VZCZCXRO8126
PP RUEHROV
DE RUEHTV #1462/01 1871411
ZNR UUUUU ZZH
P 061411Z JUL 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 2460
INFO RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS SECTION 01 OF 02 TEL AVIV 001462 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE. NSC FOR SHAPIRO/KUMAR. JOINT STAFF 
FOR LTGEN SELVA 
 
E.O. 12958: N/A 
TAGS: PREL PGOV KWBG IS
SUBJECT: INCENTIVES TO WEST BANK SETTLEMENTS MAY PERSIST 
 
¶1. (U) On 5 July, the Knesset Finance Committee broadened the 
criteria by which the government will grant National Priority 
Area (NPA) status, which could allow the continuation and a 
potential increase of incentive benefits for West Bank 
settlers. The NPA bill gives the GOI the legal authority to 
determine NPA zones based on the following criteria: security 
and socio-economic conditions, the GOI's periphery index, 
strategic location of communities, and other special 
circumstances. The Knesset committee also erased language 
stipulating that benefits of NPA status would apply to 
eligible communities "in the state" so as to prevent 
challenges from groups arguing that settlements in the 
Occupied Territories are not within the State of Israel. 
(Note: The NPA bill is part of the Israel's Arrangements 
(budget) Bill and is expected to be passed as early as next 
week. Embassy's in-depth assessment of the types of 
incentives provided to West Bank settlers can be viewed on 
the Embassy's classified website at 
http://www.state.sgov.gov/p/nea/telaviv/ under the link 
"Reporting Attachments." End note.) 
 
¶2. (U) The new draft of the NPA bill, if approved, will 
cancel the 24 August 2008 decision by the Olmert 
Government(Cabinet Resolution 3960), which stated that a 
community's distance from Tel Aviv (the "Periphery Index") 
would primarily determine its eligibility for NPA status. If 
applied strictly by the periphery index criteria, NPA status 
could only be granted to the Galilee, the Negev, and remote 
settlement communities in the Jordan Valley and the Southern 
Hebron Hills. (Note: Olmert's approach still left broad 
discretion for individual ministers to unilaterally extend 
NPA status in "special circumstances." End note.) Hagit Ofran 
from Peace Now told Econoff on 6 July that the Committee's 
discussions left little doubt that the goal of the NPA draft 
changes was to allow greater inclusion of settlement 
communities. According to Ofran, some settler leaders 
(non-Knesset members), including Ariel Mayor Ron Nachman, 
participated in the Finance Committee's discussions. Ofran 
further added that discussions emphasized the importance of 
the security criterion, which will likely benefit settlers 
who live under tighter security constraints than most 
Israelis. 
 
¶3. (SBU)  Comment: Once the Arrangements Bill has passed, the 
Prime Minister's Office will have to make a list of the 
communities that will be eligible for the National Priority 
Area subsidies. Embassy has already registered our concern 
with PMO staff over this blatant opening of the NPA to the 
settlements, though the redraft may have little actual 
impact, as the previous bill already granted significant 
discretion for individual ministers to provide incentive 
benefits to settlement communities. Nonetheless, we will be 
meeting with senior PMO officials and staff of potentially 
subsidizing ministries (e.g., Housing and Construction, and 
National Infrastructure) over the next few weeks to get a 
sense of what the Finance Committee's actions could mean on 
the ground. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TEL AVIV 00001462  002 OF 002 
 
 
 
 
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Visit Embassy Tel Aviv's Classified Website: 
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CUNNINGHAM