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 002451 
 
SIPDIS 
 
DEPT FOR NEA/IPA, NEA/RA AND OES/PCI 
 
E.O. 12958: DECL: 06/21/2016 
TAGS: ECON ENRG SENV IS ECONOMY AND FINANCE ISRAELI SOCIETY
SUBJECT: PLANS FOR NEGEV/GALILEE DEVELOPMENT MOVING SLOWLY; 
PERES CREATING ECONOMIC INITIATIVES FOR ARAB SECTOR 
 
Classified By: Economic Counselor William Weinstein, reasons 1.4 (b) an 
d (d) 
 
¶1. (C) Summary:  Although a plan for Negev development 
approved last year included significant funding levels, the 
current budget included no new funds.  Current Negev 
initiatives include encouraging industry and the military to 
shift operations there, using solar power to generate 
electricity, developing oil shale resources, and cleaning up 
the Ramat Hovav hazardous waste disposal site.  Development 
of a master plan for the Galilee is to start in July.  Shimon 
Peres is pushing an expansive "Peace Valley" vision of 
cooperation with Israel's neighbors, but has clashed with the 
Infrastructure Minister over institutional turf battles and 
dealings with Jordan on the Red Sea-Dead Sea water transfer 
project.  End summary. 
 
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The Negev -- Plans, But No Money 
-------------------------------- 
 
¶2. (C) Noah Kinnarti and Jill Reinach, advisors to Vice Prime 
Minister Shimon Peres, told NEA Senior S&T Advisor Charles 
Lawson and ESTH Officer June 15 that the development plan for 
the Negev region had been approved in a formal government 
decision at the end of 2005.  The plan includes NIS 17 
billion in spending over ten years, beginning in 2006, with 
Peres' Negev-Galilee development ministry as the coordinating 
body, even though most of the funds would be allocated 
through other ministries.  The 2006 budget, however, included 
no/no funds to support the Negev development plan.  Kinnarti 
said that people in the Negev were upset and were beginning 
to "act against the government" after supporting Kadima in 
the last elections.  He added, "Israel bluffs itself with 
plans many times."  He commented that Peres might be charged 
with resolving problems of the Bedouin.  Peres' ministry 
continues to push industry to locate in the Negev.  Other 
ministries provide incentives.  The Negev/Galilee ministry 
acts like a "one-stop shop."  In addition to his ministerial 
title, Peres is head of the Government Committee for 
Development of the Negev and Galilee.  Major issues go 
through the Committee and Committee decisions can become 
government decisions if there is no objection from the 
Cabinet after a two-week waiting period.  Interestingly, 
Kinnarti said that water would not be a major challenge for 
development of the Negev, as the focus was on industry, not 
agriculture.  Water supply infrastructure would require NIS 
300-500 million in funding. 
 
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Vision of All Electricity from Solar 
------------------------------------ 
 
¶3. (C) Peres' ministry is very involved in pushing solar 
energy projects in the Negev.  This has led to clashes 
between Peres and Infrastructure Minister Ben-Eliezer and 
between Peres' staff and Infrastructure Director General Eli 
Ronen, Kinnarti said, because Eliezer has overall 
responsibility for energy development.  Lawson and ESTH 
Officer briefed Kinnarti and Reinach on U.S. support for the 
International Partnership for the Hydrogen Economy (IPHE) and 
noted U.S. interest in Israel carrying out research in this 
promising alternative energy source and becoming a member of 
the IPHE.  Kinnarti agreed that solar in the Negev had the 
potential to produce hydrogen for use in fuel cells.  Peres 
has a vision of Israel producing its electricity from solar 
power within 30 years.  The Negev/Galilee ministry does not 
get involved in evaluating specific technologies, but is 
looking for ways to support innovative companies.  The 
Infrastructure Ministry has set aside 900 dunams in the Negev 
for solar energy projects.  PM Olmert has directed the Chief 
Scientist in the Ministry of Industry and Trade to support 
Israeli companies who could contribute to the effort.  Dov 
Raviv, who helped develop the Arrow rocket system at MOD, 
recently brought Peres' ministry a new project that will use 
off-the-shelf solar technologies to generate electricity at 
lower cost.  Raviv proposes to build a pilot plant producing 
one to two megawatts of electricity to prove the concept. 
The Infrastructure Ministry had 50 million NIS for 
development of solar and Raviv was to identify an additional 
five million, Kinnarti said.  Peres wants the pilot and 
future larger-scale plants to be located along the border 
with Jordan, as part of his vision of joint economic 
development between the two countries and in the wider region. 
 
