SHIMON PERES ON DISENGAGEMENT, PALESTINIAN SOCIAL

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001847

SIPDIS

NSC FOR ABRAMS/DANIN

E.O. 12958: DECL: 03/25/2014
TAGS: KWBG PREL EFIN EAID IS GAZA DISENGAGEMENT ECONOMY AND FINANCE ISRAELI SOCIETY ISRAELI PALESTINIAN AFFAIRS
SUBJECT: SHIMON PERES ON DISENGAGEMENT, PALESTINIAN SOCIAL
SECURITY, NEGEV DEVELOPMENT


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


1. (C) Summary: Vice Prime Minister Shimon Peres told NSC
director Elliott Abrams, NEA Assistant Secretary David Welch,
and the Ambassador March 23 that the economic needs of the
Gaza Strip and West Bank are immediate and pressing, while
solutions are slow in coming. In his view, the PA is torn
between its high hopes for disengagement and its reluctance
to "come to the table" with the GOI on specific issues like
passages, settlement assets, and Israeli-Palestinian
agribusiness cooperation. The Palestinians will be starkly
disappointed after withdrawal, he warned, unless they
coordinate with the GOI on these issues immediately. Peres
emphasized the need for a Palestinian social security
program, saying that Spain has pledged 30 million Euros for a
"safety net" that will provide 100,000 families in Gaza with
USD 100 per month. He also touched on the USD 140 million
plans to improve border crossings, noting that the World Bank
has pledged half of this amount. Finally, Peres discussed
his hopes for developing the Negev and Galilee in tandem with
disengagement, stating that this can serve as the "positive
message" to counteract the difficult optics of evacuation.
He requested USG assistance on Negev development, suggesting
a meeting with Secretary Rice to name top U.S. businesses
that might lead the way in investment. End summary.

--------------
PA Ambivalence Will Harm Palestinians
--------------


2. (C) Vice Prime Minister Shimon Peres spoke to NSC
director Elliot Abrams, NEA Assistant Secretary David Welch,
and the Ambassador March 23 about the gap between "immediate
and pressing problems" within the Palestinian economy, and
"solutions that are slow in coming." He lamented the PA's
reluctance to talk to Israel on the economic aspects of the
disengagement plan, particularly the transfer of settlement
assets and hothouses. Although the Aspen Institute is
looking into ways to cover the difference between the GOI's
settler compensation and the total value of settlement
agribusiness, he said, the PA rejects the concept of
third-party purchase of settlement assets because in its
view, settlements do not belong to Israel. He warned,
however, that Gazans will be "very disappointed" following
withdrawal if they find Israeli settlers have dismantled
their hothouses because no arrangements were made for their
purchase and transfer. Peres mused that the Palestinians
have "no experience governing, only with rebelling," a fact
resulting in expectations disproportionate to the PA's
ability to act.

--------------
Social Security Program in the Works
--------------


3. (C) Peres said that a major Hamas win in the upcoming PLC
elections could freeze any nascent GOI-PA coordination on
disengagement and the larger peace process. A PA social
security program could undercut Hamas popularity, he said,
noting that Spain has pledged 30 million Euros for a program
that would provide some 100,000 Gazan families with USD 100
per month. At the EU's request, Peres and PA Finance
Minister Salaam Fayyad sent congruent letters to the EC
requesting further assistance. A decision on this issue was
ostensibly taken March 22, Peres said, and he expects an
answer shortly.

--------------
Donors Key in Post-Disengagement Economy
--------------


4. (C) In Peres' view, "a strong economy is the foundation
for democratization" within Palestinian society. He proposed
a QIZ after the fashion of Jordan and Egypt in the Gaza
Strip, and encouraged EU as well as U.S. private sector
investment in Palestinian industrial zones. Peres
underscored as well the importance of the donor community in
building a post-disengagement Gaza economy. Noting that the
Norwegians have been "confused" since the London Meeting, he
suggested a donor conference in April as opposed to May.
Peres said that the World Bank can play a key role by
contributing half of the USD 140 million Israel needs to make
immediate improvements at the border crossings, despite
internal Bank difficulties precipitated by the imminent
departure of president James Wolfenson.

--------------
Developing the Negev and Galilee
--------------


5. (C) Disengagement is necessary, Peres said, but it is a
"negative message" for the Israeli people. He hopes that
economic development of the Negev and Galilee regions in
tandem with the pullout can provide the balm of a clearly
positive step forward. In Peres' view, Israel has "lost one
million dunams of Negev land to the Bedouin", some 65,000 of
whom reside in unrecognized settlements on state lands from
Dimona to Beer Sheva. The Arab sector in both the Negev and
the Galilee is poor, he said, and if their sense of
oppression is not relieved a social crisis will undoubtedly
erupt. Development of these regions can therefore relieve
what Peres termed a demographic threat. Peres requested U.S.
assistance in this area, pointing to President Bush's
expression of support for Negev and Galilee development in
his April 2004 letter on the disengagement plan. He
suggested that he meet with Secretary Rice to discuss the
possibility of U.S. assistance in developing the tourism and
high tech sectors as well as the education system, and he
raised the idea of selecting top U.S. companies to invest in
Gazan industrial zones.


6. (U) NSC Director Abrams and A/S Welch cleared on this
cable.

********************************************* ********************
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