VZCZCXYZ0038
OO RUEHWEB

DE RUEHTVA #0502 0461530
ZNR UUUUU ZZH ZUI RUEWMCE0746 0461556
O 151530Z FEB 07
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC0000
INFO ARAB ISRAELI COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS TEL AVIV 000502 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA/FO FOR DANIN; NEA/IPA FOR WILLIAMS, SHAMPAINE, 
BELGRADE, ZIMMER; EB/IFD FOR GARRY; NSC FOR 
ABRAMS/DORAN/WATERS; TREASURY FOR HIRSON 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL KWBG IS
SUBJECT: ISRAELIS AND PALESTINIANS TO CONTINUE ECONOMIC 
DEVELOPMENT DIALOGUE 
 
REF: TEL AVIV 422 
 
¶1.  (SBU) SUMMARY: AS ONE ELEMENT OF THE ONGOING EFFORT TO 
IMPROVE IMPLEMENTATION OF THE AGREEMENT ON MOVEMENT AND 
ACCESS (AMA), ISRAELI AND PALESTINIAN DELEGATIONS MET ON 
FEBRUARY 13 AT THE CHIEF OF MISSION'S RESIDENCE TO DISCUSS 
ACTIONS THAT COULD AID A REVIVAL OF ECONOMIC ACTIVITY IN THE 
WEST BANK AND GAZA.  MINISTER OF DEFENSE AMIR PERETZ AND 
DEPUTY MINISTER OF DEFENSE EPHRAIM SNEH HEADED THE ISRAELI 
DELEGATION, WHILE CHIEF PLO NEGOTIATOR SAEB EREKAT LED THE 
PALESTINIAN DELEGATION, WHICH ALSO INCLUDED PRIVATE SECTOR 
REPRESENTATIVES. THE PARTICIPANTS HELD WIDE-RANGING 
DISCUSSIONS ON ELEMENTS OF THE AMA, AND ENGAGED IN A 
CONSTRUCTIVE EXCHANGE OF VIEWS TO IDENTIFY PRACTICAL STEPS 
FOR PROMOTING PALESTINIAN ECONOMIC DEVELOPMENT UNDER THE 
LEADERSHIP OF THE PRIVATE SECTOR.  THE PALESTINIANS CALLED 
FOR DECISIVE ACTION, NOTING THAT ISRAELI SUPPORT WOULD BE 
VITAL TO SPURRING PALESTINIAN PRIVATE SECTOR ACTIVITY.  SNEH 
COMMITTED TO WORK WITH THE PALESTINIANS, AND SUGGESTED 
CREATING A BI-LATERAL "ECONOMIC COMMITTEE" THAT WOULD CONVENE 
EVERY TWO WEEKS AS A PERMANENT FRAMEWORK FOR PROMOTING 
ECONOMIC DEVELOPMENT.  END SUMMARY. 
 
---------------------------- 
PALESTINIANS CALL FOR ACTION 
---------------------------- 
 
¶2.  (SBU) EREKAT CALLED FOR DECISIVE ACTION, STRESSING THAT 
THE BEST INSURANCE POLICY TO GUARANTEE SECURITY INVOLVES 
ISRAEL HAVING A NEIGHBORING PALESTINIAN STATE THAT PROSPERS 
ECONOMICALLY.  HE EMPHASIZED THAT PA PRESIDENT MAHMOUD ABBAS 
(ABU MAZEN) IS COMMITTED TO A TWO-STATE SOLUTION, ADDING THAT 
"WE ARE NOT GOING THE WAY OF HAMAS."  BASSAM KHOURY, CHAIR OF 
THE PALESTINIAN FEDERATION OF INDUSTRIES AND SECRETARY 
GENERAL OF THE PALESTINIAN PRIVATE SECTOR COORDINATION 
COUNCIL, OPINED THAT ONE KEY TO SPURRING ECONOMIC DEVELOPMENT 
IS TO FIND PRACTICAL SOLUTIONS THAT CAN REDUCE REDUNDANT 
BUSINESS COSTS ASSOCIATED WITH THE ISRAELI CHECKPOINT AND 
CLOSURE REGIME.  HE SUGGESTED, FOR EXAMPLE, THAT HAVING AN 
OPEN AND TRANSPARENT SYSTEM OF PRE-SCHEDULING GOODS TO 
TRANSIT THROUGH THE KARNI (AL-MINTAR) CROSSING POINT WOULD 
ENSURE THAT PALESTINIAN BUSINESSMEN HAVE A FAIR CHANCE TO 
SCHEDULE A "TURN" THROUGH THE CROSSING, INSTEAD OF PAYING THE 
CURRENT "MARKET" RATE, WHICH CAN BE UP TO FOUR TIMES AS 
EXPENSIVE AS THE PUBLISHED RATE. 
 
