SHARON CAUTIONS CODEL REID ON PROVIDING DIRECT

C O N F I D E N T I A L SECTION 01 OF 04 TEL AVIV 001730

SIPDIS

E.O. 12958: DECL: 03/22/2015
TAGS: OREP PGOV PTER KWBG MNUC IS IR SY ISRAELI PALESTINIAN AFFAIRS ECONOMY AND FINANCE GOI EXTERNAL
SUBJECT: SHARON CAUTIONS CODEL REID ON PROVIDING DIRECT
ASSISTANCE TO THE PA

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


1. (C) Summary: Prime Minister Sharon emphasized to Codel
Reid March 21 that ensuring Israel's security against
terrorism is his primary objective, although he is optimistic
about the opportunities created by Arafat's death and the new
Palestinian leadership. Codel Reid and Sharon discussed how
best to assist Palestinian Authority President Abbas; the
dangers presented by Iran, Syria, and terrorist
organizations; the Israeli economy; and other issues. Sharon
noted that he is willing to cooperate with Abbas and PA
Finance Minister Fayyad to address Palestinian economic
development. Sharon and his office director general, Ilan
Cohen, advised the senators to target USG assistance to the
Palestinians toward infrastructure, private industry and
housing, and urged that the USG require the PA to demonstrate
accountability for any direct assistance it receives. End
Summary.


2. (U) The delegation, consisting of Senators Harry Reid,
Richard Durbin, Barbara Boxer, Patty Murray, Robert Bennett,
Lamar Alexander, and Ken Salazar, and Senate staff, was
accompanied by Ambassador Kurtzer and poloff notetaker.
Prime Minister Sharon was joined by Foreign Policy Advisor
Shalom Tourgeman, Office Director General Ilan Cohen, Press
Advisor Ra'anan Gissin, MFA Deputy Director General for North
American Affairs Yoram Ben Ze'ev, and MFA Congressional
Affairs Advisor in Washington Alon Ushpiz.

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No Progress Without End to Terror
--------------


3. (C) Codel Reid and Prime Minister Sharon stressed the
strong U.S.-Israel friendship and mutual hopes for security
and peace in the region. Senator Reid began the meeting by
asking for Sharon's views on advancing cooperation with
Palestinian Authority (PA) President Mahmoud Abbas and
Sharon's prospects for passing the 2005 budget. Sharon joked
that passing the U.S. budget is certainly an easier task than
passing Israel's budget.


4. (C) Sharon's main message throughout the meeting was
that, while he is open to cooperating with, and taking steps
to support, Palestinian President Abbas, Abbas must combat
terrorism or such cooperation will fail. Sharon repeatedly
stressed that he will not make any compromises on Israel's
security. "Israel is a tiny, small, country," Sharon
emphasized, "with a courageous people... It is the only place
in the world where Jews have the right to defend themselves."
Sharon underlined that the most important thing for him is
that he is a Jew. "On the one hand," he underlined, "I am
willing to compromise, but not when it comes to terror... I
tell my friends, 'don't pressure us when it comes to our
security -- only we determine what is necessary.'" Sharon
emphasized that "If terrorism continues, we won't move
forward... that's the situation." The USG repeats the same
message "again and again," he commented.


5. (C) Sharon explained that he initiated a unilateral
disengagement plan, which he called a "pre-roadmap phase,"
because he believed at the time that a Palestinian partner
did not exist. After Arafat's death, he noted, cooperation
with the Palestinians is more feasible, but he emphasized
that the PA must honor its commitments to the roadmap. "I
believe we can progress," Sharon repeatedly stressed, "if the
Palestinian Authority fights terror, dismantles terrorist
organizations, collects weapons, and ceases incitement
against Israel." Sharon assessed that incitement has
decreased, but he asserted that mosques still incite against
Israel and "in schools (they are) poisoning kids (beginning
in) kindergarten" against Israel.

--------------
Terror Organizations Still Operate
--------------


6. (C) The incidence of terrorism has recently declined,
Sharon said, but he added that the threat continues. He
noted that weapons smuggling across the border from Egypt to
Gaza continues and that Abbas has not taken steps to
dismantle Hamas. Sharon claimed that in the last two weeks,
five anti-aircraft missiles were found being smuggled in
tunnels. Sharon said he spoke with Egyptian President
Mubarak two days ago and asked Mubarak to take more serious
steps against smuggling. He added that the "Palestinian
military industry works day and night without rest." Sharon
stressed that he is willing to give the PA a chance, but he
has not yet seen "any real improvements" in its fight against
terror. Sharon expressed concern that Abbas is negotiating
with Hamas for a cease-fire, which he noted could end at any
time. He worries that if Hamas gains more authority within
the PA, it will become impossible to dismantle that terrorist
organization.

