THE DEPUTY SECRETARY'S MAY 21 MEETING WITH ISRAELI

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 003243 SIPDIS NSC FOR SINGH E.O. 12958: DECL: 05/29/2016 TAGS: PREL PGOV PHUM KPAL IS SUBJECT: THE DEPUTY SECRETARY'S MAY 21 MEETING WITH ISRAELI FOREIGN MINISTER LIVNI REF: CAIRO 3119 ¶1. (U) Classified by: Ambassador Francis J. Ricciardone, Reasons 1.4 (b) and (d) ¶2. (U) MAY 21, 2006; 2:30pm; Sharm El Sheikh, Egypt ¶3. (C) Participants: U.S. -------------- The Deputy Secretary Ambassador Ricciardone NEA DAS Scott Carpenter D Executive Assistant Mike Matera D Senior Advisor Rich Mills D Special Assistant Aaron Jost ISRAEL -------------- Foreign Minister Tzipi Livni Foreign Minister's staff ¶4. (C) Summary: The Deputy Secretary met with Israeli FM Livni on the margins of the World Economic Forum in Sharm el Sheikh Egypt. The Deputy Secretary and FM Livni discussed Israeli-Palestinian issues and Trafficking in Persons. End Summary. -------------- Israeli-Palestinian Issues -------------- ¶4. (C) The Deputy shared with FM Livni some of the concerns raised with the Deputy by President Abbas (reftel) and EGIS Director Soliman in May 20 meetings, including Israel's "undercutting" Abbas by not dealing with him and Fatah's extreme shortage of arms and ammunition. ¶5. (C) Livni noted that the Government of Israel (GOI) is trying to be reasonable and is not in any way trying to delegitimize Abbas. The GOI is treating Abbas as a serious interlocutor, but he has a credibility problem. Several months ago he said he was unable to do anything to implement the first stage of the roadmap. "Now he comes back to us saying that he wants to negotiate. This is not realistic." Abbas could be the "ticket to bail Hamas out of a difficult situation." The danger is that Hamas might allow Abbas to be the "nice guy" in trying to negotiate, but if negotiations fail, Hamas will emerge strengthened in the eyes of Palestinian society. In particular, entering final status negotiations now could lead to more violence, particularly when Abbas is unable to deliver such an agreement. She clearly stated that she does not see Abbas as a partner for final status negotiations. Hamas would use Abbas' inability to secure an "acceptable" agreement to legitimize itself at his expense. ¶6. (C) Regarding Soliman's request that Israel try for six months to work/negotiate with Abbas before proceeding unilaterally, Livni stated that Israel was willing to take risks and make compromises in promoting its new initiative to achieve a two state solution. However, "stagnation is not a viable option. Time works against a two state solution." She believes that it "could serve our mutual interests to coordinate with the other side as long as talking to Abbas does not give legitimacy to Hamas." But she does not know if Abbas - "someone without authority, legitimacy and power to implement agreements" - can be an effective partner. When pressed, she stated that she was intentionally not charting a clear way forward now because that path would depend on many factors and the evolving situation on the ground. ¶7. (C) Livni said "it's not me you have to ask" when asked about Abbas' request that Israel allow Egypt and/or Jordan to provide rifles and ammunition to Presidency-controlled security forces. (Note: Soliman had claimed Israel had agreed to the transfer of some material.) ¶8. (C) Regarding the financial situation of the PA, Livni said that GOI policy is to delegitimize Hamas as a government. The GOI needs to do everything possible to keep the pressure on Hamas without punishing the Palestinian people. This is why the GOI has provided electricity and medicines (including another 50 million shekels-worth that same day),but as money is fungible, it is opposed to any money for salaries. ¶9. (C) On ensuring that the Presidency had resources to maintain itself and its affiliated security forces, Livni noted that she had recommended Abbas utilize funds in the "Palestinian Fund," but he had maintained that the Presidency needed these funds for other purposes. ¶10. (C) The Deputy expressed concern that two major Israeli banks have stopped clearing payments from Palestinian businesses and financial institutions, which could have a very deleterious impact on the Palestinian economy and trade. Livni's staff stated they were working on a new solution to the problem. -------------- Trafficking in Persons -------------- ¶11. (C) Livni expressed concern that Israel might be downgraded from the Global Tier 2 to Tier 2 Watch List or even Tier 3 in the State Department's upcoming Trafficking in Persons report. She reviewed GOI efforts on the issue including the announcement that day of a decision to form a new committee. The Deputy promised to look into the issue. ¶12. (U) The Deputy Secretary' party has cleared this cable. RICCIARDONE