¶3.  (SBU) MUHAMMAD MUSTAFA, ECONOMIC ADVISOR TO PRESIDENT 
ABBAS, LAMENTED THAT THE ANTICIPATED ANNUAL COST JUST TO KEEP 
THE PA GOVERNMENT OPERATING WOULD BE BETWEEN USD 1 AND 1.5 
BILLION -- MONEY HE DID NOT EXPECT THE PA TO HAVE.  THIS 
ESTIMATE DID NOT INCLUDE ANY EXPENDITURES ON INFRASTRUCTURE 
OR DEVELOPMENT.  HE SAID THAT A SUSTAINABLE AND SUCCESSFUL 
PALESTINIAN ECONOMY WOULD REQUIRE A VIBRANT PRIVATE SECTOR TO 
MOVE AWAY FROM DEPENDENCE ON A BLOATED PUBLIC SECTOR AND 
DONOR SUPPORT.  HE ADDED THAT FOUR ACTIONS WOULD BE REQUIRED: 
INCREASING MOBILITY AND ACCESS FOR PALESTINIANS; DEVELOPING 
PUBLIC INFRASTRUCTURE IN CRITICAL SECTORS SUCH AS 
TRANSPORTATION, WATER, AND ENERGY; INCREASING ACCESS TO 
CREDIT; AND DIVERSIFYING THE PALESTINIAN ECONOMY.  MUHAMMAD 
SHTAYYEH, FORMER HOUSING AND PUBLIC WORKS MINISTER, SAID THAT 
SUCH EFFORTS WOULD ALSO HELP COUNTER THE EMIGRATION OF 
TALENTED PALESTINIAN ENTREPRENEURS AND PROFESSIONALS.  ABDUL 
MALIK JABR, CEO OF PALTEL, SAID JOB-CREATION PROJECTS IN THE 
IMMEDIATE FUTURE WOULD HELP STIMULATE THE ECONOMY, INCREASE 
TAX-BASED REVENUES, AND PROVIDE PALESTINIANS ALTERNATIVES TO 
JOINING MILITIAS.  HE HIGHLIGHTED SEVERAL PROMISING 
PRIVATE-SECTOR INITIATIVES, INCLUDING A PROJECT TO BUILD A 
CITY NEAR RAMALLAH THAT WOULD PROVIDE 20,000 NEW JOBS AND 
CREATE 7,000 NEW HOUSES.  HE UNDERSCORED THAT ISRAELI SUPPORT 
WOULD BE VITAL TO BRINGING THESE PLANS TO FRUITION. 
 
----------------------------------- 
GOI TO CONSIDER PRACTICAL SOLUTIONS 
----------------------------------- 
 
¶4.  (SBU) MINISTER PERETZ EMPHASIZED THAT HE IS AN 
"UNCONDITIONAL PARTNER" IN WORKING TO LESSEN THE HARDSHIPS ON 
THE PALESTINIAN PEOPLE AND IMPROVE THE PALESTINIAN ECONOMY. 
SENIOR MINISTRY OF DEFENSE (MOD) ADVISOR HAGGAI ALON STRESSED 
THAT HIGH-LEVEL COOPERATION IS MUTUALLY BENEFICIAL, AND 
CONVEYED THAT THE GOI UNDERSTANDS THAT IT NEEDS TO BE "AN 
ACTIVE PLAYER" IN PROMOTING ISRAELI-PALESTINIAN ECONOMIC 
DEVELOPMENT.  MOREOVER, HE NOTED THAT THE MOD IS TAKING A 
MODIFIED APPROACH TO COORDINATING WITH PALESTINIANS THAT IS 
NOT AS SECURITY-CENTERED.  THE COORDINATOR FOR GOVERNMENT 
 
 
 
