KARNI/AL-MINTAR CROSSING CALL CENTER CONTINUES TO

S E C R E T SECTION 01 OF 02 JERUSALEM 005031

SIPDIS

NOFORN
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/STEINGER; NSC FOR ABRAMS/DORAN/WATERS;
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON; COMMERCE FOR
ITA/MAC/JDERSTINE

E.O. 12958: DECL: 12/20/2016
TAGS: ECON EFIN PGOV KWBG KCOR IS
SUBJECT: KARNI/AL-MINTAR CROSSING CALL CENTER CONTINUES TO
FOSTER CORRUPTION, DELAYS AND HIGH COSTS

REF: A. TEL AVIV 2301

B. JERUSALEM 4587

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


1. (U) This is a joint cable with Embassy Tel Aviv.


2. (S/NF) Summary: Palestinian companies, including several
representing U.S. firms, continue to charge that a call
center established by the GOI late last year to coordinate
the flow of goods through the Karni/al-Mintar crossing fuels
corruption, delays shipments and drives up transportation
costs. They report -- and GOI officials confirm -- that the
call center assigns timeslots to enter the crossing to
Israeli truck drivers who then sell their place in line to
the highest bidder. The cost of shipping a truckload of
goods from the West Bank to Gaza has gone from about USD 300
to almost USD 7,000. When an IDF liaison officer responsible
for Israel-Gaza crossings approached the Israeli Airport
Authority (IAA) about call center complaints, IAA officials
told him that he had no authority to intervene in this
matter. He plans to use a letter provided at his request by
Embassy FCS when he raises the issue with "relevant
authorities." The Embassy has been working with the GOI
Ministry of Finance to initiate an investigation of
Karni/al-Mintar practices, which are also the subject of
discussions under the AMA agenda. Completion of an upgrade
project at Karni/al-Mintar has significantly increased the
number of containers entering and leaving Gaza. End Summary.


2. (C) Acting Tel Aviv FCS Section Chief, accompanied by
ConGen Econoff and two Palestinian businessmen, met December
13 with Colonel Nir Press, Head of the Coordination and
Liaison Administration (CLA),Erez Crossing and members of
his staff to discuss continuing difficulties plaguing
Palestinian companies attempting to ship U.S. products into
Gaza through the Karni/al-Mintar crossing. Press had
requested the meeting after receiving an Embassy FCS list of
U.S. products waiting to enter Karni/al-Mintar for as long as
seven months. The focus of most of the discussion was a call
center established last year to schedule shipments into Gaza
through the Karni/al-Mintar crossing. (Note: The call
center is operated by an IAA contractor. End Note.)

--------------
Barriers to Trade
--------------


3. (C) Acting FCS Chief told Press that Palestinian
representatives of U.S. companies continue to face three
obstacles when attempting to ship goods to Gaza. First,
although goods leaving the West Bank are inspected prior to
entering Israel, they are subject to additional scrutiny at
Karni/al-Mintar before entering Gaza. Israeli products are
processed separately and more quickly. Second, the hefty
fees charged by Israeli truckers have rendered most West
Bank-Gaza trade unprofitable. Third, the call center system
lacks transparency and fosters corruption throughout the
entire process.

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Bidding Up Transport Costs
--------------


4. (C) Mansour Abu Jamous, Gaza Branch Manager of the West
Bank-based National Beverage Company (Coca-Cola bottler)
advised that several of NBC's Coca-Cola shipments with a
total value of almost USD 200,000 have been delayed as long
as seven months. One stalled shipment of 16 pallets recently
exceeded the product's expiration date. Abu Jamous asserted
that when the call center first opened it dealt almost
exclusively with the companies wishing to import or export
their products. In recent months, however, the call center
has been issuing timeslots to Israeli truckers while ignoring
calls from Palestinian companies. Abdullah Zuhayka, a
logistics consultant for U.S.-affiliated companies stated
that five U.S.-affiliated firms had called the center during
a recent four-day period and not one call was answered.


5. (C) Abu Jamous and Zuhayka described how, after securing
a coveted slot, Israeli truckers sell the use of their trucks

JERUSALEM 00005031 002 OF 002


and place in line to the highest bidder. As a consequence,
the cost of shipping a truckload of goods from the West Bank
to Gaza has risen from NIS 1,200 (USD 300) to almost NIS
30,000 (USD 7,000),according to Abu Jamous and Zuhayka. Abu
Jamous said that a trucker had approached him on December 12
offering to deliver a truckload for NIS 28,000 (USD 6,682),
which included the NIS 8,000 (USD 1,909) the trucker had to
pay for the timeslot alone. By refusing to pay these
excessive amounts, the companies involved, in many instances,
must pay to have their products stored in Israeli-owned
warehouses near the Karni/al-Mintar crossing. Abu Jamous and
Zuhayka suggested an immediate improvement would be to have
the call center return to its past practice of dealing
directly with exporting companies.

--------------
Transparent Process Needed
--------------


6. (C) In reply to Zuhayka's reiteration of a prior request
(ref A.) that U.S.-affiliated companies receive a monthly
quota of timeslots, CLA Economic Branch Chief Lt. Colonel
Michael Cirulnik said the problem is not limited to U.S.
products, but extends to all private business conducting
trade through Karni/al-Mintar. He asserted that, even if it
had the authority to do so, the CLA could not give preference
to one company over another, except in situations when
humanitarian shipments were needed. He noted, for example,
that the Pepsi bottler, Mohammed Yazgi who had been among the
Gaza businessmen meeting with Press the week before, had
waited five months for shipments of raw materials and had
laid off 100 of his 180 employees. How, Cirulnik continued,
could he facilitate imports of Coca-Cola but not help the
Pepsi plant? ConGen Econoff interjected that during a visit
to Karni/al-Mintar the previous month he had seen hundreds of
cases of Israeli-produced soft drinks being transferred into
Gaza. He suggested that what is needed is a transparent
process.


7. (C) Referencing a meeting he had had the previous week
with prominent Gaza-based Palestinian businessmen, Press said
he is well aware of the complaints about the call center. He
advised that the Gaza businessmen had reported similar
problems with unanswered calls and truckers' exorbitant fees.
Press said that he had approached IAA officials but was told
that he had no authority over the subject and to mind his own
business. Press, however, asked Acting FCS Chief to send him
a letter outlining the problems which he would then use in
raising the issue with "relevant authorities." (Note: FCS
sent the requested letter to Press December 15, 2006. End
Note.) He also requested information for a "test case"
delayed shipment that he could discuss with the
Karni/al-Mintar management. He opined that a "new mechanism"
is needed in scheduling shipments through Karni/al-Mintar.
He noted, however, that security threats to the crossings
risked disrupting even the best of plans.

--------------
Good News On Containers
--------------


8. (C) Press advised that a promised change in the handling
of containers at Karni/al-Mintar had been implemented
December 10 whereby full containers of goods going into Gaza
are now more quickly exchanged for empty containers coming
out. He explained that the installation of a new conveyer
for aggregate had freed up additional space at the crossing
for the container swap. On the first day, 50 containers had
gone in and 50 had come out. Press said he hoped to reach 80
containers each way per day in the near future. Press also
said he hoped that the working hours at the crossing would be
extended 1-2 hours per day in the coming weeks, resulting in
30-50 more trucks entering Gaza daily.

WALLES