NEA A/S WELCH'S AUGUST 16, 2005 MEETING WITH

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 005138

SIPDIS

E.O. 12958: DECL: 08/16/2015
TAGS: PREL KPAL KWBG PGOV IS EG GAZA DISENGAGEMENT GOI EXTERNAL GOI INTERNAL
SUBJECT: NEA A/S WELCH'S AUGUST 16, 2005 MEETING WITH
ISRAELI MOD DG AMOS YARON REVIEWS POST-DISENGAGEMENT ISSUES


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

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SUMMARY
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1. (C) Israeli MOD Director General Amos Yaron updated NEA
A/S Welch, Ambassador Kurtzer and General Ward August 16 on
the status of post-Gaza disengagement issues. On the
disposition of settler housing, Yaron asked the USG to
continue its efforts to identify a program manager to oversee
removal of rubble from the Gaza Strip to the Sinai. A/S
Welch said the USG would try to get the Europeans to identify
as soon as possible a company that could serve as project
manager, or allow pursuit of alternatives. On Gaza-West Bank
passage improvements, Yaron suggested Dahlan was blocking
progress on the issue by focusing on the northern Gaza-Israel
border, thereby making it impossible for USAID to release USD
50 million to Israel for passage improvement. Yaron stressed
that Israel would continue to fund its own efforts to move
forward on passages, but requested A/S Welch's assistance in
getting USAID to turn over the USD 50 million to the GOI so
that Israel could directly procure relevant U.S. technologies
and cover related operational and infrastructure expenses.
Yaron clarified that Israel's fulfillment of Palestinian
demands for "door-to-door" service are contingent on the
maintenance of security after disengagement, and this would
take time.


2. (C) On Philadelphi and Rafah, Yaron reviewed the Israeli
and Palestinian positions, and offered Israel's willingness
to explore an alternative to Palestinian control and
operation of the Rafah crossing for goods and people by
opening a temporary terminal in Kerem Shalom. Yaron made it
clear that Israel could not accept a third party, such as
Egypt, clearing off on goods and persons crossing the
Egypt-Gaza border. A/S Welch and Ambassador Kurtzer urged
Yaron to explore creative solutions to the Rafah impasse,
including a third party role, that would satisfy Israeli and
Egyptian security interests and tangibly demonstrate to the
Palestinians that their situation has changed as a result of
disengagement. END SUMMARY.

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HOUSING: PROJECT MANAGER, AGREED SECURITY REGIME NEEDED
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3. (C) Yaron said the GOI hopes to reach agreement in the
near future with Palestinian Authority (PA) Civil Affairs
Minister Mohammed Dahlan about how to securely remove the
remains of dismantled setter housing from Gaza. All sides
agree that the Egyptians are to take the unusable and
non-hazardous rubble. For the GOI, the remaining issue is
ensuring that that rubble removal process conforms with
Israel's security requirements. The trucks exiting Gaza must
haul rubble, and, when they return, they must be empty or
only contain sand for Gaza's beaches.


4. (C) Yaron also stressed that the GOI hopes to learn as
soon as possible who will be the program manager for the
settler housing dismantlement project. He understood that
the USG had approached the World Bank and European Union.
A/S Welch said that the USG had been working hard over the
last few days to resolve the matter. Secretary Rice had
raised it with her Quartet counterparts on August 12, and A/S
Welch had discussed it with his Quartet counterpart, Mark
Otte, on August 15. Yaron wondered aloud whether an American
company could provide the services. A/S Welch said it would
be more efficient to have a company involved that has
experience working in Gaza. (NOTE: A/S Welch mentioned IMG,
and Yaron indicated familiarity with the company. END NOTE.)
A/S Welch promised to get the Europeans to reach agreement
or have them decide that an alternative should be pursued.

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YARON SAYS DAHLAN, USAID STALLING PASSAGE IMPROVEMENTS
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5. (C) Yaron stressed that the GOI knows how important it is
to help the Palestinians see that the Gaza-West Bank passage
issue has improved for them as a result of disengagement:
"We are ready to make a 180-degree change regarding services
to the Palestinians." He complained, however, that Dahlan is
making progress on passage improvement difficult by insisting
on discussion of the Erez border line. Yaron recalled that
he told Quartet Special Envoy (QSE) Wolfensohn that while
Israel has funded the establishment of a passage for goods at
Erez, the Palestinians have insisted that work also continue
on the Erez Industrial Zone. In doing so, Yaron explained,
the Palestinians demonstrate they wish to drag their feet,
while Israel wants to move forward and allow the passage of
goods from Erez to Ashkelon, the West Bank, and other
destinations. Yaron said Wolfensohn promised to speed up the
delivery of USD 50 million to the GOI in return for the
building of the new passage for goods at Erez. Yaron
suggested that the best solution would be for USAID to turn
the USD 50 million over to the GOI so that it can use USD 30
million to procure scanners and other U.S. technology through
its defense procurement agency in New York, and use the
remaining USD 20 million to cover infrastructure and
operational costs. Conversely, Yaron expressed concern that
if USAID used its standard procedures for allotting the USD
50 million, the acquisition process could be dragged out and
end up complicated by questions about who signs the
contracts. Yaron said he is ready to work with USAID.