--------------
Helping Abbas
--------------


7. (C) Emphasizing the positive changes since Arafat's
death, Senator Durbin expressed concern that Hamas could
upset this progress by receiving strong support in the July
Palestinian Legislative Council elections. He asked Sharon
how best to rally popular support for Abbas against Hamas,
especially in the way of economic and developmental support
to the Palestinian population. Sharon agreed that helping
Abbas is important, but cautioned against providing direct
financial assistance to the PA, charging that such support
could also reach terrorist organizations since Abbas is
"trying to buy them." Instead, Sharon advised, the USG
should target assistance directly to infrastructure
improvements, housing for refugees, desalination, and
economic support for Palestinian private industry. In this
respect, Sharon said, "Israel is ready to help." Sharon
noted that he asked Vice Prime Minister Shimon Peres, with
whom the Codel met March 20 (septel),to "mobilize" funds to
assist the Palestinians with economic development. Sharon
also noted that he sent Peres to donor and Arab countries to
request funding to assist the PA. Ilan Cohen added that the
GOI is working with Palestinian Finance Minister Salam Fayyad
to develop a PA social security system in order to replace
Hamas assistance.


8. (C) Senator Durbin pressed Sharon as to how best to help
Abbas before the July Palestinian Legislative Council
elections. Senator Salazar also noted that the current
window of opportunity could disappear quickly. Without
providing a direct response, Sharon asserted that he does not
believe Hamas will gain a majority in the July elections. He
noted that the GOI has a "good relationship" with Abbas, but
underlined that Abbas "made a major mistake" by "reaching
out" to Hamas and negotiating with that organization. He
asserted that once Abbas signs an agreement with Hamas,
dismantling the organization will be difficult. Sharon noted
that it is not a "normal situation" where you have a "serious
partner in government" (i.e. Hamas) that is an armed
organization. Sharon said that the GOI will not take
"actions" during the period of quiet, but he expressed
concern that terrorist groups will be using this period to
rebuild, thereby placing Israel in a "difficult situation."


9. (C) Senator Murray asked Sharon to comment on any
connection between poverty and terrorism and asked how the
USG could effectively target its assistance to the PA.
Sharon underlined that he "never found a direct connection
between terror and poverty." Israel has examined this issue
over the years, he said, and has found that suicide bombers
come from diverse social and economic backgrounds, and are of
all ages. On assistance, Sharon elaborated that the GOI is
helping PA Minister Fayyad develop a social insurance program
for Palestinians that would provide every poor Palestinian
family with USD 100 per month. The mutual goal is to bring
poorer families out from the influence of Hamas. Sharon
advised the Codel to discuss this issue in more detail with
Minister Fayyad, noting that "we know him well -- he's one of
the more serious people (in the PA)." Senator Alexander
asked Sharon how the USG can help the PA with reforms if it
should avoid providing the PA with direct financial
assistance. Cohen advised that the USG should require the PA
to employ a "control system" to ensure that the assistance
reaches its targets. Cohen urged that the USG make sure it
is satisfied about this system before it provides assistance.

--------------
Sharon: The Dangers of Iran, Syria
--------------


10. (C) Asked for his views on Iran, Sharon stressed that
"(the GOI) know(s) for sure" that Iran is making "every
effort" to develop nuclear weapons. Russia and China helped
Iran develop ballistic missiles for a 1,300-to-1,500
kilometer range, and Iran is now developing missiles that
have a 2,500 kilometer range, he asserted. "We should not
compromise on Iran," Sharon underlined, advising that
preparations should be made to bring the matter of Iran's
nuclear program before the UNSC. Sharon characterized
British, French, and German efforts as inadequate and called
for political and economic pressure to be mounted against
Iran. He expressed concern that the international community
could become too accepting of Iran's nuclear program.


