VZCZCXRO3134
OO RUEHROV
DE RUEHJM #1117/01 1820746
ZNR UUUUU ZZH
O 010746Z JUL 09
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5304
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEKJCS/JCS WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 001117 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE AND NEA/IPA; NSC FOR SHAPIRO/KUMAR; 
TREASURY FOR AHERN; DEPT PLEASE PASS TO USAID FOR ANE/MEA: 
MCCLOUD/BORODIN; JOINT STAFF FOR LTGEN SELVA 
 
E.O. 12958: N/A 
TAGS: ECON ETRD BEXP EAGR PREL KWBG IS
SUBJECT: GOI MOVES TO BLOCK PALESTINIAN MEAT AND DAIRY 
PRODUCTS FROM EAST JERUSALEM 
 
¶1.  (SBU) Summary:  Palestinian meat and dairy companies in 
the West Bank have received notification from the Israeli 
Ministry of Health that they will no longer be permitted to 
"export" their products to East Jerusalem as of August 15. 
Palestinian Authority officials and private businessmen 
stressed the economic importance of the East Jerusalem 
market, and characterized the move as "a politically 
motivated effort."  PA officials said that the PA will 
respond with "reciprocal" measures on Israeli products 
entering the West Bank.  End summary. 
 
Cut-Off Discussed and Averted for Several Months 
--------------------------------------------- --- 
 
¶2.  (SBU) ConGen sources said that wrangling over the 
threatened cut-off of West Bank meat and dairy sales to East 
Jerusalem began several months ago.  The Israeli Civil 
Administration (CA) notified Palestinian dairy and meat 
suppliers in March that, as of April 1, 2009, their permits 
to sell to East Jerusalem would be rescinded.  According to 
Palestinian business contacts, talks between Palestinian Food 
Industries Association (PFIA) representatives and the CA in 
April and May 2009 resulted in extension of the deadline 
until August 15, 2009.  In a follow-on letter dated May 21, 
the Israeli Ministry of Health, citing Israel's Animal 
Disease Ordinance of 1985, notified West Bank meat and dairy 
companies that products of animal origin from the Palestinian 
Territories will not be permitted to enter Israel, and past 
permits will be invalidated.  The implementation date is not 
stated, but the letter set a July 1 deadline for companies to 
respond in writing.  (Note:  Post has obtained copies of the 
May 14 and 20 letters.  End note.) 
 
PA Threatens "Reciprocal" Response 
---------------------------------- 
 
¶3.  (SBU) Minister of National Economy Bassim Khoury told 
Econoff that he held an emergency meeting on June 20 with 
Minister of Agriculture Ismael Edeiq, Minister of Health 
Fathi Abu Moghli, and businessman Mazen Sinokrot to discuss 
the PA reaction.  He said he planned to contact the relevant 
GOI ministries directly to explore what steps the companies 
could take to maintain their connection to the East Jerusalem 
market.  If talks fail, Khoury said, the PA will impose 
"reciprocal" restrictions on Israeli meat and dairy products 
sold in the West Bank, to be enforced through the Palestinian 
customs police and at the point of sale. 
 
¶4.  (SBU) PA Ministry of National Economy Advisor Saad 
Al-Khatib told Econoff on June 26 that the GOI's move is a 
"politically motivated effort to assert Israeli economic 
dominion over East Jerusalem."  Bader Rock of the PA's 
Negotiation Support Unit (NSU) said the cut-off a "clear 
violation of the Paris Protocol," of Article VII in 
particular.  Rock told Econoff on June 30 that the PA 
requested a meeting of the Agriculture Committee (a 
sub-committee of the Joint Economic Committee) on June 28. 
If the PA does not receive a positive response, he said, they 
will elevate this issue as a dispute to the JEC. 
 
¶5. (SBU) NSU contacts said that it does not appear there are 
new standards that Palestinian food exporters need to meet or 
new permits to obtain; rather, this decision is a categorical 
refusal of the entry of such products.  Rock said that the 
decision appears to be based upon a new reading of the GOI's 
Animal Disease Ordinance of 1985, which treats the entry of 
animal products from the Palestinian Territory into East 
Jerusalem and Israel as "importation."  Rock said that, since 
the Palestinian Territories are not on the Israeli list of 
"foreign countries," according to the Animal Diseases 
Regulations of 1974, companies in the Palestinian Territories 
cannot apply for an import permit -- and therefore cannot 
receive permission to export into East Jerusalem or Israel. 
 
Palestinian Businesses Rely on East Jerusalem Market 
--------------------------------------------- ------- 
 
¶6.  (SBU) Mashour Al Juneidi, CEO of Hebron's al-Juneidi 
Dairy (the West Bank's largest), told Econoff on June 29 that 
his dairy has had GOI licenses to sell in East Jerusalem 
since 1995.  He said that he wants to resolve this problem, 
 
JERUSALEM 00001117  002 OF 002 
 
 
but "we just don't know what they need, or what they are 
asking for."  Al Juneidi said he fears that the dairy will 
soon lose the 12 percent of its revenues that it derives from 
sales to East Jerusalem.  Contacts in PFIA said that sales to 
East Jerusalem account for as much as 20 percent of 
Palestinian companies' dairy and meat sales, and added that 
the new measure would deal a particularly harsh blow to meat 
companies that have already lost the Gaza market, formerly 
about 35 percent of sales, to the GOI blockade. 
WALLES