NSC'S GABI BLUM ON WORLD BANK PROCESS, PERES,

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000285

SIPDIS

E.O. 12958: DECL: 01/13/2014
TAGS: KWBG ECON PREL IS GAZA DISENGAGEMENT GOI INTERNAL ECONOMY AND FINANCE
SUBJECT: NSC'S GABI BLUM ON WORLD BANK PROCESS, PERES,
POSSIBILITIES FOR A COORDINATED DISENGAGEMENT


Classified By: Economic counselor Bill Weinstein for reasons 1.4 (b) an
d (d)


1. (C) Summary: NSC strategic advisor Dr. Gabi Blum met with
EconCouns January 13 to discuss movement on the World Bank
process, Shimon Peres' projected role in disengagement
planning, and potential GOI dialogue with the PA on
settlement assets and other economic aspects of withdrawal.
On the World Bank process, Blum argued that the GOI-approved
plan to install two new container scanners at Karni will
solve the problem of delays at the terminal, rendering moot
the bank's proposal for a pilot program there. She also
indicated that the GOI is considering, but has not committed
to, an alternative to the back-to-back shipping arrangement.
Finally, she reiterated that the bank's language on
"monitoring and benchmarks" is politically charged and unfair
to Israel, but the GOI accepts such a process in principle.
On Peres' new role, Blum confirmed that he will be
responsible for Negev and Galilee development as well as
economic aspects of disengagement, but that "political
instability" will keep him from opening any new offices to
carry out these functions.


2. (C) Summary continued: On the potential for more direct
coordination with the Palestinians on disengagement, Blum
said the GOI has made no strategic decision on this but that
officials continue to state coordination is preferable to
unilateral action on many aspects. For instance, she said,
GOI officials at the request of the PA are drafting an
inventory of settlement assets to be used as the basis for
future discussion. EconCouns emphasized the need for direct
GOI-PA dialogue on agribusiness, and urged the GOI to
facilitate the movement of Palestinians stuck on the Egypt
side of Rafah crossing. End Summary.

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GOI Has Own Plan For Fixing Karni
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3. (C) NSC strategic advisor Dr. Gabi Blum told EconCouns
January 13 that the World Bank's proposed pilot programs at
Karni and Jalame will "take too long" to plan and implement.
The GOI will solve "95 percent" of the problem of delays at
Karni terminal, she argued, by installing two new container
scanners that will check full as well as empty containers
leaving the Gaza Strip. The GOI has reached an agreement
with PM Finance Minister Salaam Fayad that the PA's MinFin
will contribute USD 4.5 million and the GOI that same amount
to finance the scanners. The GOI's MinFin will determine who
to charge for the GOI contribution, she said -- most likely
the Ministry of Defense. Blum added that she was not aware
of a GOI request to Congress for U.S. dollars to finance the
scanner or improvements at the crossings overall.


4. (C) The Karni scanners will not be ready for installation
for another 18 months, Blum said, while technological
improvements at Erez crossing in northern Gaza and Jalame and
Shaar Ephraim crossings in the West Bank may be complete
before withdrawal. Other aspects of the GOI's proposed
crossings improvements, including construction of a Gaza-West
Bank rail link, are underway. In addition, she said, the GOI
is considering replacing back-to-back shipping with
"horse-and-cart" -- a free-circulating trailer system -- at
the crossings. The GOI has made no commitment to the bank on
this, however. (Note: Palestinian militants bombed Karni on
Thursday, January 13, killing six Israeli civilian staff and
severely damaging the terminal. IDF sources stated that the
terminal will be closed for weeks and possibly months as
infrastructure is repaired. End note.)

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GOI Will Accept "Progress Report" Instead of "Monitoring"
-------------- --------------


5. (C) Bloom reiterated the GOI position that the World
Bank's language on "monitoring and benchmarks" is politically
charged and inappropriate, and unfairly requires Israel to
take "dozens" of specific steps on crossings and closures
while the PA is held to a vague directive to "improve"
security. In meetings with GOI officials Nigel Roberts
claimed monitoring will be focused more on the PA than on
Israel, she said, but added that she was skeptical of this.
She emphasized, however, that the GOI supports the donor
community's need to ensure its money is not misspent, and
"does not object" to the World Bank process overall. In
conversations before the visit of Bank president Paul
Wolfenson, she said, Roberts seemed willing to substitute
words like "progress report" and "steps" for monitoring and
benchmarks, a move she thought could quiet GOI objections.

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Peres Won't Create New Bureaucracy
--------------


6. (C) As new Deputy PM, Blum said, Shimon Peres will be in
charge of Negev and Galilee development as well as the
economic aspects of disengagement. Because the political
situation is unstable, however, Peres will not set up new GOI
offices to deal with these issues, but will use his own staff
and influence. One of his proposals for economic development
in post-disengagement Gaza is a program whereby EU countries
"adopt" industrial zones, maintaining their infrastructure
and giving incentives to European investors. Blum noted that
such a program would require close GOI coordination with
Palestinian as well as European actors.

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Who To Talk To, and When, on Disengagement?
--------------


7. (C) The GOI has not made any strategic decision to
coordinate disengagement with Abu Mazen and the new PA
leadership, Blum said, but GOI officials continue to state
that coordination on some aspects of withdrawal would be
better in principal than unilateral Israeli action. The GOI
will have to work with the World Bank on certain issues and
the PA on others, she added. She gave the example that the
PA had "convinced" the GOI that Gazans do not have a clear
idea of what settlements contain -- in response, Israeli
officials are drawing up a detailed inventory that will serve
as the basis for future discussions. The GOI is also
considering working with third parties like the U.S.-based
East/West Institute, who offered to serve as a middleman
through which settlers can more comfortably sell agribusiness
assets to Palestinians.


8. (C) Overall, Blum said, the past several weeks have seen
increased GOI-PA dialogue at the working level, but PM Sharon
has yet to make clear to the ministries under what criteria
more robust and open engagement could take place. (Note:
Following the Karni bombing, Dov Weissglas reportedly told PA
Minister of Negotiations Affairs Saeb Erekat that the GOI
will suspend contact with the PA. End note.)

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The Rafah Closure
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9. (C) EconCouns encouraged the GOI to consider ad-hoc
solutions to the ongoing humanitarian situation at the Rafah
crossing, which has been closed since Palestinian militants
bombed the terminal December 12. He pointed out that Israel
showed its ability to facilitate the exit of large numbers of
Palestinian hajjis from the Gaza Strip in late December and
early January. Blum responded that after Rafah was bombed,
it became exceptionally difficult to retain civilian staff at
the terminal or recruit new employees, making it more
difficult to reopen the crossing. She pointed out that even
Egypt, who vociferously objected the last time the GOI closed
the crossing, has been "remarkably silent" this time since it
understands that militants "brought this on."

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