NSC CHIEF SAYS PASSING THE BUDGET IS GOI CHALLENGE

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 001594

SIPDIS

NEA FOR BURNS, SATTERFIELD/DIBBLE, E.
NSC FOR ABRAMS/DANIN

E.O. 12958: DECL: 03/16/2010
TAGS: PREL PGOV KWBG GZ IS GOI INTERNAL GAZA DISENGAGEMENT ECONOMY AND FINANCE ISRAELI PALESTINIAN AFFAIRS
SUBJECT: NSC CHIEF SAYS PASSING THE BUDGET IS GOI CHALLENGE
NUMBER ONE


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


1. (C) Summary: Israeli NSC Director Giora Eiland told
CODEL Corzine March 13 that passing the budget is the GOI's
biggest disengagement-related hurdle and that all other
issues are operational and will be resolved. The GOI's
worst-case scenario is Palestinians attacking Israelis in
Gaza while Israeli security forces and the settlers battle
each other. Should Palestinian militants stage serious
attacks during the withdrawal, the IDF may have no choice but
to re-occupy Khan Yunis in order to protect the settlers
during the evacuation. Eiland criticized Abu Mazen for
giving too much away to Hamas in order to obtain the
militants' compliance in maintaining a period of quiet.
Israel, Eiland maintained, will not engage in any final
status talks until the PA has dismantled terror organizations
and Israel's security is thus ensured. He dismissed
Palestinian assertions that recent elections, economic
reforms, nascent security re-organization, and the sharp
decrease in attacks is a sufficient basis on which to begin
negotiations. Eiland said that absence of an effective
mechanism within the IDF to quickly bring problems on the
ground to DefMin Mofaz's attention inadvertently delayed
implementation of political priorities, such as the handover
of West Bank cities to PA security control. End Summary.

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GOI Challenge Number 1: Passing the Budget
--------------


2. (C) NSC Chief Giora Eiland told CODEL Corzine and the
Ambassador March 13 that the largest disengagement-related
hurdle facing Israel is passage of the budget. Eiland said
that although the GOI expects the budget to pass, there are
no guarantees. Should the budget fail in the Knesset, new
elections must be held by June -- only one month before
disengagement is scheduled to begin. Although disengagement
is an official GOI position, Eiland cautioned, a new Israeli
government could delay disengagement implementation until
December 2005 and still remain within the parameters of
existing GOI decisions. Eiland said that MKs understand that
Israel has reached the "point of no return" on disengagement,
however, adding that, even if the budget should fail to pass
and new elections be called, disengagement would proceed.

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Worst Case Disengagement Scenario
--------------


3. (C) Eiland said that, the budget aside, the remaining GOI
problems connected to disengagement are operational in nature
and can be resolved, even if the process is difficult. He
expressed the GOI hope that the actual withdrawal will be
carried out in a period of calm. If, however, the
Palestinians launch attacks as a means of portraying it as an
exit under fire, the IDF may have no choice but to re-take
Khan Yunis to control the situation (Note: Khan Yunis is the
Palestinian city closest in proximity to the Gush Katif
settlement bloc and the area from which most attacks have
originated in recent weeks. End Note). "Imagine the
Palestinians firing rockets on us as we fight each other," he
said. Eiland agreed that occupying Khan Yunis would
certainly entail Palestinian, and possibly Israeli,
casualties. Furthermore, it is possible that disengagement
could halt if the attacks are too severe, possibly entailing
another government decision to continue.


4. (C) Eiland said that, for Israeli opponents of
disengagement, it is important to demonstrate that the
process is too difficult and should not be replicated
elsewhere. To accomplish this, these groups may try to
distract the Israeli security forces by undertaking
disruptive actions elsewhere in Israel, Eiland said, although
he expressed confidence that the GOI will be able to
successfully cope with such a turn of events.

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PA Missteps
--------------


5. (C) Eiland disputed the assumption that, because
Palestinians now have a new government, "everything is now
possible," and cited the PA's relations with militant groups,
in particular Hamas, as a major GOI concern. Having Hamas
sit on an equal footing with the PA in Cairo and elsewhere,
Eiland said, raises the organization's stature to that of an
equal, a perilous development as Hamas still remains outside
PA control.


6. (C) Commenting on the dialogue between Abu Mazen and
Hamas, Eiland said that Abu Mazen initially assumed he had
time to both negotiate with the militants and accrue some
demonstrable gains from Israel to show the Palestinian
people. This assumption proved to be mistaken, however,
because challenges to Abu Mazen's authority, such as the
break-in to the Saraya prison compound in Gaza City, were
immediate. Egyptian President Hosni Mubarak's offer of a
meeting in Sharm el-Sheikh increased the pressure on the PA,
forcing Abu Mazen to reach a deal quickly with Hamas in order
to have something to offer Israel in Sharm. In Eiland's
view, Abu Mazen gave Hamas too much by promising first, not
to forcibly disarm their militants, and second, to integrate
them into the political system according to the strength of
their showing in the elections.


7. (C) Eiland said that Abu Mazen is bereft of figures in
the PA upon whom he can lean for support, and some, including
Prime Minister Ahmed Qurei, are actively trying to undermine
him. Furthermore, what Eiland called "the Arafat legacy"
remains a part of Palestinian culture, with Palestinians
still proudly proclaiming their participation in terrorist
acts. Eiland lamented that, even under the new government,
any punishment is light for attacks against Israeli
interests, while those convicted of collaborating with Israel
are sentenced to death. The Ambassador said the U.S. does
not believe Abu Mazen is not showing sufficient leadership,
assessing rather that the GOI does not agree with Abu Mazen's
strategy.

