GAZANS TORN OVER DUBAI INVESTOR'S PROPOSED

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001064

SIPDIS

E.O. 12958: DECL: 02/20/2014
TAGS: EFIN ECON EAID KWBG IS GAZA DISENGAGEMENT ISRAELI PALESTINIAN AFFAIRS SETTLEMENTS
SUBJECT: GAZANS TORN OVER DUBAI INVESTOR'S PROPOSED
PURCHASE OF SETTLER HOMES


Classified By: Economic Counselor Bill Weinstein for reasons 1.4 (b) an
d (d)


1. Israeli media reported that Dubai businessman Mohammed
Alabbar recently visited Israel and the Palestinian
territories with an offer to purchase settler homes intact,
saving the GOI the need to demolish them. Previously, NSC
advisor Gabi Blum told EconCouns that Alabbar's visit had
been sponored by the GOI and had included a "brave" trip into
Gush Katif to speak with settlers. Einat Wilf, assistant to
Deputy PM Shimon Peres, confirmed that while there is
widespread support for Alabbar's proposal within PM Sharon's
cabinet, adopting it would require the GOI to rescind its
official decision to demolish settler homes. In addition,
she said, such a change would only be made in close
coordination with the PA, via working-level negotiation
groups to be established this week. Palestinian private
sector contacts are ambivalent about the prospect of Gulf
State investment in settlement asset development. Some
believe that foreign ownership of building contracts is
irrelevant as long as Gazan inputs and labor are utilized,
while others argue that only Gazan businesspeople have the
understanding to properly dispose of the settlement assets.
More broadly, Gazan contacts were pessimistic about direct
GOI-PA negotiations on the economic aspects of disengagement,
noting that the private sector has been ignored by the PA.

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Dubai Construction Mogul Hopes to Buy Settler Homes
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2. (SBU) Israeli print media and radio reported February 18
that Mohammed Alabbar, chairman of Dubai's Imr construction
company, recently visited Israel and the Palestinian
Territories with an offer to purchase settler homes in the
Gaza Strip in tandem with Israel's planned pullout. Alabbar
would pay "tens of millions" of dollars for the houses,
ostensibly saving the GOI the need to demolish them during
evacuation. In exchange, Alabbar's firm has reportedly
requested exclusive building contracts for the settlements.
EconCouns had received news of this visit previously from NSC
advisor Gabi Blum, who confirmed that the GOI had sponsored
the visit. In a visit to the Gaza Strip, Blum said, Alabbar
had visited Gush Katif settlements and "bravely" spoke with
settlers about his proposal.


3. (C) Einat Wilf, assistant to Deputy Prime Minister Shimon
Peres, told Econoff February 18 that there is widespread
support for Alabbar's proposal within PM Sharon's cabinet,
but that the GOI still officially intends to destroy settler
homes and remove rubble prior to withdrawal. (Note: Some
contacts state that the GOI decision to destroy homes is
political symbolism -- a "severing of ties" with the Gaza
Strip. The GOI has acknowledged on numerous occasions,
however, that demolition and removal of rubble would be
expensive and time-consuming. End note.) Wilf emphasized
that any change in the government's decision to destroy
settler homes would be made in close coordination with the
PA, via new working-level GOI-PA negotiation teams.

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Settler Homes Won't Suit Gazans -- Construction Needed
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4. (C) Private sector contacts unanimously reinforced the
view that settler homes are not appropriate for Palestinian
families and will do nothing to alleviate Gaza's housing
shortage. They also emphasized that the construction
industry can potentially be Gaza's fastest-growing sector
post-disengagement, and that development of settlement assets
post-withdrawal is therefore imperative. PalTrade
agribusiness project officer Hashim Al-Hussaini told Econoff
he is not opposed to foreign ownership of settlement assets
as long as the investor understands he must tear down the
settlement houses and use exclusively Gazan inputs and labor
to build replacement housing. Dr. Hani Shawa of the Bank of
Palestine noted that construction can, in principle,
revitalize every major sector of the Gazan economy, including
furniture, cement, aluminum, glass, and metals, and can
provide immediate work for hundreds of thousands of laborers.


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Gazan Private Sector Doubts PA is Listening
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5. (C) Jawdat Al Khoudry, engineer and board member of the
Palestinian Investment Fund, told Econoff that Alabbar
"doesn't know what Gaza needs -- if he understood the
situation, he would stop his bid" to purchase settler homes
intact. Khoudry said he is unimpressed by Alabbar's reported
discussions with Abu Mazen -- in his view the PA does not
understand what is economically good for Gaza either. He and
other contacts are pessimistic about the effectiveness of the
working-level GOI-PA negotiation groups currently being
established. Nobody is talking to the private sector,
contacts say, although it is the private sector alone that
understands how to boost the Gazan economy
post-disengagement. While he was quick to explain that many
Gazan businesspeople are preparing for disengagement --
including arranging a potential conference of third party and
NGO investors to take place in Cairo in late March -- he
expressed frustration that "economic planning for
disengagement is being done in Ramallah."

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