VZCZCXRO8808
PP RUEHROV
DE RUEHJM #1990/01 3081339
ZNR UUUUU ZZH
P 041339Z NOV 09
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC PRIORITY 6566
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 JERUSALEM 001990 
 
SENSITIVE 
SIPDIS 
 
NEA FOR NEA/IPA AND NEA/PPD; JOINT STAFF FOR LTGEN SELVA; 
PLEASE PASS TO USAID FOR ANE/MEA:SBORODIN; NSC FOR 
SHAPIRO/KUMAR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAID PGOV KWBG IS
SUBJECT: WEST BANK BUSINESSES CAPITALIZING ON IMPROVED 
CONDITIONS 
 
¶1. (SBU) Summary:  West Bank businesses are expanding, based 
on improved security conditions, greater internal freedom of 
movement, and an uptick in consumer spending.  Business 
owners claim continued growth is dependent on easier movement 
of goods and people within the West Bank, as well as between 
the West Bank and Israel and Jerusalem.  Some of the largest 
West Bank businesses, such as National Beverage Company, 
NAPCO, and Wataniya, continue to suffer from Israeli)imposed 
constraints that restrict employment and growth. End summary. 
 
Improved Conditions Bring Growth, 
With Ramallah as Retail Flagship 
--------------------------------- 
 
¶2. (SBU) In conversations throughout October 2009, a number 
of West Bank business owners expressed increasing confidence 
in the local economy.  EconOffs met separately with 
representatives from more than a dozen enterprises from Jenin 
at the northern end of the West Bank to Hebron in the south, 
almost all of whom are expanding business or investing in new 
sectors.  New investments are most noticeable in Ramallah:  a 
longtime marble and ceramic importer recently opened a 
high-end men's suit shop; an established electronics retailer 
opened a pilot "big box" store; and a family that made money 
in cosmetics invested USD 4 million in a boutique hotel, 
conference center, and spa facility.  The owners of 
Ramallah's newest and trendiest coffee shop noted that while 
it is easy to vent about the political situation, the reality 
is "it's now safe to invest here." 
 
Consumer Confidence and Spending Drive Profits 
--------------------------------------------- - 
 
¶3. (SBU) Nidal Juneidi, general manager of the West Bank's 
largest dairy, located in Hebron, said demand for his 
products has increased this year.  West Bank economic 
conditions he said are "more stable than any time since the 
signing of the Oslo Accords."  While battling a range of 
Israeli restrictions, including the prohibition of dairy 
exports from the West Bank to East Jerusalem and Gaza and a 
ban on hydrogen peroxide required for sterilization purposes, 
Juneidi's profits are increasing. 
 
¶4. (SBU) Juneidi attributes the gains to improved access and 
movement, better security, and a society that has more money 
to spend.  "West Bank Palestinians feel secure, so they're 
buying things," he said.  Juneidi has recently invested USD 
2.5 million in Ultra-High Temperature technology that 
generates longer shelf-life in order to extend the range of 
his goods.  Similar good news stories include West Bank 
importer Unipal's sales of consumer products, which have 
increased 14 percent over the last year, despite the loss of 
the Gaza market; and electronic goods distributor Safad, 
which reported growth as a result of increased consumer 
spending. 
 
¶5. (SBU) These same business owners were quick to note that 
continued movement and access restrictions -- in particular, 
difficulty exporting goods to or through Israel -) limit 
their growth.  Retailers in Ramallah noted that continued 
restrictions on movement to and from Ramallah limit their 
consumer base to relatively small geographic areas. 
 
Checkpoint Removal Brings More Tourists to Jericho 
--------------------------------------------- ----- 
 
¶6. (SBU) Kamel Sinokrot, owner of the Jericho "Mount of 
Temptation" cable car, said that the removal of Jericho's 
main checkpoint resulted in an increase in visitors to the 
city and more tourist-related business.  As a result, he has 
resumed construction halted since the Second Intifada, of a 
hotel.  Sinokrot and his brothers also are expanding their 
family-owned packing plant to increase the variety and amount 
of produce for export from the Jordan Valley. 
 
¶7. (SBU) The owner of the West Bank's largest tourist center 
(located in Jericho) said he has begun construction on "one 
of the largest tourist sites in the West Bank."  The site 
will be called "Ancient Jericho," and will include several 
structures replicating ancient homes and craftsmanship, as 
well as a self-guided tour depicting Jericho's history. 
(Palestinian tour operators and hotel owners have organized a 
visit by more than 80 Israeli tour guides to Jericho during 
the week of November 2 in order to encourage them to add 
 
JERUSALEM 00001990  002 OF 002 
 
 
Jericho sites to established tours that, until recently, have 
driven past the city on the way to Masada or Jordan.) 
 
Better Security, Rule of Law Affecting Business 
--------------------------------------------- -- 
 
¶8. (SBU) Palestinian businessmen also report that 
improvements in law and order are positively impacting the 
business climate.  Officials from a large steel company in 
Jenin credited improved security and a court system that 
"goes after those who bounce checks."  They said the PA now 
penalizes perpetrators bouncing checks "on a daily basis," 
and a stronger legal system increases the confidence of 
companies to make large transactions.  Ramallah-based 
distributor Ibrahim Barham said that the private sector was 
beginning to benefit from improvements in the rule of law. 
"The court system is starting to work," he said. 
 
¶9. (SBU) A Hebron rice trader, who plans to invest in the 
West Bank's soybean oil trade, told Econoffs that the PA's 
crackdown on traders and retail outfits operating without 
licenses was a key cause of lower rice sales this year. 
Despite the setback to his sales, he admitted that such 
oversight will create a more stable investment climate in the 
long run. 
 
But Some of the Largest 
Enterprises Still Suffering 
--------------------------- 
 
¶10. (SBU) Despite general improvements, manufacturers 
continue to experience Israeli rejection of their requests to 
import inputs essential to their production lines.  The 
National Beverage Company (NBC), one of the leading U.S. 
investments in the West Bank and bottler for Coca Cola, has 
closed down its TetraPak production line due to lack of 
hydrogen peroxide for machine sterilization.  NAPCO, the West 
Bank's only aluminum producer with annual sales of USD 10 
million, has been unable to import sulfuric acid, essential 
to its anodizing production line.  Although NAPCO's sales are 
up, it is barely breaking even as a result of the heavy debt 
it is carrying from its unused line.  Though Wataniya has 
launched its mobile telephone operation, the lack of 
certainty regarding its frequency allocation has hindered its 
marketing campaign and significantly delayed its roll-out. 
 
¶11. (U) Business owners also complain about an overly 
cautious banking sector that provides loans only against 
sufficient collateral and does not take risks to support 
entrepreneurs or innovation.  In each of the cases of 
expansion above, the capital for new investments came from 
established, family businesses.  One entrepreneur (who used 
family connections and property to secure the loan for his 
first, successful store) noted wryly, "now that I don't need 
them," banks have become eager to support his expansion 
plans. 
RUBINSTEIN