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PA-GOI Cooperation Not Yet a Reality
--------------


8. (C) Israel finds itself in the odd position of trying to
persuade the PA to engage in discussions on disengagement,
Eiland said, at a time when the PA is uncertain of what it
wants to say. If there is full cooperation, especially on
economic issues, Eiland continued, both sides benefit.
Without adequate cooperative efforts, it is unlikely that the
Palestinians will see sufficient improvement in their daily
lives to allow Abu Mazen to reap the political benefits that
disengagement offers. The Palestinians, in Eiland's view,
remain preoccupied with their new government, and it remains
unclear who exactly is responsible for what. Furthermore,
Eiland said that "no one (in the PA) is working on plans."

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Not Repeating Oslo Mistakes
--------------


9. (C) Although the GOI recognizes that it must help Abu
Mazen, and could move faster in, for example, dismantling
roadblocks and fixing passages, Eiland said Israel cannot
move forward on status talks while "all of Hamas' capacity is
still intact." The first day that Hamas is dissatisfied with
developments, Eiland said, Hamas will use that capacity to
again hold Israel hostage. Abu Mazen, Eiland continued, is
not strong enough to take on Hamas, and therefore he must
persuade the faction to comply. The Ambassador pointed out
that, even were Abu Mazen stronger, Hamas is a problem that
would not disappear. Eiland responded that the GOI
understands that dismantling militant groups will be "a
gradual process," and that there is a clear difference
between the GOI's public statements and private expectations
in this regard. The PA could, however, take steps such as
making it illegal to carry weapons in public in lieu of
immediately attempting to fully disarm militant groups. Abu
Mazen needs such "demonstrations of (his) direction" for
himself as much as for Israel, Eiland stressed.


10. (C) The GOI, according to Eiland, is determined not to
repeat what he called the "mistakes of Oslo," and will insist
that any dialogue or process with the Palestinians lead to
better security for Israel. The perception of 80 percent of
Israelis, Eiland said, is that Oslo failed because Israel did
not insist on the full dismantling of terrorist
infrastructure before giving political concessions to the
Palestinians. The roadmap is far more specific than the Oslo
process, he added, and, under the Israeli interpretation,
Israel will not even begin to discuss final status issues
until its security concerns are addressed.


11. (C) The Palestinians, however, insist that what has been
accomplished to date -- elections, some economic reforms, the
beginnings of security re-organization, and the overall
improvement in the security situation -- is a sufficient
basis upon which to proceed with political talks, Eiland
said. The Palestinians warn that failure to initiate final
status talks soon (and certainly before the PLC elections in
July) will result in a perhaps fatal loss of momentum.

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On the Plus Side
--------------


12. (C) Eiland acknowledged some positive trends in the PA:
Abu Mazen has replaced a number of security personnel with
better qualified people; PA security forces have intercepted
some five or six planned attacks and are prepared to take on
security in several West Bank cities. When asked if others
in the GOI also recognize the PA's accomplishments, Eiland
responded that the IDF Chief of Staff assessed in a recent
conversation that the PA had accomplished 10 percent of what
is required. As that is up from zero the last time Eiland
asked the question, Eiland laughingly affirmed that things
may be moving in the right direction.

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Speaking a Different Language
--------------


13. (C) Elaborating on the handover of West Bank cities to
PA security control, Eiland said that Israel and the PA are
both playing tactical games at the expense of larger
strategic issues. For example, although DefMin Mofaz issues
orders that a handover will take place, it is left to local
IDF commanders to negotiate the details and carry out the
handover. IDF and PA negotiators then clash over definitions
of, for example, whether a road is or is not "open," with the
IDF saying that opening the checkpoints is sufficient to
enable movement, while the PA holds out for a complete
absence of IDF forces in the area. Eiland said that "it
takes two weeks" for problems like this to come to DefMin
Mofaz's attention, as the IDF lack a mechanism that ensures
his timely notification until the issue works its way up
through channels.

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Lebanon
--------------


14. (C) In Lebanon, Eiland identified three elements --
sustained U.S. and European pressure, pressure from Lebanese
groups, and Arab anger -- that, in the aftermath of the
Hariri assassination, all aligned and provoked remarkable
opportunity for change. Eiland predicted that the Syrian
withdrawal from Lebanon would be a complete one and would
have one of two results: either a strong, independent
Lebanon, or else a return to the chaotic wars of the 70's.
Even in a best case pullout scenario, however, Syria will
still retain economic clout in Lebanon, plus the loyalty of
no small number of Lebanese, Eiland said. If UNSCR 1559 is
fulfilled, Hizballah must disarm along with all other
militias in Lebanon, Eiland said. While the GOI believes
that it would have been more reasonable to press on Hizballah
only after the new government gets on its feet, the Israelis
understand that that moment has passed.

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Iraq
--------------


15. (C) Eiland said that the trend emanating from Iraq is
now positive and will have an increasingly positive impact in
the region once other Arab populations recognize that Iraqis
will have a better life than they do. Another positive sign
to watch for will be Iraqis speaking out against foreigners
who are fighting on behalf of the insurgency and who are
responsible for killing Iraqis. The impact on the
Palestinians of Iraq's move towards democracy is somewhat
less, Eiland said, as Palestinians have a democratic example
much closer in Israel.


16. (U) CODEL Corzine did not have an opportunity to clear
this message.

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