DONORS EYE ISRAELI PULLOUT WITH MIXTURE OF HOPE,

UNCLAS SECTION 01 OF 03 BRUSSELS 001586

SIPDIS

E.O. 12958: N/A
TAGS: PREF EAID UNRWA EUN USEU BRUSSELS
SUBJECT: DONORS EYE ISRAELI PULLOUT WITH MIXTURE OF HOPE,
CONCERN



1. (U) Summary: At a one-day informal meeting of the
"no-name" group in Brussels, convened by Canada to discuss
Palestinian refugee issues, participants were fixated on the
issue of Israel,s proposed withdrawal from Gaza, which they
characterized as posing both an opportunity and an enormous
challenge. They were anxious to learn more details of PM
Sharon,s plan, and what the U.S. reaction to it would be
when Sharon visits the U.S. April 13-15. The group was
unanimous that Israel should coordinate its pullout with the
governing authorities in Gaza; that Israel should ensure
continued humanitarian access; and that the international
community (especially donors),the Palestinian Authority, and
the United Nations Relief and Works Agency for Palestinian
Refugees (UNRWA) need to begin planning now for the host of
issues implied by The withdrawal. End summary.


2. (U) Participants of the meeting:

Ambassador Marc Otte, EU Special Representative for Mideast
Peace;
Christian Berger, political officer, Directorate General
RELEX, European Commission;
Charlotta Sparre, Swedish PermRep to EU;
Geoffrey Dean, Dept. Of Foreign Affairs, Canada;
Markus Kostner, World Bank Representative for West Bank and
Gaza, Washington DC;
Takashi Ishii, Japanese mission to EU;
Mark Singleton, MFA, Netherlands;
Fritz Froelich, MFA, Switzerland;
Barbara Fontana, MFA, Switzerland;
Katherina Lack, Foreign Office, Germany;
Benedicte de Monthaur, MFA, France;
Oleg Ozerov, MFA, Russia;
Martin Rapley, DFID, United Kingdom;
Age Tiltnes, Regional Representative for FAFO, Amman;
Bernard Philippe, European Commission;
Matthias Burchard, UNRWA, Geneva;
Lindsay Campbell-Reidhead, USEU/PRM;
Robert Ward, program officer, PRM, Washington, DC;
Keith chang, CIDA, Canada;
Roula El Rifai, IDRC, Canada;
Helene Kadi, CIDA, Canada;
Wolfgang Barwinkel, EU;
Jan Thesleff, EU;
Rex Brynen, McGill University, Canada;
Jill Sinclair; Foreign Affairs, Canada;
Ghaith Al Omars, Geneva Accord negotiator, Jerusalem;
Daniel Levy, Geneva Accord negotiator, Jerusalem.


3. (U) The Refugee Working Group (RWG) was established under
the Declaration of Principles in 1993 and Canada was named
chair. Although the RWG is defunct, Canada remains active in
its leadership role on Palestinian refugee issues and
Convened a meeting of the group of interested countries ("no
name" group) April 2 in Brussels. Major themes of the
meeting follow.

Negotiate or coordinate
--------------


4. (U) Participants expressed concern about a unilateral
pullout from Gaza by Israel. They echoed Palestinian
pollster Khalil Shikaki,s warning that an Israeli pullout
without prior negotiation could lead to infighting, chaos,
anarchy, and a worsening humanitarian situation. One
participant noted that a recent poll in Gaza revealed 55
percent thought that an Israeli pullout without negotiation
would strengthen extremist groups (Hamas). There may not be a
need to negotiate Israel,s withdrawal, but there is a need
to coordinate a pullout, participants agreed. In fact, in
the absence of an actual pullout timetable, it was warned
that an escalatory climate is emerging. In this climate, the
Israeli military has little choice but to take a forward
military posture while Palestinians scramble to "make their
mark" by imparting the most damage possible before a military
withdrawal. Given the implications suggested, coordination
may need to preempt further progress toward a pullout.
However, many noted that, by working with the Palestinian
authority, the GoI and the international community could
strengthen the foundering institution, which would not only
improve prospects for Gaza, but also spur the defunct peace
process.

Access routes, humanitarian aid
--------------


5. (U) Participants were unanimous that Israel needed to keep
access corridors open so that humanitarian aid could flow
into Gaza (especially through Karni). They also noted that
an Israeli pullout would likely compel the international
community to hold a donor,s conference to raise funds for
the reconstruction of Gaza, and that such reconstruction, if
done right, could serve as a model for the West Bank. A
first step would be the conducting of a comprehensive needs
assessment.