6. (C) Yaron said that the GOI will improve the Karni passage
to ensure that Palestinian goods will cross from the Gaza
Strip to the West Bank "in a very short time," with the main
passage running from Karni to Tarkumiya, south of Hebron. He
cautioned that GOI efforts to fulfill Dahlan's demand for
"door-to-door" service are contingent on the maintenance of
security in the area "for months" after disengagement.
Israel, he said, is ready "in principle" to fulfill Dahlan's
request, but needs time and equipment. Delivery of the USD
50 million in the near term would be helpful. Palestinian
observance of Israel's security needs would be crucial.
Yaron said he told Wolfensohn that it does not matter what
kind of checks the Palestinians perform on their side of the
Gaza border -- Israel cannot rely on them.

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YARON PROMISES TO THINK CREATIVELY TO RESOLVE RAFAH IMPASSE
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7. (C) Yaron stressed that it is in Israel's interest to
leave Philadelphi as soon as possible -- possibly before the
Israeli holidays in October. He mused that Israel might be
completely out of the Gaza Strip within two months, as long
as the parties reach agreement on the establishment of an
Israeli-controlled border crossing at Kerem Shalom, at the
intersection of the Israeli, Egyptian and Gazan borders.
Yaron said that after Israeli troops pull out of Philadelphi,
Israel wants to build a new terminal at Kerem Shalom that
will service goods and people. He said it could be completed
in a short time, as long as there are no problems with the
customs envelope arrangement under which Israel retains
customs and security control of entry to Gaza. In the GOI's
view, however, the Palestinians cannot accept separate
customs envelopes in the Gaza Strip and the West Bank, and
Yaron indicated that Israel will use the threat of abrogating
the customs union to press the Palestinians to agree to a
Kerem Shalom crossing. Yaron said the GOI has made it clear
to the Palestinians that Israel is ready to allow the
Palestinians to transport goods into and through Israel
"without checking -- at least for the beginning" -- as long
as the Palestinians continue to accept a customs envelope
including Gaza for which Israel retains control. The GOI
would be willing to call the Kerem Shalom access point a
"temporary terminal," and then decide its ultimate fate in
the future.


8. (C) In the meantime, Yaron said, Israel could not discuss
third-party involvement at the Rafah terminal. Yaron said
the best compromise Israel could accept would be to open the
temporary terminal in Kerem Shalom, and then allow
construction of a seaport in Gaza. Then, after a year, the
two sides could assess the seaport in Gaza and make decisions.


9. (C) A/S Welch and Ambassador Kurtzer suggested to Yaron
that proceeding according to current plans will likely not
satisfy Palestinian desires to see real, measurable changes
in their situation. While Israel will have withdrawn from
the Gaza Strip, Israeli officials will still be checking
goods and persons crossing even the Gaza border with Egypt.
A/S Welch and the Ambassador urged Yaron to think creatively
so that Israel will be able to maintain the customs duty,
revenue collection and tariff code provisions of the customs
envelope -- and its focus on security -- while demonstrating
tangibly that the situation at Rafah has changed for the
Palestinians as a result of disengagement. They suggested
that the GOI consider further how Israeli and Egyptian
security interests coincide as a result of disengagement, and
how Egypt might share Israel's interest in enforcing the
security aspects of the passage of goods and people across
Rafah. A creative solution, including a third party role,
should be able to demonstrate change at Rafah, while
addressing Israeli security concerns, possibly through
technological solutions at the Erez and Karni crossings into
Israel as a discreet backstop. Yaron acknowledged that,
after considering all the options, his experts had concluded
that a security regime involving Palestinians checking goods
and persons under Egyptian supervision was Israel's "second
best option" and promised to "think about it" as a possible
way ahead to the Rafah issue.


10. (U) This cable was cleared by Assistant Secretary David
Welch.

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