Identifier
Created
Classification
Origin
05TELAVIV4819
2005-08-04 11:00:00
SECRET
Embassy Tel Aviv
Cable title:
DISENGAGEMENT COORDINATION: THE CUSTOMS UNION
how-toThis record is a partial extract of the original cable. The full text of the original cable is not available.
S E C R E T SECTION 01 OF 02 TEL AVIV 004819
SIPDIS
E.O. 12958: DECL: 08/01/2015
TAGS: ECON ETRD EAID IS GAZA DISENGAGEMENT ECONOMY AND FINANCE
SUBJECT: DISENGAGEMENT COORDINATION: THE CUSTOMS UNION
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d)
This cable was cleared with Consulate General Jerusalem and
the Wolfensohn team.
(C) Summary. With only 13 days left before the start of
disengagement, the GOI intends to propose a modified customs
enforcement mechanism that incorporates relocating Rafah
Terminal to Kerem Shalom and gradually utilizing an
international third party working with the PA as a way to
maintain the customs union. Minister of Defense Mofaz will
present this plan to PA Civil Affairs Minister Dahlan this
week. NSC Director Giora Eiland told Quartet Special Envoy
(QSE) Wolfensohn that three alternative proposals continue to
receive some attention from the GOI and donors, including
complete abrogation, and maintenance of the union with
relocation of Rafah terminal to Kissufim or Erez crossings.
Eiland linked resolution of the customs union debate to other
disengagement-related economic issues, including the Gaza
air- and seaport. Gabi Bar of the Ministry of Industry,
Trade, and Labor said that recent working-level EU-GOI-PA
negotiations on trade issues had been undermined by the lack
of a GOI political decision on the customs union. End
Summary.
--------------
MoD Will Present Official GOI Position:
Move Rafah to Kerem Shalom
--------------
2. (C) In several recent conversations with the Ambassador,
Ministry of Defense (MoD) officials have emphasized that even
after the IDF withdraws from the Philidelphi Corridor there
will be a continuing need to monitor people and materials
passing from Egypt into Gaza. Contacts told the Ambassador
that the GOI will propose to temporarily move the Rafah
terminal for people and goods to Kerem Shalom on the
Egypt-Israel-Gaza border, thereby maintaining the customs
union and addressing Israeli security concerns. While the PA
has in the past rejected this proposal, they explained, this
latest iteration will include the GOI,s offer to accept the
gradual participation of an international third party
working with PA customs on the Gaza side of the Kerem Shalom
border. This would enable the GOI to cooperate with the PA
and the third party on establishing customs clearance
procedures that could be utilized at the future Gaza airport
and seaport. The GOI will also express its intention to
eventually move the GOI customs point to the Karni or Erez
crossing on the Gaza-Israeli border, if these other
arrangements to not gain PA agreement.
-------------- --------------
Eiland: Customs Union Is Linked to Passage Improvement
-------------- --------------
3. (S) QSE Wolfensohn shared with the Ambassador and the
Consul General NSC Director Giora Eiland,s views on the
resolution of issues related to the passages and on Gaza
disengagement overall. According to Wolfensohn, Eiland
detailed the following alternative proposals for a
post-disengagement customs system. (Note and comment: The
first three of these proposals have received very little
attention in recent weeks, as the GOI has moved more
decisively towards the Kerem Shalom option. End note.)
-- Abrogation of the customs union and immediate relocation
of the Israeli customs terminal from Rafah to Karni or
Kissufim crossings.
-- Maintenance of the customs union and relocation of the
customs terminal from Rafah to Nitzana crossing, in the
center of Gaza,s eastern border with Israel. Vice Premier
Peres is supporting this proposal.
-- Maintenance of the customs union, with Rafah remaining in
place under Palestinian control, the Israeli customs point
relocating to Erez crossing, and a third party providing
technical assistance to the PA. The IMF is supporting this
proposal.
-- The GOI,s current preference is maintenance of the
customs union and relocation of the Rafah terminal to Kerem
Shalom at the junction of the Gaza border with Israel and
Egypt.
