TULKARM INDUSTRIES FACE BARRIERS TO MOVEMENT AND

UNCLAS JERUSALEM 002598

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/GREENE/WATERS/WAECHTER; NEA/RA FOR CLAWSON; NSC
FOR ABRAMS/DORAN/LOGERFO; TREASURY FOR NUGENT/ADKINS; USAID
FOR BORODIN, USDA FOR HUDAK

E.O. 12958: N/A
TAGS: ETRD EIND EAID PREL KWBG
SUBJECT: TULKARM INDUSTRIES FACE BARRIERS TO MOVEMENT AND
TRADE



1. (SBU) Summary: In a June 21 meeting with the Consul
General and NEA/IPA Director, Tulkarm business leaders and
the Acting Governor described how restrictions on the
internal and external movement of persons and goods in the
West Bank had precipitated the governorate's economic decline
and impeded the growth of key industries, such as textiles
and poultry. The business leaders railed against the
closures that now shaped their investment decisions and often
prevented them from traveling outside of the West Bank to
close key business deals. They noted that the USG-funded
scanners were not being used at the crossing. (Note: ConGen
will report septel on the status of the scanners at the West
Bank/Gaza crossing points. End Note.) End Summary.

Small governorate, big pains
--------------


2. (SBU) Acting Governor of Tulkarm Rafat Balawi, Director
General of Palestinian Poultry Company (PPC) Abdel Al-Fattah
Odeh, and Badran Textile Company President Yosef Badran
briefed the Consul General and NEA/IPA Director June 21 on
how Israeli-imposed controls are damaging the Tulkarm
economy. Tulkarm governorate's 176,000 residents rely on
agriculture, trade with Israel, and services provided to
other West Bank governorates, Balawi said. The higher costs
of agricultural inputs and tighter closures have dissuaded
farmers from exporting. The current economic choke-hold had
translated into losses of NIS 7 million (USD 1.6 million)
daily. Local service providers were also suffering without
visits from Israelis, who used to travel to the West Bank to
fix their cars and shop, prior to the Intifada.
Restrictions in movement undermine investment
--------------


3. (SBU) Odeh said Israeli restrictions on movement of
people and goods are shaping investment decisions for many
industries in Tulkarm. The PPC Board of Directors had
approved the building of a poultry slaughterhouse in order to
integrate their operations vertically. However, actual
construction of the slaughterhouse has been delayed because
of problems finding a location not plagued by barriers to
movement, and thus easily accessible to farmers throughout
the West Bank. Odeh also noted delays at checkpoints
endangered PPC deliveries of day-old chicks from its hatchery
to West Bank farmers since the chicks can only be in transit
for 8 hours. Odeh asserted that Israeli distributors do not
experience similar problems, as they can easily access
Palestinian markets on the road networks in the West Bank
that is restricted for Israeli use. Odeh suggested that
Palestinians manufacturers should have access to these roads.
Odeh commented that he had passed six checkpoints (three
were flying checkpoints) in traveling from Ramallah to Nablus
recently, whereas before January 2006, there had been only
one checkpoint at Zaatarah.

Trade is going nowhere due to restrictions
--------------


4. (SBU) Odeh opined that the Israeli-imposed security
restrictions are non-tariff trade barriers. He said he was
unable to import grain for feed-mills directly and must go
through Israeli agents, who often run out of stock. Odeh
said the company has built silos, valued at JD 1.8 million
(USD 405,000) to store grain ordered directly, but these
silos were currently standing empty. (Note: Odeh had hoped
to work with US NGO ACDI/VOCA to purchase U.S. grain
monetized under the Food for Progress program, but the
program had not been selected by USDA. End Note.)


5. (SBU) Badran stated that although he had had successes in
the past exporting textiles to name-brand importers in the
U.S., Europe, Jordan, and the Arab Emirates, Israeli delays
at the nearby Tulkarm/Sha'ar Ephraim crossing had made it
difficult to compete with Chinese textile manufacturers. He
also lamented that Palestinians had to regularly remove
high-quality merchandise from the vehicles and put them on
the ground to be inspected by dogs.


6. (SBU) Badran noted that Palestinian exporters, unlike
Israeli exporters, had to provide a unified tax invoice at
the crossing each time they exported goods from the West
Bank. He said such invoices should be collected monthly, not
for each shipment.


Need for permits for business people and laborers
-------------- --------------


7. (SBU) Both Badran and Odeh commented that the lack of
permits for the business community and laborers is
detrimental to the Tulkarm economy. They argued that
business people should have long-term permits to travel to
Israel, in order to conduct business. Badran asserted that
members of the business community should be allowed to travel
through Ben/Gurion Airport, rather than travel to Jordan each
time to go overseas. In addition, he and the governor said
that more Palestinian laborers should be given permits to
work in Israel, as this would greatly help the economic
situation in Tulkarm. (Note: According to Balawi, 400
workers presently enter Israel from Tulkarm. End Note.)
WALLES