PERES ADVISOR, NSC ADVISOR DISCUSS DAHLAN'S

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 002427

SIPDIS

NSC FOR ABRAMS/DANIN

E.O. 12958: DECL: 04/15/2015
TAGS: KWBG PGOV PREL EAID ECON IS GAZA DISENGAGEMENT
SUBJECT: PERES ADVISOR, NSC ADVISOR DISCUSS DAHLAN'S
POSITIONS, GOI DISENGAGEMENT PLANS

Classified By: Charge d'Affaires Gene A. Cretz for reasons 1.4 (b) and
(d)


1. (C) Summary: Einat Wilf, foreign policy advisor to Vice
PM Shimon Peres, and Gabi Blum, NSC advisor, briefed
EconCouns on the recent Aspen Institute conference; the
potential for U.S. involvement in Negev/Galilee development;
and PA Civil Affairs Minister Muhammad Dahlan's progress on
negotiating the civil and economic aspects of disengagement.
On the Aspen conference, Wilf said the Institute revealed its
plans to fund projects, including water desalinization, joint
Palestinian-Israeli textile production, and rebuilding the
Gaza airport. In side meetings at the conference, Dahlan
reportedly told NSC director Giora Eiland, Peres advisor
Amnon Lipkin-Shahak, and Member of Knesset Ephraim Sneh that
he is ready to coordinate with Israel, although no date has
been set. He also presented a series of requests that he
said will help demonstrate to the Gazan people that
disengagement is "worthwhile," including the reunification of
some 10,000 families, an increase in the number of PA
employee permits granted, and the release of 4,000 political
prisoners. On Negev and Galilee development, Wilf reported
that GOI will request U.S. assistance, mostly likely during
the autumn, when Congress considers proposals for
supplemental allocations. On the GOI's disengagement
positions, Blum said that Israel will continue to supply
water to the settlement areas, and will consider maintaining
the quasi-customs union provided Rafah terminal is moved from
the Gaza-Egypt border to Keren Shalom inside the Green Line
on the Israel-Egypt border, close to Gaza. End summary.

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Aspen's Assistance Will be Small-Project Oriented
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2. (C) Einat Wilf, foreign policy advisor to Vice PM Shimon
Peres, told EconCouns April 14 that the result of the Aspen
Institute conference held April 8 in Washington was Aspen's
announcement of its intention to raise funds for a number of
development projects in Gaza post-disengagement. These
projects include water desalinization, joint
Palestinian-Israeli textile production, development of Gaza's
offshore gas fields, a new private hospital, a rebuilt Gaza
airport, and housing construction in Rafah. The Institute
will work to mobilize the Portland Trust, OPIC, and other
funds to assist with these projects.

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Dahlan Says He's Ready to Coordinate:
Still No Date, But PA Expectations Announced
--------------


3. (C) Wilf said that both PA Civil Affairs Minister
Muhammad Dahlan and PA President Mahmud Abbas have gone on
record with the Palestinian press announcing PA readiness to
coordinate with the GOI, and Wilf noted that Dahlan is
increasingly seen as the "point-man" on disengagement issues.
Nevertheless, he has not provided the GOI with a specific
meeting date, which Wilf called a source of significant
frustration for Vice PM Peres. She explained that in side
meetings with NSC director Giora Eiland, Peres Center for
Peace Chairman Amnon Lipkin-Shahak, and Member of Knesset
Ephraim Sneh during the Aspen Institute conference, Dahlan
made clear several of his positions on disengagement (see
below). In addition, she said, he has emphasized to the
international media that the PA will "not be a party" to any
settlement asset transfer deal that gives de facto
legitimization to Israeli ownership through the third-party
purchase of the assets. In Wilf's view the PA will take a
"don't ask don't tell" attitude, accepting the assets as long
as the details of purchase are not advertised.


