DEPARTMENT OF TREASURY U/S LEVEY'S MEETING WITH

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001211

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FOR NEA/IPA LOGERFO

E.O. 12958: DECL: 02/22/2015
TAGS: PTER GOI EXTERNAL ISRAELI PALESTINIAN AFFAIRS
SUBJECT: DEPARTMENT OF TREASURY U/S LEVEY'S MEETING WITH
MFA OFFICIALS

Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d)


1. (C) Summary. During their February 14 discussions, Under
Secretary of Treasury Stuart Levey and GOI MFA officials

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focused on the possible designation of Hizbollah as a
terrorist group during the EU Clearinghouse meeting on
February 16. The GOI has been working proactively to obtain
support from key EU capitals for the designation End Summary.

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Designate or Delay ?
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2. (C) MFA Deputy Director General of Strategic Affairs,
Jeremy Issacharoff initiated discussions with a chronology of
attacks by Hizbollah during the last year. Issacharoff
stated that in the last year there have been 68 attacks in
the territories that were supported by Hizbollah, and at
least 24 Israeli citizens were killed in these attacks. In
his estimation, no less than 64 Hizbollah-supported attacks
had been disrupted by security forces during the same time
period. The culmination of these activities in Issacharoff's
mind was the bombing on the Lebanese border on January 30
(during Palestinian presidential elections). Regarding the
January 13 bombing that closed the Karni crossing Issacharoff
claimed, "there is reliable evidence that Hizbollah was
financing (the perpetrators)."


3. (C) In light of the above information the MFA is making a
concerted effort to have the EU Clearinghouse designate
Hizbollah as a terrorist organization. Issacharoff stressed
that it was critical that this action be taken, because
elements of Hizbollah are "trying to insert themselves into
the Palestinian Authority." To increase their chances of
success in getting Hizbollah declared a terrorist group, the
MFA prioritized EU countries whose support will be essential
for the plan to succeed. Issacharoff identified France as,
"the toughest nut to crack." Foreign Minister Shalom was
traveling to France at the time of the meeting to discuss the
matter with President Chirac. Besides the USG, the MFA
assessed that the Netherlands, the Czech Republic, and
Germany were most likely to support the GOI request for
designation.

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Problematic Paperwork ?
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4. (C) The MFA legal advisor, Danny Taub commented that the
Israeli request for designation of Hizbollah as a terrorist
group was filed within days of the required time for
consideration (implying that it was filed too late to be
considered for the Feb. 16 meeting). The GOI was informed
that consideration of their request would therefore be based
on a request from the USG filed in 2002. (Note: The USG
request was not acted upon because the committee claimed it
did not contain evidence that the USG was taking legal action
against Hizbollah. Participants at the meeting agreed that
this may have been a political tactic on the part of some
members of the Clearinghouse. Nonetheless, the GOI included
evidence of legal actions taken in their submission, and the
combination of the USG and GOI requests should hopefully
satisfy all of the technical requirements necessary for the
clearing house to consider the case against Hizbollah. End
note.) The GOI participants also indicated that their
government's submission focused on the activities of
Hizbollah in the Palestinian territories after the death of
Yasser Arafat.

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Terrorists or Politicians ?
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5. (C) MFA Deputy Director General of North American Affairs
Yoram Ben Ze'ev raised the possibility that the Clearinghouse
would offer to designate only the "military arm" of Hizbollah
as a terrorist organization. Treasury DAS Daniel Glaser
commented that this approach, "leaves the decisions up to
individual members to determine what organizations are
terrorist financiers." In addition this approach, while
having political implications, will not likely result in the
freezing of terrorist financing or assets. Ben Ze'ev noted
that there was internal debate within the GOI whether or not
it should accept the designation of only the military wing of
Hizbollah as a terrorist organization. He noted that even if
the Clearinghouse makes such as decision, "it will not be the
end of the game, as this issue will stay with us through
disengagement."

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Target or Terrified ?
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6. (C) The MFA indicated that, based on contact with
Palestinian officials, they believe that the PA is concerned
about the niche that Hizbollah is carving for itself in the
territories, but is not in a position to formally support the
designation of Hizbollah as a terrorist organization. In
part, Abbas' ability to support the designation will depend
on the continued cooperation from Hamas elements in the West
Bank and Gaza. U/S Levey and the US delegation explained
that, building on the positive working relationship that has
been established with Finance Minister Fayyad the USG hopes
to establish mechanisms for getting assistance to
Palestinians in need, but also to shut down the means of
terrorist finance in the territories.

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Money Men or Maybe More ?
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7. (C) Commenting on read-outs of recent conversations with
European colleagues, Issacharoff commented that he believes
that the EU has broached the subject of financing terrorism
with Tehran during recent meetings about the Iranian nuclear
program. Issacharoff commented that "the EU has done this on
their own." The MFA estimates that $100 million dollars per
year is supplied by Iran for Hizbollah.


8. (C) Ben Ze'ev inquired if the designation of Hizbollah
would have consequences for states that harbor Hizbollah
elements. While not specifically mentioning Iran, he mused
about possible implications for Lebanon and Syria (which in
Ben Ze'ev's estimation is open to influence because of the
outside pressure from UNSC 1559). U/S Levey indicated that
decisions to take action against states that harbor
terrorists involve interagency deliberations in Washington.


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The End or Just the Beginning?
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9. (C) The GOI believes that no matter what decision is made
by the Clearinghouse on February 16, its campaign will have
been successful in moving the issue of financing and support
for Hizbollah to "a whole new level." However, the GOI team
will have to meet and reassess additional tactics that could
be used to counter Hizbollah attempts to derail disengagement.

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Participants
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10. (U)

USG:
U/S Levey
Senior Advisor to the U/S Adam Szubin
DAS Daniel Glaser
Senior Advisor Anne Wallwork
Public Affairs Specialist for Enforcement Molly Millerwise
Senior Analyst, IRS Mark Weber
U.S. Secret Service Jacqueline Marengo
U.S. Secret Service Scott Salo
Economic Officer Barbara Masilko (notetaker)

GOI:
DDG Strategic Affairs: Jeremy Issacharoff
DDG North American Affairs: Yoram Ben Ze'ev
MFA Legal Advisor: Danny Taub
Embassy of Israel (Washington, DC) ME Attache: Eynat Shlien


11. U/S Levey cleared this cable.

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