Wolfensohn said that Eiland felt there must be a global
approach, to solving the numerous disengagement-related
economic issues. Resolution of the customs union, for
instance, could not be divorced from improvement of the
passages and the West Bank-Gaza link. In this vein, Eiland
said, third-party involvement in maintaining the customs
union and the protection of Israeli security concerns have a
direct impact on any agreement to open an airport or seaport
in Gaza.
--------------
GOI-EU-PA Trade Talks A Bust
--------------
4. (S) An inter-ministerial team traveled July 26-28 to
Brussels for trilateral negotiations between the EU, PA, and
GOI. While EU trade commissioner Mandelson requested the
negotiations as a means of making progress on the customs
union, Ministry of Industry, Trade, and Labor Middle East
director Gaby Bar told Econoff that the negotiations failed
to produce any results, in large part because the GOI had not
yet made several "political decisions" on the customs union,
and thus the negotiating team had no mandate. Bar said that
the EU pushed for the GOI to formally recognize the interim
economic agreement signed between the PA and the EU, yet
Hagit Ben-Yakov of the MFA -- a member of the working-level
negotiating team -- told Econoff that in the GOI view this
would contradict the Oslo Accords. Despite the lack of
results, the EU has proposed September 26 for the next
trilateral meeting. The PA has asked that this meeting be a
ministerial meeting. Bar indicated that the GOI has not yet
accepted the suggestion. (Note: The GOI is unlikely to send
a team for more negotiations until key decisions have been
made within the GOI about the future of trade relations with
the PA after Gaza disengagement. End note.)
--------------
Impact of the CU On PA Revenues
--------------
5. (C) Approximately two thirds of the PA's total revenue
receipts currently come from taxes collected by the Israeli
customs service on the PA's behalf as a result of the
existing CU, according to World Bank and IMF analyses.
Although the donor community supports resumption of the
customs function by the PA Finance Ministry in the long term,
Israeli officials believe that the PA currently lacks the
capacity to ensure efficient revenue collection, and assert
that any PA Customs office established at the Rafah terminal
is likely to be overwhelmed by the volume of work to be done.
Additionally, they say, the terminal does not contain
adequate infrastructure, such as scanners and storage
facilities, to facilitate the secure import of goods.
(ConGen note: PA officials would dispute the Israeli
assessment of PA revenue collection abilities. They would
also point out that no infrastructure or scanners exist at
Kerem Shalom now. End note)
********************************************* ********************
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
SIPDIS
E.O. 12958: DECL: 08/01/2015
TAGS: ECON ETRD EAID IS GAZA DISENGAGEMENT ECONOMY AND FINANCE
SUBJECT: DISENGAGEMENT COORDINATION: THE CUSTOMS UNION
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d)
This cable was cleared with Consulate General Jerusalem and
the Wolfensohn team.
(C) Summary. With only 13 days left before the start of
disengagement, the GOI intends to propose a modified customs
enforcement mechanism that incorporates relocating Rafah
Terminal to Kerem Shalom and gradually utilizing an
international third party working with the PA as a way to
maintain the customs union. Minister of Defense Mofaz will
present this plan to PA Civil Affairs Minister Dahlan this
week. NSC Director Giora Eiland told Quartet Special Envoy
(QSE) Wolfensohn that three alternative proposals continue to
receive some attention from the GOI and donors, including
complete abrogation, and maintenance of the union with
relocation of Rafah terminal to Kissufim or Erez crossings.
Eiland linked resolution of the customs union debate to other
disengagement-related economic issues, including the Gaza
air- and seaport. Gabi Bar of the Ministry of Industry,
Trade, and Labor said that recent working-level EU-GOI-PA
negotiations on trade issues had been undermined by the lack
of a GOI political decision on the customs union. End
Summary.
--------------
MoD Will Present Official GOI Position:
Move Rafah to Kerem Shalom
--------------
2. (C) In several recent conversations with the Ambassador,
Ministry of Defense (MoD) officials have emphasized that even
after the IDF withdraws from the Philidelphi Corridor there
will be a continuing need to monitor people and materials
passing from Egypt into Gaza. Contacts told the Ambassador
that the GOI will propose to temporarily move the Rafah
terminal for people and goods to Kerem Shalom on the
Egypt-Israel-Gaza border, thereby maintaining the customs
union and addressing Israeli security concerns. While the PA
has in the past rejected this proposal, they explained, this
latest iteration will include the GOI,s offer to accept the
gradual participation of an international third party
working with PA customs on the Gaza side of the Kerem Shalom
border. This would enable the GOI to cooperate with the PA
and the third party on establishing customs clearance
procedures that could be utilized at the future Gaza airport
and seaport. The GOI will also express its intention to
eventually move the GOI customs point to the Karni or Erez
crossing on the Gaza-Israeli border, if these other
arrangements to not gain PA agreement.
