VZCZCXYZ0037
OO RUEHWEB

DE RUEHJM #2598/01 1731431
ZNR UUUUU ZZH
O 221431Z JUN 06
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2967
INFO RUEHXK/ARAB ISRAELI COLLECTIVE IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE
RUEHRC/DEPT OF AGRICULTURE WASHDC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE

UNCLAS JERUSALEM 002598 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR 
WILLIAMS/GREENE/WATERS/WAECHTER; NEA/RA FOR CLAWSON; NSC 
FOR ABRAMS/DORAN/LOGERFO; TREASURY FOR NUGENT/ADKINS; USAID 
FOR BORODIN, USDA FOR HUDAK 
 
E.O. 12958: N/A 
TAGS: ETRD EIND EAID PREL KWBG
SUBJECT: TULKARM INDUSTRIES FACE BARRIERS TO MOVEMENT AND 
TRADE 
 
 
¶1.  (SBU) Summary:  In a June 21 meeting with the Consul 
General and NEA/IPA Director, Tulkarm business leaders and 
the Acting Governor described how restrictions on the 
internal and external movement of persons and goods in the 
West Bank had precipitated the governorate's economic decline 
and impeded the growth of key industries, such as textiles 
and poultry.  The business leaders railed against the 
closures that now shaped their investment decisions and often 
prevented them from traveling outside of the West Bank to 
close key business deals.  They noted that the USG-funded 
scanners were not being used at the crossing.  (Note:  ConGen 
will report septel on the status of the scanners at the West 
Bank/Gaza crossing points.  End Note.)  End Summary. 
 
Small governorate, big pains 
---------------------------- 
 
¶2.  (SBU) Acting Governor of Tulkarm Rafat Balawi, Director 
General of Palestinian Poultry Company (PPC) Abdel Al-Fattah 
Odeh, and Badran Textile Company President Yosef Badran 
briefed the Consul General and NEA/IPA Director June 21 on 
how Israeli-imposed controls are damaging the Tulkarm 
economy.  Tulkarm governorate's 176,000 residents rely on 
agriculture, trade with Israel, and services provided to 
other West Bank governorates, Balawi said.  The higher costs 
of agricultural inputs and tighter closures have dissuaded 
farmers from exporting.  The current economic choke-hold had 
translated into losses of NIS 7 million (USD 1.6 million) 
daily.  Local service providers were also suffering without 
visits from Israelis, who used to travel to the West Bank to 
fix their cars and shop, prior to the Intifada. 
Restrictions in movement undermine investment 
--------------------------------------------- 
 
¶3.  (SBU) Odeh said Israeli restrictions on movement of 
people and goods are shaping investment decisions for many 
industries in Tulkarm.  The PPC Board of Directors had 
approved the building of a poultry slaughterhouse in order to 
integrate their operations vertically.  However, actual 
construction of the slaughterhouse has been delayed because 
of problems finding a location not plagued by barriers to 
movement, and thus easily accessible to farmers throughout 
the West Bank.  Odeh also noted delays at checkpoints 
endangered PPC deliveries of day-old chicks from its hatchery 
to West Bank farmers since the chicks can only be in transit 
for 8 hours.  Odeh asserted that Israeli distributors do not 
experience similar problems, as they can easily access 
Palestinian markets on the road networks in the West Bank 
that is restricted for Israeli use.  Odeh suggested that 
Palestinians manufacturers should have access to these roads. 
 Odeh commented that he had passed six checkpoints (three 
were flying checkpoints) in traveling from Ramallah to Nablus 
recently, whereas before January 2006, there had been only 
one checkpoint at Zaatarah. 
 
Trade is going nowhere due to restrictions 
------------------------------------------ 
 
¶4.  (SBU) Odeh opined that the Israeli-imposed security 
restrictions are non-tariff trade barriers.  He said he was 
unable to import grain for feed-mills directly and must go 
through Israeli agents, who often run out of stock.  Odeh 
said the company has built silos, valued at JD 1.8 million 
(USD 405,000) to store grain ordered directly, but these 
silos were currently standing empty.  (Note:  Odeh had hoped 
to work with US NGO ACDI/VOCA to purchase U.S. grain 
monetized under the Food for Progress program, but the 
program had not been selected by USDA.  End Note.) 
 
¶5.  (SBU) Badran stated that although he had had successes in 
the past exporting textiles to name-brand importers in the 
U.S., Europe, Jordan, and the Arab Emirates, Israeli delays 
at the nearby Tulkarm/Sha'ar Ephraim crossing had made it 
difficult to compete with Chinese textile manufacturers.  He 
also lamented that Palestinians had to regularly remove 
high-quality merchandise from the vehicles and put them on 
the ground to be inspected by dogs. 
 
¶6.  (SBU) Badran noted that Palestinian exporters, unlike 
Israeli exporters, had to provide a unified tax invoice at 
the crossing each time they exported goods from the West 
Bank.  He said such invoices should be collected monthly, not 
for each shipment. 
 
 
Need for permits for business people and laborers 
--------------------------------------------- ---- 
 
¶7.  (SBU) Both Badran and Odeh commented that the lack of 
permits for the business community and laborers is 
detrimental to the Tulkarm economy.  They argued that 
business people should have long-term permits to travel to 
Israel, in order to conduct business.  Badran asserted that 
members of the business community should be allowed to travel 
through Ben/Gurion Airport, rather than travel to Jordan each 
time to go overseas.  In addition, he and the governor said 
that more Palestinian laborers should be given permits to 
work in Israel, as this would greatly help the economic 
situation in Tulkarm.  (Note:  According to Balawi, 400 
workers presently enter Israel from Tulkarm.  End Note.) 
WALLES