AFFAIRS IN THE TERRITORIES (COGAT), MAJOR GENERAL YUSSEF 
MISHLEV, OUTLINED SEVERAL MEASURES -- INCLUDING INCREASING 
PERMITS AND EASING MOVEMENT THROUGH CROSSING POINTS -- THAT 
COGAT HAS EITHER TAKEN OR HAS PLANNED THAT WOULD CONTRIBUTE 
TO PALESTINIAN ECONOMIC DEVELOPMENT.  DEPUTY DEFENSE MINISTER 
SNEH AGREED WITH THE AMBASSADOR AND THE CONSUL GENERAL THAT 
THE PARTIES NEED TO FOCUS ON PRACTICAL SOLUTIONS, AND PRAISED 
THE PARTICIPANTS FOR THEIR CANDID CONTRIBUTIONS. 
 
---------- 
NEXT STEPS 
---------- 
 
¶5.  (SBU) SNEH SUGGESTED CREATING A BI-LATERAL "ECONOMIC 
COMMITTEE" THAT WOULD CONVENE EVERY TWO WEEKS AS A PERMANENT 
FRAMEWORK FOR PROMOTING ECONOMIC DEVELOPMENT.  MAJOR GENERAL 
MISHLEV WOULD SERVE AS THE ISRAELI CHAIR OF THE GROUP, WHICH 
WOULD ALSO INCLUDE ALON AND REPRESENTATIVES FROM THE ISRAELI 
AIRPORT AUTHORITY AND MINISTRY OF FINANCE.  THE PALESTINIAN 
CONTINGENT WOULD BE LED BY SA'EB EREKAT, AND INCLUDE 
PROMINENT PRIVATE-SECTOR REPRESENTATIVES.  THOUGH THE 
"ECONOMIC COMMITTEE" WOULD BE BI-LATERAL IN NATURE, THE 
PARTICIPANTS WELCOMED USG INVOLVEMENT, AND WERE GRATEFUL THAT 
THE AMBASSADOR HOSTED AND FACILITATED THE DIALOGUE.  THE 
AMBASSADOR EMPHASIZED THAT THE USG WOULD BE HAPPY TO PLAY A 
CONSTRUCTIVE ROLE.  AS REQUESTED BY THE PARTIES, FUTURE 
MEETINGS COULD BE HELD AT THE CMR OR THE CONSUL GENERALS 
RESIDENCE IN JERUSALEM. 
 
--------- 
ATTENDEES 
--------- 
 
¶6.  (SBU) THE PRIMARY PARTICIPANTS IN THE DISCUSSION WERE AS 
FOLLOWS: 
 
U.S. DELEGATION 
--------------- 
 
EMBASSY TEL AVIV 
---------------- 
 
AMBASSADOR 
DCM 
USAID DIRECTOR 
ECON COUNSELOR 
POL COUNSELOR 
SPECIAL ADVISOR TO THE AMBASSADOR 
NAVAL ATTACHE 
 
CONGEN JERUSALEM 
---------------- 
 
CONSUL GENERAL 
ECON CHIEF 
 
USSC 
---- 
 
ADVISOR 
 
 
ISRAELI DELEGATION 
------------------ 
 
MINISTER OF DEFENSE AMIR PERETZ 
DEPUTY MINISTER OF DEFENSE EPHRAIM SNEH 
COGAT MAJOR GENERAL YOSSEF MISHLEV 
MOD SENIOR ADVISOR HAGGAI ALON 
LT. COL. ODED HERMAN, ADVISOR TO POL-MIL DIRECTOR GILAD 
IRIT BEN-ABBA, MFA HEAD OF BUREAU FOR MIDDLE EAST ECONOMIC 
AFFAIRS 
 
PALESTINIAN DELEGATION 
---------------------- 
 
PLO CHIEF NEGOTIATOR SA'EB EREKAT 
FORMER PA MINISTER OF HOUSING & PUBLIC WORKS MUHAMMAD SHTAYYEH 
PA PRESIDENCY ECONOMIC ADVISOR MUHAMMAD MUSTAFA 
ABDUL MALIK JABR, CEO OF PALTEL 
BASSAM KHOURY, CHAIR, FEDERATION OF INDUSTRIES (PFI) 
NISREEN HAJ AHMED, ECONOMIC ADVISOR TO PRESIDENT ABBAS 
INES ABU LABAN, NEGOTIATIONS SUPPORT UNIT 
 
********************************************* ******************** 
 
 
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