VZCZCXRO8585
PP RUEHROV
DE RUEHTV #1950/01 2470824
ZNR UUUUU ZZH
P 040824Z SEP 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 3305
INFO RHEHNSC/NSC WASHDC PRIORITY
RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS SECTION 01 OF 02 TEL AVIV 001950 
 
SIPDIS 
SENSITIVE 
 
DEPARTMENT FOR NEA/IPA, NSC FOR SHAPIRO/KUMAR 
 
E.O. 12958: N/A 
TAGS: ECON KPAL KWBG IS
SUBJECT: GOI CONSIDERS SEPTEMBER 2 JEC MEETING CONSTRUCTIVE 
AND FRIENDLY 
 
¶1. (U) SUMMARY: The September 2 Israeli-Palestinian Joint 
Economic Committee (JEC) meeting marks the first 
ministerial-level meeting between the Netanyahu government 
and the PA and the first time in recent memory that the JEC 
has been chaired at the ministerial level.  Vice PM and 
Minister for Regional Cooperation Silvan Shalom and PA 
Economy Minister Bassem Khoury co-chaired the three-hour 
Jerusalem meeting to enhance economic cooperation.  The 
atmosphere was described by representatives of the Regional 
Cooperation Ministry (MRC), Foreign Ministry (MFA), Ministry 
of Finance (MOF) and Coordinator for Government Activities in 
the Territories (COGAT) as constructive, friendly, 
productive, and non-political.  Issues discussed included 
frequency allocation for Wataniya, dual-use imports, 
agriculture, tourism, Allenby and other commercial crossings, 
investment, visas/entry stamps, Israeli hospitals, and Gaza. 
Subcommittees were formed to follow-up on issues related to 
tourism, industry, agriculture and health. The GOI praised 
the PA for improving internal security, enabling GOI actions 
to relax checkpoints and thus allow the PA to demonstrate to 
West bank Palestinians, before the upcoming PA elections, 
that improvements are permanent and reliable.  Participants 
agreed that JEC meetings will take place every six weeks 
until the end of the year. END SUMMARY. 
 
¶2.  (SBU) INVESTMENT.  Accordion to MFA's Yael Ravia-Zadok, 
the PA expects five to seven percent growth in the West Bank 
in 2009, and investment is up 600 percent over the previous 
year as a result of the Bethlehem and Nablus conferences, 
coupled with the effect of the global financial crisis on 
Gulf investor strategies. The GOI agreed that investment is 
key to continued economic success.  The PA requested 
"permanent" multiple-entry visas for Jordanian investors and 
promised to forward examples of relevant cases.  The GOI 
noted that it had already issued such a visa to 
Jenin-investor Khoury, and would consider other cases.  When 
the PA raised the issue of 'West Bank Only' stamps placed in 
passports at Allenby and Ben Gurion and the potential for 
adverse effects on business and investment from abroad, the 
GOI responded that they are aware of the issue, that the 
Ministry of Interior is working on addressing these concerns, 
and that it will be raised in the next meeting of the GOI 
Interministerial Committee on Improving the Situation of 
Palestinians of Judea and Samaria. 
 
¶3.  (SBU) WATANIYA. The GOI learned that 3.8 MHz bandwidth 
would allow Wataniya to offer SMS and voice service only, 
while 4.8 MHz would allow Wataniya to offer 
commercially-viable 3rd-generation wireless service.  The PA 
explained that if 4.8 MHz is not made available by September 
15th, Wataniya investors would withdraw their $140 million 
investment, thereby damaging the PA's efforts to market the 
West Bank as an investment destination.  MRC representative 
Yishay Sorek and MFA's representative Yael Ravia-Zadok said 
that the GOI takes these concerns very seriously and noted 
that Jawwal needs to return the 1 MHz temporary allotment so 
that it can be reassigned to Wataniya.  Discussions are 
ongoing within the Ministry of Defense (MOD), but no clear 
decision has been taken. 
 
¶4.  (SBU) INDUSTRY. A subcommittee was established to 
facilitate frequent and direct dialogue on issues related to 
the proposed internationally-backed industrial zones. 
Further, the PA expressed interest in improving its 
industrial infrastructure.  Updated technology would improve 
competitiveness of PA industries, MFA's Yael Ravia-Zadok 
reported, and this would require new equipment to be allowed 
through the crossings. 
 
