 
¶8. (C) Peres described Qualified Industrial Zones as "the 
greatest success in the Middle East."  He stressed the 
importance of private sector involvement in creating jobs and 
urged U.S. companies and investors to open businesses in 
industrial areas in Gaza and the West Bank.  He volunteered 
assistance from his staff for any problems U.S. companies or 
investors might encounter.  As a final alternative, Peres 
suggested that U.S. donors could build tennis clubs where 
Palestinian and Israeli children could learn tolerance and 
coexistence through sporting activities. 
 
¶9. (SBU) Senator Levin inquired about the technologies being 
installed to lower the hurdles to the passage of people and 
products at checkpoints.  Peres explained a USD 140 million 
program, financed jointly by the World Bank and GOI, which 
will use modern scanning technology to reduce border crossing 
times to two or three hours for cargo. 
 
¶10. (U) CoDel Levin did not have an opportunity to clear this 
cable, but asked to receive a copy of it from H. 
 
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