11. (C) Sharon also underlined the danger that Iran presents
by calling it "the center of world terror." Iran provides
Hizballah with military support, Sharon said, claiming that
the latter currently has 30,000 rockets based in southern
Lebanon. Sharon said that Iranian Revolutionary Guard
members are in Lebanon and cooperate with the Lebanese army,
the latter causing "daily friction" on Israel's northern
border. Sharon stressed that he wants the Iranian
Revolutionary Guard expelled from Lebanon and the rocket
system in southern Lebanon dismantled. Iran is also trying
to recruit Israeli Arabs to commit terrorist acts within
Israel, Sharon said. While most of Israel's one million Arab
citizens want to be integrated into Israel society, Sharon
noted, a "small but growing minority" are active in terrorist
groups. Sharon charged that an Israeli Arab transported the
suicide bomber responsible for the February 25 terrorist
attack at Tel Aviv's Stage discotheque.


12. (C) Sharon also underscored that Syria is facilitating
Iranian support for Hizballah in southern Lebanon. He noted
that Syria occupies Lebanon and claimed that some one million
Syrian citizens are now working there. Sharon characterized
Damascus as the "headquarters of terrorism," underlining that
orders to commit terrorist activities come from Damascus and
that reports on the results of such activities travel back
there as well.


13. (C) Senator Boxer noted her "surprise" as one of the
authors of the Syria Accountability Act that Vice Prime
Minister Peres downplayed the military threat that Syria
poses, with Peres noting that Syria has old equipment.
Sharon responded that with his military background, he
"always takes the other side seriously," asserting that "you
can't say that Syria is not a danger." Sharon underlined
that Syria is also supporting terrorism in Iraq and that it
has "serious quantities of chemical weapons." Sharon added
that the Syria Accountability Act is "very, very important."

--------------
Separation Barrier and Security
--------------


14. (C) Asked to address the effect of the separation
barrier, Sharon stressed that the GOI's goal in constructing
the barrier was to enhance Israel's security. The fence is
not a political border, he said, but rather a security
border, which could be removed if the situation so warranted.
Sharon noted that the separation barrier has "sharply
reduced" the incidence of terrorism in Israel. The GOI
considers the humanitarian needs of the Palestinians when
routing the fence, he said, and has rerouted several areas to
alleviate hardships. He made clear, however, that faced with
the choice of paying with Israeli lives or creating
difficulties for the Palestinians, he will choose the latter.

--------------
Sharon: Will Solve "Budget Problem"
--------------


15. (C) Turning to internal politics, Sharon asserted that
the Israeli Left could never achieve disengagement, but added
that he "lost his (coalition) majority" because the Right is
working against disengagement. Nonetheless, Sharon
emphasized, he remains fully committed to the plan as well as
its timeframe. "Now the budget is a problem," Sharon said,
noting that if the budget does not pass (by March 31),
elections will be mandated within 90 days. Elections would
postpone disengagement's implementation, Sharon said, and
would cause "a complicated, unnecessary situation." He
pointed out that because the budget has not yet passed,
compensation can not yet be provided for thousands of
evacuees, many of whom, he claimed, would have moved already
had compensation been available. Despite the difficulties,
Sharon opined that he would be able to solve the budget
problem within the coming week.

--------------
Economy Improving
--------------


16. (C) Senator Bennett stressed his interest in the
continued strengthening of Israel's economy. He noted that
he was impressed with Finance Minister Netanyahu's Washington
presentation showing how Israel's economy continues to
progress toward a free market system. (Note: Senator Bennett
did not indicate when this presentation took place.) Senator
Bennett encouraged Sharon to continue in this direction,
noting that if Israel's economy is not strong, it will be
harder for Israel to fund critical security measures. Sharon
noted that the changes have been difficult, and there
continues to be poverty and unemployment, but expressed
confidence that Israel is moving in the right direction.
Cohen noted that the rate of inflation has been reduced to
9.9 percent and that the GOI is taking a serious approach to
reaching targets in public expenditure reductions.

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Threat to Al-Aqsa Mosque
--------------


17. (C) Senator Boxer noted that when the Codel toured the
Temple Mount, which includes the al-Aqsa Mosque, the tour
guide charged that Israel intends to assert authority over
the area in order to build a Jewish temple in its place. She
asked Sharon how widespread this belief is among the
Israeli-Arab and Palestinian Muslim populations. Sharon
stressed the importance of the Temple Mount for Jews as well,
but underlined that the GOI has no intention "whatsoever" to
gain control of the Temple Mount area. Sharon said that only
since Israel gained jurisdiction over these areas has there
been free access to all holy places.


18. (U) Codel Reid cleared this cable.


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