ISRAELI ARAB FLIGHT A BOON TO BETHLEHEM ECONOMY

C O N F I D E N T I A L JERUSALEM 003595

SIPDIS

SIPDIS

NEA/IPA FOR WILLIAMS/MAHER/WAECHTER; NSC FOR
ABRAMS/DORAN/WATERS; TREASURY FOR NUGENT/ADKINS

E.O. 12958: DECL: 08/14/2016
TAGS: ECON EIND CASC KWBG IS
SUBJECT: ISRAELI ARAB FLIGHT A BOON TO BETHLEHEM ECONOMY


Classified By: Acting Principal Officer Thomas Duffy, Reasons 1.4 (b) a
nd (d).


1. (SBU) Summary: The influx of as many as 1,500 Israeli
Arabs fleeing Hizballah rockets provided a significant boost
to Bethlehem's beleaguered economy. During the past month,
hotel occupancy rates and sales at restaurants and food
markets dramatically increased, thus more than offsetting the
simultaneous drop in an already meager flow of foreign
tourists, according to a prominent Bethlehem businessman. On
August 14 Israeli Arabs began to depart for their homes in
northern Israel. Local business leaders hope the town's
new-found "safe-haven" status will prompt both the GOI and
USG to reconsider restrictions and warnings on travel to
Bethlehem. End Summary.

--------------
In a Twist, Regional Conflict
Buoys Bethlehem Businesses
--------------


2. (C) Bethlehem Chamber of Commerce and Industry Chairman
Dr. Samir Hazboun told Econoff August 14 that the number of
Israeli Arabs seeking refuge in the Bethlehem area in recent
weeks had reached about 1,500, approximately 1,200 of whom
were staying in local hotels. He emphasized that hotel
owners, although suffering from years of low occupancy rates
and, most recently, yet another round of tourist group
cancellations, responded to the arrival of Israeli Arabs by
lowering hotel rates, in some cases by as much as 50 percent.


3. (C) Noting that he had conducted several informal surveys
of local restaurants, shops and hotels in recent weeks,
Hazboun asserted that the presence of Israeli Arabs had
"doubled" the amount of business conducted in Bethlehem.
Fruit and vegetable markets and grocery stores experienced a
15 percent increase in sales. Several restaurants have met
their seating capacity as often as three times a day in
recent weeks, according to Hazboun. In addition, unlike with
tourist groups, restaurants serving Israeli Arabs were not
obliged to give bus drivers a 10 percent share and tour
operators a 30-35 percent cut of the business. Hazboun,
however, stated that handicraft vendors and tourist shops,
patronized by now mostly absent foreign pilgrims, have
experienced a downturn in sales.

--------------
Quiet Stay in a Peaceful Community
--------------


4. (C) Hazboun said that the business community, local
government officials and the citizens of Bethlehem, as a
whole, had succeeded in creating a hospitable environment for
their Israeli Arab guests. He asserted that, in the past
month, 350-400 yellow-plated (Israeli) vehicles had entered
Bethlehem without incident. There were no reports of thefts
or other crimes involving Israeli Arabs. At the
recommendation of local businesses, the Bethlehem governorate
created a special emergency telephone number, but no serious
problems have been reported. (Note: Hazboun advised that
the special telephone number was established both to ensure a
pleasant stay for the visitors from the north as well as to
help deal with any potential criminal or social problems they
might be bringing with them. End Note.) Hazboun advised
that, based on a quick survey of hotels earlier on August 14,
many Israeli Arabs had begun that morning to head back to
their homes in northern Israel. Some of them, however, are
being more cautious about the fate of the recent cease-fire
and are electing to wait until the end of the week.

--------------
Looking For Help With Access and Tourism
--------------


5. (C) Hazboun stated that he and other business leaders
believe that Bethlehem's successful role as a "safe-haven"
during this period would serve as a good indicator for the
future. He advised that he would be meeting with Israeli
officials August 15 and hoped that they would agree to closer
cooperation in facilitating travel to and from Bethlehem. He
lamented the continuing Israeli closure on the travel of
Palestinian workers and businessmen to Israel and worried
that continued closures would negatively impact preparations
for Ramadan in late September. He said that he hoped that
the positive experience of Israeli Arabs would prompt the GOI
and the USG to reconsider restrictions and warnings governing
the travel of their respective citizens to Bethlehem.
DUFFY