Economic development a top priority
--------------


6. (U) Participants were also unanimous that should the GoI
pull out of Gaza, donors should focus on rebuilding the Gaza
airport and port so that economic development can proceed.
Without the port and airport, Gaza will remain an economic
basket case relying on international handouts. One
participant noted that it would be important for the GoI to
issue a minimum number of permits for Gazans to work in
Israel, which is important considering there are few economic
opportunities in Gaza and wages are higher in Israel. The
Netherlands rep noted that even with an Israeli pullout,
investors would likely steer clear of Gaza until a final
settlement occurred, which could be years away. A complete
Israeli pullout would also likely result in a new flow of
trade between Gaza and Egypt, ending Gaza,s economic
dependence on Israel.

Security
--------------


7. (U) Several participants highlighted the importance of
security following an Israeli pullout. Swiss rep Froelich
suggested that the donors formulate a plan to train and
finance 1000 police to help keep law and order. Russian rep
Ozerov suggested the temporary insertion of an international
force to maintain security. The World Bank rep noted that an
Israeli pullout would provide the pportunity for us to
bolster the Palestinian Authority,s capacity to administer
Gaza. If we fail to identify a Palestinian partner and
subsequently fail to get the necessary mandate needed to meet
demands, then the power base in Gaza will be up for grabs.
The inclusion of the PA from the outset will be essential.
Otherwise, Hamas is likely to fill the vacuum, several
participants concurred.

Land use
--------------


8. (U) Participants noted that an Israeli pullout would
trigger an intense debate within Gaza regarding land use
issues. There are only 1200 or so houses in Israeli
settlements in Gaza - and they are higher quality and more
expensive than refugee housing. Thus, the governing
authority might sell them rather than let refugees take them
over. There is a question of what land is state land and
what land is private land. There is also a question as to
what would happen with the refugee camps. Refugees think
they own the housing they are living in, but they do not.
The pullout would bring great pressure on the governing
authority to relieve the congestion of the refugee camps,
which are severely overcrowded in Gaza. The PA's Ministry of
Planning should begin working on housing plans for Gaza, if
it has not already started to do so. However, the PA should
not have sole responsibility over the land issue. It will be
necessary to impart international control; otherwise there is
a very real risk of infighting over land, which the PA would
be unable to control. The UNRWA rep noted that donors could
help right now by fully funding UNRWA,s 2004 emergency
appeal, which requests $32 million for housing projects in
Gaza. (Note: The USG has contributed $20 million of the
total $45 million donated to UNRWA,s emergency appeal in

2004. The appeal requests $193 million in humanitarian
assistance for the West Bank and Gaza. End note.)

Flow of refugees, control of border
--------------


9. (U) Participants noted that if Israel should pull out
completely, pressure might mount on Gaza refugees living in
Egypt, Syria, Lebanon, and Jordan to return via Egypt to Gaza
without waiting for a "final" settlement. Such movements
could have ramifications for the peace process.

UNRWA,s role?
--------------


10. (U) UNRWA rep Burchard noted that UNRWA, s mandate
allows it to care For non-refugees in emergency situations.
Therefore, UNRWA could be the conduit for assistance for the
500,000 non-refugees in Gaza, as well as the 900,000 refugees
there in the event of an Israeli pullout. UNRWA,s
longer-term role in Gaza would have to be revisited by the
United Nations General Assembly, which sets UNRWA,s mandate
every three years.

Conclusion
--------------


11. (U) Participants, while generally upbeat about the
prospects of an Israeli pullout, were also well aware of how
many ways things could go wrong. They were cognizant of the
inherent difficulty in brainstorming a response to the
withdrawal absent a copy of the actual Israeli plan. There
is a "matrix of possibilities," as one participant said.
Ideally, participants want their governments to have input
into how to help manage the Israeli withdrawal in a way that
minimizes the potential for a humanitarian disaster for
Palestinian refugees. They want to be briefed on the plan by
the quartet, and to have a say in discussions regarding
reconstruction of Gaza, which they as donors will be called
upon to fund. One participant noted that donors are tired of
pouring money into the "black hole" of the occupied
territories, and stressed that donors want to be sure that
this time, their money will be used in a transparent and
accountable fashion such that there is real movement from
relief to development. They also acknowledged that
throughout the process, there will be a need for the
governing authority, as well as the international community,
to solicit the views of the refugees themselves prior to
taking actions on their behalf.

(This cable was drafted by PRM/ANE.)

SCHNABEL