--------- 
Oil Shale 
--------- 
 
¶4. (SBU) Kinnarti told Lawson that there were two companies 
competing to develop Israel's oil shale resources.  One 
company is the Israeli firm Rotem.  Lawson noted that the 
Jordanians are interested in developing their oil shale 
resources as well.  A Mexican investor had won the Israeli 
concession to the Timna copper deposits, which also extend to 
Jordan and Egypt, according to Kinnarti.  That investor is 
also interested in oil shale development in both Israel and 
Jordan.  Kinnarti noted that Israel was adopting a "private 
sector approach" to the development of the Negev's energy and 
mineral resources. 
 
------------------------------------ 
Ramat Hovav Hazardous Waste Facility 
------------------------------------ 
 
¶5. (C) Kinnarti told Lawson and ESTH Officer that the 
December visit of an expert team from the U.S. Environmental 
Protection Agency (EPA) had in one week provided conclusions 
and recommendations about the future of the Ramat Hovav 
industrial and hazardous waste site that had taken others 
months to reach.  "EPA really pushed the (Israeli) system," 
he said.  The related court-ordered arbitration is still in 
process.  Industry at the site was still arguing with the 
Ministry of Environment (MOE) about the values of materials 
included in MOE licensing permits.  Industry hired its own 
Dutch consulting firm (Note: MOE had earlier engaged a Dutch 
firm for expert advice on handling pollution issues at Ramat 
Hovav. End note.) and "they all went to Holland to argue," 
Kinnarti said.  The army runs hot and cold about whether to 
shift hi-tech bases to the Negev, he said, although the major 
decision to do so had been made three times.  Defense 
Minister Peretz is in favor of Negev development, but the 
question is how much he can push the military, Kinnarti 
commented. 
 
----------------------------- 
A Master Plan for the Galilee 
----------------------------- 
 
¶6. (SBU) In July, the government will announce the name of 
the person assigned to lead planning for the Galilee region, 
Kinnarti said.  It will take a year and a half to produce a 
master plan.  The GOI is trying to take steps to improve 
economic conditions for the Arab sector, which is 
concentrated in the Galilee.  The Ministry of Industry and 
Trade has plans to set up one or two municipal industrial 
zones in Arab areas within the next year, Kinnarti said. 
These will include some high-tech operations.  Kinnarti told 
Lawson that Motorola is planning to set up a development 
center in the Jordan Valley, with 500 software engineers in 
place within two years.  Peres' ministry has proposed a 
similar center near Arab populations, near Sakhnin or Tamra 
in the Galilee, and Motorola has agreed, Kinnarti said. 
 
---------------------------- 
Peres' Vision for the Region 
---------------------------- 
 
¶7. (C) Reinach stated that Peres is also responsible for 
regional economic cooperation, heading the Inter-Ministerial 
Committee on Cooperation with Israel's Neighbors established 
in early June.  Peres had encouraged the participation of a 
Canadian investor who was financing a water technologies 
incubation center on the Jordanian side of the Jordan Valley, 
Kinnarti said.  The development ministry was asking Motorola 
to hire some Jordanians for its plant on the Israeli side of 
the valley, Kinnarti reported.  Peres is pushing a "Peace 
Valley" initiative broader than the Red Sea-Dead Sea water 
transfer project, which he has also endorsed in discussions 
with King Abdullah.  This has created further friction with 
Ben-Eliezer, who sees himself as having the lead on Red-Dead. 
 The Peres version of Red-Dead includes more modest 
desalination plans than those in the current World Bank terms 
of reference for the project (50 million cubic meters per 
year vice 850 MCM/yr).  Peres is also pushing a joint 
Aqaba-Eilat airport located on the Jordanian side of the 
border and the idea of a common rail line, focused on cargo 
services, that could eventually have links to Saudi Arabia. 
In the north, Peres sees a "Jordan Gate," with industry on 
the Jordanian side and Israeli customs facilitation of 
exports at the Sheikh Hussein border crossing.  Peres also 
believes that Gaza trade should be connected to Egypt rather 
than Israel, Kinnarti said, with exports through El Arish. 
 
 
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