Identifier
Created
Classification
Origin
05TELAVIV85
2005-01-06 10:02:00
CONFIDENTIAL
Embassy Tel Aviv
Cable title:  

YOSSI GAL AND ILAN BARUCH DISCUSS AHLC, WORLD BANK

This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000085 

SIPDIS

E.O. 12958: DECL: 01/05/2014
TAGS: ECON PREL KWBG IS ECONOMY AND FINANCE SETTLEMENTS ISRAELI PALESTINIAN AFFAIRS
SUBJECT: YOSSI GAL AND ILAN BARUCH DISCUSS AHLC, WORLD BANK
MONITORING, AND SETTLEMENT ASSETS WITH AMBASSADOR

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

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000085

SIPDIS

E.O. 12958: DECL: 01/05/2014
TAGS: ECON PREL KWBG IS ECONOMY AND FINANCE SETTLEMENTS ISRAELI PALESTINIAN AFFAIRS
SUBJECT: YOSSI GAL AND ILAN BARUCH DISCUSS AHLC, WORLD BANK
MONITORING, AND SETTLEMENT ASSETS WITH AMBASSADOR

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


1. (C) Summary: The Ambassador met with Yossi Gal and Ilan
Baruch of the MFA's Economic Affairs division Wednesday,
December 28 to discuss Israeli follow-up from the Oslo AHLC,
World Bank-proposed monitoring and benchmarks, and GOI and
Israeli private-sector contact with the Palestinians on
settlement assets and agribusiness post-disengagement.

--On the AHLC Gal was extremely positive, noting that the
chair had recognized Israel's legitimate security needs, and
that all parties had been complimentary on GOI steps like
proposed facilitation of PA elections.

--On benchmarks and monitoring, both Gal and Baruch took
exception to the language of the World Bank proposals. They
argued that it is inappropriate for the donor community to
tie PA-bound aid to Israeli actions. The Ambassador
responded that the donors must have a way to determine their
money will be effective, and that both Israeli and PA actions
are therefore relevant.

--Gal said that the GOI supports pilot projects at Karni
terminal and other border crossings in principal, but has yet
to formulate a position on many details.

--On the handover of settlement assets and the continuation
of Israeli-Gazan agribusiness cooperation post-disengagement,
Baruch said that while the GOI has a plan for transferring
assets and know-how, there is "nobody to talk to" on the
Palestinian side.

--The Ambassador noted that it would be difficult for the GOI
and the PA to talk directly with each other on disengagement
issues immediately following PA elections. A several-week
period of political and symbolic "catharsis" would have to
take place on both sides before dialogue could begin, he
said. End summary.

--------------
Oslo AHLC: Appreciation for Israel's Efforts
--------------


2. (C) The Ambassador met with Yossi Gal, MFA deputy
director general for Economic Affairs, and Ilan Baruch, chief
of the Middle East economic affairs bureau, on Wednesday,
December 28. Gal discussed the Oslo AHLC meeting at length,

praising it as "unlike any AHLC I remember" in terms of
atmosphere. All parties "behaved," he noted. In his view,
the Palestinians made it clear they were impatient for more
pledges and commitments from the donors right away, yet they
contributed in spite of this to the overall positive
atmosphere. Salam Fayyad even told the delegations that
Israel is currently doing more than any other donor for PA
finances, Gal said, attesting that Fayyad announced that in
November and December 2004 GOI-released revenue attachments
were the PA's only source of outside income.


3. (C) There was "wall to wall acceptance of the importance
of disengagement" at the meeting, continued Gal. Moreover,
all parties from the Norwegian chair to the World Bank
acknowledged Israel's legitimate security needs, expressed
appreciation for the GOI's proposed facilitation of the
upcoming PA elections and support for monitoring delegations,
and called on the Arab states to provide greater assistance
to their Palestinian "brothers." While the Israeli
delegation had misgivings over aspects of the four technical
reports the bank presented, he added, they expressed their
concerns only to the U.S. delegation, in an effort to keep
wider discussions cordial and positive.

