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 001923 
 
SIPDIS 
 
E.O. 12958: DECL: 05/17/2016 
TAGS: ECON EAID PREL PHUM ENRG KWBG KPAL IS GTIP ISRAELI PALESTINIAN AFFAIRS HUMANITARIAN AID
SUBJECT: GOI CONCERNED MECHANISM TO PROVIDE AID TO 
PALESTINIANS TO BE USED TO PAY SALARIES 
 
Classified By: Ambassador Richard H. Jones, reasons 1.4 (b) and (d). 
 
¶1. (C) Summary:  During a May 12 meeting with the Ambassador, 
MFA Deputy Director General for Economic Affairs Yossi Gal 
and Deputy Director General for Europe Ron Curiel expressed 
concern about the EU offer to develop a mechanism to deliver 
assistance to the Palestinians, fearing it might be used to 
pay salaries of PA officials.  The Ambassador said that the 
U.S. opposes using the mechanism to pay salaries and intends 
to actively work to shape the mechanism.  Gal viewed the 
decision by the private petroleum company Dor to discontinue 
supplying Palestinian gasoline stations as a commercial 
dispute over nonpayment rather than a humanitarian crisis. 
Gal said that Livni,s proposal to release  collected tax 
revenues to purchase medical assistance for the Palestinians 
has not yet been finalized by the government.  The Ambassador 
suggested that the GOI make progress on legislation to 
criminalize labor trafficking prior to PM Olmert,s trip to 
Washington.  Gal said that the GOI is interested in 
continuing the Middle East Regional Cooperation Program 
(MERC) and the Middle East Cancer Consortium (MECC), but with 
private Palestinian partners only as long as Hamas is in 
control of the PA.  Gal said the Israeli Embassy in 
Washington could raise with U.S. officials GOI interest in 
getting USAID to review its decision to terminate the 
Cooperative Development Research Program (CDR).  End summary. 
 
 
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CONCERN ABOUT MECHANISM, NO TO SALARIES 
--------------------------------------- 
 
¶2. (C) On May 12, the Ambassador met with MFA Deputy Director 
General for Economic Affairs Yossi Gal and Deputy Director 
General for European Affairs Ron Curiel to discuss the 
statement issued by the Quartet at its May 9 meeting and 
Israel's approach toward assistance to the Palestinians. 
Curiel said that the GOI does not want humanitarian relief to 
lead to a lessening of political pressure on Hamas.  If Hamas 
does not comply with the Quartet conditions, Gal said, the 
onus should be on Hamas and not Israel.  Gal, who had just 
finished a meeting with EU Middle East envoy Marc Otte, said 
that whatever mechanism the EU devises to provide assistance 
to the Palestinians, it is most important that Hamas not 
claim credit.  The mechanism should not be seen as giving 
legitimacy to Hamas.  He said one of the problems that the 
GOI has with the payment of salaries is that it helps to 
legitimize Hamas because of the necessity to have contact 
with various PA ministries, such as the Ministry of Finance. 
Gal said FM Livni has said that Israel will work with the 
mechanism, but will draw the line at payment of salaries. 
The Ambassador said the U.S. firmly opposes payment of 
salaries and will actively work to shape the mechanism. 
 
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DOR GAS CUTOFF 
-------------- 
 
¶3. (C) The Ambassador raised the issue of the gasoline supply 
by the Israeli company Dor due to non-payment by 
Palestinians.  Gal stressed that Dor is a private company 
that sells to a PA monopoly, which in turn sells to private 
gasoline stations in Gaza and the West Bank.  The GOI could 
not and would not would assume the responsibility for funding 
private companies dealing with Palestinians.  He also 
wondered what has happened to the money consumers are paying 
for fuel.  He said the fact that Dor has not received payment 
is the source of the problem.  If Dor refuses to continue 
supplying fuel until it gets paid, it is a commercial dispute 
and not a humanitarian crisis.  (Note:  In a meeting with the 
Ambassador on May 14, FM Livni appeared willing to consider 
the possibility of using tax revenues to support a 
humanitarian fuel reserve ) to supply fuel to hospitals, 
ambulances, trucks in the transport of humanitarian goods, 
etc. - administered by UNRWA or a reputable NGO.  End note.) 
 
