1. (C) Summary: Mossi Raz, a former Meretz MK, provided a
brief history of the growth of settlements, and outlined the
hidden support that the Israeli government has given to
settlers over the past 13 years. Settlers focused on
expanding existing settlements between 1992 and 1996 because
Prime Minister Yitzhak Rabin ordered new construction to
stop, he said. After 1996, however, they began new
construction when the GOI turned a blind eye to settler
activities, and in some cases, elements of the GOI actively
supported the settlements enterprise. According to Raz,
Ariel Sharon provided funds and materials to the settlers
when he was Minister of Construction and Housing in 1998, as
did government bureaucrats affiliated with the settlements
movement in the Civil Administration and Ministries of
Defense, Tourism, Infrastructure, and Transportation. Raz
and Dror Etkes of Peace Now claimed that the GOI currently
continues to provide hidden support to the settlers, and they
explained that it is difficult to trace the flow of funds
because auditors are themselves settlers and little
motivation to stop the misappropriation of government funds.
Post will report septel on PM Advisor Talia Sasson's upcoming
report, which is expected to support Raz's points. End
summary.



--------------------------


A Brief History of the Illegal
Settlements/Outposts Enterprise


--------------------------





2. (C) Mossi Raz, former Meretz MK until March 2003 and
current Deputy Executive Director of the Institute for
Advanced Studies, explained to economic officers that prior
to 1992, settlers did not have any bureaucratic hurdles to
overcome when building new settlements in the West Bank and
Gaza Strip. In 1992, however, Prime Minister Yitzhak Rabin
ordered construction of new settlements to stop and,
according to Raz, the settlers were "in a state of shock."
They focused instead on populating and expanding existing
settlements, and lowering vacancy rates in the settlements
became the settlement leaderships' primary objective. Raz
reported that even in 1995, however, the vacancy rate in the
West Bank was still a relatively high 12.5 percent.



3. (C) According to Raz, when Binyamin Netanyahu was elected
Prime Minister in 1996, he publicly rescinded the
government's commitment not to construct new settlements, but
in practice the Cabinet did not approve new construction.
The settlers decided, however, that they "didn't need
approval, they just needed no reaction from the government,"
and continued to expand existing settlements while also
erecting new settlements/outposts without authorization. Raz
said that the lack of a government response to the settlers'
activities led to continued building, and that many of the
settlements/outposts constructed at that time, such as Itamar
(Hanekuda outposts) and Ofrah (Amonah outpost), now have
permanent homes.



--------------------------


The GOI Provides Support


--------------------------





4. (C) Raz continued that government ministers, at the time,
often did not bother with or consider the legal status of
outposts. He said many of the outposts/settlements were on
state land and within the municipal borders of mother
settlements so no one questioned their presence. According
to Raz, often the settlers would claim that the new
settlement/outpost was in fact only a new neighborhood --
even if geographically distant -- and the government would
issue retroactive approvals to support the addition of the
new site. However, ministers who supported the establishment
and development of these illegal sites did more than just
look the other way and actively provided funding and
materials. Raz claimed that current Prime Minister Ariel
Sharon championed this activity while he was the Minister of
Construction and Housing (MOCH) in 1998, and that the
Religious Affairs Ministry also supported the settlements
enterprise.



5. (C) Raz explained that when he was in the Knesset Finance
Committee he saw a list of mikvaot, or religious baths, that
settlers were requesting from the Religious Affairs Ministry.
The Minister of Religious Affairs subsequently justified the
request saying, "People live there, people need a mikvah."
This formulation that people were established on the ground
and needed services later became true for ministries who went
on to supply other forms of infrastructure such as water,
electricity, and roads, as reported in ref A. According to
Raz, the Civil Administration -- responsible for all civilian
activity in the West Bank and Gaza Strip -- was mostly
comprised of settlers themselves, so they helped by building
roads while the Defense Ministry authorized soldiers to
defend the neighborhoods and ignore demolition orders. Raz
said that he appealed to the High Court for these actions to
stop but he was ignored because Prime Minister Ehud Barak
accepted them.



6. (C) Dror Etkes, Settlement Watch Coordinator for Peace
Now, explained that these activities continue today. He said
that the local and regional settlement councils may buy an
old trailer for NIS3,000-4,000, place the trailer in an
unauthorized location, and then complain to the Civil
Administration that the trailer is "unsafe." The government
will then authorize the replacement of the trailer with a
more secure one, and then will eventually lay cement
foundations for permanent homes. The settlers will move the
"unsafe" trailer to a new location and the process starts
over again. In another example of hidden government support,
Etkes explained that the MOCH may overbudget the amount of
time it takes to work on a legal project by a few days and
spend the extra days working at an illegal outpost.



7. (C) Raz also reported that settlers can currently build
illegally in the West Bank because their compatriots often
hold key government positions in charge of stopping that
activity. Raz said that their supporters provide material
and financial support to illegal construction, and he claimed
that the Civil Administration, the Higher Planning Committee,
the Defense Ministry, and persons in the Ministries of
Construction and Housing, Infrastructure, Tourism,
Transportation, etc., all have settler activists in key
positions that allow the government to assist the illegal
sites. Raz reported that settler bureaucrats are telling
their field operatives, "you create the facts on the ground
and we'll find a way to help."



--------------------------


Who's Watching?


--------------------------





8. (C) In response to econoff's question, Raz said that
there were and continue to be auditors from the Ministry of
Interior in place to track the disbursement of funds from
ministries to regional councils. He explained, however, that
the auditors are not supplied with sufficient data to see
what the councils actually spend the funds on, nor are the
reports ever published. Furthermore, the auditors often look
to see if the funds were used as they were intended -- for a
road, trailer, or mikvah -- but not to ensure that the money
only went to projects in authorized areas. Therefore, Raz
said that the local and regional councils are able to use
funds given to them by government ministries to support
unauthorized building projects. In addition, Raz noted that
the regional councils have their own auditors but most are
settlers themselves so presumably they will not blow the
whistle on any illegal spending that may be taking place.
Raz also said that many of the government auditors and
bureaucrats are themselves settlers and have little
motivation to crack down on misappropriation of government
funds. Etkes confirmed that regional councils do not report
if the money goes to an outpost or is spent within an
authorized settlement.



--------------------------


GOI Needs to Change Priorities
to Stop Settlement Activity


--------------------------





9. (C) Raz speculated that the GOI will continue to allow
the illegal establishment and construction of outposts unless
it changes its building priorities away from the West Bank.
Raz said the GOI has not yet accepted the proposition that it
has to evacuate the remaining outposts, and will probably
attempt to retroactively approve those sites. As a next
step, Raz suggested that the GOI cancel the meetings of the
Higher Planning Committee to send a message that construction
in the West Bank is over. Raz also reported that the GOI
continues to spend three times the amount of money on
settlers as it does on Israelis living within the Green Line,
and said that the government wastes a lot of money in the
settlements that could be used elsewhere.

********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv

You can also access this site through the State Department's
Classified SIPRNET website.
********************************************* ********************
KURTZER