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

UNCLAS SECTION 01 OF 02 TEL AVIV 000518 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAID EFIN EG IS JO KWBG PGOV PINR PREL ISRAELI PALESTINIAN AFFAIRS GOI EXTERNAL GOI INTERNAL ISRAEL RELATIONS
SUBJECT: SHIMON PERES ON PALESTINIAN 'COHABITATION' 
 
REF: TEL AVIV 391 
 
This message is Sensitive But Unclassified.  Please Treat 
Accordingly. 
 
¶1.  (SBU) Summary:  In a February 1 meeting with the 
Ambassador, Shimon Peres reiterated a pitch for U.S. 
financial support for Negev/Galilee development and political 
support for private-sector-led development of the Jordan 
Valley.  The Ambassador stressed the importance of supporting 
the caretaker PA government and President Abbas, including 
the continuation of VAT and customs transfers.  Peres 
reported that Abbas had made three demands of Hamas (see para 
2 below).  Peres, although not currently in government, said 
he expects a continuation of GOI support unless/until a Hamas 
government is formed that remains hostile to Israel.  Peres 
said Kadima's parliamentary list would reflect the Israeli 
electorate, and would prove to be a "new center" in Israeli 
politics.  He discounted the political threat posed by 
Netanyahu.  End Summary. 
 
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ABBAS MAKES DEMANDS ON HAMAS 
---------------------------- 
 
¶2.  (SBU) Shimon Peres likened the Palestinian political 
situation to a period of 'cohabitation' akin to the period of 
Mitterrand/Chirac powersharing in France during the 1980s. 
He argued that President Abbas retained responsibility for 
security and negotiations, but acknowledged that the PA 
President would not likely control the Finance Ministry in a 
Hamas-led government.  Peres reported that President Abbas 
had made three demands of Hamas: 
 
-- that Hamas respect the positions of "international 
legitimacy" adopted by the international community; 
 
-- that Hamas accept Arab League positions, including the 
Beirut Declaration; 
 
-- that Hamas respect agreements between Israel and the 
Palestinian Authority, including Oslo and the roadmap. 
 
Peres agreed with the Ambassador's assessment that Hamas 
would soon face contradictions between its desire to govern 
(the PA) and running a terror campaign.  Peres predicted that 
the initial Palestinian enthusiasm about Hamas will evaporate 
with time.  If Hamas cannot pay salaries of the PA, including 
security forces, that will be the end of Hamas, according to 
Peres.  The Ambassador said that the reality of governing 
would soon intrude on Hamas ideology. 
 
---------------------------------------- 
ISRAEL ISN'T CORNERED; KADIMA ISN'T HURT 
---------------------------------------- 
 
¶3.  (SBU) Peres expressed confidence in Israel's ability to 
deal with the consequences of the January 25 election.  The 
Ambassador asked Peres about relations with the PA.  Peres 
said he expects that the GOI "won't change," i.e. Israel 
would continue to cooperate with the caretaker PA government, 
including transferring VAT and customs revenues. "We 
shouldn't proceed as if we are the ones that want to cut Abu 
Mazen off," Peres stressed.  Peres added that Palestinian 
developments had not hurt Kadima.  He discounted the 
political threat posed by Netanyahu: "He wants to be on the 
Right and be perceived as in the Center, but this is 
unconvincing." 
 
-------------------------------- 
HELPING THE PALESTINIAN ECONOMY: 
LOOK TO NEIGHBORS, NOT ISRAEL 
-------------------------------- 
 
¶4.  (SBU) In response to the Ambassador's question, Peres 
said a delay in the formation of a Palestinian government 
would not affect Israeli politics unless bombs start going 
off.  Peres argued that economic means must be found to fight 
"the reasons for terror."  The Ambassador noted, in this 
regard, that the Karni crossing had been closed for three 
weeks, but Peres seemed unconcerned by the impact of this 
closure on the Palestinian economy.  He suggested that the 
Palestinians could export produce via El Arish, Egypt, rather 
than through Israel.  Peres also pitched 
Israeli-Palestinian-Jordanian cooperation from the Red Sea to 
the Yarmouk River in Israel's north -- a sort of Jordan River 
Authority that would rescue the Dead Sea while building on 
the success of the QIZ concept.  Peres said private financing 
could be relied upon for such an initiative (see reftel for 
elaboration on Peres' thinking). 
 
---------------------------------- 
NEGEV/GALILEE DEVELOPMENT: 
A PITCH FOR U.S. FINANCIAL SUPPORT 
---------------------------------- 
 
¶5.  (SBU) Peres confirmed that he will re-engage on 
Negev/Galilee development planning should Kadima win election 
on March 28.  He recalled the GOI's ten-year plan to invest 
17 billion shekels (approximately four billion USD) in the 
Negev over ten years, starting with a one billion shekel 
outlay in 2006.  Peres noted that he had spoken recently to 
the Secretary about the Israeli request for 2.1 billion USD, 
two-thirds of which would go to Negev/Galilee development and 
another third for security along the Israel-Egypt border and 
to cover the costs of disengagement. He hoped such funding 
could be requested in a February supplemental request to 
Congress. 
 
¶6.  (U) Peres said 150 thousand Negev Bedouin are ripe for 
democracy and modernity, and claimed (note: unconvincingly to 
us) that the Bedouin would welcome the opportunity to live in 
modern high-rise apartments clustered in rapidly expanding 
Negev towns such as Rahat.  The Ambassador commented that 
Israel had good reason to create economic incentives for 
developing the Negev and Galilee.  Both agreed that the 
Olmert government had been correct in removing the illegal 
outpost of Amona in the West Bank. 
 
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JONES