SETTLEMENTS AND BARRIER: OLMERT CHANGES GEARS;

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001065

SIPDIS

E.O. 12958: DECL: 03/15/2016
TAGS: PREL PGOV KWBG KPAL IS SETTLEMENTS ISRAELI PALESTINIAN AFFAIRS
SUBJECT: SETTLEMENTS AND BARRIER: OLMERT CHANGES GEARS;
CLAIMS U.S. SUPPORT

REF: TEL AVIV 0940

Classified By: Ambassador Richard H. Jones; Reasons 1.4 (B) and (D).


1. (C) Summary: A/PM Ehud Olmert has recently made a number
of public statements on the separation barrier, annexation of
settlements, and finalizing Israeli borders that appear to be
at odds with his oft-stated commitment to the Roadmap and
previous agreements with the USG concerning settlements. In
response to campaign pressure from the Israeli right, Olmert
has increasingly elaborated upon plans to hold an internal
Israeli dialogue on the separation barrier, complete the
barrier, make that line Israeli's de facto border, annex
major settlement blocs (including Maale Adumim, Ariel, Gush
Etzion, and the "Jerusalem envelope"),proceed with
construction in E-1, retain Israel's "security border" along
the Jordan Valley, and separate the Israeli and Palestinian
populations to the maximum extent possible. He also called
for settlers to consolidate from isolated locations in the
West Bank into expanded settlement blocs west of the barrier.
Olmert's purported intention to seek international support
is made problematic by his (and Avi Dichter's) stated
intention to leave the IDF deployed on the West Bank. Olmert
and his staff have told the press that the USG was consulted
on and supports such plans. Post recommends that we approach
A/PM Olmert now, and the new GOI immediately after formation,
to stress that the USG has not concurred with Olmert's stated
plans. End summary.

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Evolution of Olmert's Settlement and Barrier Policies
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2. (C) After assuming the Prime Minister's duties in January,
Olmert was initially cautious in his remarks on peace process
issues. In private meetings with USG officials and visiting
CoDels, he repeatedly stressed his commitment to the Roadmap
and pledged to uphold the GOI's commitments to the President
on the removal of outposts. He ordered -- and saw through to
completion -- the removal of settlers from the Hebron market
and the demolition of nine permanent houses in Amona. On
March 7, Olmert told a group of transportation experts that
"Israel will not invest in construction or infrastructure
development beyond the Green Line in the coming years,"
although it was clear from context that he meant the area
east of the barrier.


3. (U) Following the combination of the Hamas victory, strong
criticism from political opponents such as Bibi Netanyahu
during the ongoing Knesset election campaign, and a gradual
slide in Kadima's polling numbers, Olmert has changed gears.
On March 10, he outlined for reporters his plans to separate
Israeli and Palestinian populations by 2010. He said that if
the new Hamas-run PA refuses to accept the international
community's three conditions "after a reasonable amount of
time -- and this will not be measured in years," then Israel
will take further unilateral action. The steps he mentioned
track closely with the plan leaked by Kadima candidate and
former Shin Bet chief Avi Dichter on March 5 (reftel).


4. (U) Olmert has also pledged to complete the security fence
by the end of 2006. In a press interview, Olmert said the
separation barrier will be adjusted to a new line, one
marking what he is specifically terming "permanent borders."
He said the barrier could potentially be shifted either east
or west depending on the outcome of an internal Israeli
dialogue on the subject. Olmert also called for settlers to
consolidate from isolated locations in the West Bank into
expanded settlement blocs west of the barrier. (Note: The
barrier, when complete, will likely include several lobes or
fingers reaching up to 20-plus kilometers into the West
Bank.) Although he refused to define the scope of such
settlement blocs, he mentioned that Israel intends to retain
Gush Etzion, Maale Adumim, and "the Jerusalem envelope." He
later acknowledged that some Arab parts of Jerusalem
currently within the municipal boundaries, such as the Shufat
refugee camp, would be excluded. On March 14, Olmert went a
step further, offering settlers a dialogue and telling them,
"I want to be clear on this, the Ariel bloc will be an
inseparable part of the State of Israel under any situation."
He has also mentioned that the IDF will remain deployed on
the West Bank and the GOI will maintain what he calls its
"security border" along the Jordan Valley.


5. (C) Following the interviews, unnamed GOI officials told
the press that the GOI had discussed Olmert's plans with the
USG, which, they claimed, did not object. When asked by
reporters whether he intends to build in the E-1 area despite
U.S. objections, Olmert replied on March 10: "of course.
After all, it is unthinkable that we will talk about Maale
Adumim as part of the State of Israel and leave it like an
island or an isolated enclave ... This is clear to both the
Palestinians and to the Americans." In a meeting with the
Ambassador on March 14 (septel),Internal Security Minister
Gideon Ezra confirmed that Israel has already begun
construction of the long-delayed police district headquarters
in E-1. He baldly claimed that the President's letter of
April 14 had acknowledged that Maale Adumim and E-1 would
remain in Israeli hands, adding that the GOI had always
intended to build in E-1, but had been temporarily prevented
from doing so by recently concluded court cases. Ezra denied
that the move was in any way connected to the ongoing
election campaign. The Ambassador reminded him that the
President's letter specified that adjustments to borders
should be mutually agreed and noted consistent U.S.
opposition to a move that would effectively split the West
Bank in two. Ezra blithely pointed to GOI plans to use
tunnels to preserve connectivity.

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Olmert Changes Gears
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6. (C) Comment: Olmert's position on settlements and Israel's
borders has evolved and become more specific due to the press
of the Knesset election campaign. There might be some
pullback after the successful Jericho operation. However,
his public pronouncements on annexing settlement blocs and
setting Israel's borders along the barrier line push the
envelope of -- and in points clearly exceed -- the U.S.
position on these issues contained in the President's letter
of April 14, 2004. While Sharon followed much the same
strategy, he rarely revealed his full intentions to the
public and was also careful not to claim -- as Olmert has
done -- that the U.S. is reconciled to construction in E-1
and other unilateral steps in the West Bank. While post does
not recommend an official USG response to every campaign
pronouncement in the ongoing Israeli election debate, we
recommend that the USG quietly reinforce our views now with
the GOI and with the next government immediately after
formation to avoid future misunderstandings. If we do not
lay down a marker now, then we can expect public assertions
to continue. Even in the press, such assertions might be
taken as de facto U.S. acquiescence by the GOI and among
Israelis, making future disagreements harder to resolve.

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