¶5.  (SBU) DUAL-USE IMPORTS. There is no dramatic change in 
the GOI's approach to potentially dual-use products, MRC 
representative Yishay Sorek explained.  This is a MOD issue 
and there is a procedure in place.  Referring to the National 
Bottling Company (Coke) case as an example, Sorek said the 
GOI asked why PA industry could not use the same materials as 
their Israeli counterparts, materials that would not be 
problematic.  MFA's Yael Ravia-Zadok reported that the PA 
proposed coordinated security to overcome this issue, but the 
GOI rejected this proposal, saying coordination needed to be 
developed step-by-step, and this was too far and fast a 
development.  On September 3, EconCouns reiterated to MOD's 
Oded Herman the need to offer mitigation measures as a normal 
part of the GOI dual-use review committee's work.  Herman 
said the committee would be discussing the general issue of 
mitigation at its next meeting (not yet scheduled), but 
informal polling of its members showed little support for 
using the Wassenaar Agreement as a model for 
Israeli-Palestinian interaction on dual-use goods. 
 
TEL AVIV 00001950  002 OF 002 
 
 
 
¶6.  (SBU)  ALLENBY BRIDGE AND COMMERCIAL CROSSINGS.  The GOI 
views possible PA presence at the Allenby crossing as a 
political issue that should be addressed in meetings between 
PM Netanyahu and Abu Mazen, not in the JEC, MRC 
representative Yishay Sorek explained.  MFA's Yael 
Ravia-Zadok added that the GOI is not committed to respond to 
this request, but is willing to talk about Allenby in the 
context of other commercial crossings.  The GOI was surprised 
and pleased by the PA's report that extended hours at Allenby 
had already netted savings of $50 to $100 million in hotel 
bills.  When the PA stressed the need for strategic 
discussion about the crossings, MFA's Yael Ravia-Zadok said, 
the GOI responded that it had already sent a letter 
expressing willingness to hold such discussions, provided 
they do not jeopardize future discussions on permanent 
status.  Infrastructure on the PA side at crossings such as 
Kalandia will be addressed in the next JEC meeting. 
 
¶7.  (SBU)  AGRICULTURE (meat, milk, 
technology/infrastructure, and access).  According to MFA's 
Yael Ravia-Zadok, the PA requested improved access to the 
Jordan Valley for agriculture.  Further, the PA asked to be 
allowed to develop agriculture in Area C by building 
greenhouses and public buildings.  The PA requested the 
possibility of importing larger quantities of dairy and meat 
(veal, lamb) products into the West Bank, beyond current 
quotas, to counteract upward price pressures caused by 
limited supplies during Ramadan.  The GOI is concerned about 
re-importation of these cheaper products into Israel.  A 
subcommittee, including representatives from the ministries 
of Health, Agriculture and Customs, was established to 
discuss this request. 
 
¶8.  (SBU)  TOURISM. Both sides emphasized that tourism (e.g., 
Bethlehem) is a mutual interest, and established a 
sub-committee to study this issue.  The PA asked that Israeli 
Arabs to be allowed into the West Bank, including to Ramallah 
(which cannot be done legally at present), and, stressing the 
important role that East Jerusalem plays in the West Bank 
economy, underscored the need for improved access. 
 
¶9.  (SBU)  HOSPITALS. The GOI noted that Palestinian use of 
Israeli hospitals is declining.  Learning from the PA that 
lower costs in Jordan are attracting Palestinian patients, 
the JEC agreed to form a health subcommittee, co-chaired by 
the MOF's Michal Finkelstein and Hatem Yousef, to try to 
develop packages of services at reduced rates. 
 
¶10.  (SBU)  GAZA.  According to MFA's Yael Ravia-Zadok, the 
PA asked the GOI to reconsider its policy on Gaza, saying 
that the current policy strengthens Hamas and does not help 
bring home abducted soldier Gilad Shalit.  They requested 
that a greater variety of products be shipped to Gaza via the 
official crossings, that more cash be shipped to non-Hamas 
banks in Gaza.  Regarding cash, the GOI responded that better 
information exchange is key to this process (septel), but 
remained noncommittal. 
 
¶11.  (SBU)  Comment: The higher-level JEC ushers in improved 
PA-GOI communication on problematic issues, but positive 
atmospherics aside, little of substance was achieved.  Some 
hope hinges on the PM's Interministerial Committee on 
Improving the Situation of Palestinians of Judea and Samaria, 
and its ability to take meaningful action.  The 
Interministerial Committee, chaired by Deputy PM Silvan 
Shalom, is likely to meet within the next two weeks and the 
MRC official responsible for setting the agenda has once 
againg solicited USG input. 
 
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