4. (C) Dahlan reportedly told Eiland, Shahak, and Sneh that
the PA believes the GOI can take a number of steps to
convince the Gazan people that disengagement will benefit
them, and that coordination with Israel is worthwhile. The
first of these requests is reunification inside the Gaza
Strip for some 10,000 families separated by GOI security
restrictions during the Intifada. Dahlan has noted that
despite GOI agreement to reunite 5,000 families annually, it
did not follow through with any reunifications in 2003 or

2004. Along these same lines, Dahlan has requested the
legitimization of status of 54,000 Palestinian "visitors"
that he claimed are currently residing illegally with their
families inside Gaza. Significant easing of security
procedures and increasing of passenger limits at the Erez and
Rafah terminals, as well as an increase in the number of PA
employee permits granted, are Dahlan's two additional
expectations. Wilf noted that Dahlan emphasized that he
believes these are "easy for Israel to deliver" -- especially
inasmuch as the GOI should not care who goes into a Gaza
slated for disengagement -- but will appear as significant
confidence-building measures to the Palestinians.

5. (C) Mohammed Yazgi, 7-Up CEO and Chairman of the
Palestinian Business Association (PBA),told EconCouns April
17 that "Dahlan has been acting like a politician with the
business community, telling us all the right things." Yazgi
noted with satisfaction that Dahlan has already given the PBA
two lengthy briefings on PA plans for disengagement and his
negotiations with the GOI, and a third is planned for next
week. PBA members are given an opportunity to ask questions
first, he said, which Dahlan often answers on the spot or
tasks an assistant to handle. According to Yazgi, Dahlan's
message has been consistent -- the private sector is crucial
to successful disengagement coordination, and he will bolster
business by working to obtain GOI assurances on increased
numbers of permits, greater freedom of movement between Gaza
and the West Bank, and ease of restrictions at the crossings,
Karni especially. In return, Yazgi explained, Dahlan has
requested that the business community "help him" by ensuring
that business permits remain with the business community and
are not provided to laborers.

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Dahlan on Election Timeline
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6. (C) NSC advisor Gabi Blum told EconCouns April 9 that
Dahlan had also discussed the timing of the upcoming PLC
elections with NSC head Giora Eiland in side meetings at
Aspen. According to Blum, Dahlan told Eiland that the PA
would postpone elections in order to avoid coincidence with
the Israeli withdrawal and the potential restrictions on
Palestinian movement that the withdrawal could cause. Blum
noted that the GOI is concerned it will be blamed by the PA
and the international community for "forcing" the PA to
change its date. (Comment: Dahlan,s opinion is not the
final word on postponement, and this issue is still being
debated within the PA Cabinet and the Palestinian Legislative
Council. End Comment).

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Developing the Negev and Galilee with U.S. Help
-------------- --


7. (C) Wilf told EconCouns that U.S. assistance for
development of the Negev and Galilee regions in tandem with
disengagement was "put firmly on the agenda" with AIPAC and
Congress during Vice PM Peres' recent visit to the U.S. The
GOI hopes Congress will pass a supplemental assistance
package during its next opportunity to do so, likely
September/October. The development plan, Wilf explained,
will seek to mobilize funds from the Israeli budget,
worldwide Jewish communities, and the USG. The plan is
broad-spectrum and will address education, business and
investment opportunities, and overall "quality of life"
issues. In the Negev the plan will be anchored in a
multi-ministry development initiative for the Bedouin
community, including relocation of some 65,000 Bedouin living
in unrecognized villages between Beer Sheva and Dimona (see
septel.) (Note: A majority of this population opposes
relocation, arguing instead that the GOI must recognize the
45 largest Bedouin settlements and provide them with
government services such as water, schools, and medical
clinics. End note.)

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GOI Quietly Reconsidering 2008 Labor Cutoff
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8. (C) NSC Advisor Gabi Blum told EconCouns April 9 that
while the GOI still officially intends to halt Palestinian
labor inflows by 2008, this position is evolving behind
closed doors. The proposal for a labor cutoff was not put
into the October 2004 disengagement legislation, Blum
emphasized. "Look at Erez," she said, referring to NIS 10
million of upgrades including a total of six passenger lanes,
a design clearly meant to accommodate drastically increased
numbers. Wilf confirmed in a previous meeting that the GOI
is privately reconsidering the cutoff. Blum also highlighted
several aspects of the GOI's disengagement planning,
emphasizing in particular that the GOI "will find water for
the Palestinians" following withdrawal, although details
remain to be discussed within the Trilateral Water Working
Group. She also noted that the GOI will consider maintaining
the quasi-customs union even if IDF troops withdraw from the
Philedelphi corridor, provided that Rafah crossing is moved
from the Gaza-Egypt border to Keren Shalom inside Green Line
Israel.

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