VZCZCXRO8187
PP RUEHROV
DE RUEHTV #0080 0141615
ZNR UUUUU ZZH
P 141615Z JAN 10
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 4967
INFO RUEKJCS/JOINT STAFF WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHXK/ARAB ISRAELI COLLECTIVE

UNCLAS TEL AVIV 000080 
 
SIPDIS 
 
NEA FOR FRONT OFFICE. NSC FOR SHAPIRO/KUMAR. JOINT STAFF 
FOR LTGEN SELVA, JERUSALEM PASS AMB. HALE 
 
E.O. 12958: N/A 
TAGS: PREL KWBG IS
SUBJECT: CONSTRUCTION MORATORIUM: COMPENSATION UPDATE 
 
¶1. (U) On January 11, the Finance Ministry announced that it 
had earmarked an initial NIS 30 million to compensate those 
who invested in residential building projects in the West 
Bank and are now facing financial losses due to the GOI's 
moratorium order. This sum is expected to rise as homebuyers 
and contractors, who are prevented from starting or 
continuing construction, begin to file claims with the MOD's 
compensation committee. Last month, discussions in the 
Knesset's finance subcommittee suggested that financial 
damages likely could reach NIS 500 million, and potentially 
as high NIS 1 billion. Settlers and would-be-settlers who 
took out mortgages to purchase land and finance construction 
were initially slow to seek compensation, preferring first to 
challenge the legality of the moratorium in the hopes of 
overturning the order. However, as they continue to make 
mortgage payments without construction progress, calls for 
compensation have intensified. 
 
¶2. (U) Central Bureau of Statistics data reveals that the 
number of new housing starts in the West Bank, particularly 
private starts, spiked considerably in the third quarter of 
2009, as settlers sensed the impending moratorium and rushed 
to begin construction so as to be grandfathered into any 
agreement. (Note: CBS data shows that overall, new starts in 
the west Bank fell 27.6 percent in the first 9 months of 
¶2009. End note.) However, the GOI's stipulation that only 
projects with a poured concrete foundation could continue 
left many with significant sunken costs. In an early December 
meeting with Congen Poloff and Embassy Econoff, Rabbi Meir 
Rubinstein, mayor of the Beitar Ilit settlement, estimated 
that as much as 30 percent of construction costs are incurred 
preparing the rocky West Bank ground prior to pouring a 
foundation. 
 
¶3. (U) Since the implementation of the moratorium in late 
November 2010, the GOI has faced significant internal 
criticism in the Knesset, the courts, and in public forums, 
for failing to devise an accompanying compensation mechanism 
or to secure a compensation budget. In Knesset meetings on 
the subject, MKs from all parties have heatedly chastised the 
GOI. In a 21 December Finance Committee meeting, MKs Uri 
Ariel (National Union) and Moshe Gafni (United Torah Judaism) 
froze the transfer of NIS 500 million to the MOD, vowing not 
to release the funds until the MOD created a Compensation 
Committee, as required by the original moratorium order. Two 
days later, Israel's High Court of Justice lambasted the 
GOI's handling of the situation, and ordered State's 
attorneys to provide clarification on the compensation issue 
within 30 days. The MOD has since established the 
compensation committee, but has yet to publish the procedural 
rules and eligibility criteria for filing claims. 
CUNNINGHAM