-------------- --------------
"Benchmarks and Monitoring" Objectionable Terminology
-------------- --------------


4. (C) Both Gal and Baruch objected to the language of the
World Bank's proposal for benchmarking and monitoring of GOI
steps to facilitate economic growth in the territories. Gal
argued that the reports unfairly suggest donors should tie
PA-bound assistance to Israeli actions. There are "dozens"
of specific GOI steps prescribed in the borders and trade
facilitation report, Baruch said, as opposed to a small
handful of vague "suggested" PA actions. He proposed that it
would make more sense to regard planned events, like Gaza
pullout and the PA elections, as benchmarks in and of
themselves. Alternatively, the U.S. could apply more
discrete "pressure" on the GOI to follow through with key
steps, the way it did on the revenue transfer issue in 2003.
On the bank's proposed pilot programs at select border
crossings, Gal said the GOI supports them in principle but
has yet to formulate an official position on specifics.


5. (C) The Ambassador explained that the bank's proposed
benchmarks and monitoring are focused on "sequencing" of
GOI-PA actions rather than conditionality, and are primarily
a mechanism by which the donor community can ensure their
money is not misspent. As such, he said, they cannot simply
be set aside. It is crucial to donors that the PA not argue
they are unable to make certain reforms or invest in private
enterprise because of steps the GOI has or has not taken.
"Israel will get blamed if the donors believe the GOI is
impeding" Palestinian economic growth, he explained, adding
that if access to Gaza for relief workers was still
problematic in one month's time, it would be clear Israel was
in fact the impediment on that issue.

-------------- --------------
Settlement Assets, Agribusiness: "No-one to Talk To"
-------------- --------------


6. (C) Gal and Baruch said they had tried to talk to the
Palestinians at the AHLC about why the PA had so far "refused
to engage with the World Bank or Israel" on the issue of
handover of settlement assets, but that the PA delegation had
not seemed to take it seriously. "Give us an inventory of
the settlements," they reportedly told Gal. Baruch assured
the Ambassador that the GOI has a plan for the transfer of
agribusiness infrastructure and know-how, including
settlement greenhouses, but there is "no-one to talk to" on
the Palestinian side.


7. (C) The Ambassador emphasized the importance of
Israeli-Palestinian cooperation in expanding the Gazan
agriculture sector. While industries like construction can
flourish independently of Israel, he said, agriculture
depends on a stable export regime. The two men responded
that Israel would "of course" help facilitate exports of
Gazan agricultural produce like flowers and strawberries, and
noted that sector experts had predicted major increases in
Gazan exports during 2005 "regardless of disengagement."
With robust Palestinian investment, said Baruch, the
agriculture sector could double in size within three years,
increasing the number of Gazans it employs from some 90,000
to 180,000. (Note: Baruch added that Nabil Sharif put the
number of Gazans currently employed in agriculture at closer
to 60,000. End note.)


8. (C) Gazans will not be starting from scratch in terms of
agribusiness, said Gal. Gazan growers own thousands of
dunams of greenhouses, and Gazan laborers have worked in the
settlement greenhouses since their inception -- they already
have know-how. The Ambassador suggested that USAID
facilitate a multilateral agriculture conference in order to
link Gazans with Israeli, Egyptian, and Jordanian
counterparts. Gal and Baruch agreed this would be
beneficial.

-------------- --
GOI-PA Dialogue on Disengagement Post-Elections
-------------- --


9. (C) Gal and Baruch explained that the disengagement plan
had been "born under a different reality", and now the GOI
had to decide whether to engage directly with new Palestinian
leadership or work through the U.S. as a third party in order
to move forward. The Ambassador said that Israel should not
expect PA elections to effect an immediate "magic change" in
terms of enabling GOI-PA dialogue. A several-week period of
"catharsis," in which both the GOI and the PA engaged in
political and symbolic demonstrations of strength, would be
in order before real bilateral work could begin on
disengagement's economic aspects. "The relationship can go
off track" very easily during this time, said the Ambassador
-- the U.S. would have to manage it carefully.

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