-------------- --------------
Eiland: Customs Union Is Linked to Passage Improvement
-------------- --------------
3. (S) QSE Wolfensohn shared with the Ambassador and the
Consul General NSC Director Giora Eiland,s views on the
resolution of issues related to the passages and on Gaza
disengagement overall. According to Wolfensohn, Eiland
detailed the following alternative proposals for a
post-disengagement customs system. (Note and comment: The
first three of these proposals have received very little
attention in recent weeks, as the GOI has moved more
decisively towards the Kerem Shalom option. End note.)
-- Abrogation of the customs union and immediate relocation
of the Israeli customs terminal from Rafah to Karni or
Kissufim crossings.
-- Maintenance of the customs union and relocation of the
customs terminal from Rafah to Nitzana crossing, in the
center of Gaza,s eastern border with Israel. Vice Premier
Peres is supporting this proposal.
-- Maintenance of the customs union, with Rafah remaining in
place under Palestinian control, the Israeli customs point
relocating to Erez crossing, and a third party providing
technical assistance to the PA. The IMF is supporting this
proposal.
-- The GOI,s current preference is maintenance of the
customs union and relocation of the Rafah terminal to Kerem
Shalom at the junction of the Gaza border with Israel and
Egypt.
Wolfensohn said that Eiland felt there must be a global
approach, to solving the numerous disengagement-related
economic issues. Resolution of the customs union, for
instance, could not be divorced from improvement of the
passages and the West Bank-Gaza link. In this vein, Eiland
said, third-party involvement in maintaining the customs
union and the protection of Israeli security concerns have a
direct impact on any agreement to open an airport or seaport
in Gaza.
--------------
GOI-EU-PA Trade Talks A Bust
--------------
4. (S) An inter-ministerial team traveled July 26-28 to
Brussels for trilateral negotiations between the EU, PA, and
GOI. While EU trade commissioner Mandelson requested the
negotiations as a means of making progress on the customs
union, Ministry of Industry, Trade, and Labor Middle East
director Gaby Bar told Econoff that the negotiations failed
to produce any results, in large part because the GOI had not
yet made several "political decisions" on the customs union,
and thus the negotiating team had no mandate. Bar said that
the EU pushed for the GOI to formally recognize the interim
economic agreement signed between the PA and the EU, yet
Hagit Ben-Yakov of the MFA -- a member of the working-level
negotiating team -- told Econoff that in the GOI view this
would contradict the Oslo Accords. Despite the lack of
results, the EU has proposed September 26 for the next
trilateral meeting. The PA has asked that this meeting be a
ministerial meeting. Bar indicated that the GOI has not yet
accepted the suggestion. (Note: The GOI is unlikely to send
a team for more negotiations until key decisions have been
made within the GOI about the future of trade relations with
the PA after Gaza disengagement. End note.)
--------------
Impact of the CU On PA Revenues
--------------
5. (C) Approximately two thirds of the PA's total revenue
receipts currently come from taxes collected by the Israeli
customs service on the PA's behalf as a result of the
existing CU, according to World Bank and IMF analyses.
Although the donor community supports resumption of the
customs function by the PA Finance Ministry in the long term,
Israeli officials believe that the PA currently lacks the
capacity to ensure efficient revenue collection, and assert
that any PA Customs office established at the Rafah terminal
is likely to be overwhelmed by the volume of work to be done.
Additionally, they say, the terminal does not contain
adequate infrastructure, such as scanners and storage
facilities, to facilitate the secure import of goods.
(ConGen note: PA officials would dispute the Israeli
assessment of PA revenue collection abilities. They would
also point out that no infrastructure or scanners exist at
Kerem Shalom now. End note)
********************************************* ********************
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