VZCZCXYZ0007
RR RUEHWEB

DE RUEHTV #1994/01 2461438
ZNR UUUUU ZZH
R 021438Z SEP 08
FM AMEMBASSY TEL AVIV
TO RUEHFR/AMEMBASSY PARIS 0179
RUEHC/SECSTATE WASHDC 8259
INFO RUEHLJ/AMEMBASSY LJUBLJANA 0040
RUEHMO/AMEMBASSY MOSCOW 2033
RUEHSG/AMEMBASSY SANTIAGO 0162
RUEHTL/AMEMBASSY TALLINN 0073

UNCLAS TEL AVIV 001994 
 
SENSITIVE 
SIPDIS 
 
PARIS PLS PASS USOECD 
EEB FOR MUDGE, SCHOLZ 
NEA/IPA FOR ASACHAR, DZIMMER 
 
E.O. 12958: N/A 
TAGS: ECON ETRD OECD IS
SUBJECT: STATUS ON ISRAEL'S ACCESSION TO THE OECD 
 
REF: A. A:TEL AVIV 1978 
     ¶B. B:TEL AVIV 1845 
 
¶1. (SBU) SUMMARY:  Ministry of Finance (MOF) Senior Deputy 
Director General Oded Brook noted to Econ officers during a 
meeting on August 27 that Israel was using the Organization 
of Economic Cooperation and Development (OECD) accession 
process to accomplish domestic goals on the environment, 
taxation, and intellectual property rights (IPR).  He 
expressed some concerns about OECD best practices with regard 
to sovereign wealth funds and expectations for official 
development assistance. Brook said that Israel had made 
progress on incorporating environmental criteria in public 
tenders and fostering "green policies."   He recognized, 
however, that certain Israeli tax programs would raise 
questions at the OECD.  On IPR, Brook was less sanguine. 
While the OECD does not have a formal instrument on IPR, 
Israeli IPR policies will still be examined in several OECD 
committees. END SUMMARY. 
 
ENVIRONMENT 
 
¶2.  (U) During Israel's initial phase as an OECD candidate 
country, many Israeli policy makers were concerned that 
Israel's biggest stumbling block towards full membership 
would be adhering to the bribery convention.  Israel quickly 
overcame that barrier by ratifying the convention, one of the 
OECD's most important legally binding instruments.  In fact, 
the environment, and notably Israel's lack of environmental 
legislation, quickly eclipsed bribery as one of the most 
important issues that Israel has to address before it can 
become a full OECD member. Brook admitted to EconCouns that 
this was a "problematic area" for Israel, but added that 
Israel is trying to demonstrate its excellent technical 
capabilities in areas such as recycling and agriculture.  As 
an example, he mentioned a "garbage sorting machine" which 
divides recyclable materials as one invention that shows 
Israel's seriousness about addressing its environmental 
problems. 
 
¶3.  (U) Partly in reaction to the OECD's requirements, the 
GOI has aggressively moved to pass legislation to strengthen 
Israel's environmental protection regime and cover the gaps. 
(NOTE: For details, see REF B.  END NOTE.) In addition, the 
Knesset is now taking "green policies" into account when 
making decisions. Israel also recently began incorporating 
environmental criteria in public tenders; in Haaretz, one of 
Israel's leading dailies, the Ministry of Environment 
published a tender announcement for an advisor to write 
background documents related to Israel's participation in the 
OECD.  Brook also said that an "environment committee" would 
be formed within the GOI to track implementation of Israel's 
environment policies. 
 
TAXATION 
 
¶4.  (U) Taxation is another area that poses challenges for 
Israel's OECD accession.  Brook mentioned that certain unique 
Israeli tax practices -- like giving tax breaks to new 
immigrants to Israel -- would not viewed positively by OECD 
members. There is also a notable lack of transparency and 
exchange of information regarding taxes in Israel, which 
requires legislation to fix. 
 
INTELLECTUAL PROPERTY RIGHTS 
 
¶5.  (SBU) While recognizing that there is no specific OECD 
instrument on IPR, Brook raised IPR in the context of 
Israel's accession to the OECD and highlighted its importance 
in several different OECD committees including trade, 
investment and science and technology.  Israel is working on 
completing a survey from the Trade Committee that 
specifically asks about IPR.  The EU has also begun raising 
this issue with the Israelis.  (NOTE:  A full reporting of 
IPR and Israel can be found in REF A.  END NOTE.) 
 
INVESTMENT 
 
¶6.  (SBU) Israel expressed some concern with recent OECD work 
on sovereign wealth funds.  A recent OECD best practices 
document highlights transparency for investment transactions 
by foreign countries, a demand that Israel could not adhere 
to because of fears of compromising national security. 
EconCouns was quick to note that a detailed explanation of a 
rejection of foreign investment on clear national security 
grounds might go beyond the requirements of the OECD 
document.  Brook said that only Israel and Russia had voiced 
reservations about agreeing to the best practices, and 
realized that Israel might stand out in the accession process 
due to its rejection. 
 
OFFICIAL DEVELOPMENT ASSISTANCE 
 
¶7.  (SBU) Brook also voiced some concern over the amount of 
official development assistance that Israel currently offers 
and whether it met the criteria of the non-members of the 
Development Assistance Committee (DAC).  Present figures for 
non-DAC members suggest that 0.2 per cent of GDP should be 
devoted to development assistance, but Israel was far from 
reaching this mark. 
 
COMMENT 
 
¶8.  (SBU) Brook remarked that the OECD accession was having 
an impact on Israel's domestic economic policies by promoting 
changes and awareness on issues that have in the past been 
problematic and neglected by Israel.  Israel seems willing to 
move on several entrenched economic issues to accomplish its 
goal of membership in the OECD; the desire to gain OECD 
status and recognition as a developed market economy is 
serving to press Israel's fractious political parties to 
compromise for the national good.  Post sees the accession 
process as useful in bringing pressure in several key areas 
of USG concern like IPR and environmental legislation. 
 
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