--------------------------------------------- ---- 
RELEASE OF TAX REVENUES TO PURCHASE MEDICAL GOODS 
--------------------------------------------- ---- 
 
¶4.  (C) The Ambassador said that the best way to keep world 
pressure on the Hamas government is to ensure that the 
&story8 is not the suffering of the Palestinians and 
pointed to press reports of children dying, because they 
could not get dialysis.  Gal said that Livni,s proposal to 
use PA tax revenue now held in escrow to purchase medical 
assistance for the Palestinians has not yet been finalized by 
the government.  Gal said the proposal shows the GOI,s 
willingness to help with the health humanitarian crisis.  He 
said that the GOI could take one of three approaches: 
purchase medicine in Israel and transfer it to hospitals; 
give money directly to WHO and work through that 
organization; or, try to work through NGOs.  Gal said more 
Palestinians had sought care in Israeli hospitals in the last 
three months and that FM Livni had asked about the ownership 
or control of Palestinian hospitals (three are Hamas-run but 
the rest are not).  The Ambassador suggested the GOI also 
work with East Jerusalem hospitals; it would be easier for 
the GOI to control their contacts. 
 
¶5.  (C) Curiel said that the GOI must first resolve a legal 
problem before proceeding with the release of tax collections 
in any case.  He said that using PA tax revenues to pay for 
electricity is permitted through an agreement previously 
signed between the PA and the GOI.  No such agreement exists 
for the purchase of medical assistance.  The Ambassador 
offered that if Israel saw fit to deal with Mahmud Abbas on 
such issues, it would make things easier.  Gal said he does 
not believe the GOI will reach an agreement regarding working 
with Abbas before PM Olmert,s May 23 visit to Washington. 
The Ambassador said that reaching a decision before the trip 
would be useful and there would be intense interest in 
Washington on the GOI position.  He added the longer it took 
to reach a decision, the harder it would be to keep all 
parties, especially the EU, on the same page regarding 
contact with the Palestinians. 
 
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PERMITS FOR PALESTINIAN WORKERS 
------------------------------- 
 
¶6. (C) Curiel said the GOI has no interest in weakening the 
Palestinians, economic and social situation.  Noting that 
MOD Peretz has announced that he would approve 8,000 permits 
for West Bank workers to enter Israel, the Ambassador asked 
whether permits would be issued to Gazan workers as well; the 
economic condition in Gaza is weaker than in the West Bank. 
(Note: A COGAT official told econoff May 12 that Peretz had 
yet to issue the announced West Bank permits and would not do 
so until after the Jewish holiday on May 16.  The official 
believed that Peretz did not need Cabinet approval for this 
decision.  End note.)  Gal opined that the present 
government, especially Peretz, will not be as tough on such 
issues as the Sharon government.  Nevertheless, he was not 
sure that the Israeli public is receptive to the idea of more 
Palestinian workers.  The Ambassador said that if permits are 
not issued to workers, it becomes a trafficking and a 
security issue, because those seeking jobs will find ways to 
enter Israel, and terrorists would exploit the same avenues. 
He stressed that if those legitimately seeking work were 
vetted and issued permits, then law enforcement and security 
services can focus on those without permits, who are in the 
country for other reasons. 
 
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TRAFFICKING IN PERSONS 
---------------------- 
 
¶7.  (C) The Ambassador mentioned a recent article in the New 
York Times that said that the fight against trafficking in 
persons (TIP) is a high priority for the Bush Administration. 
 The Ambassador noted that PM Olmert had made statements on 
fighting TIP during the recent Knesset election campaign.  He 
said it would be helpful to have progress on pending 
legislation to criminalize labor trafficking, such as having 
the pending bill pass its second reading, prior to the trip 
to Washington.  He said that there are criminal penalties for 
sex trafficking, but only fines for labor trafficking, which 
many employers consider part of the cost of doing business. 
The Ambassador asserted that if there were criminal penalties 
for labor trafficking, then its incidence would decrease 
markedly. 
 
--------- 
MERC/MECC 
--------- 
 
¶8.  (C) The Ambassador informed Gal the U.S. has decided to 
continue supporting the Middle East Regional Cooperation 
program (MERC) and Middle East Cancer Consortium (MECC), but 
only with vetted independent Palestinians interested in 
working with Israeli counterparts.  Gal said that the GOI is 
also interested in continuing these programs, which also 
involve Jordan and other countries. The GOI,s only 
condition, Gal said, is that there be no contact with the PA 
and that no PA officials are involved. 
 
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COOPERATIVE DEVELOPMENT RESEARCH PROGRAM 
---------------------------------------- 
 
¶9.  (C) The Ambassador and Gal discussed the Cooperative 
Development Research (CDR) Program, which USAID Washington 
has decided to terminate.  Gal said that the program paired 
U.S. money with Israeli expertise for various projects in 
developing countries.  Israel would like USAID Washington to 
review its decision and continue the CDR program, which has 
provided important support for Israel's efforts to build 
relations in the developing world, Gal said.  Currently, Gal 
said, Israel is looking for alternative partners, such as the 
World Bank or the EU, who have resources for working in Third 
World countries.  The Ambassador suggested that the GOI might 
want its Embassy in Washington to discuss the issue with U.S. 
officials.  Gal said that the Israeli Embassy could easily do 
that. 
 
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