VZCZCXRO0554
RR RUEHROV
DE RUEHTV #1299/01 1671224
ZNR UUUUU ZZH
R 161224Z JUN 09 ZDK
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC 2205
INFO RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS SECTION 01 OF 02 TEL AVIV 001299 
 
SIPDIS 
SENSITIVE 
 
STATE FOR NEA/IPA, PRM, OES 
 
E.O. 12958: N/A 
TAGS: ECON SENV KWBG IS
SUBJECT: SPECIAL TREATMENT IS NOT ENOUGH: THE GOI 
PERSPECTIVE ON NORTH GAZA WASTEWATER TREATMENT PLANT 
 
¶1.  (U)  SUMMARY: The GOI disputes World Bank 
assertions--widely picked up by U.S. analysts--that the North 
Gaza Wastewater Treatment Plant (NGWWTP) project is at a 
standstill because the GOI had not approved entry of 
necessary equipment and materials into Gaza, noting that all 
approvals were issued a year-and-a-half ago. The GOI is 
anxious to have North Gaza sewage properly treated and says 
that the problem is the lack of bidders on the USD 12 million 
construction project.  That said, an unclear Gaza policy and 
the consequent increase in perceived business risk dissuaded 
potential bidders on this important construction project. 
Having been caught by the unintended consequences of past 
policy, it remains to be seen whether the GOI may now be open 
to establishing a more transparent system that will enable 
future important infrastructure repair projects to move 
forward quickly. END SUMMARY. 
 
¶2.  (SBU)  One thing is clear: Phase II of the NGWWTP 
project, the sewage treatment plant, is not moving forward. 
The reasons for this stagnation are murky, and there is 
plenty of muck being hurled.  A June 8 Reuters piece ("World 
Bank says Blair sewage project in Gaza may collapse") places 
blame for lack of progress on the project squarely on Israel, 
citing a June 4 memo to donors, in which the World Bank 
reportedly said Israel had prevented delivery of critical 
equipment to the project since March.  In answer to an 
Embassy request for an official response to these 
allegations, Coordinator for Government Activities in the 
Territories (COGAT) Deputy Head of Foreign Relations Uri 
Singer wrote to EconOff: 
 
BEGIN TEXT: 
"My response is as follows: 
"1. I have urged (World Bank Country Director for West Bank 
and Gaza) Mr. David Craig, numerous times to stop giving 
excuses and to stop blaming Israel for his lack of success 
regarding the NGWWTP. 
"2. We are concerned, and I personally suspect (and I told 
Mr. Craig as much) that the second phase of the project will 
not happen (i.e., the part in which the sewage will be 
treated), for two main reasons: lack of interest from the WBG 
(PA) side and lack of interest from the PWA (Palestinian 
Water Authority) side. 
"3. Take into consideration that ALL items required for the 
second phase have been approved a year and a half ago." 
END TEXT 
 
¶3. (U)  At a June 10 follow-up meeting with EconCouns, Singer 
elaborated on the progress of the NGWWTP project.  Phase I, 
which involved digging basins to hold pumpage from the Beit 
Lahiyya lagoon, is complete, and already six of the nine 
basins are filled with sewage.  The GOI issued all approvals 
for Phase II, the treatment plant itself, one-and-a-half 
years ago, he said, so from the GOI perspective, there is no 
reason not to go ahead with the work.  On one issue--a World 
Bank request David Craig made to COGAT one-and-a-half months 
ago to open the security fence for more direct delivery of 
materials--the GOI refused, saying that to do so would risk 
setting up a staging area for terrorists.  Instead, the GOI 
assured access through the normal crossing points to Gaza, 
and so, in its view, offered everything necessary to 
implement Phase II.  In the meantime, the PWA has proposed 
drilling 35 holes into which to release this untreated 
wastewater.  The GOI is opposed to this proposal, because the 
untreated sewage would be released into the aquifer, creating 
an "ecological timebomb," Singer said. 
 
¶4.  (SBU)  The real reason why Phase II has not gone forward, 
Singer asserted, is that there were no bidders on the USD 12 
million tender to complete the project, a tender "which the 
PWA designed."  The request for tenders went unanswered, and 
the World Bank hopes to reissue it at an as yet unspecified 
time when they expect greater resonance among potential 
bidders.  This of course raises the question: why were there 
were no bidders?  Businessmen who had been expected to submit 
bids on the NGWWTP Phase II tender indicated that there was a 
great deal of insecurity on the part of contractors regarding 
whether equipment would get into Gaza through the crossings 
in a timely manner--Israeli assurances notwithstanding. 
Further, this insecurity made it nearly impossible to 
estimate costs, because of the uncertainty over whether 
materials could be procured through the crossings or, at 
double-to-quadruple the cost, through the tunnels. 
Interestingly, these same businessmen submitted a bid on June 
10 for a treatment plant at Rafah, saying that the relative 
size of the project--and hence the overall risk--and ICRC 
assurances made them feel comfortable bidding on the project, 
though at a very high price. 
 
 
TEL AVIV 00001299  002 OF 002 
 
 
¶5.  (U)  Singer told EconCouns that the GOI had received at 
the June 7 AHLC information about a German KfW-funded 
wastewater project at Khan Younis, to be implemented by UNDP. 
The GOI is studying the proposal, but is favorably inclined 
to seeing it happen. 
 
¶6.  (SBU) COMMENT.  The NGWWTP is in Israel's stated and 
actual interest.  An Israeli-caused ecological disaster or a 
disease epidemic in Gaza would not be a desirable outcome. 
Consequently, Israel has, in its view, done everything it can 
to make this project happen.  Nonetheless, current 
restrictive procedures have generated a level of insecurity 
that, assurances notwithstanding, discourage bidders on 
large-scale projects.  So, while the World Bank assertions 
appear to have gone too far, certainly in this particular 
case, there is a subtle undercurrent of truth in that the 
basic distrust in the system of allowing materials into Gaza 
may carry with it a disincentive to invest or take on 
business risk.  With possible reconstruction in the offing, 
now is the time for Israel to redefine its Gaza policy, to 
create a policy that is at the least transparent, and at best 
also responsive to commercial needs for materials in Gaza. 
 
********************************************* ******************** 
Visit Embassy Tel Aviv's Classified Website: 
http://www.state.sgov.gov/p/nea/telaviv 
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CUNNINGHAM